How Your Businesses Can Boost Revenue and Margin Using Data You Already Own.

By Mike Meyer & Rob Biggin

You have a Head-Start if you have Accessories, Spares and Services

Businesses which sell technical or complex products to other organisations should have a head-start when it comes to sales of closely related spares, accessories, preventative maintenance, repairs and additional professional services.
In sectors like industrial products, instruments and diagnostic equipment the opportunity to sell add-on products and services can be worth many times more than the initial sale. Margin gains can be even higher since, in our experience, the margin on the add-on sales is typically 50 per cent higher than on the initial product. The opportunity to sell service contracts is particularly attractive since they are often paid up-front and the credit risk is small.

Commentators agree.

 Accenture claims that if businesses are mainly organised around initial capital sales of industrial equipment they may leave as much as 90% of the potential lifetime revenue ‘on the table’.
Accenture considers that spares, accessories, maintenance, training, operator certification, leasing costs and other add-on products or services are all potentially within the portfolio of original equipment vendors.

Can you come up with a number for customer lifetime revenue for your services or products?

Most businesses already store enough data to analyse the cumulative revenue over time of their individual customers, segments or the entire business.

However, we find that only a few of them have the skills, experience or time to access that data and turn it into actionable information.
Often their head-start is not exploited. Suppliers of technical or complex products and services only achieve a very small proportion of these add-on sales. Sometimes the opportunity goes to a direct competitor, sometimes to a general facilities management organisation or customer internal engineering group but sometimes it isn’t fully exploited by anyone.

Applies to suppliers of technical & professional services.

Suppliers of technical & professional services (for example, legal, environmental, financial) often have what they consider to be a  successful business with just one geographical branch of their client base or in just one service speciality.

Sometimes failure to sell add-on services can hurt the vendor more seriously than in the pocket.
The user’s compliance and subsequent liability can also be affected if regular and repeat services are missed.

Many reasons for failing to exploit opportunities

We often encounter human factors, for example, field-based capital equipment sales people receive better training, incentives and accolade than the office-based colleagues who sell the add-ons. Even the field-based team is often inadequately
rewarded when they sell ‘mere’ accessories.

However in our experience, it’s the lack of customer intelligence that is most important.

 The staff who are responsible for marketing and selling these add-on products and services

• Can’t access enough information about the sales history
• Can't make appropriate and timely offers.
• Don’t know what ‘assets’ the customer has,
  
  • When they were installed
  • What the detailed specification or upgrade history is.
• Don’t receive alerts when warranties or prior service contracts expire
• If there is a reliability problem they generally don’t find out.

Who is responsible for Customer intelligence in your business?

We know that it's a measure of the power of a business to access, link and exploit the contact, transaction and specialist data about their customers that is scattered in their computerised operational systems  but who is really responsible?

We have recently worked  with suppliers of

•   Materials testing equipment for manufacturers and laboratories
•   Internet security hardware, software and services
  
•   Diagnostic products and services for hospitals
•   Catering equipment for restaurants, staff canteens & public institutions
  
•   Therapeutic equipment for hospital intensive care units
•   Microscopes and other instruments for laboratories
•   Business and financial services to accountancy firms.

These businesses are usually already experienced users of computerised operational business systems, including invoicing, field service and customer contact or customer relationship management (CRM) systems and they may be software experts in their own domains.

However most are frustrated by their inability or lack of resources to link the information in their scattered operational business systems to provide really useful customer intelligence.

Is your customer intelligence deficit holding your business back?

If you'd like us to take a look to see if you have a few hidden gems in your business then email us.
info@rainmaker-coaching.co.uk ...

We'll come to you and take a look under the bonnet for free

Good Rainmaking
Rob and Mike