Almost 30 years ago when tiered service plans were first introduced, they were usually shown to customers in tabular form. These tables listed the features in the left column and the various service levels across the top. Check marks, or something similar, were used to indicate the features included in each level. When complete, the table looked like this:
Customers understood that the cost of the plan increased as the value of the underlying metal increased. When a company decided to add a super plan, it was usually named “platinum” and shown next to the gold column.
Since the bronze level was so basic, it was unlikely that the business would introduce a plan with fewer features and if they did, it was usually described as an extended warranty. And we all knew that it was not like a real service plan.
What Has Changed?
In a recent blog post titled It’s All About The Outcome; I describe how people now buy services (and products) to enjoy the outcomes they get when using their purchase. For example, nobody buys a tablet just to learn to type with one or two fingers. They buy the tablet to get the knowledge or enjoyment from reading a book, to keep in contact with friends and family using Facebook, or to find a new job using LinkedIn. They buy for the outcomes, not the features! And when the outcomes make their work better or easier then the product or service is creating customer value.
When they upgrade features like extra memory, it is because they want to watch streaming videos or create their own music.
Yet many companies still position their service plans based on the features as in the first table.
So, how do you change your marketing approach and sell the outcomes? The good news is that it is not as hard as it sounds. The bad news is that you have to know what outcomes your customers need and what you can realistic promise to deliver. Here is an example:
You can see that this table uses Class 1…Class 4 instead of Platinum …Bronze and that instead of check marks the table outcomes, specifications, and actual performance for each plan level. Customers know exactly what to expect if and when an issue arises. Let me give an example why this is so important.
An Actual Story
When I first became VP of Global Services for a data communications company, I started traveling to meet with our key customers. My first visit was with the Network Director of one of the New York based stock exchanges. We had a valuable discussion and I went home and started acting on his concerns. After a few visit with him we, both felt very comfortable with each other. We went to lunch and he surprised me by announcing that he would pay for the lunch. What a feeling of accomplishment! After some small talk, I asked him the one question I was dying to ask:
Q. “Our product is fault tolerant and redundant and the likelihood of any two of the same redundant parts failing simultaneously is miniscule. Why do you have such a comprehensive and expensive plan including an on-site engineer during the critical hours of operation?”
A. He smiled and said, “If during the trading and settlement hours the network is down for more than a total of 40 minutes for the whole year, I lose my bonus! So, I buy the best products, from the best companies, and then I buy the best service contracts that are available. I am doing what my company wants me to do; spend their money to ensure we meet our uptime requirements. That may cost them a lot of money but one major outage can lose us more in credibility and lost revenue.”
He never mentioned features, benefits, or outcomes. However he was clearly fixated on two outcomes – network uptime and his bonus!
If you still show your customers the first table, you may be guilty of not selling your customers what they actually need and want. And, if your services business is a microcosm of your whole company, then the company may find that it is missing out on new sales because they are talking features and benefits (20th century) and the competition is talking outcomes (21st century).
Sam Klaidman is the Principal Adviser at Middlesex Consulting, based in Massachusetts. He applies the methodologies and techniques associated with the Services Marketing and Customer Experience professions to assist his clients achieve their growth objectives by designing and commercializing new value-added services and the associated business transformations. Sam also utilizes his 20+ years hands-on experience in Engineering, Manufacturing, Consulting and General Management to help clients grow their services business and win Customer Loyalty. Prior to his career in consulting, Sam was Vice President of Customer Support for Oxford Instruments, a leading global scientific instrumentation manufacturer and Global Vice President of Customer Service at Bytex Corporation, a high-end data communications equipment manufacturer serving Fortune Global 100 organizations like the New York Stock Exchange, British Airways, AT&T, British Telephone, Visa and MasterCard. Sam is a Life Member of the IEEE.
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