A Conversation with Kyle Andrews: Creating Business Value Changes Customer Perceptions and Wins More Business
With services revenues on the rise compared to product revenues, technology companies are finding that their services organization is under the scrutiny of Wall Street for the very first time–with some positive and negative results. On the positive side, service organizations (including PS, tech support and field service) are getting more visibility and respect. On the downside, the thirst for additional services revenue grows, and companies struggle to identify the right services, in the right package, at the right price point, to meet the needs to today’s customers.
If I could pick one area of service and support with which most companies could use assistance, I’d have to go with services marketing. I’d even go so far as to say “services marketing” is an oxymoron in many companies–the skill sets required to be good service and support techies do not lend themselves easily to marketing. Luckily, there are a few experts out there who can teach you these essential skills, and a great example is an upcoming Professional Development Workshop entitled “Creating Business Value Changes Customer Perceptions and Wins More Business,” at our TSW Conference in Las Vegas on Monday, October 18th. The workshop instructor is Kyle Andrews, founding partner of Pretium Partners, a long time TPSA and TSIA partner. For over 15 years, Kyle has helped clients learn how to define the business value created by their solutions and how to work with their customers to develop a business case that explains it. I was able to schedule some time to sit down and talk to Kyle about the role of services in tech companies and his upcoming workshop.
John Ragsdale: Kyle, it is great to see you! Thanks for making time for this interview!
Kyle Andrews: Thank you, John, I appreciate being here!
John: I wanted to start with services marketing. In your workshop, you demonstrate how to create meaningful offer messaging and content to help marketing and sales align their efforts. Do you find marketing skills are hard for service professionals to master, or are you seeing more hiring of marketing-savvy types for service and support roles?
Kyle: It’s not that marketing skills are harder for service professionals than anyone else but marketing is a profession of its own. When a technology company has a commitment to a service strategy, then you’ll see marketing professionals for the service business. Too often service marketing is underfunded due to a lack of real commitment to the business.
Sales and marketing have the common goal of finding and retaining customers but their actions are not always aligned even with seasoned marketing professionals. In this workshop we are addressing an important gap: marketing and sales messaging, especially around points of differentiation and claims of value. Our clients hire us to teach their sales teams to sell value; yet, the marketing message remains focused on product and capability and worse yet, is not competitively differentiated.
John: Let’s talk services revenue. The good old days of “gold, silver and bronze” are long gone. How do you see companies going about finding new sources for services revenue? Any industry trends you’d like to report?
Kyle: When service solutions are designed to address known business problems, then value can be easily demonstrated. Innovations in collaboration technologies have improved knowledge sharing and have reduced the time to solve problems…for the provider and the customers. Knowledge management technologies have allowed service providers to increase the overall proficiency of the technicians, consultants and other providers. Bundling capabilities and technologies in creative ways AND being able to demonstrate the value to the customer is essential.
John: I’m sure you are aware of our STAR Awards, which we award to members with exemplary service and support operations. One of the toughest areas of the STAR Award application is when members have to demonstrate the business value delivered to customers–creating those ROI models are hard work. One of the things attendees will learn in your workshop is how to understand the value their services create in terms of business impact and how to define service attributes that are actually meaningful to customers. Could you talk a bit about that process? How do you help companies identify business impact?
Kyle: Service’s value must be defined by the impact on the customer’s business and framed according the decision makers’ point of view. Our clients sell solutions that must be positioned at the executive level, or at least to business managers. So it not sufficient to define value using only a cost avoidance projection or the old cost comparison: today you are spending $X on time and materials so a contract costing $Y will save you money. These are important pieces of value but senior managers need to understand the impact on business processes and the resulting cost, revenue, strategy and risk benefits.
We help our clients examine the ways their solutions create efficiencies, productivity improvements, alignment to customer’s strategy and reduce and manage risk. There is a strong focus on understanding the customer’s business – how they compete, what their priorities are, what KPI’s do they focus one, etc – and align solutions accordingly.
We outline how to collaborate with the customer to quantify the projected value through use of logical assumptions and sound reasoning. Quantified financial benefits can then be used in an ROI analysis. A common problem with creating an ROI model the customer accepts, is not involving the customer. The customer must accept the assumptions that underlie a business case so having the customer participate in the process is essential.
A major obstacle that interferes with ROI work is the belief that the results have to be accurate. I know that seems counterintuitive! When working with numbers and spreadsheets it is easy to think that you are doing highly precise work and no one wants to be wrong when projecting benefits! But what you are actually doing is forecasting or predicting the future so there are few absolutes. Once the provider and customer get comfortable with this, then their focus shifts from accuracy to logic. When you use sound logic about the projected business impact of your service, then benefit quantification and return on investment work is much more successful.
John: I see a mention in your workshop abstract that a professional investment analysis tool and framework will be provided to enable attendees to quantify the benefits of their services and explain the ROI. Can this tool be applied across hardware and software, enterprise and SMB, etc.?
Kyle: Absolutely. Our clients sell solutions consisting of hardware, software, services of all types – support, professional and outsourcing. The tool is designed for use with decision makers who want to understand the costs/benefit relationship over time for an investment.
John: Could I get a bit more detail on the workshop? How is it structured? How will the attendees spend their day?
Kyle: The workshop teaches key elements of service value, how to define differentiated messages and attributes, how to quantify benefits and use the investment analysis tool and more. In order to reinforce the learning, and create useful take-away material, we have activities where participants use their own service solutions and customer opportunities. If applicable, we have participants work in teams. We think that stimulates ideas and learning.
John: It has been a pleasure speaking with you! Thanks for taking the time to sit down with me today!
Kyle: Thanks for the time, John, and I look forward to seeing you in Vegas!
If you have any comments or questions for Kyle, please add a comment or drop me an email. And as always, thanks for reading!