If you have a service-centric business, you rely on repeat business. Long gone are the days that transactional hardware sales are enough to get you by every month, which is why contract management is such a critical business function for service providers. With that in mind, you’d want as many devices or machines under contract as possible. Contracts represent recurring revenue for ongoing service, parts, supplies and, in some cases, hardware sales. But how do you ensure these contracts meet both your needs and your customers?
What is solution selling?
Solution selling is one of the many strategies you can use to ensure that your team is creating profitable contracts the first time, so you don’t have to worry about being locked into costly contracts that hurt your bottom line.
Solution sales involves a salesperson guiding potential customers through the buyer’s journey, from beginning to end, and delivering a contract that provides value and helps them achieve their goals. This is a markedly different approach from transactional sales, a model in which the salesperson is the gatekeeper that appears at the end of the buyer’s journey to close the deal.
For many businesses, particularly service providers, transactional selling is not a sustainable business model. It doesn’t provide the flexibility or scalability required to grow your business. Thankfully, solution selling is ideal for service-centric businesses that offer highly customized offerings like maintenance and service contracts.
There are many benefits of solution selling that extend beyond the initial sale, helping you secure that reliable recurring revenue so you can focus on growth. Here are five ways that solution sales can help you improve your overall contract management:
- Actionable information: An effective contract is built to meet your customer’s needs. A critical step in the solution selling process is collecting information about your potential customer’s pain points and developing a plan to address them. Using this information, you can create contracts that are personalized for the customer and profitable for you.
- Cost control: With solution sales, you can avoid the budget and forecast pitfalls associated with transactional sales. You can design contracts for customers who need a more consistent bill to budget from. In turn, this provides you with predictable and scalable revenue that you can use to properly allocate resources and run your business.
- Transparency: Customers today know how much they’re paying and can often find pricing for many products and services within minutes. Service providers have to content with these new attitudes toward pricing. Solution selling relies on personalized proposals that give potential customers complete visibility into the cost of your offering, setting clear expectations and creating a positive customer experience.
- Repeat business: In many cases, transactional selling doesn’t obligate or incentivize the customer to purchase from you in the future, which isn’t ideal when it comes to growing your business. Solution selling can help you create effective service contracts provide a reliable source of recurring revenue and deliver value to customers.
- Leverage technology like ERP: Take your contract management even further by leveraging an ERP system. Solution selling best practices—collecting information, generating personalized proposals, creating profitable contracts—go hand-in-hand with the features and functionality of most ERP solutions. Supporting your sales process with contract management technology can provide critical visibility into your contract performance so you can flip costly contracts.
Maintenance and service contracts are the bread and butter for any service provider. Embracing solution selling gives you the information you need to build smart, profitable contracts the first time.
Download our free ebook, 5 Principles of Solution Selling, for a more in-depth look at how you can adjust your sales strategy to improve your contract management.
Stay on top of industry trends and insights.
Subscribe to the Big Ideas for SMBs blog.