How to Sell High-Margin, Low-Cost Service (Without Commoditization)
As integrators look to maintain healthy margins, there is one offering they can bring to the table that will never commoditize: service.
The commoditization of home technology products has been one of our industry’s most prominent trends for years.
As we contend with this reality, it’s become increasingly important to focus our sales and marketing energy on product categories that still offer high-margin, panelized lighting control and automated shades for example. But even these bastions of profit will eventually feel the forces of downward pricing pressure.
Thankfully, as we look to maintain healthy margins, there is one offering we can bring to the table that will never commoditize — our ability to provide clients with an excellent service experience.
A Look at the Commoditized Service Experience
For proof that great service is not a commodity, look no further than the your local ISP.
Customer service interactions with these companies are universally regarded as awful, and for good reason. Attempting to provide low-cost service at a large scale, these companies pack cheap call centers with poorly trained reps armed with little more than a boilerplate script and support checklist.
A poor customer experience is nearly inevitable.
Other large companies have taken a different approach to providing low-cost service through the use of self-help materials and user forums — Google Apps for business is a great example.
Any user of these products who has ever tried to get support from an actual person knows that it is virtually impossible. Surely, this is one of the key reasons that Google can keep the cost of this software suite so low. But unless you’re technically-inclined (or remarkably patient) this approach to service often results in a frustrating customer experience.
The Service Conundrum
Clearly the commoditized approach to service will not work for the type of clients we deal with, but that’s not telling you anything you didn’t already know.
So the question becomes: how do we expand our high-margin service offerings without sacrificing the customer experience?
This conundrum often leads business owners and managers to simply work more hours. Not wanting to burn out their employees (a very real concern for service teams) but still wanting to ensure a good client experience, they take the urgent, after-hours calls themselves.
I speak from personal experience when I say that this practice of having clients call the boss for service is a bad idea. It quickly becomes a constraint on your company’s ability to respond rapidly and reliably to service incidents, not to mention the negative impact it has on the business owner’s work/life balance.
Scaling Service Without Commoditizing the Experience
The fact that selling great service provides high-margin and simply doesn’t commoditize makes it a very compelling offering.
Ironically however, the very fact that it doesn’t commoditize makes it difficult to sell at scale.
The service demands of our clients simply cannot be met effectively using commoditized techniques such as the cheap call centers or self-help resources. And as many of us have experienced, there are not enough hours in the day for bosses and managers to meet this demand themselves.
Thankfully there are many effective strategies for expanding your high-margin service offerings without damaging our customer’s experience, or sacrificing our own nights and weekends. A few examples of these strategies include:
- Fully leveraging RSM tools to reduce truck rolls that are not only expensive, but are also a major constraint to scaling your service operations
- Consolidating service requests to a dedicated phone number allows you to spread the workload evenly throughout the company using a rotating on-call schedule.
- Using a modern ticketing system to boost efficiency and help create a knowledgebase of issues that can be referenced for future incidents
- Deploying modern instant messaging systems such as Slack to improve real time communication and allow for a highly collaborative approach to service
By using the above tactics, we can effectively meet the increasing service demands of our market without sacrificing the customer experience. In addition to the above strategies, I’d be remiss not to mention that the goal of providing an excellent and scalable customer service experience (which lies at the very core of OneVision's Instant Triage offering).
But whether you look to outside companies for help in this arena or choose expand your in-house offerings, the key is to take action. In an industry that so clearly feels the pressure of commoditization, we must find a way to meet the surging demand among our client base.
Put simply, there has never been a better time to get in the business of selling great service.
For more information about service and using it to create RMR, visit www.onevisionresources.com/blog.
Joseph Kolchinsky is the founder of OneVision Resources and investor of companies in the personal and home technology industry. He is also a frequent speaker on the evolving nature of supporting the connected home and related IoT. Have a suggestion or a topic you want to read more about? Email Joseph at [email protected]
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