The Sale of Services During a Recession Needs a New Business Model

Most people are finding it just a bit harder to sell business services in today’s tough markets, not because of competition, but because customers are holding off writing deals. What can we do to get them moving?In our business we are turning down offers from people, not because we don’t need their stuff, but because we need our cash more! Our guess is the majority of businesses feel the same way. Cash is King. Money is tight for everybody, and businesses are pessimistic about when things are going to improve.So is there a strategy that unlocks the customer’s check book? We think so. That strategy is value sharing.Value sharing works both ways, on the upside as well as the downside. It works for the customer, because his/her risk is mitigated. If the project doesn’t pay off the supplier has something to lose. Failure means both parties share the pain.It works for the vendor, because when the project pays off there’s a bonus related to the value created. The customer goes along with the idea when his primary motivation is avoiding risk. The vendor goes along when the fee rates don’t properly reward the contribution.For some services providers value sharing can be a bitter pill to swallow. After all they just want their day rates. But what happens when the customer needs the service, and will build value with it, but won’t sign on the dotted line? Everybody loses.Doing a value sharing deal unlocks the check book, albeit maybe for a smaller fee, and opens the opportunity for much bigger upside. And there’s a much bigger win.Once they’ve figured out a way to share value, the parties aren’t customer and supplier anymore. They’re partners, with a common interest in making it work. And there’s further upside for the services provider. The customer won’t even think about working with anybody else on the next deal.Value sharing unlocks deals, increases revenue and margins, and locks in customers. Look at the success of the Business Process Outsourcing industry. Those guys figured out, a long time ago, that mitigating the customer’s risk enabled higher rewards for the supplier.

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