Driving down the highway, you notice billboards. Although large, they don’t have room to say much. They rely on big keywords and some way to compel people to connect while driving by. Early LinkedIn company pages used to be like that. They provided the basics in hopes they would induce you to look up the company on its website while you were viewing the LinkedIn page.

Now, these pages include updates, blog posts, job listings, services and analytics. This turns the formerly static company page into a regularly updated one that gives people a reason to return.

Adding products and services to your company page

Because of these exciting features, at InternetVIZ, we spend the most time in LinkedIn on the InternetVIZ page. We’re slowly building our company pages by adding our services. (If your company sells products, you can list products.)

On the company page is a tab for Products and Services. Figure 1 shows “Services” since we don’t have products. To add products and services, ensure you’re on the Services tab and then select “Edit” from the “Admin tools” drop down and follow the directions as Figure 2 shows.

Figure 1. LinkedIn Services tab.

Figure 2. Adding a new product or service.

The cool thing is that you can create multiple versions of the services page for your target audiences. You can customize pages for  each audience based on the company size, job function, industry, seniority and geography. The template includes banner images, disclaimers and the ability to include a YouTube video.

Including blog posts and jobs

All you need to do to publish your blog posts is use the RSS feed. In PSJ Blog, you can see an orange icon for subscribing to the RSS feed as Figure 3 shows. We’ve connected the blog to the page so whenever a new blog post publishes, it appears on Overview tab. To use the RSS feed, select the link to get the URL to the blog’s RSS feed. Copy that link and go back to LinkedIn.

Figure 3. PSJ Blog RSS feed.

Go to the Overview tab. Select “Edit” from the “Admin tools” drop down and paste the URL into “Company Blog RSS Feed” box. While on the Overview page, be sure to fill in all the fields about your company as completely as you can.

To add jobs, jump to the Careers tab, choose “Post a job” and fill in the template. LinkedIn has a chat feature for help posting a job. Note: This isn’t a free feature.

Viewing analytics

LinkedIn provides analytics for company pages. Here are the available charts:

• Page views.
• Unique visitors.
• Products and services clicks.
• Members following your company page.
• Member visits by industry, function and company.

For page views and unique visitors, LinkedIn compares your company to similar companies. Figure 4 shows page views of the Overview page. Notice a jump in December? That’s when we added more to the InternetVIZ LinkedIn page.

Figure 4. Page view analytics.

At least a few times a week, we share an update in the form of a link to an article of interest to our readers or relevant insight. You need to turn on this “Company Status Updates” feature by designating an admin or admins responsible for updating the company page. Do this in admin tools on the Overview page.

Don’t stop there. Just updating and maintaining our own company page is like having a website. You can’t just stand by hoping people will land there. Put yourself out there in LinkedIn by getting involved in other areas.

Venturing beyond your company page

A good place to start is with LinkedIn groups. You can create your own, join existing groups or both. With many groups already out there, check what’s available before you create one. A search for “b2b” groups yields almost 2,000 results. “Professional services” provides more results, but these groups are all over the place, ranging from golf and pets to real estate and auto retail.

Play with the group search, and you’ll eventually find a few that fit your needs. When you do, join a group and listen for a little while. You wouldn’t barge in a room and start talking. Instead, listen to get the gist of the conversation and contribute when you have something of value to offer that isn’t a promotion.

Promotion opportunities come up. For example, one business-to-business (B2B) social media group invited members to post links to their company’s Facebook page. Before you take off looking to do the same, beware of the disadvantages of doing this.

When people like your Facebook page, they expect reciprocation. The problem is that your page may not be a fit for them and theirs may not be a fit for you. For example, a smoking products company liked our Facebook page. We tried to avoid this situation by describing the purpose of our Facebook page, thinking only those interested in the topic would take action.

Resist the temptation to overpromote your company in group discussions. People can and will flag promotions or anything that’s inappropriate.

What questions do you have about LinkedIn for companies? Please share them in comments or email meryl at internetviz dot com. We’ll answer them here or in a future article.

About the author

Meryl K. Evans is senior editor at InternetVIZ and the content maven behind the Professional Services Journal. Follow her on Twitter @merylkevans.

We will release our fifth annual Professional Services Maturity Model™ benchmark this month. Over the past five years, we have surveyed 850 firms and reported results on an annual basis. The past five years were hopefully not normal as the global economy experienced one of the greatest financial meltdowns and recessions in history. Professional service organizations (PSOs) went from torrid growth in 2007, to near chaos in 2009, and now begin to revert to double-digit year over year growth.

The professional services (PS) market is unique, not only because it is people and knowledge-based, but also due to the high caliber of the individuals who are attracted to it. PS practitioners spot the trends, create the strategies and help their clients change business processes and behaviors to be able to capitalize on them.

PS includes research, management and IT consulting, architecture, accounting and advertising. PS constituents are at the forefront of developing new strategies for improving productivity by helping their clients apply the right blend of people, process and technology. Thus, they pave the way to a brighter and more dynamic 21st century business model.

Given the economic uncertainty of the past five years, professional services executives have had to peer inward to reduce costs and overhead, and at the same time, look outward to ensure they focused on the right markets and services. In general, people and knowledge-based businesses lack the expensive capital-intensive assets that can create havoc on the balance sheet in a downturn. The real assets are people and know-how so it’s easy to cut personnel in order to remain profitable.

However, because the professional service market is human capital-based, people are different from machines and buildings. Their productivity and value-add can be severely impacted by uncertainty and fear. Our research shows PS firms who primarily used layoffs to keep profits in check, now struggle to attract and retain a talented and loyal workforce. Those who used layoffs as the tactic of last resort have been rewarded by retaining the necessary staff to capitalize on the economic upturn.

Higher ratios of billable staff

One thing the 2012 benchmark has taught us is that PS executives have worked hard to improve efficiency by eliminating overhead and waste. The percentage of billable staff compared to total staff has risen every year from 67% in 2007 to 73% in 2011. Technology has propelled this shift to a higher ratio of billable employees. Today even the smallest firms have replaced PS administrators with powerful cloud-based applications to manage time capture and billing, client relationships and resource, project and knowledge management.

Along with the decrease in non-billable staff, we have seen a drop in the number of firms that use “None, other or homegrown” as their core enterprise resource planning (ERP), customer relationship management (CRM) and professional services automation (PSA) applications. This indicates more and more firms are investing in commercial applications to run the business. The productivity enhancements these applications provide are undeniable as they show up in a smaller non-billable staff ratio, fewer lost hours and improved on-plan project delivery. The question is, how long can this productivity improvement trend continue?

Investments in training

The recession has also affected employee training. In 2007, PSOs offered roughly 4.5 days of training annually for each of their employees. In order to save money, this figure dropped to 3.5 days in 2009. Another sign that the economy is growing again is that in 2011, PSOs offered more training (5.2 days) than they ever have in the five-year history of the benchmark.

Training is a good indicator of economic growth because it serves as an employee incentive to enhance skills and an inducement for attracting and ramping new hires. Training has become a critical component to support growth as highly skilled baby boomers leave the consulting profession and are replaced by tech-savvy millennials who lack experience. It also belies a shift in the type of work sold with a growing emphasis on vertical industry and business process knowledge and less reliance on deep technical skills.

Growing pipelines

Another sign that the economy is improving appears in the PSO deal pipeline and increased sales and marketing spending. Ideally, organizations strive to have a pipeline that’s two to two and a half times their quarterly bookings forecast. In 2007, we saw average pipelines at almost this level.

However, as the economy retrenched pipelines decreased. This means organizations had to offer bigger discounts and incentives to close business while considering additional cost-cutting measures in order to meet profit goals. From its lowest level in 2009 (160%), we have seen the size of the deal pipeline increase again, albeit only to 200%. In other words, the economy still has a way to go to reach pre-recession levels.

More competition

One area highlighting potential difficulties and increased competition over the next few years is in that of the bid-to-win ratio, an important measure of sales and marketing effectiveness. Our research shows that in 2007, this ratio was approximately 5.7 wins for every 10 bids submitted.

Since that time, it has dropped to approximately 5.1 wins. Essentially, this key performance indicator (KPI) shows that PSOs are only winning about half of the bids they submit. As a result, they’re spending a lot of time, effort and money on potential prospects that will not bear fruit.

Length of the sales cycle

While a majority of the KPIs behaved like we would expect in a declining economy, one KPI performed unexpectedly. We found that the length of the sales cycle — defined by the number of days required to move a qualified lead to a signed contract — actually went down while the economy tanked, and has since gone up while the economy has shown new signs of life.

Normally, the sales cycle lengthens as companies worry about money. This counterintuitive KPI might highlight that with fewer available deals, PSOs did a much better job of qualifying leads as the economy began to slow, thereby closing them faster. As the economy improves, these organizations added new marketing programs and business development resources most likely resulting in a more shotgun approach to sales, which reduces the quality of their leads and elongates the sales cycle.

What lies ahead

Similar to 2011, the 2012 benchmark highlights an economy in growth mode, but with many potential pitfalls ahead. PS executives must cautiously plan their growth strategy, consider the varying economic conditions around the world, and how the conditions might affect their target markets.

To attract, ramp and retain a top-quality consulting workforce, PSOs must provide new benefits including support for personal technology, social networking and easy-to-use tools as well as flexible work options. With an improving economy and new technologies, many new entrants are challenging the PS status quo by offering guaranteed time-to-benefit contracts. The good news is that there’s plenty of consulting work available for those sharp enough and agile enough to grasp it.

About the authors

Jeanne Urich, Service Performance Insight Managing Director, is a management consultant specializing in improvement and transformation for project- and service-oriented organizations. She has been a corporate officer and leader of the worldwide service organizations of Vignette, Blue Martini and Clarify, responsible for leading the growth of their professional services, education, account management and alliances organizations. She is co-author of the PS Maturity Model 2011 Benchmark report. Contact Urich at jeanne.urich@spiresearch.com or 650-342-4690.

Dave Hofferberth, Service Performance Insight Managing Director, has more than 25 years of experience in information technology, serving as an industry analyst, market consultant and product director. Hofferberth focuses on the services economy, especially on white-collar productivity issues and technologies that help people perform at their highest capacity. Hofferberth’s background includes the management of application development teams and analytical tool development to support business decision-making processes. He is also a licensed professional engineer. Contact Hofferberth at david.hofferberth@spiresearch.com or 513-759-5443.

As 2012 unfolds, what do you see on the horizon? Are you excited? Do you envision opportunity? Are you anticipating great things? Or will you just hold on for another year and hope that this dreaded recession will finally end? Your answer to this key question will likely determine what kind of year you and your organization will have.

Many leaders of professional services firms are planning to offer new services to jump-start laggard revenue growth. If your organization is considering rolling out a new service or even a suite of new services, here are some points to help you accomplish this important goal.

Be clear about your objectives

The first question to ask yourself is this — what do we want the new service to accomplish for our firm? The obvious answer is “we want to make more money.” Beyond that, a new service is an extension of your brand. So, it should fit your core position in the market. Ask yourself the following non-financial questions:

• Will the new service make us look innovative and cutting-edge?
• Will the new service energize sales people and create dialogue with the market?
• Will the new service create PR opportunities and buzz about our brand?

It’s relatively easy to create financial models for the top and bottom line revenue impact of a new service. It’s much more difficult to base those projections in reality. So I recommend that you build three tiers of modeling: best-case, mid-case and barely-acceptable-case scenarios. As it relates to the new service’s contribution to your 2012 revenue, it is probably wise to forecast your barely-acceptable-case.

Build a good profile of your ideal service buyer

Too many entrepreneurs make the mistake of envisioning the face-less service buyer. When you think of the ideal buyers of your new service, who are they? What size company do they work at and in what industry? What are their greatest challenges and opportunities? How will your new service help them realize their opportunities and resolve their challenges?

What is their budget for the type of service you want to offer? What does a sales cycle look like? How will you engage this buyer in dialogue with your sales people? The answers to these questions help you form a clear profile of the ideal service buyers. You’ll use this profile as you conduct research, run your pilot and market the service.

Conduct two types of market research

I encourage you to conduct both qualitative and quantitative market research about the new service to determine its features, benefits and pricing model. This research also will help you market the service more effectively later.

The best place to start with qualitative research is right next door. It’s likely that no one at your company has more contact with the market than your field people, such as technicians and engineers, and sales people. So, I recommend you hold a brainstorming session with them and tell them about the new service you are planning to roll out.

Get their feedback and refinements. Ask them if they know of a client who has spoken about the opportunities or challenges you think the new service will address. Compile a list of those clients and set up at least 10 interviews with them and audio record them, if they will allow it, or take extensive notes. You’ll learn a great deal from these interviews.

Next, conduct quantitative research with a larger market sample. These days it’s easy to run online surveys. I recommend that you run a survey with at least 1,000 people who fit your ideal buyer profile. It’s best if half of those you solicit to participate in the survey are existing clients and the other half are not. This will allow you to compare findings.

Once you get your data back, analyze it carefully. What is the market telling you? Do they see value where you thought they would see it? Do they have budget and willingness to invest in the service you want to roll out? What refinements do you need to make to the features and benefits of your new service?

Run a pilot project

The clients who participated in your qualitative research make great candidates for a pilot program. Be honest with them about the service being new and be ready to cut a deal on price in exchange for a video testimonial after the client realizes the benefits of the service.

Depending on the size and complexity of the service, you should plan to have at least five clients participate in the pilot. While they don’t have to be existing clients, it helps when they are because existing friendly clients tend to be more forgiving and patient with pilot programs.

Market benefits more than features

Once you’ve defined features, benefits and pricing, conducted a few pilot programs and secured some testimonials, it’s time to roll out the service to the larger market. One of the biggest mistakes I see service firms make at this stage in the process is talking about features more than benefits. Let me fill you in on a little secret here. The market doesn’t initially care about features. They want the benefits.

Many service firms send their people to classes to gain a new skill and new certifications that they want to quickly parlay into new revenue. While new skill-sets make for great announcements, they make for terrible new service offerings. Thus, as you create a marketing plan for your new service, make a list of the top ten benefits the ideal service buyer will realize. Build your messages around these benefits, not the mechanics of the features.

Roll the new service out to existing clients first

You might get your first 10 new deals from existing clients. Go to them first. Roll out the new service to existing clients at least 30 days before offering it to the larger market. They’ll appreciate the heads up. More than that, it’s always easier to sell something new to someone you know that to someone you don’t know.

Monetize your content marketing efforts

Most service organizations these days use content marketing to some degree. Tools like white papers, guidebooks, webinars, blogging, videos, podcasts, article writing and others help pull prospective buyers into dialogue with you. However, this can be quite expensive, time-consuming and labor intensive. So I recommend that you also include marketing automation tools that allow you to track and monetize the content you build.

About the author

Randy Shattuck is a senior marketing executive and founder of The Shattuck Group, a full-service marketing firm that specializes in growing professional services firms. You can reach him at randy@theshattuckgroup.com.

This is the second of an ongoing Seriously Selling Services series.

With all the potential benefits of selling services, why don’t more product companies do it? Several factors can hinder or stop this initiative in its tracks. Certain obstacles can be predicted to be a part of any significant change. However, there are several aspects unique to selling services that make this transition a tad more trying.

This executive-level overview describes the process for taking the selling of services within product companies to the next level of performance. Note that to be successful, the executive team must embrace and support all steps to avoid the fits and starts of ad hoc change. Just like a set of religious tenets or commandments, all steps must be followed; this is not pick and choose.

Step one: Accept the difficulty of the task

Let’s face it, for most product companies, getting serious about aggressively building, marketing and selling services is a big deal — a major change. The troubling truth of the matter is that about three out of four major change efforts fail to achieve and sustain the desired objectives (Alexander, 2004). My experience in advising organizations confirms this, and the same goes for your personal experiences.

Look at the last few years during times when you experienced the launching of initiatives (e.g., implementing an ERP or CRM system, adapting Six Sigma, going “Lean”). How many of these efforts have brought about the lasting value intended at the time of announcement?

And anyone who has participated in an organizational change effort knows the tension that develops and the resistance that naturally occurs when the people of the organization are asked to behave in new and different ways. Productivity immediately drops as water-cooler conversations speculating on the impact and political ramifications of the change and the always-present “what’s going to happen to me?” take a priority over the mundane tasks of meeting customer requirements. In addition, other multiple “costs of resistance” take their toll, touching everything from loss of key employees to lowered corporate credibility to stifled innovation.

Special challenges of transitioning to services selling

As you probably know from your own experience, big-time change targeted at making major improvements in organization performance is tough. Yet, making the transition to seriously selling services is often on a more difficult order of magnitude.

Two factors drive this:

1. The invisible factor. The first factor is the extreme difference between products and services. Products are tangible; they can be seen, felt and easily quantified. Services, however, are intangible; they are invisible to producer, seller and customer. Evert Gummesson, a services researcher, said it eloquently: “Services are something that can be bought and sold but can’t be dropped on your foot.”

The challenge of dealing with the added complexity of intangibility alone raises the bar. These distinctions have a fundamental impact on how one produces, markets, sells, delivers, services and measures the performance of services offerings and the success of the services organization itself.

What may have worked extremely well in managing a traditional product company often will be ineffective in running the services component. Hence, companies must seek different characteristics and competencies in people, create different management support systems and develop different metrics to reward performance and guide the enterprise.

For example, even if you follow all the recommendations in this series, an estimated one-third of your product sellers will never be successful selling services! This is a significant management challenge. Later articles in this series discuss this in detail and outline how to deal with these obstacles.

2. The culture fights back factor. The second critical factor is the significance of dealing with organization culture. Any manager who has been around for a few years understands the power of the company culture to resist change, even change that’s necessary for survival. The culture will do whatever it can to maintain the status quo.

Aggressively selling services in a product-thinking, product-acting business is a full frontal attack on the existing culture, and the defensive mechanisms of the organization will resist any way it can. The fundamental problem is that, in most cases, the people running the show got there by being exceptionally good at making, marketing and selling products. Products are their expertise, and this expertise got them promoted.

Their past successes built around products helped create, develop and nurture the culture — a culture that lives, breathes, and reinforces products-related success while shunning other alternatives to business. In this setting, they regarded services as necessary evils and tolerated them because they were a requirement in supporting products. Service was traditionally a cost center, and services were things negotiated and often given away either to make a sale or to keep a customer happy.

Figure 1. Biggest Challenge in Building and Selling Services

Figure 1 shows my services research, which confirms the critical importance of understanding and addressing the product company culture. As you see, culture change dwarfs all the other obstacles a product company must deal with to be successful in building and selling services.

Seriously selling services requires a serious change in thinking about the business. Companies must now view services as an equal offering of the organization, a true value-adder, the potential differentiator in the marketplace and an important contributor to profitable revenue. Executives must now view products as customers have for a long time — as commodities that take a secondary role in a total solutions package. Services management and services employees must now vie for the respect that they may not have held before. This is not an easy transition to make, as it flies directly in the face of the tried and true.

Furthermore, certain departments are more threatened than others, as different internal groups, possibly product marketing or engineering, for example, feel that making services more important makes them less important. Transitioning to a more services-friendly, services-are-good-for-our-business mindset confronts internal tradition, established ways of thinking and embedded power that will work together to try to squelch the selling of services.

It’s often true that the very things that made you successful yesterday are the same things that hinder your success today. Bringing about this services business mind shift is a leadership challenge of the highest order.

Set the compass heading to north, then stay the course, constantly bringing back the needle in the face of high seas, stiff winds and changing currents.

Step two: Align the services strategy with the business mission

As in any business, if you don’t get the strategy right, it is darn near impossible to get the marketing right, the selling right or anything else right — stuff rolls downhill.

My research in the technology industry confirms this criticality and expands it to the realities of being embedded inside a product company. A key differentiator that separates top-performing services organizations within product companies from everybody else is their ability to better align their strategy with the mission and focus of the parent organization. This makes perfect sense, but doing so is a constant challenge.

The repercussions of non-alignment can be severe, as there is nothing worse than doing things really well that shouldn’t be done in the first place. For example, maximizing utilization rates can be an important target of a mature, freestanding professional services organization (PSO), but if the appropriate strategy of a PSO is primarily that of supporting the parent company by helping sell products, the goals may be in conflict to the overall detriment of the company. As the quality folks say, “optimizing one group [the PSO in this case] while sub-optimizing the organization.”

Strategic alignment means determining which possible strategic role of services best supports the overall business mission.

Gist: Do it right the first time — conduct a strategic alignment assessment where you consider how services can best contribute to organization success balanced against your existing capabilities, your customer issues and needs, and your competitive position. This is too important to the future of the organization not to get it right. Confirm your services strategic role today, and get the facts to demonstrate what the role needs to be in two years.

You can do this quickly and economically, and the benefits can be huge:

• Base decisions on facts, not best guesses.
• Align your services with the practices and processes most appropriate for your strategy.
• Focus on the realistic, not the wishful.
• Involve senior management and other team members in the process to develop momentum for future changes.
• Benchmark your performance against others to monitor your success.
• Save yourself headaches and hassle.

Once you’ve got the strategy right, it’s time to take a serious look at your commitment.

Step three: Go big or stay home

Here my bias shows through once again, but I’ve seen a group of top management review, discuss and approve tens of millions of dollars for new plants all within a single 30-minute meeting. I’ve also seen this same group of executives agonize over the course of several meetings and several months over spending $60,000 to launch a pilot services project that would validate the services assumptions and business model that all agree is vital to long-term business success.

Remember these executives have grown up in products and have been successful at running product companies. They have the experience and the insights to make competent, correct product decisions quickly and confidently. However, services are a different business, and as any of us would do when faced with something out of our expertise, the tendency is to cautiously go slow and keep a very tight rein on funding.

Yes, you should look for the easiest goal to reach that doesn’t take large investments, and target quick wins to help pay your costs. If there are doubts about the value of services within your organization, then conducting a pilot is a low-investment, low-risk way to confirm your services assumption and demonstrate its value.

Please resist the temptation to cautiously cut corners in hope that magically a new business will sprout and bloom without adequate fertilizer, water and grooming. Don’t do it. Anything in life worth having requires a commitment of time, money, focus and sweat. Remember, you’re creating a new business! If your senior management group isn’t willing to invest to build a services capability the right way, then save your energy for better times. In his book, Who Says Elephants Can’t Dance, Lou Gerstner, past chairman and CEO of IBM, said:

“In building services, there’s no such thing as a toe in the water. When you take this plunge, it’s full-body immersion … I’ve said repeatedly that this is the kind of capability you can’t simply acquire (though our competitors keep trying). The bet you’re really making is on your own commitment to invest both the years and the capital, then build the experience and discipline it takes to succeed.”

Obviously, there are many obstacles that can cause a selling services initiative to stumble, and like any meaningful change, it takes stalwart executive support to make it successful. If you have any serious hesitation now, don’t launch the selling services initiative — you will do more harm than good. Remember: In for a penny, in for a pound.

Five best practices for executives in selling services

Here are proven best practices of executives that have successfully guided the transition to seriously selling services:

1. Create a sense of urgency.

When people are reluctant to do something, they will come up with every excuse imaginable to put it off. Change is time-sensitive, and prolonged hesitation only makes things more difficult. Leadership needs to trumpet the cause and build the emotional momentum needed to break the status quo and get things rolling.

To demonstrate urgency and show your seriousness, initially host highly visible weekly updates on progress. Personally call and write people to ask how it is going. Put this at the top of your task list each day. Publically publish selling services success performance so that everyone can see progress.

To emphasize the criticality, publish results versus targets not only quarterly, but monthly, weekly, even daily. Break it down by division, geography, even by salesperson to build the necessary momentum of change. Remember that when you are challenging the status quo, fast is better than slow.

2. Tie executive compensation to seriously selling services success.

Make seriously selling services a core objective tied to compensation for the entire executive team. Yes, you “get it,” but your executive colleagues may not. These are the same people who achieved their success and power through the very system you are trying to alter dramatically.

Remember that it is rare for the ruling class to support the revolutionaries, so the case for change must be seen as the only choice for organizational survival. Everyone will be watching for the slightest wavering at the top to justify stalling or plain non-compliance, and the best way to prevent this is a one-for-all-and-all-for-one approach to compensation based upon hard numbers and firm time frames.

3. Make heroes out of those who attempt the change.

This is a scary change for many people, and you want to look for every opportunity to reinforce their new, seriously selling services behavior, even when the results aren’t as good as you like. Make it a point of singling out those who are doing what you request of them at your weekly feedback sessions. Send them notes and copy everyone, publish their success in internal newsletters and magazines, and give them small incentives to keep them going. Early on, it is the little things that matter.

4. Give zero tolerance for slackers.

Here is the scenario: It is year-end, and you’ve made good progress with selling services. However, your top seller, Ace Flanagan, has blown the doors off his product quota, doubling his target and selling twice as much product as anyone else. Yet, Ace didn’t come close to reaching his services quota, ending up at 28%. Your vice president of sales doesn’t want to rock the boat and risk losing Ace, so he suggests business as usual, paying Ace full commission and bonuses.

What a great opportunity! After telling your vice president of sales thanks but no thanks, you have a one-on-one sit down with Ace. First, thank him for his product sales contribution, but then quickly state your major disappointment in his services performance. You confirm that this is the new strategy, it is vital to the company and that everyone must contribute. You’re sorry, but he will not get any bonus, he and his wife will not be going to Bora-Bora as part of the President’s Circle, and if he misses his quota next year, he will be fired.

5. Stay the course.

There’s a good chance that 90 to 120 days into the transition to seriously selling services that performance will go down. If you’re doing the right things, giving lots of training, involving people in the process and allowing for the inevitable lost water-cooler time, overall sales could well drop. Anticipated services sales may not materialize as people try to figure out how to do it, and product sales will drop due to lost time out of the field and the lowered productivity that comes with the deer-in-headlights stare when people are passively aggressive.

Don’t panic! If you give up now, you will never get services off the ground and you most likely will never regain your level of past product sales. Suck it up, stand tall, damn the torpedoes, full speed ahead!

Changing from product to services selling

Managing the transition to seriously selling services has an immense upside for most companies. Protecting the product, creating new, profitable revenue streams, generating more sales of products, reaching higher levels of customer satisfaction and building competitive differentiation are all probable outcomes of a well-executed shift to services.

As with any significant change, strong leadership is a critical success component. A services leadership framework exists, and executives willing to listen to the voice of those who already have made the journey will enjoy major rewards in a relatively short time. For most organizations, the time for seriously selling services is now!

Alexander, James A. 2004. The State of Professional Services II: An Industry Comes of Age. St. James City, FL: Alexander Consulting.

About James “Alex” Alexander

Alexander is founder of Alexander Consulting, a management consultancy that helps companies create and implement professional services strategies for product companies. Contact him at 239-671-0740, alex@alexanderstrategists.com or visit www.alexanderstrategists.com.

© Alexander Consulting

While I tried to calm the employee, her crying grew worse. The immediate supervisor snapped, “Stop crying right now. This is a business office. Get yourself together.”

The employee wiped her eyes and looked vulnerable, making me feel like a dolt. I suggested we finish the review after she had time to take it in. I acted professionally without being snippy or humiliating her.

I know we’re human and crying happens. But how should managers deal with it? Accept it? Let an upset employee calm down elsewhere? How should we handle this situation in the workplace?

— Manager

Summary of Advice Received

Three Steps to Saving Teary Employee’s Face
It’s OK, we’re all human
by Meryl K. Evans, Editor, Professional Services Journal

 Science fiction TV shows like Star Trek: The Next Generation and movies like A.I. Artificial Intelligence reveal what Hollywood thinks robots would be like if they were human. Things don’t go over well for the androids when people give them emotions.

Yet it’s natural for humans to show emotions. Unlike robots, humans have had years of experience studying and dealing with them.

We all agree that people make businesses successful. And with people come these emotions. Sometimes, we forget companies consist of people with feelings.

“Emotions, albeit duly controlled, at work are a real value-adder for the organization as they are the clear sign that organization is made by human beings and not by unemotional aliens,” says Valter Quercioli, sales planning manager with GE Oil and Gas, Global Services. “The warmness of a team of human beings always wins over the coldness of emotionless technocrats.”

Help the employee through a difficult situation in three steps:

1. Show empathy.
2. Reschedule.
3. Talk to the supervisor.

Share your experiences and tips for supporting a teary employee, or ask your own question.

 Show empathy

 The employee may have come to the meeting already upset about something. Maybe something went wrong at home, or she’s struggling with a work issue. We all encounter bad moments, and sometimes it’s hard to shut out those feelings as we go on with our everyday lives. Scott Weir, VP of professional services for Logica, says, “You first need to understand that the crying and response may not be attributed only to the discussion happening. Often, the thing that initiates this kind of emotional response is just one last straw on the camel’s back.”

“I’ve found the best thing to do is stop, tell the person that you understand that they’re upset, and take a moment to let things pass,” says Randy Murray, principal, Who Writes. “After she regains composure, ask why she’s crying.” Weir also advises telling the employee you care about her as a person. Then offer tissue.

Quercioli says to let her know that the feedback comes from observable behaviors that interfere with reaching her goals. And that what we observe as behavior is something dysfunctional for reaching the assigned goal.

Reschedule

Whatever the cause, it may be wise to reschedule the meeting after the employee has had time to calm down.

While this focuses on an employee’s distress, we need to remember that performance appraisals should never contain surprises. When they do, it indicates a breakdown in communication.

“The traditional performance review methodology is almost half a century old and fraught with problems,” says Tom Armour, co-founder of High Return Selection. “There are much better ways for companies to build a culture of high-performance.”

Talk to the supervisor

Good leaders guide their direct reports to help them learn from the situation. Armour provides three suggestions for the supervisor to react better next time.

• Consider treating the employee the same way you would treat your upset child or a loved one.
• Remind the supervisor of the importance of tolerance and how it affects the ability to lead.
• Provide a book recommendation like The Seven Habits of Highly Successful People by Stephen R. Covey.

Or, you could simply learn from a conversation with Lieutenant Command Data, an android, from Star Trek: The Next Generation:

Lieutenant Commander Data: Captain, I believe I am feeling … anxiety. It is an intriguing sensation. A most distracting …

Captain Jean-Luc Picard: Data, I’m sure it’s a fascinating experience, but perhaps you should deactivate your emotion chip for now.

Lieutenant Commander Data: Good idea, sir. [beep] Done.

Captain Jean-Luc Picard: Data, there are times that I envy you.

Notice that Picard says, “there are times.” Emotions are a good thing to have despite any down sides. What other ways do you help an upset employee? Please share your thoughts in the comments because we’d like to hear from you. If you face other work challenges, ask a question.

 About the editor

Meryl K. Evans is senior editor at InternetVIZ and the content maven behind the Connected Digest, IT Solutions Journal and Professional Services Journal. Follow her on Twitter @merylkevans.

How can I convince the CEO that none of this can happen without action and training? Or am I stuck doing business as usual and trying to do what I can with what I have?

— Jamie, VP of Services

How can we stop the flu season? What kind of shot do we need to protect ourselves from the effects of a lean sales funnel that depends on our product sales organization?

– Keith, Sales Manager

Social media — the seemingly infinite universe of web-based and mobile technologies through which users interact — is a pressing topic. It’s so pervasive with hype so ubiquitous that it’s easy to be overwhelmed when considering how to best incorporate this channel into your marketing strategy. In fact, some may question social media’s business value or even its permanence. However, the explosive and unprecedented growth of this global communication channel, supported by staggering statistics, isn’t debatable.

According to Pew’s 2010 annual “State of the Media” report, more people now get their news from the Internet than from newspapers. Facebook has over 800 million active users. LinkedIn has 100 million users with a new user added every second. YouTube gets over 3 billion views every single day. Twitter processes 230 million tweets a day, a 110 percent increase since the start of the year. Over half of all people in the U.S. over the age of 12 have set up a social media profile.

Although this channel is in its infancy, businesses are investing in social media and achieving significant quantitative and qualitative returns. If your organization is part of the majority that has not fully incorporated social media into an overall marketing strategy, have no fear. Best practices have emerged to help your firm successfully begin using social media for marketing.

Recognizing the benefits of social media for professional services

In professional services, where talented, highly skilled people are the product, effective use of social media can become a competitive advantage. For the first phase of social media marketing, it is important to establish a realistic set of objectives, scope and target use of specific technologies, or social media sites.

Following are key social media benefits:

• Build company brand and reputation.
• Broadcast thought leadership.
• Lower marketing costs.
• Increase marketing campaign efficiency and effectiveness.
• Provide real-time insight to industry trends and client preferences.
• Gather intelligence.
• Do prospecting.
• Create another channel to manage client relationships.
• Expand recruiting sources.

The most popular social media for businesses are:

• Social networks such as LinkedIn and Facebook have become powerful marketing vehicles for providing visibility into relationships, news, events and jobs.
• Twitter as a service channel.
• A company blog.
• YouTube for presentations and product demonstrations.

In particular, LinkedIn helps individuals promote their experience and skills, and highlights the diversity and range of their contacts and references. This network has become a primary source for referrals, relationships and jobs. Few business meetings occur without all parties researching the background and relationships of the people invited to the meeting.

Creating a social media marketing plan

The most important element of the social media marketing plan is to establish a clear set of business goals and objectives. A recommended goal of social media marketing for professional services is to share unique thought leadership, brand values and market differentiation.

Consistent with other business plans, objectives should measurable. Be conservative with these measurable, yet attainable objectives when beginning. Following are some sample objectives that would require a specific quantitative measure for a plan:

• Building awareness.
• Strengthening relationships with clients, prospects and influencers.
• Increasing referrals and references.
• Targeting buyers.
• Increasing website traffic.
• Improving search engine rankings.
• Driving traffic to webcasts and events.
• Generating leads.
• Generating sales.
• Sharing thought leadership and knowledge.

Determine which sites, networks and technologies to use for this phase. Prior to deciding, research target client social media preferences to ensure you reach this audience.

Use social media to publish whitepapers, presentations and case studies, to showcase knowledge of and approach to solving client business problems. Pick topics that create market differentiation and build buzz. For those who do not currently publish, create an editorial calendar of thought leadership topics and line up content experts. Once core content is developed, it’s easy to polish it to make it industry-leading and newsworthy.

Plan a trial period to test results and line up high-value content providers. Content must be fresh with a unique point of view that provides value to the reader. The more value provided, the more people will read it. When companies search specific topics, they may find your work, which might help them solve a pressing problem.

With time and attention, company awareness and audience will grow, doors opening up around the world.

Monitoring social media

If you do nothing else with social media, the very least you need to do is monitor social media for mentions of your company, competitors and industry. People will talk about you and your business regardless of whether or not you’re involved in social media. Companies that have shunned social media have gotten in trouble for not responding to complaints. By the time they did, the damage to the company’s reputation was done.

Domino’s responded well to a complaint from a customer with a disappointing experience. Because the company monitored and listened to online activities, they saved face by responding with a genuine apology video.

The way to monitor is to create automated searches for your
organization’s name, key executives’ names, your brand names, competitors
and their brand names, and other industry keywords. Some search services send
you an email as soon as the mention happens, daily, weekly or some other
timeframe.

Accepting that not everything you hear will be positive will help you prepare the right response for when it does happen. A good way to manage this is to have a (informal most likely) team in place to monitor and manage any chatter, both good and bad. The most important thing is to acknowledge quickly even if you don’t have answers yet, and follow up with updates.

Moving ahead with social media marketing

Many leading professional service organizations have a reputation, or cachet, that goes with their names. Based on their premium brand, they are able to win first-class projects, hire elite employees and charge top rates. If your organization isn’t one of those, you must explore ways to bolster your reputation and to highlight past work so new clients with a similar business problem will knock on your door.

Social media marketing is an exciting new realm that will have a sweeping impact on your business. There are hundreds of networks and sites available with a few like LinkedIn and Twitter dominating the professional services landscape today. However, with the pace of this technology, professional service organizations must stay abreast of new social media technologies and sites that will eclipse the way they work to realize greater market opportunity while enhancing their brand. The most successful firms we track demonstrate a deep knowledge of their areas of focus. Social media can reveal the depth of your knowledge to a broad audience.

When social media first appeared, many thought it would be a fad, as most could not figure out how to monetize the work they were doing, unless they received payment for blogging. It turns out social media might be one of the most efficient marketing tools ever. It provides an inexpensive way to market expertise and respond quickly to changing market conditions and preferences.

Before starting, consider these quick points about social media. First, you must watch out. Like letters, voicemail and other types of media, what you type, write or say can come back to haunt you. Strong opinions or blatantly incorrect statements can damage you and your company’s reputations. Do your research and try to balance your opinions showing others that you can see both sides of an issue.

Also, watch the people in your social media circle, because guilt by association is a natural human emotion. You probably have requests from many individuals who you don’t know very well, if at all. Check them out before you accept them into your circle of peers.

Social media has the power to extend marketing reach, to extend relationship management. This is only the beginning and the professional service organizations that harness its power now will be ahead of the pack.

About the authors

Jeanne Urich, Service Performance Insight Managing Director, is a management consultant specializing in improvement and transformation for project- and service-oriented organizations. She has been a corporate officer and leader of the worldwide service organizations of Vignette, Blue Martini and Clarify, responsible for leading the growth of their professional services, education, account management and alliances organizations. She is co-author of the PS Maturity Model 2011 Benchmark report. Contact Urich at jeanne.urich@spiresearch.com or 650-342-4690.

Dave Hofferberth, Service Performance Insight Managing Director, has more than 25 years of experience in information technology, serving as an industry analyst, market consultant and product director. Hofferberth focuses on the services economy, especially on white-collar productivity issues and technologies that help people perform at their highest capacity. Hofferberth’s background includes the management of application development teams and analytical tool development to support business decision-making processes. He is also a licensed professional engineer. Contact Hofferberth at david.hofferberth@spiresearch.com or 513-759-5443.

Carey Bettencourt, Service Performance Insight Managing Director, is a management consultant who specializes in improvement and transformation for project-driven professional service organizations. She has over 20 years of domestic and international experience in leadership roles with software firms including Oracle, ChannelPoint and J.D. Edwards. Contact Bettencourt at carey.bettencourt@spiresearch.com or 949-521-3830.

Two years after it launched in 2006, I fell under Twitter’s spell. Even after using it for a few years, I still learn new conventions and abbreviations. For example, one of the more common abbreviations is RT, which means retweet. Someone used MT, and I thought it was a typo of RT. Then a few more occurrences popped up. I did a little searching and learned that MT means modified retweet.

What does it mean to retweet? What does it mean to modify one? I’m getting ahead of myself. Let’s start at the beginning so you don’t have to fake nod your way into conversations surrounding Twitter, pretending you understand what people are talking about.

Rather than alphabetizing the list of things to know, they appear below in order from most important to least important, or terms you need to know first before learning the next.

Profile is the first thing a new Twitter user should create. A profile includes your name, a 160-character bio, a link, your location and your picture. People won’t follow you without this critical piece. When you view someone’s profile, you see information like that below, along with the person’s most recent tweets.

Tweets are the essence of Twitter. These are short messages, up to 140 characters, that people post in Twitter. These messages can be about almost anything except for spam or X-rated content. A tweet shows up on the sender’s profile page and in the timeline of those following the sender.

@username represents a person’s Twitter ID, such as @internetviz, @psjournal and @merylkevans. Talking to another Twitter user requires adding the “@” symbol. The Twitter ID is also called a handle.

Timeline displays the most recent tweets in real-time (live). When you log into Twitter, you’ll see your “Home Timeline.” This is your Twitter homepage and timeline of the most recent tweets from the people you follow. To view everyone’s tweets, including those from people you don’t follow, go to the public timeline at https://twitter.com/public_timeline.

RT is a retweet, which repeats someone else’s original tweet. It’s a way to pay it forward, sharing a valuable tweet. In the following example, Larry Lourcey, Twitter name Larryphoto, retweeted a message originated by @merylkevans. When I look at tweets mentioning me, I see this one. If Lourcey had left off the “@,” it would not be clickable or show up in my mentions. Click @username to view that person’s profile.

MT is a modified retweet. Sometimes users modify the original tweet for length or to add a comment.

Follow means to follow someone to see that person’s tweets in your timeline. When you don’t follow someone, you won’t see that person’s tweets show up unless you’re looking at the public timeline. “Following” means you actively follow someone. “Followers” are the people who follow you.

Mention is a Twitter user mentioning another Twitter user by including the @username. Clicking “Mentions” from your Twitter account displays all the tweets that mention you.

Reply is one Twitter user responding to another user’s tweet. These often begin with the @username followed by the reply.

Favorites are tweets marked as a favorite. Anytime you see a tweet you like or want to keep, click “Favorite” from inside the tweet.

Lists give users a way to sort the people they follow into categories of their own creation.

Listed indicates that another user has included you in his or her Twitter lists.

#hashtags are words that begin with the number (#) symbol to create a keyword or a topic. When clicking on a #hashtag, Twitter displays the most recent tweets that include the hashtag. For example, people often use #quotes when tweeting a quote. Click #quotes for a list of the most recent tweets mentioning quotes. #ff is a popular hashtag that stands for “Follow Friday.” When users add #ff to a tweet, they’re recommending others to follow that person. These tweets often appear on Fridays.

What questions do you have about Twitter? Please share them in comments or email meryl at internetviz dot com. We’ll answer them here or in a future article.

Meryl K. Evans is senior editor at InternetVIZ and the content maven behind the Professional Services Journal. Follow her on Twitter @merylkevans.

Marketing automation is a sweeping trend in a variety of industry verticals. Service organizations are adopting marketing automation tools in droves. I’ll bet you’re already either considering or have implemented a marketing automation platform for your business. But, what benefits do these tools really offer your unique company? In my opinion, that’s the most important question you should be asking yourself as you either execute or plan for marketing automation in 2012. Here are some points to consider.

Platform providers

If you do a search on the term “marketing automation,” you’ll encounter nearly nine million records. Since I assume you don’t have time to read all those records, I’ll give you the short list. There are dozens of software companies who claim to do marketing automation and new competitors pop up every day. I’m sure, by the time this article is published, five more new companies will emerge. So this is not a definitive list, by any means.

Organizations like Eloqua, Aprimo, ActOn, Marketo and Hubspot all claim to have the best marketing automation products on the market. Well … it depends. I think of these companies as divided into two buckets: small medium business (SMB) and enterprise. While they all try to play at the low end of the market, I believe only a handful do that well. SMB marketing automation providers tend to offer lower prices and ease of deployment. Enterprise marketing automation providers offer rich feature sets with more complex deployment requirements and much bigger price tags. Speaking of price tags, be sure to factor in the cost of a customer relationship management (CRM) system if you are thinking of marketing automation.

So the first question you have to ask yourself is – what do I want marketing automation to do for my firm?

Promised benefits

While all marketing automation tools make a lot of promises, as it relates to professional service firms, these are the most compelling benefits to me and other marketing professionals with whom I speak.

Revenue impact:

• Marketing automation tightens integration between sales and marketing. Marketing can now more fully qualify leads and prep them for sales dialogue. This improves the productivity of your most important sales resources and truly brings marketing into the revenue generation business.
• Marketing automation improves management of the sales funnel with more suspects becoming prospects becoming clients. Now marketers can track movement in the sales funnel and automate message delivery to prospects to draw them through the sales funnel more effectively. Learning your “trigger events” (messages that prompt prospects to move to the next stage in the sales funnel) is key.
• Marketing automation increases the velocity of prospects moving through the sales funnel. Wouldn’t we all love a shorter sales cycle and faster time to revenue?

Efficiency impact:

• Marketing automation allows you to provision emails, landing pages,
  webinars, articles, newsletters and other content with the greatest of
  ease — so they claim. But from one platform to the next, the way they handle provisioning can be quite different.  So do your homework here.  Also, if flexibility is really important to you, pay particular attention to workflow options in these toolsets.
• Marketing automation automates lead nurturing. This allows you to send a pre-sequenced set of messages by email on a pre-determined schedule to leads that enter the top of the sales funnel. The net effect should be that those leads “self-nurture” by feeding on your content until they are ready to opt-in to sales dialogue.
• Marketing automation integrates reporting. Dashboards display analytic data for web traffic, email opens and clicks, landing page forms, webinars and other key data points. This saves a lot of time versus using the reporting analytics of various tools. It also allows you to drill-down and track an individual’s progress through the sales funnel — something I tried to build systems to do back in the ’90s. Very painful!
• Marketing automation makes list management easy. Every good marketer
  knows that you have to manage a variety of lists and keep them updated,
  cleaned, cross-referenced and ready for new campaigns. Most marketing
  automation solutions offer some level of list management that ranges
  from brilliant to better than Excel.

Visibility impact:

• Marketing automation lets you monitor leads in your sales funnel and
  track their “digital footprint” like never before. It’s a little creepy, but
  virtually every marketing automation tool lets you see exactly how people
  are interacting with nearly every point of contact with your brand — from
  email opens and clicks to landing page visits to white paper downloads and
  social media posts.
• Marketing automation lets you score the digital behavior of leads so you can tell who is a hot prospect and who you should allow to self-nurture in the funnel a while longer. Even more creepy — marketing automation positions you to contact hot leads even if they don’t request it. I recently got a phone call from a marketing automation company because I looked at their pricing page. Their rep could tell me exactly how many emails they’d sent me, how many I had opened, how many webinars I had attended and how many of their web pages I had viewed. Like I said — kind of creepy. Because I clicked on the pricing page, I became a hot prospect and the rep called me immediately.
• Marketing automation lets you rinse and repeat successful campaigns and dump the losers.

Hold on a minute

With the promise of all these great benefits, it’s no wonder that marketing automation businesses are growing by leaps and bounds. In fact, it’s tempting to see these tools as justification for greatly reducing marketing staff.  But, there are a few things to consider here before making bold moves.

In my opinion, marketing automation is really effective at streamlining
low-level tasks, like HTML creation and email broadcasts.  However,
there are a few important functions that marketing automation cannot help.
Here is a short list.

Marketing automation tools will not improve your thought leadership. If
you deploy content marketing as a strategy for lead generation, all a
marketing automation tool will do is increase the efficiency of content
deployment. At the end of the day, it’s the quality of the thinking, the
clarity of the strategies you recommend and your credibility that will
convince prospects to work with you.

Marketing automation tools won’t improve your value proposition. Sure, you can get your message out faster and with greater ease. This might even fill the top of your sales funnel with more “leads” than you’ve ever had before. But, if they don’t convert, or if they buy your least profitable service, you’ve spent money on a tool that still hasn’t fixed your business problem. In my experience, too many service firms leave way too much money on the table by not working on their service offerings and value propositions.

Marketing automation tools won’t improve your targeting. While list management capabilities make it easier to cull lists, it’s still marketing’s job to understand the ideal client and build a profile of what matters to the client. A perfect message targeted at the wrong audience still falls flat. A so-so message targeted at the right audience is equally weak.

Next steps

As you evaluate and implement marketing automation at your firm, I’d love to hear from you. This is one of those areas that I plan to monitor closely over the coming year. So please email your experiences to me at randy@theshattuckgroup.com. I’d genuinely like to hear how it’s going for your company.

About the author

Randy Shattuck is a senior marketing executive and founder of
The Shattuck Group, a full-service marketing firm that specializes in growing professional services firms. You can reach him at randy@theshattuckgroup.com.

I have trained him and showed him how his work affects our success. I pay a fair salary and have tried positive motivation. Nothing works.

He is a nice guy, and I don’t want to give up on him, but his lack of work ethic affects my  ability to bring in new business. He doesn’t understand that a successful career happens through hard work and dedication. I could replace him, but I’d like to cash in on my investment in him. Do I need to get tough and intimidate him, even though that’s not my style or preference? Or do I have another option for helping him?

— Owner

Summary of Advice Received

Hunting for Good-will Employee
If light fails to spark, then fire away
by Meryl K. Evans, Editor, Professional Services Journal

I grew up with a boy whose high-school transcript included all the electives possible. Obviously, he wasn’t a motivated student and did enough to get by. Eventually, he enlisted in the U.S. Navy. Today, over 20 years later, he has his college degree and is an officer. What provoked the change? Most likely, it was the strict military regimen and structure.

Despite the example, providing that kind of discipline for an employee isn’t feasible in the corporate world. Business works differently. Company leaders look at an employee as an investment. A reader says, “Consider your investment in him so far as an investment in your own growth as a leader/manager. Your small company cannot afford the cultural and productivity negatives that this young man brings to the organization.”

Respondents suggest two actions:

• Go for a second chance.
• Learn from the experience.

Most readers vote for giving him a second chance and firing him if it doesn’t work. Share your experiences and tips for motivating an unmotivated employee, or
ask your own question.

Go for a second chance

Most readers recommend meeting with the employee to have a crucial conversation that reminds him of his importance to the organization, the team and you. That conversation should answer the question of why he’s not performing to standards. “Give clear, measurable actions that Chris needs to take to improve. They should be specific and easy to track. Set a date for follow-up and review,” says Karen D. Swim, PR and Marketing Communications Specialist at Words for Hire.

I agree with the reader who says every employee is an investment and it’s important to make the most of your investment. “I would seek out a career path for him in the organization where the fit would be better and boost his motivation, then do succession planning to backfill him,” the reader says.

If coaching him doesn’t work, it’s time for the heave ho. Swim adds, “Unfortunately, sometimes being a nice guy is not enough to collect a paycheck.”

Should it come time to let him go, a reader advises to help him reach “the conclusion that he is not happy in your organization and help him decide to leave. During that phase, prepare for a replacement and manage him out of the business.”

Learn from the experience

Another reader looks at the situation differently because it could happen again. When an employee won’t grow or change, reflect on the time you interviewed and hired him and learn from the traits and cues that could’ve revealed that he wouldn’t be a good fit.

“Develop a more stringent protocol, always get additional feedback from a candidate’s future colleagues in your company, and plan for one-month, three-month and six-month formal check-ins for new staff. Be prepared to keep your company’s needs as the objectives in those conversations. Develop questions that call on Chris, and others like him, to pay attention to the purpose and objectives of his work, and how the company can support his success.

“You will learn a lot if you assess new staff and take action early in a less-than-stellar employee’s tenure!”

What other ways can you handle an employee who isn’t performing at full potential? I’d like to hear from you because I value your thoughts. Please share your thoughts in the comments section. If you face other work challenges, ask a question.

About the editor

Meryl K. Evans is senior editor at InternetVIZ and the content maven behind the Connected Digest, IT Solutions Journal and Professional Services Journal. Follow her on Twitter @merylkevans.

Most customers view your products as commodities! Blasphemous, I know! Regardless of how unique or elegant or innovative your products are, in most all buying situations, customers see no meaningful difference in the top two or three products in any category, across all industries, across all geographies.

Yes, I understand this may not be 100 percent factual, but it’s true from the customer’s perception. Hence, perception is reality. Your products are more vulnerable than you think. Sobering thought indeed.

Research confirms that once customers have determined their short list of the two or three potential products or bundles they seriously consider buying, they often cast their product ballot based on what they believe are the best services surrounding the product. These services will best ensure the product works as promised, keeps working and does so with minimal hassle and added expense. It’s important to note that, in many cases, they will pay a premium for your offering if they understand the higher value your services offer them. In essence, they vote with their pocketbook.

Furthermore, if your salespeople are strategic and sell an assessment early in the buying process — before needs are clear and products are specified — the probability of you getting the product business later on is greatly improved. This gives you the chance to shape the final recommendations early while building relationships with people key to the final purchase.

Gist: Selling services effectively from the get-go will protect your products and land you more initial deals.

Handle fewer train wrecks

Sadly, sometimes companies position products with these words coming out of the salesperson’s mouth: “Our products don’t break. You don’t need any additional services,” or “It’s so easy to implement our software. Just read the manual and you can do it, no worries.” This is a bunch of baloney, especially if you are dealing with a complex situation, an important customer process, the customer has little if any familiarity with the implementation, or all of the above.

It’s rare for a product not to need some type of service in its life cycle, whether a tailored implementation, ongoing maintenance, software updates, refurbishing, and on and on. Not positioning this reality of life with the customer upfront is negligent selling.

Services sold up front greatly improve the probability that:

• The product will work the way it is supposed to work the first time.
• Greater functionality of the product will be used.
• Irritated customers ringing the bell of the fire engine, escalating their concerns up your organization ladder, will be greatly minimized.

Gist: Selling services upfront saves your organization, time, hassle and money over the long term.

Sell more products and services later

Experience also shows that when deals are sold with services up front, more products and services are sold later on (Hahn, 2007). Services greatly improve the chances that installation and implementation will be done correctly the first time, and services and support improve uptime and productivity. Delivering services means dealing personally with customer personnel. Done properly, it’ll start building trust-based relationships. These customers are very likely to buy more of your products (and more services, of course) and are well on the way to being loyal, highly profitable customers for life.

Figure 1 shows a real-world example of this revenue opportunity beyond the initial product sale. By selling services correctly early on along with the product, this company had a very realistic opportunity to add 2.7 times the original product revenue through incremental services.

In this example, the product sold for approximately $100,000, so the potential for more services revenue was approximately $270,000. Plus, the customer was more likely to buy this company’s product at the end of the equipment’s life.

Figure 1

Gist: Want to be a true total solutions provider? Services are the key.

Enjoy predictable revenue streams

Want to see a CFO’s eyes light up? Watch her face the first time she grasps an understanding of the predictable, repeatable sales that come from a services business built upon service and support contracts coupled with a finely tuned professional services capability. This is pure joy to a bean counter. The services annuity stream makes life a whole lot easier for all of management, as it helps to take the guesswork out of business financials and becomes an early warning, leading indicator of organization success or failure.

Gist: Strong services help you manage your business more effectively.

Differentiate yourself

Depending on the maturity of your industry, your competitor’s strategy
and your competitor’s dealings with distribution, services can differentiate
you in a big way. The more complex your products, the more they cost the
customer. The more mission critical they are to your customer’s business,
the more the value-packing promise of services.

Leading services researchers note from their studies that more and more companies in tough competitive markets are looking at services to yield competitive advantage (Brown, Gustafsson and Witell, 2009). If your competitors don’t have full portfolios of strong service offerings or if they don’t know how to sell them, this is a huge opportunity for you should you embrace the challenge. Give your customers what they need, want and will pay for, while locking out everyone else.

Gist: Services are the drivers of market dominance.

Create new markets

Business consultants like to talk about adjacency strategy (Zook, 2004), the strategy of building upon an organization’s core competencies in one market to transport those capabilities to an adjacent, but different market space. For example, a company with specialized battery technology designed for the automotive industry could potentially attempt to build upon that battery expertise to develop and sell to the marine market.

The same possibilities hold true with services. For example, an energy utilization assessment developed for the automotive industry could be adapted for the marine market. Taking advantage of your experience and expertise can crack new markets and expand profitable revenue.

Gist: Services adjacency strategy can be a powerful component of any growth blueprint.

To summarize, services have proven themselves able to contribute significant value to many, many product companies through profitable growth of both products and services. Properly executed, strong services capabilities can increase customer satisfaction and generate customer loyalty. In addition, having the right portfolio of services helps some companies make a smooth entry into new markets. Finally, in some cases, having an arsenal of new or better services can create competitive differentiation.

Here are the core elements of a conversation I had with the CEO of a software company that I was interviewing as part of a services assessment for his company.

Alexander: Tell me what role you’d like services to play in helping your company be successful.

CEO: Frankly, I wish services were a much smaller part of the business. They negatively impact our overall profitability. Every time I talk to financial analysts, they beat me up on this issue. If you can tell me how to eliminate services altogether, I’d been extremely happy.

This perception is common among executives at companies with high product profit margins. However, in most cases it’s not entirely correct.

My research shows that, on average, there’s no difference between the profit margins of products and those of services.* In general, product profit margins have decreased as industries have matured, and services profit margins have increased as services management has learned how to optimize their organizations. For example, professional services organizations within product companies have improved their profitability by seven points over the last decade. In fact, top-performing services organizations have profit margins double that of their products.

There are exceptions, of course. New products in new industries could have higher profit margins initially. However, experience shows that product margins will consistently drop. A few products, due to their innovation, patents or special circumstances, may be able to maintain very high product margins over time.

Yet, recalling the high value that customers place on services, adding a portfolio of services, even at lower margins than products, will increase the overall value to the customer. Hence, looking at blended margins is probably a much more realistic way to view and understand overall profitability.

Finally, examining the financials of many services businesses inside product companies raises a few eyebrows, if not a few questions, about how profitability is calculated and the fairness of the calculations. Here are some issues to consider:

• If services consultants are spending 30 percent of their time in a pre-sales role, why isn’t that expense charged to sales?
• If you are a value-added reseller (VAR) and your partner agreements require you to have a number of certified experts on staff, shouldn’t some of the costs of these low-billable people be charged elsewhere?
• If a big customer has a blow-up, and company execs require a busload of the services business’ top technical talent to do whatever it takes to fix the problem at no charge to the customer, should that cost be eaten by the services business?

My biased experience says that if you sell the right services to the right customers in the right way, they will be very profitable and make the rest of your products look much better as well.

Gist: Re-look and re-think cost allocation, pricing strategies and margin expectations versus customer value. There’s a good chance that you don’t readily have this information, and it will take time to get the quality data you need.

Best practices for selling services with products

High quality information is required to make the best business decision regarding the strategic role of services in your organization. Here are some proven best practices to objectively determine if seriously selling services is right for you:

1. You have current, high quality research on your existing customers regarding what services they use and value today and what they want and will pay for tomorrow.
2. You have current, high quality research on your services competitors, their breadth, focus and customer acceptance.
3. You have recent findings from an internal readiness review, determining your organization’s willingness and ability to get serious about services.

Boldly build, powerfully promote and seriously sell services

Managing the transition to seriously selling services has an immense upside for most companies. Protecting the product, creating new and profitable revenue streams, generating more sales of products, reaching higher levels of customer satisfaction and building competitive differentiation are all probable outcomes of a well-executed shift to services. Know that the path to services success is clear and the obstacles are known.

Having the information gleaned from these three best practices will let you know:

• The strategic value of services.
• A realistic services potential.
• The probability of success if transitioning to services is attempted.
• How far and how fast you can go.

In the next article, I’ll answer, “With all the potential benefits described here, why don’t more product companies sell more services?”

*Note that services margins are declining on average in some industries as more and more services appear similar to customers, thus they see them as commodities, and therefore seem to have less value and worth less.

This is the first article of an ongoing series on Seriously Selling Services.

Alexander, James A. 2004. The State of Professional Services II: An Industry Comes of Age. St. James City, FL: Alexander Consulting.

Brown, Stephen W., Gustafsson, Anders and Witell, Lars. 2009. Beyond products. New York, NY: The Wall Street Journal.

Hahn, Al. 2007. The True Strategic Value of Services. Sandy, OR: Hahn Consulting.

Zook, Christopher. 2004. Beyond the Core: Expand Your Market Without Abandoning Your Roots. Boston, MA: Harvard Business School Press.

About James “Alex” Alexander

Alexander is founder of Alexander Consulting, a management consultancy that helps companies create and implement professional services strategies for product companies. Contact him at 239-671-0740, alex@alexanderstrategists.com or visit www.alexanderstrategists.com.

© Alexander Consulting

In 2007, we developed the PS Maturity Model™ as a strategic planning and management framework. With more 5,000 service- and project-oriented organizations using it to chart their course to service excellence, it’s now the industry-leading professional services performance improvement tool.

The 2012 Professional Services Maturity™ benchmark will come out in early February 2012. While the release is more than a month away, we can already see the market has picked up, based on survey responses from more than 150 professional services organizations. Although this information isn’t the final tally, it presents a strong preview of what to expect.

The PS Maturity™ benchmark looks at approximately 180 key performance metrics used by professional services organizations to measure and improve productivity and profit. In the latest survey, the independent providers (management consultancies, IT consultancies, architects, engineers and marketing) outnumber the captive service providers (PS within hardware and networking, software, and software as a service) by a margin of 2-to-1. Thus, the survey leans heavily toward independent service providers that are primarily focused on service growth and profitability as opposed to embedded PSOs who must also focus on driving product revenue.

Growth is back!

In recent white papers and webcasts, we’ve predicted strong growth in the professional services sector. Our preliminary analysis shows this to be true, with revenue growth doubling from the anemic levels of 2009 and 2010 (3.6 percent and 7.6 percent, respectively), to double-digit year-over-year revenue growth of 14.2 percent in 2011. Clearly, the PS market bottomed out between 2008 and 2009, recovered slightly in 2010, and now has returned full throttle in 2011.

At the same time, profitability (earnings before income tax and depreciation) has also risen significantly, growing from less than 7 percent in last year’s benchmark to almost 19 percent in 2011! Obviously, this growth in profitability isn’t simply a result of higher revenue. It also means that the leaner, meaner professional service organizations of 2011 are more productive and profitable than they were in 2008, before the recession started.

Increased operational efficiency helps PSOs survive

Because there are no labor contracts or unions that prohibit layoffs, PSOs could have easily reduced headcount when conditions headed south. Savvy PS executives know that eliminating talented people with hard-to-find skills in a people-based business can harm morale over the long term. That’s why the best-of-the-best organizations did everything in their power not to reduce headcount.

The survey results thus far have shown an increase in the percentage of employees who are billable. When we initiated the first PS Maturity™ benchmark in 2007, this figure hovered around 68 percent, and it crossed the 70 percent plateau in 2010. Currently, with more than 150 responses, it sits at slightly under 75 percent.

This increase shows that instead of laying off consultants, PS executives have worked to increase the number of billable personnel on staff. This mean that executives shifted many nonbillable positions to at least partial billability. This change from non-billable to billable headcount also contributed significantly to the huge profit improvements shown in 2011.

Throughout the recession, PSOs reduced their reliance on subcontractors and third-party resources, with less than 12 percent of top-line revenue delivered by third-party resources. This strategy favors preserving work (and positions) for direct employees by eliminating subcontractors.

Over the past five years, we have seen the reliance on third-party revenue decline from 13.8 percent to 11.6 percent. This has proven to be a good approach for maintaining and invigorating a loyal workforce while ensuring valuable skills and knowledge remain “in-house.”

Now as the economy improves, PSOs must build stronger performance and career management disciplines to ensure that loyal employees are also the most productive employees.  At the same time, a robust market still exists for mercenary, freelance consultants as long as they have strong specialized technical skills.

With fewer overhead resources, firms have invested heavily in improved business applications. Better resource management also contributes to the increase in profitability from 2010 to 2011. Billable utilization has increased by more than 1.5 percent in absolute terms, equating to an over 2 percent increase in relative terms. This trend means PSOs are annually billing roughly $5,000 more per consultant, which translates directly to bottom-line profitability.

Improving sales also helps

We can attribute further profitability improvements to an increased emphasis on sales and marketing, especially in the development of new services. In 2009, most of the PSOs surveyed did not strongly focus on the development of new services, let alone finding new clients. In this year’s benchmark, one of the standout findings is that many PSOs have developed new service offerings and are successfully selling them to their existing client base.

Considering they already have a relationship, this evolution makes sense. Repeatedly, we have found the most successful service organizations develop deep relationships with their top clients. As they become trusted client advisers, these clients rely on them to help solve new challenges, essentially underwriting new service product development. As economic conditions improve, service innovation will be one of the core drivers of growth.

While service innovation takes center stage, clients continue to shift more accountability and risk to their service providers. Again this year, the percentage of time-and-materials-priced work has declined, while the percentage of fixed-price work has increased. Over the past five years, time-and-materials-priced work declined from more than 60 percent of revenues to 52 percent in 2011, while fixed-price work has increased from 30 percent to 46 percent.

This trend will continue to accelerate, indicating that firms must get a handle on their costs, estimating practices and project quality controls. Integrated business applications are becoming mandatory to help PSOs capture level of effort and costs to ensure that estimating accuracy improves.

Losing money on projects is a going-out-of-business strategy, so today’s firms focus on researching competitive pricing strategies and deploying best-qualified yet lowest-cost resources. They tightly control estimates, pricing and discounts to ensure that every project starts profitably. Then they apply strong project management governance to keep projects on track. Disciplined sales and service delivery execution have become the name of the game.

Watch out for attrition

An improving economy and faster growth have some negative side effects, perhaps the most critical being increased voluntary employee attrition. During the dot-com era, PSOs were accustomed to seeing attrition rates in the 15 to 20 percent range. However, as the economy struggled, this figure declined to less than 7 percent.

We predict attrition for 2011 to be approximately 8 percent. Although not devastating, it could be a precursor of things to come. Leading PSOs worked to avoid layoffs during the recession, and it would be a shame for firms to see talented consultants leave once the economy moves forward.

At the same time, the days of huge annual salary increases are over. A recent Aon-Hewitt compensation study predicts annual salary increases in the professional service sector will be 3.1 percent in 2012. Over the past five years, all organizations have shifted to a heavier reliance on variable compensation. The same study forecasts professional service variable compensation will average 14.6 percent.

As firms move to lower base salaries and more reliance on “pay-for-performance” variable compensation, a key success factor will be identifying the top performers and rewarding them disproportionately. Cash compensation is only part of an effective talent management strategy. Successful talent management requires clear measures of performance while providing skill and career growth options and programs.

Based on our client interviews and projects, today’s greatest challenge is “finding qualified consultants.” Only the largest consulting organizations have deep-enough talent growth programs to rely on college hiring as they are able to invest years into growing well-rounded consultants.

The majority of midsize and smaller PSOs depend on stealing skilled employees from their competitors and clients. This situation must change if the professional service industry wants to sustain double-digit growth. We predict the war for talent will spur leading PSOs to focus on new-hire ramping programs. This should shorten the length of time for consultants to become productive, but it will add additional training and overhead costs, taking a bite out of profits for the fastest-growing organizations.

PSOs have a long way to go

For nearly two years, signs have indicated a market turnaround. However, we believe much needs doing to grow the services marketplace faster and more profitably. For the last five years, PS executives have juggled increased client demands with a changing workforce and greater regulatory scrutiny.

They have succeeded despite the downturn in the global economy but must relentlessly concentrate on all aspects of the business to speed growth. The market constantly changes, and they must learn to anticipate and embrace change to stay on top. The juggling act will continue. Despite this, PSOs can face and take advantage of a new era of growth and profitability with the right attitude, workforce and tools.

About the authors

Jeanne Urich, Service Performance Insight managing director, is a management consultant specializing in improvement and transformation for project- and service-oriented organizations. She has been a corporate officer and leader of the worldwide service organizations of Vignette, Blue Martini and Clarify, responsible for leading the growth of their professional services, education, account management and alliances organizations. She is co-author of the PS Maturity Model 2011 Benchmark report. Contact Urich at jeanne.urich@spiresearch.com or 650-342-4690.

Dave Hofferberth, Service Performance Insight managing director, has more than 25 years of experience in information technology, serving as an industry analyst, market consultant and product director. Hofferberth focuses on the services economy, especially on white-collar productivity issues and technologies that help people perform at their highest capacity. Hofferberth’s background includes the management of application development teams and analytical tool development to support business decision-making processes. He is also a licensed professional engineer. Contact Hofferberth at david.hofferberth@spiresearch.com or 513-759-5443.