Top Reasons Why Customers Do Not Buy Services

Why don’t customers buy services? Because they believe they do not need the coverage or that they do not feel that the costs outweigh the benefits. Selling the value of service is making the case for why the customer is better off with it than without. Selling services demands that you establish a credible and compelling value proposition.

Overcome Customer Objections

Selling the value of service is making the case for why the customer is better off with services than without. Selling services demands that you establish a credible and compelling value proposition to equip your sales channels with the knowledge and skills to overcome customer objections.

Top Reasons Customers Do Not Buy Services

Why Customers Don’t Buy Services

The primary reason customers do not buy services is that they do not feel that they need what is offered. Sometimes customers do not buy services because they are simply not given the opportunity to do so. In other cases, customers react to the cost of services and feel the price is too high, or they simply cannot afford to purchase a service contract.

When customers express that they do not need services there is also a consideration for the price they are asked to pay.  If services were free, then they would most certainly take the services.  This “I can do without” attitude combined with some degree of price sensitivity demands that we equip our sales channels with the knowledge and skills to overcome customer objections.

Establish a Compelling Value Proposition

The value proposition describes the relationship between the price and benefits from the services a customer receives. To be compelling, the benefits must be perceived to exceed the cost. Service benefits may be intangible – insurance against risk, or tangible – a commitment of specific resources or attainment of a specific outcome.

Although difficult, it is imperative to quantify the value of all service benefits so that they can be compared to the price. A compelling value proposition is fundamental for successful sales and renewal activities. Selling the value of services requires the following:

  • Understand your customers’ needs and expectations from the product and services they purchase from you.
  • Offer a robust portfolio of services. Not all customers will need or benefit from the same types of service so develop offerings that can align to the customer segments you serve.
  • Set reasonable prices for your offerings. This does not suggest that reasonable is low, but it must be justifiable. Customers must understand and agree that the benefits of service are consistent with the price they pay.
  • Define a clear and compelling value proposition.
  • Help sales channels and renewal teams understand the elements of the value proposition so that they can clearly articulate it to customers during sales and renewal activities.

Featured: Selling Service Value

Selling services demands that you establish a credible and compelling value proposition. To be compelling, the benefits must be perceived to exceed the cost. This playbook describes the essential steps to develop a compelling value proposition to maximize support sales and renewal activities.

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How Much Should You Charge for Support?

Setting the correct price for your support programs begins with a baseline understanding of what your market will bear but ultimately the price must be based on the type and level and entitlements offered.

Average Support Program Price

The average prices for support programs range from 15.6 percent for a basic level of support to more than 26 percent for a high-end premium program.  Prices vary based on the entitlements offered and the ways that pricing is structured.  Here are a few considerations:

Net vs. List

Pricing may be based on the percent of a products’ list price or the net price after discounts.

Add-on’s and Fixed Fees

Some support programs consists of a fee tied to the percent of product list or net price plus add-ons.  Add-ons are often associated with optional entitlements such as named support resources such as designated support engineers and/or account managers.

Adjustment Fees

The price of support in the first year is often not the price a customer will pay in subsequent years.  Support prices typically include annual adjustment fees to account for inflationary factors.

Pricing by Support Program Tiers

Support pricing is typically established by program level or tier.  It is not uncommon for support portfolios to consist of two or more tiers with names like Silver, Gold and Platinum.  Although support programs may sound alike, they often vary from vendor to vendor.  For the purposes of establishing baseline pricing benchmarks ServiceXRG has normalized support programs into the four distinct tiers described below.  Classification is based on the underlying program entitlements and not on the program names.

Support Program Tier Classifications

Average Support Program Price

Establishing Support Prices

The price of support must be set at a level sufficient to cover delivery costs, yet not too high to discourage customers from buying.   Customers are likely to have preconceived ideas about what support should cost based on experiences they have with working with other technology vendors.  If your “gold” support is priced at 23% of product list price but other vendors are priced at 18%, customers may perceive that your prices are too high even though you offer more for the price. 

It is imperative that you price support reasonably so that you can make a compelling case that the benefits outweigh the costs to the customer.

Making the Case for Services

Selling services demands that you establish a credible and compelling value proposition built upon the entitlements customers want and need from services balanced with a reasonable and justifiable price level.

Featured: Selling Service Value

Selling services demands that you establish a credible and compelling value proposition. To be compelling, the benefits must exceed the cost. This playbook describes the essential steps to develop a compelling value proposition to maximize support sales and renewal activities. Log-in to get your copy.

Login to Access the Full Report

If you don’t have an account, create a free* membership.

Login

*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

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read more

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Making the Case – Overcoming Customer Objections to Buying Services

A credible value proposition based on what customers need and want from Services is the best way to overcome customer objections to buying services.

Making the Case for Services

Customers want the products they purchase to work.  Many understand that technology is inherently complex and access to expertise and periodic updates are worth the investment.  This is particularly true if a product is considered business critical. Some customers conclude that they need Services on their own, many do not however and need to be convinced.

Selling the value of service is making the case for why the customer is better off with service than without.  Selling services demands that you establish a credible and compelling value proposition built upon the understanding of what customers want and need from services.

Top Reasons Customers Use Services

Customers that purchase services are most likely to use them to adopt and use products effectively and not simply to fix problems. 

The value of services must therefore emphasize Services’ ability to provide tools and resources to help customers implement, learn and use product effectively.  A complete and compelling value proposition must also recognize that if product issues do arise, services are available to respond quickly.

Top Reasons Customers Use Services

Most Important Attributes of Service

The services characteristics customers want most are access to expertise when they need it. They expect service organizations to be available during reasonable hours and to be responsive to requests for help.  As noted above, access to technical expertise is not simply about fixing issues, it must also be used to provide training and coaching to help customers apply products more effectively. 

Most Important Attributes of Service

Featured: Selling Service Value

Selling services demands that you establish a credible and compelling value proposition. To be compelling, the benefits must be perceived to exceed the cost. This playbook describes the essential steps to develop a compelling value proposition to maximize support sales and renewal activities.

This Playbook is FREE – Log-in to get your copy.

Login to Access the Full Report

If you don’t have an account, create a free* membership.

Login

*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Related Articles

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read more

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