As a product company, your culture is very different from a services company. Your sales approach is about features, sales cycles are shorter, operations not as complex, you can hire junior and less experienced staff. Also, your on boarding and training programs require less rigour because your solutions are very tangible and simple. You may also have been first to market and had the luxury of being the goto vender for products (e.g. DEC and the VAX computer back in the 80s comes to mind).
Move to a services model and that all changes. What changes? Approach to management (more collaborative vs autocratic), hiring more experienced people is required to deal with solution selling and delivery complexity, sales models move from transactional to relationship and solution based, sales cycles are longer (6 months to 2 years depending on organizational complexity and the size of deal). Also if you were a market leader like DEC you had people calling for your product and backorders. As the market matures, changes and competition becomes more fierce venders experience a decline and look for ways to increase their value and grow revenues – services and a solution focus is the standard course of action.
I worked for a vender in the late 80s and early 90s that watched PC sales and margins drop significantly. Back in the day IBM PCs sold for $20k each and as the 90s approached and other venders emerged such as Compaq and even DEC the price dropped along with margins. What did the vender do? Established a services organization which I played a major role in building. Hiring, creating services and materials and training staff (sales and technical) was a key to my role. Hiring changed, no more taking orders over the phone or from manufacturers as the middleman, the new skill set required strong interpersonal, solution selling and delivery skills. This meant $25-35k above what they were paying people and a comp plan as an incentive. We had services that would jump start a customers LAN deployment based on OS2, Netware and Windows as well as Domino Server. We also had packages solutions for AS/400 and other mainframe connectivity. With the increased solution complexity and cost stronger Project Management skills were required, an up to date portfolio of case studies and references. We also created Knowledge Management systems to find expertise, proposal materials and other knowledge and sharing.
While all these service capabilities were being developed it polarized the organization. Some understood and benefited from the services, some hated the idea, long sales cycles and added complexity and cost of skills. This caused a lot of friction and problems for a couple years until the culture adopted the new model. New management was required to replace and extend the management team because some simply didn’t get it – new skills and perspectives were required. Also, the sales force had to be educated and in some cases people simply didn’t get services and had to be replaced. Another interesting impact was on service providers and consultants – they now viewed us as competition. That issue required some careful navigation and positioning when they were involved.
In subsequent jobs I had done much of the same work such as Bell, SHL and HP (Building a SharePoint practice). The difference with these companies is that I adopted disciplines from the book “Marketing your professional services company”. Aspects such as marketing, articles, blogs, webinars and trade show events. A fun learning experience for sure and some major lessons learned about the industry, people and business.