Have you bundled yourself so tight you can’t move?

Once upon a time…… I worked with a company that provided contracted services. The services were spanning many areas, and of course came in different bundles.

I was tasked with finding the "custom" contracts, those not conforming to any of the standard bundles, so that they could be standardized. Something that many companies try to do to simplify both the billing and being able to provide the service they agreed on. Up until this point, it was nothing strange to me.

When i worked on it, i quickly realized that almost all of the "weird" contracts as they were called, had been sold by one of the senior staff. These contracts were highly customized in both services provided and pricing. This of course was interesting, but what was more interesting than that, was that the company had an almost 100% retention rate of these customers.

After crunching the numbers, it also became very clear that the profit margin on those contracts were on average 7$ over the standard packages. Even after taking the "hassle" of customized billing and keeping track of what services to provide into consideration.

The Senior member had tapped several majorly important resources at once. The customer got a personal relationship which let them buy exactly what they needed. And in the process, the company:

A) Made more money
B) Kept the customers longer, (making even more money.)
C) Made the customer happy
(which i’ve harped on enough already as the only way to get good referrals.)

Simplified Billing be Damned

These wierd contracts were exactly what every customer should have been offered, Customized to perfection, the senior staff member had by "breaking the rules" shown that it was the best option available.

But as always, the "cutting costs" aspect of simplified billing and contract management was what the corporate head office could more easily measure, and therefore wanted. So that was what they got. The profitability and retention went down as could be expected.

The savings of "simplified billing" ended up costing them more than hiring an extra Accounts Recievable staffer would have cost them.

And lets not forget that they had a very powerful accounting and billing package that if used correctly would have made it a non issue to begin with.

Lessons Learned
What i learned from this staff member was that unless you are completely unable to customize, there is no reason not to. It’s simply better to sell them what they want. They are willing to pay a slight premium on the services they do get, if you allow them to cut out the ones they don’t want.

Thougts on Selling Services

-Services, should never be sold as a fixed package unless they are interdependent.

- if they are interdependent, they shouldn’t be listed as two separate items to begin with.

- Bundles are great, some customer likes the no hassle approach, and the rest can use them as a base from where to start. But to not allow customization is the same as saying "Your wants and needs are not important."

For Gods Sake, Don’t Listen to Me!

Every time you sell a custom contract that adds or subtracts a service from one of your bundles, You are being given Free Product Development . Your customer is helping you improve your bundles and packages with no other consideration than you listening to them.

Consultants like me charge big money to give you the same information that your customer just gave you for free.

So by all means, please ignore this opportunity, and call me instead, I’ll be happy to listen to your customers for you, (and bill you accordingly.)

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