How to Sell Service Agreements

More than one million sales professionals are actively involved selling service agreements on technology-based products. For many, it’s a major source of income. In almost all cases, it’s the major source of profits for the companies they represent. Ironically, most companies admit they don’t dedicate enough resources to service marketing. For those that do, there isn’t a lot of industry information regarding levels of investment and expected returns.

Most systems integrators measure success based on their own historical performance. Often success is measured in comparison to equipment and systems sales. In reality, this comparison has been a deterrent to the industry. Far too many companies are satisfied with incremental sales growth in service markets that have yet to be developed.

Every product or system manufactured and installed eventually falters or fails. Current product designs that integrate electronics, software, and mechanical devices require repair, retrofits, upgrades, and on-going maintenance. The growing number of products and systems being integrated has created a new category of users with wide ranging service needs. Product applications continue to grow, but for the most part service offerings remain the same. The gap continues to widen and most service providers have not adapted. 

Forecasts for service revenue growth are strong across most markets. In down economic cycles users often postpone purchases of new equipment in favor of maintaining existing systems. Many end users are looking for solutions to unexpected system failure and the unbudgeted expense of needed repair or replacement. That’s why service continues to be strong regardless of swings in the economy.

Most systems integrators recognize aftermarket service as a major business opportunity.  Initially, technicians were responsible for selling service. As products and systems became more complicated product sales people inherited the responsibility for selling service agreements. This strategy required adaptation as service and maintenance costs grew and purchasing channels became more sophisticated. This created the need for companies to add sales personnel, in many cases dedicated solely to selling service agreements. Integrators utilizing dedicated resources have seen strong growth. They’ve enhanced their company’s value by building large bases of renewable income. All have increased product sales by capturing business from their growing customer base. It’s the proverbial win-win. More product sales generate more service sales. More service sales generate more product sales. Progressive firms have recognized they can grow market share by expanding their brand by offering services beyond their existing product markets.

Typically sales people are not attracted to service sales. They perceive it as inferior to selling big ticket products and systems. This attitude is pervasive within most sales organizations. Selling service is looked upon as an entry-level position and a stepping-stone to something else. This situation has created a huge void of skilled service; sales, marketing, and management personnel. It’s rare to find individuals who have spent the majority of their careers in service sales or service marketing roles. Is it for lack of career growth? Is it due to limits on their earnings?  Is there a shortage of experienced mentors? Do companies overlook sales people and place operations personal in key management positions? Is management tasked with growing product and service sales under one umbrella? I believe the answer to all of these questions is yes, for even the best intended companies. 

Skilled individuals to train and develop service sales people are limited. Most companies utilize the same resources to train both service sales and product sales personnel. The information presented is typically generic in nature, falling short of what’s needed. People selling products are trained to sell features, functions and benefits. Service sales people need to be trained to sell value and master abstract selling concepts. There is little commonality between the two sales processes and most companies struggle to adapt. It’s not surprising that service sales representatives have the highest attrition rate of all sales positions. They typically lack the proper training and resources to succeed.

Over the coming months I will focus on some of the key issues related to marketing service for systems integrators. My goal is to present information that is relevant to current market conditions based on my activities with clients now servicing the market.

I’ve addressed numerous industry groups addressing service marketing. Without exception someone would ask, “How do I order your book?” or “Why don’t you write a book?” For years I spoke of the completing this daunting task. Finally in February my book, Service is Not a Product, was published. So far I’ve been surprised by its success as order counts rise, including the Kindle version. This confirms my belief that many in our industry are looking for strategies to aggressively grow their service revenue in these challenging times.

Joe Siderowicz is President of AfterMarket Consulting a firm that helps both independent dealers and manufacturers, in the systems integration market, grow service revenue. He can be contacted at or


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