Wait ... Maybe We DON’T Need Service Contracts
In the changing landscape of service agreements, should B2Bs be rethinking service contracts and delivery?

Article


Newman
January 24, 2014 By Daniel L. Newman

Following is an excerpt from CI columnist Daniel L. Newman’s e-book, “New Rules of Customer Engagement.” Check back each week as we share a glimpse of his descriptions of each of the six trends that he says are redefining how integration sales professionals must deliver solutions for their clients. The e-book is scheduled to be unveiled in conjunction with NSCA’s Business & Leadership Conference, Feb. 27 to March 1, at the Four Seasons in Dallas.

Somewhere in history, a very wise businessperson came up with the concept of “sign this service contract and for the next year we will deliver you the services entailed.”

Caveat: Even if I don’t deliver to the expectation we set, we will continue to send you a bill every month for the next year until the contract is up.

Second Caveat: Around 10 months into the contract we will show up and ask you to renew your contract. If you don’t, our service levels will further diminish because we will need to turn our attention to clients who are still under contract.

Oh, the irony. So you sign up for a contract to receive a guaranteed level of service for a period of time; however, even if you don’t get service that meets your expectation, you are stuck in the agreement.

Whoever came up with this idea was definitely smart, but were they customer-experience focused?

New Rules of Customer Engagement, an e-book for sales professionals (and their bosses)

CI columnist Daniel L. Newman’s book is being showcased on Commercial Integrator. Check back weekly for excerpts:

1/10—Intro: Redefining the Sales Process

1/17—Trend 1: How Informed Consumers are Changing Everything

1/24—Trend 2: Why Your Response Time Must be Faster: The Impact of Immediacy on Customer Experience

1/31—Trend 3: Getting Creative: Your Business Value Lies In Your Creativity

2/7—Trend 4: The Role of The Human Network; Your Human Network

2/14—Trend 5: Don’t Sell Me. Show Me! Selling More by Driving Outcomes and Advocacy within Your Client Organizations

2/21—Trend 6: Customer Experience Trumps Everything Else You Do: Why Mediocre is the New Bad and Extraordinary Must be the Ordinary

Follow @Commintegrator and @DanielNewmanUV for updates on the release of “New Rules of Customer Engagement.”

Shifting from Commitment-to-Pay to Commitment-to-Perform

I know some service providers will argue the service contract they deliver includes service level agreements or at least specific performance spelled out.

Before you assume those commitments are worth the paper they are written on, ask two questions:

1. Who set the service agreements?

2. Who wrote the contracts?

The contracts are almost always pro-provider and are often written in a way where the provider’s expectations are far lower than the goal of service should be.

The real question becomes: Are we in a marketplace where contracts are required?

In large industries like mobile telecom and cloud services there is already a tangible shift moving contracts from long-term to month-to-month. Sure, there may be a small price to pay for clients to get out of their contracts and dealing with change itself is often an immovable force, but why do you think this shift is happening?

About the author

Daniel Newman is the Co-CEO of V3B and President of Broadsuite Media Group. Prior to this, Newman spent his entire career in various integration industry roles including CEO of United Visual, a 60-plus-year-old commercial integrator. A Part-time MBA instructor, he's also a contributing writer for Forbes, Entrepreneur, and The Huffington Post.
View all posts by Daniel L. Newman
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