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Picking Sales Models and Services Offerings In Services Businesses

Picking Sales Models and Services Offerings In Services Businesses

Two of the most important decisions a services business makes are 1) how it approaches sales and 2) whether it offers one or multiple disciplines of expertise. These decisions are related and the combination has a profound effect on the trajectory the business.

Founders sometimes make these decisions without thinking through the implications, setting the business back by months or years.

Luckily, these setbacks can be avoided by being deliberate and answering a two key questions up front!

Question 1: Are you willing to manage multiple benches of talent in order to provide clients with multi-disciplinary services?

For example, providing comprehensive product development service could mean that a services business provides software architects, developers, test engineers, business analysts, scrum masters, cloud engineers, DevOps engineers, visual designers and possibly more for a client. While these are complimentary and sometimes overlapping skills, there are at least four distinct types of staff involved. Those four groups of people need to be recruited, interviewed, on-boarded, have their utilization and margins managed, be provided with career growth, and so on.

Contrast that complexity with a services business that specializes in providing a single area of expertise or discipline. A single discipline consultancy could be built around a technology-specific offering like Snowflake, ServiceNow or Salesforce services, or around a domain of expertise like Agile coaching, digital design, or machine learning. The staff required in these businesses is much more similar to one another. While these businesses still require talent at varying levels of seniority, and potentially with different specializations, it's far less complicated than carrying a bench of software engineers, cloud engineers, visual designers, and scrum masters!

Of course, the disciplines you have available directly related to the types of projects you can credibly compete for and sell to prospects, which leads to the second critical question...

Question 2: Will you sell using a partner-led sales process or a direct sales process?

Partner-led and direct sales motions are very different and require different investments in staff and other resources.

Partner-led sales processes are most common with technology-specific services offerings where a technology provider like Microsoft, Snowflake, Salesforce, etc. will use a network of services providers to design and/or implement their solutions for clients. A partner-led sales motion typically relies on good company and personal relationships between the services provider and the partner as well as investing in certifications in the technology. More sophisticated partnerships may also require, or benefit from, additional specialization by the services provider, such as focusing on a particular customer industry segment or geography, or focusing on a particular aspect of the technology.

Partner-led sales models are typically easier to get started, assuming you have or can build the relationships with the partner. They also tend to be leaner to operate because partners will help with lead generation as long as the services provider is willing to invest in some joint business planning. Partners typically expect that their services providers don't engage in competitive business, like a cloud services company simultaneously promoting both AWS and Azure solutions.

The potential downside to this model is that the services company is completely reliant on the partner for sales. If the partner decides to promote another services company, or to take services work for its own professional services team, there isn't much that can be done. It also relies on the technology remaining in demand.

A direct sales model is more common in areas where there isn't a specific technology being used, like providing digital design services or Agile coaching, or when the services tend to be multi-disciplinary in nature. Direct sales models often start with founders selling to their network. At scale, however, the direct sales model requires marketing support for demand- or lead-generation, and dedicated sales teams to lead qualified sales pursuits.

Building a marketing and sales team at scale is a much more complicated and costly undertaking. It does have some advantages over the partner-led model: a services business operating its own sales function means it's resilient to external factors like partners affecting the flow of leads. The tradeoff is that the model takes longer and costs much more to get right!

What's the best model for a services business?

Multi-disciplinary services businesses generally don't lend themselves to the partner-led sales model because partners are typically only interested in services that lead to the consumption of their own product. Multiple disciplines also increase the surface area for potentially conflicting or competitive products to be introduced to the client which is never desirable by the partner. As a result, multi-disciplinary services companies typically don't have a choice but to build their own direct sales function.

Single discipline services businesses that can focus on a single technology are good candidates for the partner-led sales model. If the technology is in demand and not commoditized, these businesses can scale to tens or even hundreds of millions of dollars in revenue built around a partner focus. This is typically the most cost-efficient path.

Single discipline services businesses that are not built around a specific technology may have no other choice than to build direct sales function. It's very difficult to do this successfully without having some track record of success selling and delivering using existing networks, though. Early stage services businesses that intend to build a direct sales function should plan on founders or other early, senior staff in the business to put in the hard work of selling to their own networks to get started.