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?
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?
Performance-Based Agreements Will Rule Future
When I started my business as a content and digital marketing service provider, I decided not to require long-term contracts. Everything is based on 30-day agreements. Considering it takes months sometimes to see ideal results I recognized the need for short-term agreements.
My number one priority has to be client satisfaction. This needs to be the number one priority for any business. Rather than focusing on how you can lock a customer in and hold them captive, reinvest that energy into ways to make them happy each and every day.
This is the future of service delivery—customer experience.
With so many organizations catching onto the idea of earning the opportunity to serve and then providing the service, the old school service “contract” may have a short shelf life ahead.
The good news is satisfied clients almost always stay. So if your business truly is about continuously creating great customer experiences, you really don’t have much to worry about.
And sure, I get the concerns with moving away from service contracts; with a shift like this a certain level of discomfort will be created.
Remember, if you deliver in the end and the customer has a need for the service you provide, you should be in great shape. Most of the time when they leave it isn’t because they don’t need your service; it is because your service let the customer down.
Nonetheless, whether the idea of the “no-term” contract sounds brilliant or asinine, it is the way of the future in a “show-me” economy.
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.”
