Let me also make the distinction here between two types of training.  The first type of training is that which seeks to improve personal effectiveness or productivity (examples from the Sales world would be skills training such as Presentation Skills, Questioning Skills, Negotiation Skills, etc.).  This kind of training is often offered to the organization via “catalogue” and is typically open enrollment.  It really doesn’t matter who else is attending the training because the individual will still benefit from it.  The second, and very different type of training focuses not only on individual effectivness but also seeks to drive team, and ultimately organizational effectiveness (examples here, also from Sales, would be training permanent (or virtual) teams that work together on strategic Accounts or large sales Opportunities, on common methodologies and tools for developing and retaining existing Accounts or for progressing and closing significant sales Opportunities).  The implementation implications are much fewer and less complex in the case of individual Skills training.  In the case however of trying to implement a common methodology and tools across an extended team, it is critical that everyone on the team receives training at the same time.  Failure to do so will result in the team-members who have been trained not being able to share particular terms, expressions or certain tools with those on the team who have not been trained.  Dilution will occur quickly in this situation and the potential productivity gains will not materialize.  Many years ago when I moved from Sales into Sales Training I used to shudder at the concept of “the big bang” training event, where several hundred salespeople get immersed in a some new sales methodology.  Now however I am fully supportive of it where extended teams have to communicate inter- and intra-team, and with their Management, and where everyone has to be on the same page.  In this situation the quicker you can get everyone trained the better, to avoid retention drop-off and dilution.  What is required here is a Change Management approach to implementing the Training initiative, and herein lies the opportunity to provide value-added services.

1) Is this initiative aligned with our overall business strategy?  How do you want your organization to be perceived by the market – as a Training company, a Consulting company, a hybrid? Are you going to lead with Consulting-type services and hope that training opportunities will come out of that, or are you going to lead with Training and provide “wrap-around” services to round-out your Training offerings and/or help to make sure that the training  you deliver sticks?

2) Do we have the right People? Are the Salespeople you currently have both willing and able to sell Services?  My experience is that most salespeople who are used to selling tangible off-the-shelf (or slightly customized) Training offerings, struggle when it comes to selling intangible Services.  Unfortunately some types of Services – Implementation-type services for example – must be sold from the start as part of your solution, otherwise it can be really tough to go back in after the Training sale and try to explain why it is important for the customer to buy these additional services.  “If these things are so important, then why didn’t you tell me that before now?” is the question you will hear from your customers.  All of this means that you may have to consider changing the profile of your salespeople, or creating the new role of “Services salesperson”, which has implications of its own that we will talk about later.  You had better examine your Delivery organization too.  How many of your Training Instructors / Facilitators are capable of deliver high-quality Consulting engagements?  This requires a very different set of competencies and experience, which typically you are going to have to pay more to get, irrespective of whether you use a W2 or 1099 model for these people.  Finally, as you look at your Management Team, who has the experience of developing, managing, and leading a Services Practice?  So be aware that your cost structure will change and your overheads are likely to increase when you move into this arena. 

3) What Processes do we need to change?  My experience is that selling Services will touch most of your existing processes.  Your Sales process will certainly be impacted because the sales stages may be different, plus other people will now be involved in the sale and their roles and responsibilities will need to be mapped-out clearly to everyone.  Implemented correctly, your sales cycle should not increase in length, but you should see your average deal size increase by the value of the Services content.  In addition, processes such as Product Management, Account Management, Project Management, Performance Management, Bid Reviews, Proposals, Order to Cash, etc. may each be affected to some degree.  I would therefore recommend a Process Review to examine your internal processes and to identify the impact of the Services business on each of them.

4) What new Systems, Tools and/or Technology are we going to have to change or add to support and enable a Services Model?   Yes, potential changes here too.  Your CRM software will most like have to be tweaked to reflect changes to the Sales process, new Management Dashboards created, etc.  Because of the higher risk of project over-runs, scope-creep, etc, with Consulting engagements, you are also going to need a Time Billing system to closely monitor actual vs. estimated hours spent on each project.  This is critical if you are using 1099s who bill you for every hour they work on the project, and is an easy way to lose money on projects.  Such a system will also enable you to monitor Realization and Utilization rates of your salaried Consultants.  You are almost certainly also going to need to alter your Master Services Agreement and Statements of Work.  Most Services Agreements are written to protect the Training Company’s Intellectual Property, and provide the client with a Licence to Use the content.  In most Consulting engagements however, the client expects a Works-for-Hire type Agreement where the client owns whatever is developed for them during the engagement.  Carefully-written Statements of Work which clearly and unambiguously define scope, deliverables, days of effort and whether projects are Fixed-Price or Time & Materials also become really important.  As a result, Proposals and the above Legal Agreements will typically need to be approved at higher authority levels than previously.

5) Do we have the right Organization Structure in place to enable the sale and delivery of Services? An Organization Structure should represent the physical manifestation of your business strategy.  In this case decisions have to be made around who “owns” the Consulting sales and delivery resources – who provides direction to them, sets their goals/objectives, measures their performance, does their salary reviews (W2s), is responsible for their development, and their hiring/firing.  My experience is, at least in the Training Company environment) that Services Consultants should be able to both sell and deliver their Service offerings, very much as overlay resources, working closely alongside the Client Account Managers who ultimately “own” the client relationship. 

6) How do we need to change the way we Measure and Reward our people?  This is a complex subject to deal with in a blog, but suffice to say R&M systems, of which Compensation Plans are just one component, will definitely need to be reviewed and adjusted.  Obvious questions are around the R&M system for Services Consultants, i.e. how and what are they rewarded for selling Services, and how and what for delivering the Services?  More complex questions include should Services Revenue be included in the Training salespeoples’ quotas (yes – so quotas will be higher!), should these people get paid an override on Services Revenue (yes – Client Account Managers should be measured/rewarded on ALL revenue from the account), should there be Team-based Compensation Plans (quite possibly).

7) How should our Channel Partners, particularly VARs and Resellers, be aligned with our new Services offerings?  Point #7 assumes you sell your Training offerings not only through your own Direct sales force but also through Resellers or VARs, and once again, it is a complex blog subject.  Most resellers of someone elses Training content, (at least all of those I know) assume within their business model that the Services they sell and the margins they make on those Services are theirs.  They are happy to pay the content provider a per head royalty fee for books or licences sold, and they will make a reasonable margin on that component of the sale, but income from Services, even those that “wrap-around” the supplier’s content (see Implementation Services) are 100% theirs.  Without getting into a philosophical debate on this point, I will say that from a practical perspective, unless you can totally ”productize” or “shrink-wrap” your Services, it is very difficult to convince a Reseller what it is they are paying you for, especially if they have developed their own set of value-added services that compete with your new Service offerings.  It is also virtually impossible, unless you exercise the right to audit their books, to know how much or how many of these Services they are selling.  The alternative is therefore to implement a Reseller model where you collect a % Royalty on the total product and services revenues that the Reseller bills for anything associated with your IP, and once again, that is difficult to monitor accurately.

(1) maximizing the revenue on every new opportunity you win, i.e. not leaving money on the table, and

(2) making sure you develop and maintain new revenue stream(s) from existing clients. 

Depending on the size of the Training deal, my experience has been that Services can add anywhere between 10% (for a large Training deal) and 50% (on a smaller Training deal) to the top-line revenue.  The higher % on the smaller deals can potentially turn an unprofitable deal, after you factor in Sales expenses, into a worthwhile opportunity.  When there are fewer opportunities around in your established accounts, it’s easy to take your eye off the ball and focus elsewhere, when there could be opportunities right under your nose to sell Services.  Not only do Services provide additional revenue streams, but they can also help insulate you from the competition, help maintain existing relationships and develop new relationships within the account, help re-position the perception of your company as a Consulting as well as a Training company, and maybe even move you towards that enviable position of being a Trusted Advisor to the account instead of  just another Training Vendor.

This blog is an opportunity for me to share my experiences (and mistakes!) in building a significant Services revenue stream, and to provide a repository for best practices in this challenging area.