Martin Summerhayes (martinsummerhay) wrote,
Martin Summerhayes

What was the $20m opportunity?

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” ― Winston S. Churchill

Further to the earlier article I wrote - What were you doing at the age of 22?, I mentioned something called the $20m opportunity. I wanted to share that from little opportunities, great things do come.

The backdrop:
It was 1987 and I was a field based multi-vendor engineer at that time. I would travel the country, visiting businesses, large and small and attempt to fix on the first visit; the issue that they had with their IT equipment. And what a mixed bag of stuff it was - dumb terminals, early HP PC’s, called Vectras, impact printers, daisy wheel printers, the first generation HP LaserJet Printers and all sorts of other stuff.

The Challenge:
Yes it was a challenge and yes it was fun. Then my local team manager, a chap called Tony Coppola, asked me if there was any way to increase the services revenue in the area? Could I sell extra services when I was out with customers?

I thought about this for a while and realised that there was a major opportunity, not only in my district, but all over the UK. I went and spoke to the marketing team about how many PC and LaserJet products had been sold into the UK in the past 3 years - since the products had been launched. They gave me the overall sales figures. I wanted to know how many products were sold to the customers and was directed to the Channel department and Bill Hill. He kindly gave me that information. So I now had the installed base. I then went and spoke to the contracts department to find out how many we had on contract and found the issue.

The Issue:
The issue was that the products were being sold through third party companies, resellers and channel companies. We were selling them with warranty and the normal method for HP, at that time, was to sell services as a maintenance contract customer by customer, using a direct sales team. Hence, nothing had been done for all of the PC’s and LaserJets sold into the UK over the past 3 years as these had been sold through the channel and not direct. There was no sales method to sell extended service contracts through the channel. In addition, though the end customers did send in the warranty cards for their products to register them, they often did not send them into HP, rather, they gave them to the channel partner.

The brainwave:
I don't know how I came up with it, but I suddenly thought….. how about if we added a predefined 3 year contract to the outside of the box when the products were delivered into the main UK distribution centre? In a clear sealed packet, with a self addressed envelope back to HP. THat way, the customers could purchase extended warranty and the revenues would come to HP.

So, I knew the total sales into the UK; I knew the installed base numbers and I also knew the total number of products that were under contract with HP. I even had the price for a 3 year extended contract by product. I was able to work out the potential opportunity.

I wrote up my findings and entitled the report as the “$20million opportunity - The total incremental contractual revenues if we had sold an extended contract against all of the PC’s and LaserJets sold into the UK in the past 3 years.” Catchy title, isn't it - not.

I gave it to my boss and thought nothing of it. He reviewed it and then came back and said, “Great job, how are you going to make it real?”. That meant that I had to follow up and put something into place.

The Launched Solution:
So, I got back in touch with the head of the Channel department, Bill and together we worked with the head of the distribution team, the contracts manager and a person from commercial and within 3 months, we launched the HP Support Pack. It wasn’t a clear packet which was my original idea, but a small cardboard box. With the predefined contract inside, along with the payment options and a self addressed envelope to send off the registration forms. The box had bright promotional labelling and a part number, so it could be ordered and shipped out to the channel and distribution network. We gave discounts to the channel partners to sell the incremental services and did a big launch event to the major partners at a local venue. After six months of helping out and pushing this along, I returned back to the day job, that of being a field engineer.

The End Result:
The business grew and grew, not only in the UK, but all over the world. Further refinements were made to the support pack product. We stopped selling physical support pack boxes and they became virtual. We authorised partners to carry out the servicing and it became a core part of the HP-Services business. Nineteen years later and when I left HP; the HP Support Pack business was generating over $1.5billion revenues in Europe alone.

Can I claim that no one else would have come up with the idea. No. What I am saying though is that I was in the right place; at the right time; had the right brainwave and followed it though.

I leave you with this thought for today...

“Be careful what you water your dreams with. Water them with worry and fear and you will produce weeds that choke the life from your dream. Water them with optimism and solutions and you will cultivate success. Always be on the lookout for ways to turn a problem into an opportunity for success. Always be on the lookout for ways to nurture your dream.”
― Lao Tzu

Tags: $20m opportunity, lao tzu, work

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