W16039

SELLING AT SERVICEBOX (A): JON CLIFFORD’S PERSPECTIVE

Professors Chris Street and J. Robert Mitchell wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-02-04

INTRODUCTION

The idea of ServiceBox came to you in October 2011. In addition to working full-time at Farm Credit
Canada, you had spent a considerable amount of time the previous three years working on your software
business in Regina, Saskatchewan, trying to break into the app market for iPhone games. But after
spending $30,000 1 on developing iPhone apps with little to show for it, you are thinking about
transitioning into a different kind of software business — one in which you would have more control over
the sales and distribution of the product (as opposed to having to compete solely on the iTunes platform).
You know that you want to use the Web-based software-as-a-service (SaaS) model in which customers
pay a subscription or licensing fee to use the service, so you can reap the higher margins associated with
SaaS services. When Jon Selinger, a friend who owns a local plumbing company, approached you to
develop a work order management system for his business, you and your new development partner, Mike
Schudel thought the request was fortuitous, and decided to build this type of product.

In April 2012, after working on the development part-time for six months, you had the first full version of
ServiceBox ready. The software was web-based and used a subscription-based SaaS business model. By
that time, you and Schudel had three subscribers. To achieve the type of growth needed to keep the
business afloat, you and your business partner needed to get subscriptions for the service — and fast.
Word-of-mouth referrals had generated interest from other small plumbing and heating contractors in
Regina and the surrounding area but these referrals alone were not going to be enough. Because you have
the responsibility for ServiceBox marketing and sales, you have decided that you need to start working
the phones, advertising online, purchasing sales leads from lead generation firms and knocking on doors
to get in front of small business plumbing and heating company owners.

1
All currency amounts are shown in Canadian dollars unless otherwise noted.

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DEVELOPMENT OF THE PRODUCT AND FIRST SALES

Your friend, Jon Selinger, wanted a Web-based work order and management system that was suitable for
a small plumbing and heating business and was capable of three things: (1) creating work orders, (2)
recording the maintenance work being done for a customer and (3) managing employees’ timesheets for
scheduling and payroll purposes. These three tasks would typically take a substantial amount of time. The
traditional way of managing these records was a paper-based approach, whereby the owner or the office
manager would receive a call from a prospective client to have work done, that work would be scheduled,
at which time a work order — which contained the detailed instructions for the job — would be printed or
sometimes even handwritten. The tradespeople employed by the company would then pick up the work
orders each morning and go to the customers’ sites to complete the work. Any details about the work
being done would be recorded on the work orders during the day, and at the end of the week, the
tradespeople employed by the company would fill out their timesheets (see Exhibit 1) and give them to
the owner or office manager. The owner or office manager would then send invoices to the customers for
payment (see Exhibit 2). This process then repeats itself the next week.

Selinger approached you because he recognized the limitations of this approach and how difficult it
would be to grow his business unless he could overcome several limitations of this system. First, the
owner or office manager had little or no visibility in the day-to-day operations because the work orders
were printed and then not seen again until the work was completed (see Exhibit 3). Until the maintenance
details were submitted, an owner or office manager had no way to know the status of a job or what was
being done other than by phoning the tradespeople employed by the firm (which could interrupt their
work flow and decrease efficiency). Second, there was little coordination in scheduling, which made it
difficult to rearrange the work crews on short notice. The tradespeople typically managed their own
workload — picking up the work orders in the morning, and then completing them individually at their
own discretion. Third, the paper records were prone to loss, as they could be misplaced or left on site.
And finally, considerable time and attention were required to manage the sheer volume of paperwork the
work crews completed in a day — time and attention away from actually doing the work that generated
revenue (i.e., talking with customers and securing new business). At the end of the day, though, it was the
peace of mind that Selinger wanted in knowing that the scheduling, monitoring and other details of his
business were being effectively managed. The ServiceBox solution was designed to address these
limitations of a paper-based system. The administration time for everyone involved could be reduced by
having these functions available in a Web-based system that allowed work crews to provide updates
throughout the day through a Web-based app on their mobile devices as work was completed.

As a result of the success that Selinger had with ServiceBox, a friend of yours, who operated an elevator
service company and was also familiar with the potential benefits of ServiceBox, made a personal referral
on your behalf to the owner of Momentum, a plumbing and heating company in Regina. The owner-
manager of Momentum was interested in the same features as Selinger and for the same reasons. The
sales process with Momentum went quickly. The owner-manager signed a subscription contract in the
first hour of your first meeting, after you demonstrated the software. To get Momentum using the
software quickly, you and Schudel worked hard to import employee records, customer records and the
necessary work order settings (which involved an additional, one-time $500 charge to the customer to
cover the time involved). Although customers do not necessarily like having the extra charge for setup
costs, the owner of Momentum was glad to be using the software the next day.

Similar to your introduction to Momentum, the owner-manager of Atlas (a sewer and sanitary services
contractor in Regina) was referred to you by another personal friend. But unlike Momentum, Atlas
wanted a little more than what ServiceBox provided. As a result, the first sales call took longer. The

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owner-manager of Atlas was interested in the core features of the ServiceBox offering, but those features
were not sufficient for him to purchase a subscription. Instead, after the first sales call and product
demonstration with Atlas, you and Schudel were told that the product did not fit with how Atlas ran its
office. Indeed, Atlas was large enough to have a dispatcher who was responsible for assigning and
scheduling the work orders to tradespeople and work crews. So although ServiceBox worked well for a
smaller operation of owners and tradespeople, it was not well organized for a dispatcher. As a result, the
first sales call ended with a clear “maybe” from Atlas. Undaunted, Schudel worked through the night to
create the dispatcher functions that Atlas required. The next morning, you returned to Atlas to
demonstrate ServiceBox’s dispatcher functions. As a result, you were able to close the sale.

SELLING SERVICEBOX, THE CORE VALUE PROPOSITION AND FUTURE DEVELOPMENT

You approached the selling of ServiceBox as a field services software system that could streamline the
operation of plumbing and heating businesses (although the system could also be expanded to other
trades-based business). You designed ServiceBox to provide owner-managers with four primary benefits:

• To create transparency in the day-to-day operations by knowing the work that is in progress and the
work that has been completed;
• To create more efficiency in the scheduling and assignment of work orders by enabling an overall
view of the work being completed by all tradespeople;
• To reduce the possibility of errors or lost paperwork and
• To reduce the time and effort required to maintain daily operations by eliminating redundancies in the
workflow process.

Because the difficulties with transparency, flexibility and lost paperwork tend to increase as the number
of jobs and size of the work crews increase, trades contractors often experience difficulty in growing their
business due to the limits of a paper-based system. The value of ServiceBox to the owners of these
companies is in time and control over operations and potential for growth.

You and Schudel knew right away that, to attract more subscribers and to compete with similar offerings
(e.g., ServiceMax 2), you would need to develop additional features for ServiceBox. As you searched for
new customers, you decided to spend the next 12 months developing the following features (in order of
importance):

1. On-site quote and invoicing capability;

2. Accounting software integration with Sage Accounting and QuickBooks;
3. GPS (global positioning system) capability to show locations of crews for accountability;
4. Ability to capture customer signatures on quotes and invoices and
5. Email and printing capability for invoices.

Although you want to respond to the needs of customers, you also feel that you and Schudel cannot afford
to be entangled with too many customer requests. These requests might be for additional features beyond
those being currently developed, but also for after-sale services such as user training or even free trials
prior to a new customer signing up. Although you did tailor the software to Atlas, you do not want to do
that for every customer. Moreover, you believe that ServiceBox is so easy-to-use that any kind of training
does not need to be part of the subscription. Even so, providing training might be difficult for you because
any training would need to occur during the workday, which would mean taking time off from your
2
ServiceMax, “About ServiceMax,” www.servicemax.com/about, accessed December 1, 2015.

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regular job at Farm Credit Canada. And creating training manuals or videos would also take a lot of time
to develop. Some customers may insist on it, though, so you have settled on charging a flat rate of $150
per hour for on-site training. Likewise, free trials do not make any sense to you, as the product is very
straightforward, and any trials would mean extra follow-up, which would mean less time finding new
customers. You currently see your primary focus as making sales. Still, you wonder whether you can
close the sales without giving in to at least some of these requests.

WHAT TO DO

After getting the first three customers reasonably quickly, the flow of direct referrals from friends and
investors has slowed down. At the beginning of 2014, you decided to follow up with prospective
customers in Regina and its surrounding region who had received the basic promotional flyers you sent.
You have pricing information (see Exhibit 4), current customer testimonials, a development roadmap and
an idea of your value proposition. From the local trades directories, you have a list of all the plumbing
and heating companies in the city and the names and contact information of the owner-operators. You are
about to begin meeting with those who had returned your calls. The first meeting is at a local coffee shop
with someone who received one of your flyers.

You start toward the coffee shop. Time to talk.

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EXHIBIT 1: SERVICEBOX WEB APP TIMESHEET ENTRY

Source: Company files.

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EXHIBIT 2: SERVICEBOX WEB APP INVOICE

Source: Company files.

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EXHIBIT 3: SERVICEBOX WEB APP WORK ORDER

Source: Company files.

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EXHIBIT 4: SERVICEBOX PRICING

Note: A $500 setup fee is charged upon purchasing a subscription to the software package.

Source: Company files.

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