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November
8, 2000
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OK, More on Service:
The Proactive Service Contract
Gary Kayye,
CTS, interviews Barry Halligan of MCSi, Atlanta
In my last column,
I eluded to the fact that Pro AV dealers need to start implementing
and selling what I call "Proactive Service Agreements." Now,
that term isn't new, but many dealers don't understand the difference
between a service agreement and a proactive service agreement. Many
do, but many don't. So, for the benefit of those that don't, I have
enlisted the help of one of the best. MCSi Atlanta (formerly Technical
Industries (TI) of Atlanta, GA), has a model proactive service department.
So, I asked Barry Halligan, Director of Service there to help explain
the concept:
Gary:
Explain what brought on the shift to a proactive service department
or what prompted you to change?
Barry:
With the "shrinking" of equipment margins over the past few
years, we at Technical Industries saw the Service/Maintenance side of
our business as an avenue to increase our bottom line. Although we have
always been very "proactive" when it comes to the sale of
service and maintenance, we revamped our Service Maintenance Agreements,
or SMAs, with a cafeteria of services. We offer everything from basic
scheduled maintenance to a full-scale plan that includes 24x7 support
and even yearly operator training. The key is flexibility and helping
the client select a plan in which they see good value. The benefit to
you is a strong relationship and company profitability.
Gary:
How is it sold or "pitched" to the client?
Barry:Selling
an SMA as part of an initial system sale is an integral portion of the
equation. The more complicated the system, the more opportunity for
a sale. The technical level of the end user is another factor, the less
technical: the greater the opportunity. Fear of the unknown can be soothed
with the feeling the dealer will be there for support. Always offer
the SMA as a line item on the proposal, and explain the additional service
over the manufacturer's warranties. There's a big difference in a projector
manufacturer giving a projector that hangs in the ceiling a 2-year warranty
and that projector being covered in an SMA. OK, maybe they will pay
to have the projector repaired and even cover shipping to a service
depot. But, who's going to pay for our time to pull it out of the ceiling,
pack it up and then re-install it - not to mention the time lost of
the install we had to pull the tech off to get the projector out of
the ceiling. If the client doesn't buy it during the sale, then one
tactic I use with them is to re-offer the agreement again after the
first billable service call.
Gary:
So, how long and how much?
Barry:
Once it is sold, the contract renewal rate will depend on the level
of service they see during that initial period. You must provide quick,
quality, personable service. Do the math on selling high margin agreements
on 75% of your new systems and keeping the yearly renewal rate at 75%.
We try to get multi-year agreements up-front and most of the time we
do.
Gary:
OK, so far we have talked a lot about reactive service (service after
the client has a problem). Where's the proactive stuff?
Barry:
We always include scheduled maintenance trips as a key ingredient in
every agreement. This puts your company's face in front of the clients
at a regular basis and in a non-crisis mode. The salesperson for that
account should even go on at least 50% of the visits with the field
engineer. We have a checklist of things we do during a routine visit,
such as projector alignment, equipment inspection, and a test of system
operation. While getting the client to sign the work order, we always
ask the important question "Anything else we can do for you?"
Often times there is. My field people have brought back sales lead for
projectors, control systems, and various add-ons. We currently have
a system in place to pay incentives on leads that result in sales.
Gary:
Any words of wisdom for those dealers considering or the clients out
there debating over a service agreement now?
Barry:
Don't under estimate what these pro-active relationships can do for
you as a company. Not only will they build a life-long relationship
with the client but they also keep the pipeline flowing for future business
opportunities within that clients company. It's much like a friendly
insurance policy where you are the hero to the client and the client
is the hero to his internal clients and, more importantly, his boss.
So, there
you have it: the value of the proactive service agreement. Oh, one other
thing, have you noticed how many times people within your own company
automatically hate any change? Well, keep that in mind as the client
moves on and is replaced by a new face. The new face doesn't have the
ownership investment in the system the way the original client did.
So, their natural tendency, if they can't figure out how to use it properly,
is to automatically hate the system. Thus, possibly turn against you
as a company without you knowing it (unless you have a proactive service
agreement and go visit them regularly and find out early enough). So,
consider automatically scheduling system training for the new client
as soon as they come on board (for FREE, of course) as they will be
more likely to like the system if they understand how it works and can
operate it themselves.
Gary Kayye
is Principal of Kayye Consulting a firm that specializes in providing
marketing consulting, telephony integration and training development
to the professional audiovisual industry. He spent 12 years at Extron
and AMX as VP of Sales and Marketing before founding his own firm. He
can be reached at www.kayye.com or via e-mail at gkayye@kayye.com. He
is also the volunteer chairman of the PETC. The views expressed in this
article are solely the author's and do not represent the positions of
any organization to which he belongs.
Gary Kayye
is Principal of Kayye Consulting a firm that specializes in providing
marketing consulting, telephony integration and training development
to the professional audiovisual industry. He spent 12 years at Extron
and AMX as VP of Sales and Marketing before founding his own firm. He
can be reached at www.kayye.com or
via e-mail at gkayye@kayye.com.
He is also the volunteer chairman of the PETC. The views expressed in
this article are solely the author's and do not represent the positions
of any organization to which he belongs.
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