“The equipment sales of the future will be made by the distributor providing the best after-sale service.” This a point former columnist Phil Consolino has stressed for years, reinforcing his belief that a distributor’s profits rely heavily on equipment repair. Let’s take a look at two significant trends we have been tracking within the service industry that bolster Phil’s claim.

To begin with, there has been a gradual change in the way many customers’ think. It’s what some call “run-to-fail.” Run-to-fail is when customers eschew routine maintenance, and instead only repair a product after it has broken down. Many customers mistakenly believe this is the cheaper option.

While this may be a wise decision on a $100 vacuum cleaner that ultimately costs more to repair than replace, the majority of today’s high-productivity machines are not in this category. And if you wait to repair a high-performance machine until after it has failed, you may have waited too long.

Unfortunately, many customers are finding that the hidden costs of the run-to-fail strategy can be enormous. For example, one hidden cost is labor. The need for an additional person to mop behind a poorly performing autoscrubber often results in doubled labor expenses.

Another hidden cost is paying a non-performance penalty when a crew can’t finish a job because a machine has finally ran to failure. Still another cost is padding the crew just for this eventuality.

All these hidden, and often unexpected, costs can be avoided by investing in a comprehensive Planned Maintenance (PM) program. Designed to deliver a consistent and predictable uptime, the PM program prevents the costly unpredictable downtime. Ensuring against unplanned machine downtime is particularly important for a cash-flow critical businesses such as building service contractors. A PM program is the best insurance you can buy.

Today, many manufacturers are seeing that more than 80 percent of the labor revenue is generated from customers on a PM program. And those numbers are growing daily.

Manufacturers also noticed their customers asking for more information about their repairs.

Some customers want maintenance operating costs broken down by the year, month or hour. Others request operating hours per machine to track usage and compare costs across different locations or across product lines. All customers basically want the same thing: more information.

Delivering on these information requests requires the service provider and the service technician to be a true partner in managing the equipment assets of the customer. Not only does the service tech need technical repair skills, but he also must be able to document the required information within the repair process. At the same time, the service provider must have a database to collect, manage, store and report the information gathered by the technician. Ultimately, the information must be delivered in the format the customer needs.

This presents a challenge when a customer has multiple locations. How do you (a) service a machine effectively when it’s in another state, and (b) how do you gather the repair information needed by that customer to manage their equipment asset base?

The answer rests in having a service network that recognizes and utilizes the core competencies of the manufacturer and distributor.

Many manufacturers are doing just that: developing integrated programs with their distributors that provide national service coverage, repair information gathering, and ultimately extraction and presentation using a powerful database.

Many have integrated their factory-direct service technicians, who provide mobile on-site service, with the distributor’s local bench repair capabilities. The distributor has the relationship and the ear of the customer and helps us understand what is important to the customer in meeting their service needs. As partners, we have to identify and build on each other’s competencies to meet the end user’s needs.

In the end, “Service of the Future” means meeting more needs of more customers in more ways, such as:

  • Information and fleet management.
  • Local, regional and/or national pricing.
  • Planned maintenance programs to maximize the uptime and hold down total operating cost over the life cycle of the equipment.
  • Rapid repair response time measured in hours, not days or weeks.

For manufacturers and distributors alike, delivering these competencies will require best business practices and processes to truly make it a profit center. Only then will the investment of money and time be justified. Failure to do so will see customers migrate to those who can.

Whether you are already in the service business (or are planning to enter), it’s worthwhile to consider some key questions:

  • Is my current service offering one of my core competencies? If not, what do I need to do to make it one?
  • Is my service return on investment better than, equal to, or less than my primary distribution business (or do I even know)? Ask your equipment provider to do an Economic Profit Audit for you.
  • Does my service business have the critical mass necessary to be profitable, or do I need to partner?
  • Is my service strategy and performance consistent with my total business goals? Do my customers value what I offer?
  • And finally, are my current service customers my best references? (At least 90 percent of them should be.)

With the many changes in our industry today, it’s the best and the worst of times.

It is the best of times if you have a clear service strategy, a strong, service-proficient manufacturer supporting you, and customers that recognize the value of a quality service and support offering. Quite simply, it’s the worst of times if you don’t.

Jerry Crawford can be reached at (800) 553-8033.




POSTED ON: 5/1/2001