Most installers of commercial security and fire alarm systems know service is their most profitable business. The majority understand selling service agreements is the best method to capture this renewable, high-margin revenue and build the value of their company. Many believe they are doing a great job growing this business. For almost all, the only measuring stick is comparing results to previous years. Most companies can do a better job growing their service business, but continue doing the same things they've done year after year. For those who have adapted their business model, the results have been dramatic. For those who haven't, the opportunity is there for the taking.
Owners and operators understand the profit potential, the positive impact of customer relationships and the financial stability that comes with a solid base of service agreement customers. Lacking, in almost all cases, is the expertise and understanding of life safety service marketing concepts. Customers today are looking for solutions that demonstrate value. A recent survey revealed that purchasers of service agreements will look beyond price if the provider can create a package tailored to the client's specific needs. Survey participants were clear in conveying that most service agreements they are presented look the same. Special requirements for things like response times, equipment replacement offerings, or an annual set price are often not presented. Almost all stated the agreements were difficult to understand or unprofessional in appearance and content.
Many installing companies utilize service marketing strategies that are dated and contrary to current best practices. Either for lack of understanding or exposure to better approaches they are unaware of the revenue they are losing. The most common scenario is companies that use central station monitoring strategies to sell fire and security system service agreements. Although monitoring falls into the category of life safety, it's a commodity product, price sensitive, multi-year marketing strategy that has no relationship to selling service agreements on access control, CCTV or fire alarm systems.
Most admit they have been "too busy" to focus on their systems service business. Service agreements are sold, but not on a consistent basis. The reasons vary, but they usually fall into one of the following areas:
- They sell testing and inspection agreements that meet codes, not solutions to needs.
- Don't understand how to locate and qualify end-user decision makers who purchase service agreements.
- Utilize service agreements that are unprofessional in appearance and content.
- Don't have the ability to bundle services for multiple systems like security, fire alarm, sound, or even sprinklers into one agreement, missing the value of single sourcing, a growing trend with end-users.
- Underestimate the need to offer coverages like parts replacement, after-hours service and detector cleaning/sensitivity testing.
- Lack estimating tools to properly price full or partial coverage service agreements.
There has never been a better time to focus on growing service revenue. Customer satisfaction is at an all time low. Manufacturers and struggling systems integrator service operations have suffered from cost restructuring. Some have had to reduce technician headcount, while others have redirected technicians to expedite install work to generate revenue. In far too many cases service customers have not received what they contracted for or response times have risen to unacceptable levels. All it takes is the right sales strategy, tools and training. Most importantly it takes a commitment to do it today, not next month or next year.
Joe Siderowicz is the president of the AfterMarket Consulting Group. He has more than 25 years of experience in designing and implementing service marketing and training programs. Reach him at [email protected].
