In order to maintain a successful business, organizations need to cultivate their most profitable component. For companies who sell equipment, most profit is gained from the service(s) offered to each client both outside of and within a contract. By focusing on your post-sale service and acquiring new contracts from non-clients, you can take advantage of the most lucrative aspect of your business. Knowing this, it is easy to analyze how your services can be strengthened or integrated to keep old clients and sign new ones. We will look at three ways to accomplish this:

1. Identify your numbers and optimize service
2. Stay ahead of competitors
3. Improve the service you offer

Your Current Status
Before you dive into improvements, know what your numbers are. Begin by identifying the following statistics:

• Equipment vs. service-based revenue


• Amount of service revenue that is post-sale (billable service, service contracts, ad hoc requests)


• Service business growth over the last three years

Unless you are receiving above average profit margins on your equipment, service-based revenue should account for between 45% and 70% of profit. If not, you are likely breaking even. Changing your business strategy to focus on service is a simple, effective way to boost revenue.

Forecasting post-sale services can be difficult, but offering a Service Level Agreement (SLA) with your equipment will offer security to your clients and a unique opportunity for your business. System contractors who sell SLA’s to more than half of their clients have higher profits than those who don’t. SLA’s are commonly annual contracts that include 2-4 onsite visits for preventative maintenance. These visits are not only valuable to the client, but also to the contractor who is building a relationship that will ensure the client renews their contract.

If your service business has not been growing significantly over the last three years, you need to look at what you offer and how to improve it. The solutions don’t need to be complex. Are you selling yourself before each contract expires? Schedule a review with your clients 2-4 months before their renewal. Discuss any concerns they have and take action. Also use this time to highlight the benefits of your service. Be sure that these benefits are not only economical for your clients, but convenient. For instance, create a function on your website for your clients to submit a service ticket and track its progress. Clients value convenience, and a web function like this can put you ahead of your competitors.

The Competition
Making sure your clients are happy will help prevent competitors from taking your accounts. The next step is to target their accounts. When your sales team contacts businesses who are working with your competition, find out who it is, what their SLA entails, and when their contract expires. About four months prior to their contract expiration, contact the client and ask how satisfied they are with their current service and response times. Ask for the chance to win their business and when it would be appropriate to submit a bid. Knowing the issues that have left your competitor’s client dissatisfied allows you to create a bid specific to the client. Outline your services based on what you know the prospective client wants. Where the other company has failed is where your strengths should lie.

Once you have succeeded in winning the new account, use them as a reference when bidding against the same competitor. It is a powerful sales strategy to be able to say, “The difference in our quality of service is A, B, and C. Just ask Company X, who signed with us after using Competitor Z.”

Service Improvements
We have discussed how you can optimize your post-sale service by offering a competitive SLA, resolving issues your client has with you, and placing yourself above your competition. There is still more you can do to extend contracts and build solid relationships. By offering new technology to your clients, you gain ad hoc and other service requests. Utilize your resources by scheduling conference calls, sending emails, or creating a newsletter to keep clients updated on technological improvements. Be the first to offer better equipment and prove your expertise. Tracking this information as part of your CRM strategy is extremely valuable and can be done with software as simple as Excel. The more you do to enhance your client’s experience, the stronger your business will thrive.

Focusing on your service means knowing what your customers want. By addressing their specific needs and concerns, you give your clients a secure and satisfactory experience that will deliver higher revenue and profit margins to your company.

Ronald Lang is President of Majestic Consulting Group, a provider of business software products including CRM Software solutions such as SageCRM, SalesLogix and Microsoft CRM. Majestic Consulting Group also provides CRM consulting and CRM training services.