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The High Cost of Cheap Service

11 Dec, 2006 By: Jack Duncan imageSource

The High Cost of Cheap Service

How much does cheap service cost? It can actually be very
expensive if a customer leases a machine for 60 months but has to replace it in
48 because it no longer functions since it has not been maintained properly!

Prior to the sale – Here’s where we need to prepare
our sales reps to counter lower pricing from competition by explaining what
quality service offers them instead of just matching the lower price. Quality
service should offer them properly trained technicians equipped with necessary
parts to offer minimal downtime on their equipment. It should have ongoing
training as needed to ensure operators are able to get the most out of the
machines and features they have purchased. It should offer some sort of loaner
policy in the event of catastrophic failure; possibly some form of replacement
guarantee. Look for scalability in case it needs change. Train your sales reps
on what these features and options are and what they mean to your customer over
the term of the lease or purchase. Don’t be afraid to meet lower price head on
with better value.

Questions to ask – Does the other vendor offer
response time guarantees? An uptime guarantee? How about service loaners? Or a
replacement guarantee? Factory trained technicians? Or adequate supplies of
parts in the technician’s vehicle? How about proactive service? And lastly,
bonus plans to give incentive to technicians for better performing machines?

After the sale – Provide your customer with value
added service by monitoring equipment performance and responding when service
call frequency goes beyond normal. Provide adequate supplies on site to meet
usage needs for one month, but remember, you are taking cost of goods when you
ship these items out, so Don’t Send Too Much. Shipping large quantities of
supplies can drastically increase your cost of goods, not to mention potential
service issues if supplies exceed shelf life. In larger accounts, have your
service team set up regular meetings with the customer to review equipment
performance. Knowing the status of their equipment can actually prompt a
customer for when it is time to begin looking for replacements. If you have done
your job right, the replacements will be yours as well!

When Service is Cheap – There are usually not enough
trained technicians and not enough parts to avoid a high reschedule rate.
Technology for the technician is lessened in the form of laptops, cell phones,
etc., which may extend repair times. Diagnostic equipment may be lessened or
eliminated. Support staffs such as specialists, team leaders etc., are also
reduced. Network training for CNE’s to perform connected installs may be
overlooked, or connectivity products may have to be outsourced for installation
and maintenance. Cheap service is almost always followed by low customer

Investment – Service revenues are invested in
providing adequate trained personnel properly equipped to maintain the
customer’s equipment in top operating condition for the machine’s lifespan. It’s
invested in technology that returns efficiency in many ways to increase customer
satisfaction and productivity. Necessary parts and supplies need to be stocked
and ready to go when needed to prevent downtime in the customer’s office. These
investments are made for the customer’s protection.

When the customer wants a cheaper service – Ask them
if that’s what they really want. Wouldn’t they really rather have quality
services at a fair price that protects their investment in their equipment to
ensure that it will last through the term of the lease or depreciation schedule?

Tanked? Automobile dealers refer to the trading in
of a vehicle before its due time as being "Tanked" or upside down. This trade-in
is done at a loss and that loss is usually rolled into the new vehicle, starting
a chain reaction and they are Tanked Again! Early replacement of our equipment
has the same results when machines have to be replaced due to poor maintenance
and service.

The next time your customer says "ABC can do it cheaper"
– Teach your sales department about the services offered through the service
department so when a customer says they want cheaper service, the rep will be
able to explain to them the real value of quality service and what it really
means in protecting their equipment investment.

Make sure your sales and marketing staff is armed with
service  knowledge instead of just a "Sharper Pencil."

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