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June 27 2019.
Building profits after sale.

During the festivities celebrating his company's 150th anniversary, A leading Elevators manufacturing company president, made an unusual announcement.

" We're not really a manufacturing company." Even though the company sells thousands of elevators & escalators annually, Our real business, the President said, is maintenance.

So, why would this manufacturer focus more on maintenance than building products?

 aA sale happens once, but service goes on forever.

It is observed that a company that institutes a first-rate service management capability can increase its service revenues by 10 ~ 20 percent. Moreover, by making its service functions more efficient, a company can reduce operating expenses, the knowledge gained by the service organization, which is in constant contact with the customers, can be fed back into the manufacturing organization to help it make better products. Better products translate into reduction in warranty expenses & better customer satisfaction---& of course more repeat /referral business.

 aAs competition escalates, new equipment sales have limited impact on profit.

Margins continue to be squeezed, forcing prices downward. It is no wonder most companies are urgently seeking new ways to boost bottom-line profits and cultivate customer loyalty.

After sales service offerings, which have major impact to the company bottom line are,

Service Labor.

Materials.

Information.

Installation.

Replacement Parts.

Parts Management.

Technical Support.

Service Kits.

Maintenance scheduling.

Dealer Service

Accessories.

Service administration.

Product Maintenance.

Product up-gradation.

Calibration Services.

Annual maintenance.

System integration.

As the tangible differences between the products are diminishing, wrapping the product with "intangibles" becomes a major source of competitive advantage.

Turning service into a growing profit center requires a major shift in focus. Everything a company provides; after Rale-spare parts Replacement/Refurbishment, Professional services, help desks, warehousing, product recalls, field technicians and the rest-needs to be managed as an integrated whole.

The service and parts business may account for only 10 to 25 percent of sales, but it typically averages 25 to 50 percent of profits.

So how many of your products have the 'intagibles' wrapped around them?

 

 

 


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