I think the most important question posed by business owners these days is, “is there continued sustainability in my business?”
It doesn’t matter what business you’re in, or how much revenue your business generates today. The question is, does your business rely upon new sales every other day? And if yes, how can you ensure there is continued growth?
What if the sales numbers start to decrease not because of the quality of your product or service but maybe due to the unstable political or economical climate? Or, what if customers simply don’t want to buy and start cutting down on spending?
Thank goodness, with the economy rebounding, corporations in almost every sector are refocusing their energies on rejuvenating revenue growth that has been stalled over the past three to four years. In the quest for new revenue streams, one of the most profitable opportunities we see is —after-sales services—, which is a key lever for new strategic growth.
” According to a recent McKinsey & Co. study, 62 percent of new hardware product orders in the U.S., and 64 percent worldwide, include maintenance and support contracts.”
This means almost 40 percent of products sold today can generate additional after-sales revenues and profits if properly pursued.
The after-sale services business, including initial product maintenance agreements and service contract renewals, is a high margin revenue driver for some businesses (i.e manufacturers, channel partners, etc).
Yet a surprising proportion of corporations are missing immediate add-on revenue and profit opportunities by failing to systematically pursue post-product sale maintenance agreements, warranty conversions or renewal agreements with existing customers.
Focusing on services is also timely because the information technology (IT) industry is undergoing an ‘inversion’ process in which product technology-centric companies are fundamentally changing their go-to-market strategies and organizational structures to become services-led businesses that can respond to rapidly changing customer needs.
Companies can take advantage of this industry inversion trend and substantially improve their financial performance, increase their account penetration, and strengthen long-term customer value by more fully targeting their after-sale service opportunities.
In fact, you don’t even need to start this proess with new clients. Existing clients are perfect to start with. You’ve already build the trust, credibility and moreover, they are much more comfortable working with you then to switch ‘boats’. Chances are, if you came up with a decent and logical service plan, they will go for it.
“According to International Data Corporation (IDC), a leading market research firm, states that nearly 60 percent of value added reseller (VAR) and distributor profits come from services.”
So, if your business currently doesn’t have this post-sales services revenue stream, you are probably leaving a lot of money on the table. Why not seriously consider adding this additional revenue stream into your business today?
We at Datum have in fact, developed a fully computerized system (ProLine) for you to keep track and automate every aspect of your service contracts and renewals using a basic computer. You can’t really just expect to remember all of your customers contract details and due dates, right?!
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- http://www.printablecontracts.com/ – view sample maintenance contracts.
- http://www.mckinsey.com/ – Mc Kinsey & Co
- http://www.asean.idc.asia/ – IDC Asia
For a FREE-No-Obligation Demo on ProLine, give us a call today at 03-9281 9319 and get ready to be mesmerized!
p.s. Is your business automated in handling after sales post maintenance contracts? Tell us…