Years ago, when I first started in Customer Service and service contracts selling, we always planned to perform the Preventative Maintenance (PMI) in month 9 or 10 of the 12 month contract period. The reason was that we wanted to have an engineer visit the customer’s location while they were considering the contract renewal offer. And that’s what the customers expected. I bet that decision process is still alive and well in many (too many) businesses.
The 4 Questions to Ask and Answer When Deciding When to Schedule the PM Visit
- Why do customers buy service contracts from you?
- What is the value proposition of each contract that includes a PM?
- How many PM’s does the customer need in the year?
- When should your company do the PM(s)?
Our research indicates that for B2B high-tech products, customers buy service contracts either to maximize equipment uptime or control expenses. For example, semiconductor manufacturers, hospitals, and financial service businesses are vitally concerned with uptime and require “immediate” rectification of problems that make their critical equipment inoperable. And research labs, government agencies, and smaller businesses are concerned with not exceeding their maintenance budgets. Secondarily, people want to avoid hassles and need peace-of-mind; and they are willing to spend company money to achieve a good night sleep!
Focusing on either maximizing uptime or controlling expenses means that both you and the customer worry more about keeping the equipment operating than making a show of having an engineer visit and leave off a service report. In both cases, uptime is your value proposition.
When it comes to deciding how many PM’s are required in any year you need to think about your product and how it is used. History shows that one PM per year is adequate for a purely electronic product like a computer or image processor. But for equipment with complex moving parts like variable speed drives or mechanical test equipment, the frequency of PM’s may depend on the number of equipment cycles and/or the forces involved in the processing.
Consider our cars; back in the day we changed oil every 3,000 miles or 3-months (whichever came first). Today, there is no time specification, only miles driven and type of oil. So, let the application and environment determine how many PM’s will be included in the contract and, of course, adjust the price to reflect the additional value being delivered.
Now we are ready to decide when to perform the first or only PM. To me, logic says do it at the beginning of the contract. The customer is paying for uptime or cost control and will only get the full benefit of the PM during the contract period if the PM is done very early in the contract term.
Worrying about demonstrating value when it is time to renew the contract should never be an issue. You should a customized letter for each piece of equipment (if possible) detailing the actual services performed, such as number and impact of software upgrades, number of PM’s, tech support calls and outcomes, service visit response and downtime, etc. The letter should also list price of each action if purchased while not under contract. And you should definitely highlight the service levels that are included with the contract that are not available to non-contract customers, e.g., 24×7 phone support.
Communicating Your Value Proposition
Reinforcing the value your contract delivers should be an ongoing part of your customer communication program and not the reason to perform the PM when it will least benefit your customer. And reinforcing your value proposition will help increase your service revenue.
It is always good business to do good for your customers because they will reciprocate and do well for you!