Preventative Maintenance Contracts – A Necessary Hero (Pt. I)

Service revenue has been the most important contributor to the bottom line for many dealers.  When a strong demand for equipment coupled with a shortage of new equipment, service becomes even more important.  That is the world we live in today.

Preventative Maintenance Contracts – A Necessary Hero

PM contracts/agreements is a part of the services provided and has its unique importance.  In this two-part series, I would like to discuss the impact of PM contracts/agreements we do not usually think about, and, in the next blog, how to leverage technology to maximize the value of PM contracts/agreements.

Not All Revenues Are Created Equal

The valuations of software companies have increased substantially.  In recent years, the driving force has been the introduction of SaaS (Software as a Service).  The secret sauce here is the recognition that not all revenues are created equal.  The differentiator is the predictability of revenue.  Predictable revenue is worth multiple times more than the revenue that has to be earned in the future.

PM contracts/agreements make this portion of the service revenue predictable, not to mention that it also makes your connection to your customers predictable.

It actually gets better from here.  One of the biggest problems in any service organization comes from the reactive nature.  In the break/fix world, service work can be feast-or-famine.  We do not know what will break today and it can be very hard to balance the workload and keep the customers happy.  By comparison, we have flexibility in performing PM contracts/agreements/agreements.  As long as we stay in the acceptable range, we have the leeway in determining when the work will be done.  This will increase technician efficiency, technician job satisfaction, and overall Service department profitability.

PM contracts/agreements generate revenue, and the unique nature of PM contracts/agreements make this revenue better in more ways than one.

It Is Not Just the Revenue from PM Contracts/agreements

The revenue generated by the PM contracts/agreements should never be limited to the PM’s.  With the right strategy and tools, a machine monitor specialist can generate more than $5,000,000 service revenue in year.

When we combine fault code monitoring, preventative maintenance, inspection and fluid analysis (commonly known as condition monitoring), we are in a position to create high valued, pro-active service opportunities for our customers.  In the end, it is the uptime without drama that is the holy grill.

Fault codes are available on many new machines.  More manufactures are providing fault codes for their machines, and, with each introduction of new models, more fault codes also become available every day.  Not all fault codes have the same level of urgency, many can be addressed at the time of PM services with parts pre-ordered and enough time scheduled.  If you sell and service multiple lines, fault codes may not come in the same format from different manufactures.  This can be daunting to manage manually but effectively handled by the proper applications to keep your machine monitor specialist working efficiently.

Inspections are critical.  With electronic inspections, problems discovered can be transmitted real time and organized by priorities.  Pictures and videos in modern electronic inspection apps increase communication efficiency dramatically.  Many problems found during inspection can also be scheduled to be addressed during the next PM service.

Fluid analysis reports are vital.  The challenge is to be able to take the right actions, especially if you are watching over hundreds, thousands or even tens of thousands of machines.  Reading one report at a time will not come close to getting the job done.  Luckily, more and more labs are starting to provide API’s (Application Programming Interface) to deliver the fluid analysis data to their customers.  API’s (Application Programming Interface) are ways for your computer to talk with the lab’ computer the get fluid analysis data electronically.  The data received in this form can be stored in organized databases to be used easily.

We can have all the fault codes, PM service alerts, findings from inspections and fluid analysis in one place to efficiently service our customers in a pro-active and effective way.  These are not just revenue opportunities beyond PMs, but planned revenue opportunities beyond PMs, a higher valued revenue.

When You Change the Game in Customer Experience

If we look one step further, how do we increase market share in today’s competitive environment?  While the advancements in machines are amazing and will continue to be, dealers are noticing brand differentiation becoming more and more of a challenge.  We see the battle of the future being fought on customer experience.

What defines the core of customer experience when there is more work than people?  To help customers increase uptime at a reasonable cost.  Whoever can do this the best will have the strategic advantage.  How do we deliver the best customer experience based on this definition?  The PM contracts/agreements might just be the right area to focus on.

PM contracts/agreements, like anything else, will not solve all the problems, but it is a necessary hero to drive high quality revenue and customer satisfaction.

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