Publisher's viewpoint

April 23, 2010
It's all about the numbers
I'm talking about your revenue numbers and some survey numbers in this issue. We call ourselves a service industry and over 80 percent of respondents stated you strongly agree that you provide services to "all" of your customers with only 5.43 percent saying that you strongly disagree with this statement. But do we perceive service as a revenue generator or more of a cost of doing business and a courtesy to our customers?

 A driving agenda across our community and every other is increased revenues. But for some time in this market, discussions have focused on the value of service contracts as a way of producing recurring monthly or annual measurable revenue. More importantly, I define it as cash flow you can count on. If you had service contracts right now it could mean tangible income, while profit margins on products and product installations are down and remain flat. Theoretically, service contracts and revenue growth from service contracts should be possible by increasing the type, the amount, the quality, the levels and the price of the services offered.

To successfully do this, we as an industry need to be able to sell service and services. Are our security products and systems so reliable and efficient that no one needs to check on them regularly? If you sent one of your best techs out to your customer's sites right now, to review their systems, would they find perfectly running solutions everywhere they went?

Selling service requires that customers believe that maintaining their system is as important as or more important than the products that it is comprised of and convincing said customer that for their system to work efficiently, over the long haul, it must be regularly inspected, cleaned, monitored and maintained and sometimes even upgraded. And that all the users on the system must know how to use it correctly or it really isn't efficient. This requires selling a concept and we're pretty used to selling tangible goods that work together for a clearly defined end-result. I realize that some believe customers will not pay for maintenance but is this true or is this in part a sales issue?

Everybody accepts that their car will last longer and run better if it's maintained. We accept that our IT departments are on the lookout for network operating problems and are invisibly upgrading its speed, capacity and firewalls and adding functionality at the lowest cost. Why would an electronic security system that is protecting people, property and assets require anything less than this? And without a regular service contract, you are left to seeing even your preferred customers only after the fact, when something is broken and they are cranky?

As technology continues to morph into more networked, software-driven, IT/IP enabled systems with security information being sent to multiple laptops and handheld devices and/or even outsourced in part or in total, support services--service in general, will increase in need. Learning to sell and sign service contracts now will help you manage this going forward if you are not already. And yes, it is a complex accounting equation to know what your costs will be, how to bill this correctly and keep the needed manpower at the ready. But I am confident you will want to master this if you haven't already. To see how you are stacking up against your peers, read our exclusive service survey starting on page 22.