Manage Your Data Well, and Your Service Contracts Will Increase Your Revenue Stream—and Your Customer Focus

Reduced product margins in today's slowing economy are placing added pressure on companies to sell more services. Many manufacturers are now viewing service contracts, historically overlooked, as important new revenue generators. Beyond providing substantial repeatable revenue streams, they connect manufacturers with their channel partners and end customers.

Yet when it comes to services, the greatest challenge that vendors face is not improving the quality of their service offerings but improving the quality of the business intelligence used to effectively reach customers to sell those service offerings.

The reality is that most organizations, and most CRM systems, lack the data analytics to effectively re-engage with existing customers. As a result, customers are failing to renew expiring service contracts, and organizations are failing to sell more extended warranties.

The bottom line is that it is difficult for most companies today to simply stay on top of customers' service needs. As a result, millions upon millions of dollars in lost revenue opportunities are being left on the table. More importantly, these organizations are missing out on building stronger brand loyalty and lasting relationships with their customers.

That's why I believe that the first and most important step in any service sales initiative should be to focus on the data core, a veritable gold mine in service sales and a way to lead a more customer-centric business. You don't have to go far to find the data you need. It exists within the walls of your own organization, as well as your channel partners' organizations. But you do have to mine and manage the data.

The process begins with gathering and assimilating important customer transaction information from ERP, CRM, point-of-sale, order processing and even legacy systems to create a single system of record of information across the supply-and-demand chain. The data should include granular details, such as end-customer contact information, customer purchase-order numbers, manufacturer sales-order numbers, product serial numbers, service level information, service contract numbers and service expiration dates.

By tracking data related to each and every transaction over a specified period of time and across a broad spectrum of products and services, your organization gains a deep, 360-degree perspective that spans isolated data repositories, from the manufacturer to the channel partner to the customer and every touch-point in between.

Different views
Once the data core is built, the next step is to apply analytical measurements to the specific portions of business that you may want to address, such as improving product or service registration rates, service renewal rates, attach rates (percent of products sold with service agreements) or even assets that did not get sold with services.

A leading technology distributor needed just such a procedure to get valuable rebates from a manufacturer. The distributor qualified for the rebates only by hitting a specific registration rate each quarter. But without registration data, the distributor couldn't establish those rates. And its sales teams lacked visibility into the lifecycles of products and services sold, as well as important information about the end customer that purchased the product and service. That meant they could lose the ability to renew service contracts promptly and fail to capitalize on future sales opportunities.

This was also bad news for an end customer who expected quick, cost-effective repairs and replacements, only to find out when hardware crashed that there was no contract. Worse was when the end user had a contract, but the distributor and manufacturer had no record of it.

Once the distributor aggregated and analyzed its data, sales and service agents were able to see such registration information as customers, products, SKUs, dates, history details, service numbers, purchase order numbers and service expiration dates through on online portal.

The easy-to-access portal quickly evolved into an important business-building tool for the distributor's VARs, which are also customers. They are now armed with the intelligence they need to stay on top of registrations, expiring service contracts, service and support, as well as end customers' technology refresh requirements.

End customers have achieved the biggest win in this new, more customer-focused scenario because their product and service needs are always being anticipated. They are getting more attention now than ever before.

And while customer centricity is king, the portal has also enabled a quick return on investment. Within two quarters, registration rates climbed to 94 percent, meaning that customer transaction data for 94 percent of all products sold was captured. This amount equated to approximately $12 million in additional renewal opportunities for the supply chain during those two quarters alone. It also earned the distributor the rebates it sought.

Whether you are a manufacturer, a distributor or a reseller, there's nothing more valuable to your service sales initiatives than good, solid business intelligence. The key to success lies in the quality of your data. Take care to ensure that its origins span multiple systems across the supply chain. And make it accessible so that it can fuel higher levels of customer care. You'll realize not only an immediate ROI in service sales, but also an immediate impact on building stronger ties with customers.

Scott Herron is CEO of MaintenanceNet, Inc., the leading provider of extended warranty and service contract management solutions. Herron is an authority and frequent speaker on the topic of using technology to improve service sales and achieve increases in overall profitability and revenue.