Surviving Service Calls

Service calls are troubling, because they unbundle the very thing that you have worked so hard to glue together: your sale of fully-engineered systems.
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Service calls are eating us alive. Weve got clients from years back who expect quick, low-cost service on items we sold in 1999. For example, if an old DVD player requires repair, we simply cant respond quickly enough, or charge enough to make it worth our while. But weve built our reputation on service, and feel we owe it to the customer. How do we fix this problem?
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Service calls are troubling, because they unbundle the very thing that you have worked so hard to glue together: your sale of fully engineered, installed systems. As soon as one piece of a clients system failsthat DVD player, for exampleyour customer becomes aware of the cost of that particular item, and your hourly labor cost associated with fixing it.

If you look at your service records, you will find that most of service calls are for disposable itemsthe cheap things most likely to fail, like emitters, DVD and CD players.

These are the items with low-margin dollars, but may still cost several hours for troubleshooting and replacement.
Lets do some math to find out how troublesome service can be. Assume that you like to bill $100/hour for general labor. The DVD service call may take two hours, including drive time, so your opportunity cost is $200. But you cant in good conscience charge $200 for a simple service call. So you put a $75 flat rate on it. Your tech finds out the DVD player is toast, and has to be replaced. Sure your customer is annoyed; they paid you good money for their system, and now they see it falling apart. But you convince them to buy another DVD player. At full retail? Of course not. At a discount. Because you feel their pain. So you earn 20 points on the DVD player. You have done this little discount dance to not call attention to the fact you really need $100 per hour, plus full margin on product just to survive.

Perhaps you feel that this is good service, but Im not convinced the customer feels like they got a good deal, even though you discounted your labor and product. Why? Because the customer would have chosen for the DVD player not to fail in the first place.

Walk into a BMW dealership these days to buy an X5, and the salesperson will excitedly tell you all tune-ups and maintenance are covered on the vehicle for several years. Sounds great. Youre thinking that you wont have to pay for expensive tune-ups for the next four years. Take that, BMW! Now walk into an Acura dealership to buy an MDX. They dont offer free extended maintenance. Instead, they will tell you the first tune-up on the car is due at 100,000 miles. Thats about six years for the average driver before the first tune-up.

Acura tackled the service issue by designing a low-service engine. It saves them the cost of providing tune-ups (the mechanic, the parts and the cost of a loaner), and more importantly, it saves the customer the entire hassle. Acura made a managerial decision to reduce the cost of service by improving the quality of their product. Simple.

You, however, have fallen victim to the increasingly horrible engineering and quality control that our industry sees on low-cost items. Why? Because the manufacturer of that DVD player didnt build the unit for custom installation. They built it for cash-and-carry sales, knowing full well that its cheap enough to be considered disposable. If it breaks in two years, then big deal. The customer will buy a new one.

But you have chosen to sell this DVD player as a custom item. Which means you have to stand behind its longevity. I suggest that you re-evaluate your product offerings and choose items more suitable to the custom business.

Heres a bit of research that will start you down the right path. How about looking into the pro versions of all the low-priced source gear you sell. For example, consumer companies like Denon and Marantz and pro companies like Tascam make pro-version CD and DVD players built for heavy-duty use. Some are RS232 controllable (with your Crestron or AMX stuff). They are built as pro gear, with rack mount ears and standard 2U and 3U sizing. Plus, they are not available through mass retailers. It should be easy for you to adopt pro gear into your offerings and make a strong case against disposable consumer products during your sales presentations. You can also choose the highest end versions of the consumer products that you currently sell which means that you should stray far from any single-disc DVD player under $500. You get differentiation in the market, plus a better built, longer-lasting source component that you will seldom service.

Take this approach to all of the items that you sell. Scrap the cheap disposables, and you will develop happier customers with far fewer service calls.

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