Having worked with over two hundred firms with service operations I’ve developed classifications regarding their success growing service revenue. A special emphasis is given to renewable revenue – service contracts. I’ve listed the number of firms in parenthesis that fit into each category.
Reactive Service Business (65%-75%)
Primarily provide service when needed, or requested by their clients. Time and Material is the primary billing method. Selling service contracts happens sporadically. Pursuit of new customers is minimal.
Basic Service Business (20%-30%)
Similar to Reactive firms, but pursue service contracts when opportunities present themselves.
Proactive Service Business (10%-20%)
Actively pursue service contracts. May have dedicated outside Service Sales Rep(s), but don’t consistently present bundled or total maintenance solutions. Often over 75% of their RMR base is Testing and Inspection contracts rather than full coverage solutions.
Advanced Service Business (5%-10%)
They have a large base of maintenance contract clients. Emphasis is on full coverage. Company focus is on growing RMR. Have one or more well trained dedicated Service Sales Reps who pursue new customers and market segments.