More tips on integrating service as a competitive weapon

Blogs Bill Wade November 1, 2013

(This is part two Bill Wade’s two-part educational feature on service. For part one, CLICK HERE.)

Making GP Increases into ROI or EBITDA Increases

Growing profitability is a challenge requiring thorough understanding of distributor and customer costs in the supply chain, cost of equipment ownership, employee costs and others. Cost-cutting — or changing cost-to-income ratio — also is complex.

Costs that appear to be “low-hanging fruit” can be cut with ill effects. Solutions to harder to find problems — interoperable information systems, ruthless restriction of data and ineffective consolidation of processes — are more likely to have longer lasting effects.

We’ve found that in counseling distributors on cost-to-income ratio improvements, most think first of reducing costs. Revenue enhancing strategies, however, are the more immediately profitable part of this equation. The most effective ways to increase revenues must be well-targeted to bring the organization together in the selling effort.

Timely tracking of sales opportunities and precise understanding of an organization’s sales efforts will lead to more confident decisions and better business outcomes. It also provides a skeleton for appropriate cost and investment build-up.

Simply raising prices on parts and services can obviously have a negative impact on volume. Finding more work through bundling of services can be effective and lead to increased sales of seldom-used services…  if customers sense a new efficiency.

Technology that helps segment customers is helpful in knowing where bundled services might be well received. Effective packaging requires knowing which services “lead” customers’ decision making process. To deliver optimized packages, the following questions must be answered:

•  Necessity: Which services will the customer refuse to live without?

•  Consistency: Which services have long sales cycles, but have proven to be valued by customers who benefited from them… How can we spread the word??

Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at bwade@wade-partners.com.

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