By: Holly Keller of CEDIA



According to CEDIA’s 2011 Benchmarking Survey, 68% of CEDIA member electronic systems contractors are offering recurring revenue services. Of those, only 38% are offering service contracts.



What’s more, service and recurring revenue make up a combined total of just 4% of ESCs’ average gross revenue.



Recurring monthly revenue has the potential to create built-in value for your company, and service contract offerings can differentiate your business from competitors. So why aren’t more ESCs offering this option?



Because it’s easy to do service contracts wrong, and doing so can be costly.
Here are three questions you need to ask yourself to determine whether service contracts might be right for your business:


1. Do you have the infrastructure needed to support a service contract program – or are you prepared to create it?

You must have the team in place to support increased demands on your company’s time. If you plan to implement a round-the-clock monitoring system, you have to be prepared for round-the-clock responsiveness.


2. Do you have a good contract template?

Structuring a service contract can be challenging, and it can take some trial and error and a few rounds of revisions to build a template that works well. While only you can determine what will be the best fit for your client base, there are some best practices out there that can help you get started without reinventing the wheel.


3. Is your service contracts program going to make you money?

Your service contracts must be structured in such a way that you’ll see a profit from implementing this offering. You can’t permit your business to take a loss in the name of customer service.



If you think your business is ready to take the next steps toward offering service contracts – or if you want to know more about what’s involved so you can decide the best course of action – CEDIA’s Service Contracts With Teeth course is your first stop.



Originally published on April 16, 2012 by CEDIA – Original Blog Can Be Found Here

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