Making more money in the service business

If you’re a regular reader of my writings, you will know that I do not endorse many products. And, even if a product delivers many outstanding benefits, I will give you the straight scoop about delivering on R.O.I. (return on investment).


Well, I just finished reviewing an outstanding product for the SMB (small-to-mid-sized business) service industry. If your company sells, installs and/or services high-value technical or industrial products – or even if you service products sold and installed by others (such as swimming pools and hot-tub systems) – SM-Plus(tm) from Single Source Systems could help you start making more money.

A study done by Aberdeen Group indicates that service companies that adopted end-to-end solutions that aided managing their business as a “system,” rather than in silos, saw an average of 14.2% increase in revenues over a two-year period. Since, for many service companies, their service revenues carry very little in Truly Variable Costs (TVCs), that means that almost all the dollar increase in revenues drops directly to the company’s bottom-line.
 
So, how does an service management end-to-end solution create this increase in revenue – and profit?
Here are a few of the key factors:

• Elimination of inter-departmental silos increases visibility of “bottlenecks” and helps executives and managers take effective action to increase Throughput.
• Integration with mobile computing devices reduces time lost for data-entry or trips back to the job site or warehouse. This means more available service hours are actually used performing billable services.
• End-to-end solutions are able to handle complex contract-based billing calculations, thus virtually eliminating “islands of information,” manual calculations and redundant data entry. This, in turn, means the enterprise can grow revenues without adding to operating expenses.

So, how would you determine if Single Source Systems’ SM-Plus would be a good investment for your service-centric enterprise?

The formula return on investment remains the same:
You and your team need to calculate how much your Throughput (T) (i.e., Revenue less TVC) might increase (see average of 14.2% over two years above, but calculate your own numbers) and any net effect on Operating Expenses (OE). Then, figure out what your investment would be to get started with a product like SM-Plus. Put those numbers into the formula for ROI (see illustration), and you can calculate your ROI simply and easily.

Give it some thought.

Drop me and email at rcushing(at)GeeWhiz2ROI(dot)com if you have further questions.

©2010 Richard D. Cushing

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