Why Maintenance 0
Maintenance agreements provide a service organization with the single most predictive source of revenue. They generate a recurring flow of cash, with little or no recurring sales effort or cost.
Maintenance agreements have an additive affect on your total revenue, in that they produce revenue from year to year as long as you perform and keep the customer. For example: ten hours invested in selling a $50,000 project will not return as many profit or revenue dollars as ten hours invested in selling a $10,000 maintenance agreement.
The extra/spin-off work generated by maintenance agreements has proven itself to be an extremely consistent and predictable ratio. Service organizations with a large maintenance base can expect $2-5 in extra/spin-off work for every dollar in maintenance revenue.
PM Growth
Project Growth
Emergency Service Growth
Therefore, in comparison the ten hours invested to sell the maintenance agreement will generate a very predictable $30-60,000 per year, for as long as you keep the agreement. Many times, agreements stay in effect for over 7 years. This brings the potential total revenue for the maintenance agreement to over $500,000. As for the $50,000 project, well, it might generate more revenue, but since it is not predictable who knows?
Emergency service falls into the same category as project sales. It is unpredictable, does not have the additive effect on revenue like maintenance and is far more difficult to manage than either projects or maintenance.
When is comes to management of these 3 revenue streams maintenance is the clear winner as well. Projects come in a distant second place while emergency or demand service hasn’t even left the starting blocks.
You plan the number and duration of every maintenance agreement visit well in advance, even years in advance in some cases. Projects might be planned a week or two in advance and emergency service well it isn’t planned at all.
Add all three revenue streams together, with the sales focus heavily point in the maintenance agreement direction and your growth and profits will be fantastic!