LED Maintenance Thoughts - Opening up a new business model that will make your customer happy and keep you in the service business.
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LED Maintenance Thoughts

With the almost total acceptance of LED for channel letters and increasing use of dedicated modules for cabinet lighting, our industry has to look at the long term effects of such a liability free product.

By Fritz Meyne, Jr

Opening up a new business model that will make your customer happy and keep you in the service business.

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  • There are numerous sign shops that look at "after-the-sale-service" as a true income stream for years to come. Naturally there are different mind sets about after-the-sale-service and there are dedicated "service" companies that only offer maintenance / service. I remember a visit I had with a sign group that is known for their spectacular signage and as I was introducing a new product that should reduce their service cycle, I was not sure how they might accept such a novel idea. I knew they offered twenty-four hour service on some of these huge displays and had a very heavy investment in maintenance people and equipment.

    So I broached the subject right up front and I was amazed of the response I received. I know what I wanted to hear, but when I heard it I was still surprised. The man in charge was very professional and responded as any business manager should: "If I can change to a product that costs me less to service I am eliminating some of the liability that is a burden of my overhead, so naturally I am interested, for my customers first, and for my company second!"

    Wow!

    So, back to the point of service as related to LED. If you offer "service" contracts for XX months on any given sign, to offer LED does not need to eliminate your maintenance stream. If anything it opens up a new business model that should make your customer happy and keep you in the service business.

    Most all LED vendors today offer from three to five-year warranties on the product(s). Power Supply warranties vary from traditional one-year to five-year warranties. So let's turn this into a consistent income stream that hopefully keeps the end user happy and you with controlled liabilities.

    It is important to remember the value of a warranty is to not have to use it and to remember you as the sign manufacturer and the end user, have expectations. My recommendation goes back to the old AS&I days where 97% of their business was leases and they knew to have a successful lease on a mechanical part also required a maintenance contract. Thus the lease technically included maintenance and it was calculated into the total lease number. The end user paid one total "lease" number and was covered totally.

    However, something not originally considered as the company only used the very best parts to cut down on future maintenance needs, was the customer's position. The customer knew he was paying a portion of the monthly lease for "service." However, when he never saw a service person or never even needed to call one, he then questioned why he was paying for something that he saw no direct benefit from. In reality there was a very real benefit in that the signs worked, and worked, and needed very little site service.


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    So a segment of their customer base wanted to cancel the "maintenance" portion of the agreement. This was not good and it needed immediate attention. The result was to offer a "preventative" maintenance program, where the Leaser saw his money actually working! And this is where I see real potential to go after or still offer maintenance contracts that use LED illumination.

    Your lease term is somewhat open in this scenario, however let's calculate the following:

    • One site visit the first year, no product warranty issues; one trip.
    • One site visit the second year, a rare LED product failure; one trip, warranted product.
    • Third year a power supply fails from an "Act of God". One trip, warranted product

    We could go on and on to get past the vendors LED warranties, but that is pretty easy to figure out. So as you can see your real liability is pretty easy to calculate and you simply estimate which type of truck - rate you will use and to take the necessary parts for any given LED service or preventative maintenance call, all in one original trip.

    Take your service truck rate and how you calculate the original call, times the hour(s) estimated times the three year or more cycle and even add a random call out of everyone's control, then divide these numbers by the term of your service agreement.

    In closing I suggest you offer a professional appearance and I would even suggest a "Preventative Maintenance Contract" where a sales person or other is assigned this account and has to make periodic visits to see the customer and get a signature. Reiterate the fact they visually inspected the sign last night in a drive-by and today and all is in working order. The end result is you get face to face customer contact and might even trip over a new lead. Your customer gets to see you are taking care of your sign and he hopefully feels they are now getting their monies worth out of their maintenance agreement.

    Fritz Meyne, Jr / Vice President Sales / Bitro Group Inc.

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