--- "Timpe, Jim" wrote:
> here at Fluke, stated that if he had his druthers, we'd be out
> of the
> service business altogether. Doesn't send any warm fuzzies my
> direction, as
> I happen to work in service. The only 'real' money to be made
> is in sales,
> I guess. Not too sure our customers that purchase $40k
> calibrators would
> appreciate that philosophy.
Better watch it, Jim. You're on company mail!
I do find this interesting because it does illustrate a mindset
difference between marketing goals. Take the industry that I
work in (Telecommunications), our business isn't selling durable
goods, but services.
Durable goods, equipment, cameras, computers, etc., are
"one-time purchases" in that you make the sale and the customer
moves along. You don't see the customer again unless they want
to buy another new widget or the old one is finally obsolete.
We call this NRR (Non Recurring Revenue). As a general rule,
the price of the product is designed to generate about a 5%
profit on each widget sold.
The service sector is based on a different model--that of MRR
(Monthly Reaccuring Revenue). Generally you operate at a loss
for a given number of months (say 24-48 months for telephone or
cable TV service) and then you make your profit over the long
term. The problem is that for "start-ups" the ROI (return on
investment) of each sale is measured in years. A ROI on
individual widget sales is immediate.
Henry Ford was alledged to have said "I'll GIVE you the car, if
you give me the service". Meaning, that he would make money
over and over again during the life of the car.
AG-Schnozz
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