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Amazon Prime Lessons for Service Contractors

Everyone knows Amazon has been on a tear lately.  Here is their stock performance over the last 5 years as compared to the broader S&P 500.  Wow!  A big part of that success has been the Prime subscription program.  

Amazon customers who subscribe to Prime to receive the following benefits:

  • Priority shipping.  It varies by area and items from FREE 2-day shipping to FREE 2-hour shipping.
  • Prime videos, music, and books.  Certain titles are available to stream or borrow for FREE.
  • Photo storage.  Amazon will store your photos so you don’t have to worry about losing them on a device.

And there is a long laundry list of other Prime benefits that you can review here.  Most folks probably only care about one or two of the benefits, but which parts of the bundle are valuable to which customers probably varies considerably.  So Amazon just includes a bunch of stuff to cast the widest net into the market.  They are committed to the costs of most of these things anyway, so why not maximize the revenues across their most attractive customers while getting the glow of a great customer service reputation?  It also leads folks to spend more time and money with Amazon products.

So, what are you doing in your service contracting business to get more by doing more for your best customers?  Do you have a Prime program?  Is there a tier of service that includes the basic preventative maintenance program PLUS a bunch of extras that get them to pay upfront?  

Here are some suggestions for how to form a program that pays you similarly to how Amazon is paid.

  1. Give it a name.  Sales people cannot talk about your program and customers cannot reference it if it doesn’t have a name.  Amazon chose “Prime,” whose root is from the Latin word prim or primo, meaning first, as in first in line.  This is a good name because it conveys some meaning while also being easy to remember.  You should do likewise.  Obvious choices are names like “Premium” or “Platinum” or “Gold,” which are unimaginative, but at least connote value easily.  Ideally, you can name your program in a way that has both meaning and rhythm and rhyme so it is easy to say and easy to remember.
  2. Charge a subscription fee.  You should collect a monthly or quarterly or annual fee in exchange for the program.  Angle for annual for the obvious reasons, but offer other options that might appeal to different customers.  Try to price it where the average customer would happily pay for the benefits and you would make a decent margin on average.  Some customers will be more profitable than others, but maximizing profit is not the angle for the program fees.  Locking the customer into your services as the preferred vendor is the goal.
  3. Offer expedited service response.  Everyone likes the idea that they will get priority (hence the “Prime” name) service relative to others.  If you are committed to great service, go ahead and make the promise to your best customers that you will respond with skilled technicians to any problem within 1 or 2 hours.  Maybe there is also a promise to return a call or web inquiry within 15 minutes.  You are probably committed to it anyway, so why not get credit for it?
  4. Include basic maintenance services. If there is a PM protocol for the equipment that will be under your care, and you are committed to delivering the work, go ahead and build it into the program.  It makes it easier to schedule the maintenance when it is included (you don’t have to ask or wonder if they will pay), and you will get opportunities to upsell based upon the maintenance reviews.
  5. Offer a lower rate on all planned services. It is good for both you and the customer for all services to be planned instead of emergencies due to failures.  When you quote repairs and upgrades that can be scheduled instead of emergency, the rates will be cheaper.  The more customers you get into proactive mode instead of reactive emergency mode, the more efficient you can be with your scarce technician resources.
  6. Offer an online account. Give your customers a reason to come to your website.  Show them online details of their plan, history, equipment, quotes, etc.  It lowers your cost and makes your company stickier and more memorable.
  7. Offer a performance guarantee. After you get their equipment into good order AND you have a regular maintenance routine or remote monitoring to expose any risk, offer emergency service response at the subscriber program rates.  It shows your confidence in your plan, and it incentivizes the customer to approve your quotes for planned repairs so that the equipment stays in the program.  Any equipment exhibiting failure symptoms that are noted and quoted by you comes off the plan if the quote for planned repair is rejected or ignored.

When customers feel that you have been thoughtful in meeting their needs with a premium customer service program, they will happily pay a program fee to claim their membership.  You can use the steady cash flow and predictable schedules to hire and grow and expand the program.  Then you can put the Amazon python squeeze on all of your competitors and laugh as they wiggle and squirm in the grip of your escalating capability and brand value.

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