P.A.C. Systems scores with services

Monday, August 1, 2005

ARLINGTON, Texas--After years of riding the rollercoaster economy of the Dallas/Fort Worth market, P.A.C. Systems President Spencer McDonald decided it was time to stabilize the company's revenues and reduce its dependence on new systems installation revenue.
Having been connected to the construction industry his whole life, McDonald experienced the boom and bust cycle of the area for years. He figured, why not incorporate a long-term strategy that guarantees year-after-after revenue?
To support this drive, McDonald shifted gears and started targeting end users directly. Whereas in the past, the company focused on general contractors, it now looks to network directly with real estate trade associations at local trade shows.
McDonald previously directed the company's attention on installing fire systems for corporate and commercial clients since the company's founding in 1986. These included schools, municipalities, small businesses, real estate management groups and large telecommunications companies.
That changed approximately one year ago, when he established a 36-month plan to balance the company's revenue from 80 percent new systems and 20 percent service contracts to an even split. Twelve months into the initiative, service contracts account for approximately 35 percent of the company's revenue.
"We're tired of riding those waves," said McDonald, who owns the company. "We're trying to flatten out that revenue curve by selling service contracts." The main driver behind the shift, he said, is the need to generate long-term revenue out of the business.
Existing customers have been receptive to the company. McDonald said the company offers a five-year contract that includes annual inspections and pre-negotiated material rates.
"The results have been pleasing, in the first year we doubled the money amount of maintenance contracts," he said, declining to disclose the company's annual revenue figures.
One example of this strategy paying off is a multi-year contract the company signed with the city of Fort Worth, Texas in March. The deal included fire alarm maintenance and inspection services for more than 50 city-operated buildings.
Internally, P.A.C. Systems, which employs 25, reorganized its sales team to concentrate on landing systems installation and service contracts. It also widened its territory to include the entire state and not just a 100-mile radius from the regional airport.
McDonald recalled how he prompted himself and his sales team to effectively implement this new strategy.
"How do we dig deeper and get deeper into your accounts?," he asked. "The thought process for us is to take corporate clients and dig as deep into the state."