• Service contracts provide ongoing revenue. Probably the most obvious advantage is that service contracts provide revenue long after the original sale.

• Service builds sales. Manufacturing companies are discovering that service can drive sales or help penetrate new markets. Personal computers are a classic example: better service and support were critical to penetrating larger, less technical markets.

• Service builds markets. Service can help build long-term customer relationships and long-term customer loyalty. In this way, service helps build markets, not just sales.

• Service can recoup quality control costs. If quality control brings service costs down, profits from service contracts increase without impacting pricing. This is especially beneficial in markets where a considerable time exists between quality improvements and market recognition of them at a level that supports a price increase. Increased profits from service provide payback during this time.

• Service can drive technology. Those who service a product often learn as much about how it works as those who built it. Proper management of this service experience through a service request system can drive new product development. Historically, in sectors such as aerospace, automotive, and electronics, servicing competitors’ products has been a key to major innovation and technology transfer.