At Your Service Is your service center living up to its potential? Find out how to get all you can from yours.

As co-founder and head of the factory service center forImageStreamInternet Solutions, Doug Hass is in charge of making sure hiscompany services the Linux-based network routers it manufactures.But there's more to the repair work done by the Plymouth,Indiana, business than keeping customers happy by replacingburned-out circuit boards and soldering loose sockets.ImageStream's factory service center is an important source ofideas for new products and product improvements, while alsoprofiting from hourly service fees. "What comes back fromcustomers helps us design for customers--everything from where thepower switch is located to the fact that a cable is hard to getto," says Hass.

ImageStream's effective use of its factory service centersets it apart from most manufacturers, according to a 2002 study byNew York City management consulting firm McKinsey & Co. Mostcompanies have realized only a fraction of their servicecenter's potential, McKinsey & Co. found. It's not justabout using customer feedback, either. Many companies sellingproducts for as little as $100 per unit could generate 20 percentof revenues-and an even higher percentage of profits--from fullyrealized service center networks, but most produce less than halfthat.

The first thing to do to make sure you're getting all youcan from your service center is to look at its location orlocations. Many manufacturers locate service centers in industrialparks or similar out-of-the-way locations, according to McKinsey& Co. That makes sense to manufacturers because they typicallylocate their factories there and sell to other businesses alsooften located in business parks. But if their products wind up inthe hands of consumers, they'd be better off locating theirservice centers in high-traffic retail locations where foot trafficwill generate sales of accessories and add-ons, in addition tomaking it easy for customers to bring in units for repair.

You should also make sure your service centers are well-managed.Manufacturers often need to hire executives with retail experienceto handle their service centers. Attention should be paid to thingslike product display, merchandising, lighting and general storeambience-items not high on the lists of most manufacturers who sellto distributors.

Before you start expanding the number or activities of yourservice centers, think about the potential for channel conflict.Many manufacturers have developed networks of third-party serviceproviders who also provide important sales distribution. If youstart taking away their repair business, you may damage yourrelationships.

The McKinsey group recommends finding ways to support andcomplement well-developed dealer networks rather than competingwith them. You can do this by providing training classes to dealertechnicians. This will help them out while giving you anopportunity to snag complicated repairs for your own service unit.You can also set up parts distribution centers to provide dealerswith faster access to less commonly used or high-cost parts andsupplies.

What will all this cost? McKinsey & Co. says an investmentof around 3 percent of product sales should enable you to generate20 percent of revenues from service centers. But don't justthrow money at the project and start renting locations and staffingup service departments. Hass says one of the most importantcomponents of ImageStream's service center is a Web-basedticket-tracking system it developed in-house. The system allowsemployees to analyze failures on a product-by-product basis-even byindividual serial numbers-so they can tell when a line or lot isprone to failures and may need redesign or replacement.

"If we have 300 customers calling about some problem,we'll know it's pretty important to get that done,"Hass says. "In the end, it generates more salesopportunities."

Mark Henricks writes about business and technology forleading publications and is the author of Not Just aLiving.