The servitization process doesn’t need to feel overwhelming. Start small and focus on your customer.
Manufacturers are realizing that there’s a huge profit margin to gain from providing strong service programs. In fact, 80% of service decision makers say mobile service drives significant revenue, and 79% say it provides new revenue streams.
The word servitization describes the shift in manufacturers’ business models from being product dominant to customer – and service – centric. If you are unfamiliar with the term servitization, our previous post provides a detailed overview.
There has been an increase in value manufacturers gain from pre-production and post-production activity, such as R&D and service programs. At the same time, the value from production and initial sale of equipment continues to decline.
Read on to discover the step-by-step process to launch and optimize your servitization program.
1. Initiate a basic service program
Building a service-centric model starts by putting yourself in your customer’s shoes. Ask yourself how your new products and services help them reach their business goals.
Supplying the basics is a good place to start. Product-related services are the perfect thing to offer your customer when selling them your product. These services can include things like break-fix services or basic preventive maintenance.
Providing these services with your product sales can help you stand out among your competitors. Your customers will see that you are providing not only the product, but its solution as well. The relationship between you and your customer can start to grow because they know that you will be there to provide assistance if the product ever needs maintenance.
2. Upsell existing offerings
Once you have a program in place to provide services to new customers, it’s time to focus on the relationships you’ve established in the past.
Developing service offerings to support already sold products will increase your profits and customer satisfaction. Providing break-fix services and preventative maintenance will enhance your partnership with your customers and supply you with a new revenue stream.
3. Supply complex services
Next, it’s time to move beyond product support. Providing maintenance services is only one aspect of servitization. It’s a great place to start, but there is so much more room for growth in your servitization methods.
Offering advanced services can increase your customer retention rate and steady your revenue stream.
To further develop your customer relationships through servitization, consider providing one of these value-adding services:
- Education. Your customers depend on your equipment to keep their businesses running. Educating them on how to properly use and maintain the equipment to maximize uptime, both you and the customer benefit. The customer benefits from greater equipment efficiency, and you benefit from fewer requests for emergency repair.
- Design. You can provide your customers with custom-built equipment to best meet their needs. Having the ability to design custom solutions for your customers will ensure the best outcome and the most efficient implementation of your products.
- Inspection. When you have the ability to regularly inspect your customer’s equipment, it opens up a new revenue stream for your business. Ensuring compliance and consistent machine uptime are critical for most customers. It’s important to provide those services for them.
When you help your customers anticipate future complications and empower them to better understand your product, it benefits everyone involved.
4. Provide equipment monitoring and proactive services with IoT
IoT (Internet of Things) is on the rise. As of 2018, 42% of field service organizations have already deployed IoT in their business.
The ability to collect and use data from equipment is becoming integral to the field service industry. Providing these services to your customers makes preventative maintenance easier and more predictable.
Preventative maintenance helps your customers’ equipment stay up and running. The health and reliability of the equipment depends on it. IoT helps you and your customer understand the demands of the equipment. Providing preventive maintenance and IoT services produces reliable revenue streams and satisfied customers.
5. Sell based on outcomes
The last step in the servitization process is for you to take full responsibility for your customer’s machine-based processes. You sell, plan, and maintain the equipment to the fullest extent possible. You track the equipment’s data and provide all the necessities.
This will allow you to sell based on equipment performance and outcomes.
Selling based on outcomes means you’re selling a promise or guarantee of the experience your customer will have, not just a piece of equipment. You can ensure your customers have the equipment they need when they need it. You’re customer won’t even have to think about the equipment. You will take care of everything.
Conclusion
Servitization is the direction that equipment businesses are moving. To be successful in the future, manufacturers need to empower their dealers to provide the service-centric experience customers expect.
More manufacturing companies will add service contracts to the product sales in order to meet the growing expectations of their customers. As the industry advances in complexity, the need for mobile management systems and stronger customer service will increase.
