Forget the days when good account management and customer relationships were enough to set you apart from your competition—that’s a bandwagon that is already overflowing. In times of economic uncertainty, manufacturers often turn to alternative revenue streams to make up short-falls in product sales. In this recent economic recession, manufacturers, from the behemoth equipment manufacturers and dealers to start-up SMBs, offering break-fix repairs and maintenance contracts, were no exception. Many relied on after-market service for their revenue growth. In some industries hit especially hard, like heavy-construction equipment, rental and maintenance, agreements may have kept the operation afloat.
This focus on service has created a new standard. Manufacturers and service contractors have used this time to hone their processes. They have made an art out of building service relationships—offering fast, reliable service on a routine basis. The days of telling a customer “we’ll be out next week to fix that” are long gone. Now, scheduling, routing and mobile technologies commonly used in after-market service have made those old images of waiting endlessly for the service technician to arrive seem absurd. Now, not only do companies tell you when the technician will arrive within an hour window, they send a photo of who to expect and email you if the technician is running late.
Going Beyond Service
As a manufacturer, what can you do to compete in this high-intensity, after-market arena and how do you keep up with the changing rules for building lasting relationships with customers?
The new goal is customer intimacy. This is a relationship that requires commitment of time, talent and resources. It goes beyond repair and replacement service. It goes beyond the overhaul processes. Only manufacturers willing to step up the level of commitment, collaboration and cooperation with customers forge long-lasting bonds.
Customer intimacy means providing proactive attention to all things relevant to the customer’s goals. This value-added level of attention can range from specialized product enhancements to sharing data with the customer about equipment performance—helping to predict though analytics when an equipment failure is likely to occur in the future. Sharing data about service and performance trends and suggestions for ways to optimize performance are other ways a manufacturer can work to establish trust relationships. When the service provider becomes a trusted advisor, the relationship is likely to withstand test of times and market fluctuations.
For many industries, volatile pricing can threaten even long-term customer relationships. When a manufacturer is forced to pass on price increases to customers, a skeptical customer base may decide to look around for bargains or alternative sources. On the other hand, if there is a trust relationship, co- designed products, mutual contracts and sharing of data and insights, the commitment can make the price hike easier to absorb.
Fostering Customer Intimacy
Some manufacturers are developing new divisions or branches which focus on installation and set up, calibrations, system optimization, preventive maintenance, inspections, green initiatives, complete system overhauls or re-manufacturing. Demand for service is taking on many forms today.
The companies who have efficient systems in place for managing the service operation will win those contracts for extended service agreement, mission-critical projects and complex overhauls. Of course, these are the long-term service opportunities with high revenue—and profitability potential.
Service must be efficient in order to be reliable, cost effective and profitable. Because of its complexity and labor intensive operations, the service division must be managed with extreme attention to cost control, technician productivity and streamlined processes. There is no room for gaps in communication caused by disparate systems, delays due to lack of parts availability or questions around configurations, schematics, components, warranties or program mandates. These issues lead to the role technology plays in customer intimacy and service.
The High Tech Advantage
Advanced technology gives service-centric companies many advantages. Not only does service provide an additional source of revenue, it also provides a way to build relationships with customers and create long-term loyalties that supersede price and budget issues. Relationships can be built around value-added sharing of historical data, collaboration on design and predictive analysis of future needs and trends.
Technology available today also allows companies to be more strategic, responsive and in tune to customer needs. This level of customer intimacy generates insights about future needs and allows companies to plan and schedule workforce, inventory and capacity with confidence. All of these insights lead to greater forecasting abilities and efficiency—necessary for riding out periods of volatile pricing and market pressures.
For example, creating customer-specific maintenance programs, proactive systems for identifying when repair vs. replace strategies; monitoring regulation compliance service alerts; and warranty status on components, helps to cement relationships. Data, collected from service calls, makes this possible.
Integrated CRM functionality helps support this account management tactic and identify related sales opportunities that arise.
When the service technician becomes a trusted advisor, recommendations for purchases, equipment upgrades and parts replacements are more readily adopted—often bypassing lengthy quoting and approval processes.
Companies can also increase the level of their value-added service by increasing the speed of delivery, surpassing what any competitor can deliver. This all but ensures ongoing service contracts.
Speed is the critical element that can’t be underestimated. Keeping equipment operational, after all, is what it is all about.
The ability to respond quickly to service requests is essential for allowing contractors to view the entire product lifecycle as a closed loop—from design and engineering through delivery and preventive maintenance and ongoing repairs. Tracking the details, from source documents to modifications and as-serviced configurations are critical to the level of confidence that must be present.
Trust is the key to the relationship between suppliers, sub-contractors, manufacturers and service providers in vertical industries dealing with mission critical equipment, such a medical devices and aerospace and defense. In each, data is the foundation of trust and detailed analytics prove when investments in new units are needed and cost effective.
Meeting the End Goals
Increased sales are certainly one of the goals of establishing or enhancing a value-added service operation and building customer intimacy.
In addition to the revenue, though, it is important to keep in mind that the relationship it generates with the customer is an important by-product. This relationship leads to loyalty and a codependent state of collaboration and innovation.
As the manufacturing industry continues to evolve its business models, processes and IT infrastructure to meet changing market demands, this lesson about the intrinsic value of service is an important one to remember.
Enhancing service capabilities to be more customer-attuned, responsive and cost effective, will offer any company a powerful weapon against inevitable fluctuations in spending. Investing in functionality to reinforce the customer relationship is a defensive tactic—that also makes a smart offensive move.