A client recently asked us, “How do we rank when it comes to innovation? If you were to benchmark our organization against your best customer, where would we fall?” It took us a few minutes, as these aren’t easy questions. My first thought was, “You rank high. You rank as one of the highest for your forward-thinking approach to technology adoption.” We had to dig a bit deeper to get to the core of it.
What things did this organization do that other organizations didn’t? There were a handful of little things that added up, but there was only one large one—the ERP decision and the service management decision were made at the same time, with the same forethought, and with equal weight.
It’s uncommon. Most companies determine the ERP solution, and implement it in phases. When the post-sales service team reviews their requirements and begins the demonstration process with the ERP provider, they often realize the ERP service module is inadequate and either implement it anyway, or start the service management evaluation process. However, this client didn’t buy into that approach.
This customer knew that their goal to reach 1B in revenue couldn’t be attained with a myopic view of service. Its decision to choose the right service management solution at the start is paying off by opening up endless possibilities for revenue generation. It has even provided a safety net by deploying extended technology solutions for new, mandatory service initiatives.
Change is Coming
From 2013 outlooks on manufacturing to the recent write ups regarding a profound transformation in manufacturers’ mindsets, change is coming, and it feels different than any other evolution of manufacturing. It doesn’t hurt that recent reports also suggest that although “U.S.’s share of global manufacturing output fell by 23 percent in the 40 years to 2010,” new technology, cheaper energy, and a falling wage gap may start to reverse these changes, (The U.S. Factory Renaissance and Your Portfolio, Reuters) creating the potential in one industry (energy) to add a million new U.S. jobs.
Another report from Oxford Economics tagged the climate as one where manufacturers must focus on two goals to remain competitive: make better things while also making things better (Manufacturing Transformation: Achieving Competitive Advantage in a Changing Global Marketplace, in partnership with PTC, Oxford Economics). This stretches from true product innovation with distinct differentiators into an entirely new outlook regarding post-sales service.
It’s Not What You Think
This isn’t necessarily what you think when analyzing your customer and field service organizations. We’re not talking about post-sales service statistics on field engineer (FE) windshield time, FE return visits, annual entitlement revenue and the like. It’s not just a 16% decrease in average time to repair or 10% increase in first time fix rates. We’re talking about taking the very tail-end of the supply chain – where the customer has already purchased product or is simply looking for a way to cover existing products from other manufacturers – and using it as a foundation for innovative customer experience.
This service extends way beyond typical maintenance and repair. It’s about a shift that jolts the business into intertwining fresh services into your existing manufacturing environment. This idea of taking your foundation and stretching it to increase revenue avenues is similarly illustrated in Chris Anderson’s The Long Tail, where he provides insight into the future of business. Although this notion may apply more specifically to inventory and numerical calculations on the purchase of popular vs. obscure products, since products become continually commoditized, core services and unique services have the potential to run in a parallel long tail cycle.
Recently, a manufacturer in the medical device equipment industry explained how they had formed a new group that stood outside every current division. This group was tasked with investing in innovative technologies that would differentiate the organization. Capital was set aside. An executive was overseeing it directly. They were talking to startups — companies with less than eight employees. They were ready to invest hundreds of thousands of dollars in technology and ideas. This effort aligned with the company’s efforts to play offense instead of relying on defensive measures to maintain their competitive edge.
The interesting part is that these innovative product ideas often are where things end. Coupling this innovation with a brand-new concierge service offers one of the interwoven services that may comprise the long tail portion of your business.
Transforming Manufacturing Innovation
However, it doesn’t just have to be around some crazy new innovative product idea or bolt-on technology. A simple deep-dive into service may help you generate revenue you only dreamed of in the past. Remember that service is the final touchpoint, and your engineers drive your customers’ experience, which then impacts the customers’ level of engagement (see Why Field Service Has the Upper Hand When It Comes to Social Collaboration).
Customers want you to figure out what they want before they can tell you. What you need to do is figure out the services in your own life that surprise, delight, and make your life easier — then dig in and focus on ways to make your customers feel the same with the services you offer.
What Your Peers Are Saying
This isn’t too surprising. The aforementioned report by Oxford Economics talks about a stronger coordination between engineering and service that will rise from 54% today to 73% in three years among a number of different manufacturing industries. Strategy and planning regarding service initiatives ranks second on the list of the key areas to improve competitive positioning. (Manufacturing Transformation: Achieving Competitive Advantage in a Changing Global Marketplace, in partnership with PTC, Oxford Economics).
Interestingly, in this particular survey, two-thirds of the respondents will focus “on ‘Voice of the Customer’ initiatives to better understand their customers”. This means that the connection between engineering and service that has been spoken about but not implemented may finally have its day. That closed-loop component that has been held together by dotted lines and casual comments between groups may now be an executive focus — an executive focus with a budget.
Before You Invest in ERP
I’m not sure how it got this way — how field service became a checked box on an RFI and thrown over the fence for the post-sales group to manage — but it has. Manufacturing execs are doing backflips in order to generate new revenue streams. Some things are right in front of them, others are extensions of what they have, and still others include entirely new ways of thinking. The key to all of this is that it’s not about the service group. It’s not about customer service or field service or any of the conventional services you provide.
It’s a discussion that needs to be taking place with manufacturing CEOs and CFOs. In the best of all worlds, when efforts involved in investing in a new ERP solution are occurring, this strategic task of interlacing inventive services into the organization should be at the top of the list. As a recent Gartner analyst suggested: this is a strategic financial decision, and as such, when looking at new technology, the services component of a large enterprise investment should be scrutinized to encompass the manufacturer’s vision. This vision will not only entail the services they anticipate but those that they aspire to provide over the next 10 years.
Perhaps one of the following four initiatives might suit your strategy as you look for further visibility through your supply chain. Here are some ideas that manufacturing customers have deployed or are in the process of deploying:
- Offer a private-cloud, dealer portal incentive program.Many organizations are offering dealer portals. Some are looking at their dealers and saying to themselves, “What unique incentives would I want if I were a dealer of my products?” Possibly, ensuring your portal is extensible with functions such as mobility or self-help might fulfill your needs? It’s time to think outside the box.
- Offer a hybrid customer service outsourcing center that includes seamless, transparent service throughout your supply chain. Many manufacturers offer this type of capability in “one-off” scenarios to their top dealers. Looking at this as a strategic avenue might offer a unique revenue generating opportunity.
- Offer vigorous and strategic warranty entitlements to your dealers with inventive, competitive compensation options. This is an area where we see huge lost revenue gaps. See questions to ask yourself in You Can’t Put Your Finger On It, But You’re Losing Post-Sales Service Revenue.
- Offer a global, interactive business service concierge. Think Lexus Enform. You press a button to connect to a contact center agent who pleasantly asks how they might assist you. They can even do a free text search via Google to find the destination you need all while you’re driving. Once they find the approved destination, they push a button, and it automatically downloads to your GPS (with three route options). You click “OK”, and you’re on your way. After all, “86% of consumers are willing to pay for a better customer experience.” (Customer Experience (CX) is the Next Competitive Frontier, Gartner)
The Elephant in the Room
Maybe you’re offering some of these services today or maybe you’re thinking about doing it. Obviously, you must review options rigorously. However, your customers are looking to you to make their lives easier. They want you to figure out what they want. They can give you ideas, answer your customer surveys, and provide personal feedback. But sometimes, the most obvious way to catapult your business from a concentration on commodities to true revenue-generating service is to simply look inward at your own customer experience — and admit, it was simply the elephant in the room.