In the first month of the new year, resolutions are ever-present. And whether you’re resolving to meet big goals, small goals or goals that completely revolutionize your life and business – the strategy is still the same: Short-term tactics and milestones help you to achieve long-term goals and results. It’s just like running a marathon – every finish line is crossed by taking one step at a time.
And, when it comes to after-sales service, reaching these milestones is ultimately about taking the time to shift priorities toward a more collaborative after-sales service ecosystem that’s going to drive the most change. “For years, we’ve seen people dedicated to making products – and people dedicated to fixing them,” says Nate Chenenko, Manager at Carlisle & Company. “Manufacturers today have the ability to control how their products are designed, which allows for a lower cost to service the parts, but their after-sales service doesn’t currently have as much control to drive and measure uptime. Successful companies have a tight relationship between the engineering team and the service team, and if you put in extra cents in those areas, it will save you dollars in downtime in the future.”
Recently, we sat down with Chenenko and other academics, customers and industry leaders to understand how manufacturers can capitalize on this significant business opportunity ahead, leading us to create our newest Orange Paper, 2019 After-sales Service Predictions: Powering The Journey To Servitization Through Maximized Product Uptime.
During this transformation, where companies are resolving to shift from selling products to selling service – also known as servitization – success can be influenced incrementally by three things: people, processes and technology. “Process has to be driven by people,” says Chenenko, “and, without process, you can’t use technology. Organizational alignment is more important than ever; you have to start somewhere to make sure you have some data, but you also don’t need to roll out the entire program all at once. There are small moves that your team can make to be more prepared.”
And, with these changes happening within the after-sales service side of businesses, teams are uncovering hidden profits and re-investing in this newfound financial lever. “We know that there are tech investments that need to be made,” says Chenenko, “Sensor data needs to be collected, and that data needs to flow somehow; somebody or something needs to aggregate it to use it.” His top two suggestions for investment? First: Spend money on establishing a data pipeline. Second, partner with another company who focuses just on specific areas that can lighten the technology investment on the front-end, with easier pivots than building something in-house. “Servitization is appealing because it allows people to really focus on what they’re good at – it’s hyper-specialization at its best.”
By making sure everybody is on the same page and working toward the same goal – which is less downtime – everybody is happier, and customers will be willing to cover the cost in the long run. “The reason that servitization is so attractive is because it aligns everybody’s incentives,” says Chenenko. And, while many manufacturers today don’t know exactly how much product uptime they can deliver, and subsequently, how much their customers are willing to pay for it, it’s crucial that they begin to uncover these areas of opportunity to stay relevant during this major industry shift.
But, what are some short-term tactics that can help companies reach this end-goal of servitization? “Subscription-based models are like ‘servitization-lite,’ a low-risk way to get into servitization,” says Chenenko. “From a marketing perspective, subscription-based ownership is going to increase rapidly over the next five years, and subscription is a great opportunity [for manufacturers] to figure out how they’re going to do things they haven’t historically operated.”
Ultimately, with subscription-based uptime models replacing more traditional product-based sales, testing servitization strategies through this business model can help manufacturers learn new ways to communicate with end-customers, interact with dealers, and ultimately, take more proactive steps toward servitization today. So, with these smaller milestones in mind, getting started on reaching some of these big, hairy goals doesn’t have to be so scary. “Not starting is the biggest mistake,” admits Chenenko, “Don’t let the perfect be the enemy of the good. Some say, ‘We can’t possibly guarantee uptime – we couldn’t possibly have control over that.’ But, there are ways to get into servitization that don’t require you to do a national rollout of a giant contract. Start small; start with pilot programs. It may be daunting, but there are ways to make it more bite-sized.”
Download our new Orange Paper to learn more about what these thought leaders predict will be major manufacturing trends in 2019 and beyond, and what resources and technologies will be needed to win.