Change is never easy. Whether it’s a shift in focus for product development, a change in direction for marketing and messaging, or the all too familiar fluctuation of demand within the market, change within an after-sales service organization takes dedication and patience – not to mention deft strategy.
Earlier this year the Syncron team got a chance to hear from Stefan Brehm, Vice President After Sales at Jungheinrich, at the International Service Logistics Association’s Service & Logistics Summit 2017. The tone of the event kept touching on one simple motif: change, and Stefan was no different as he shared the story of how Jungheinrich took a service-first approach to outperform their previously installed base growth in after-sales service.
Jungheinrich is one of the leading after-sales service organizations in Hamburg, formed just over 65 years ago. Producing trucks, automated systems, tow tractors, with digital and systems solutions, Jungheinrich began as a family owned business, growing to employ over 15K people in 37 different companies. At a glance Jungheinrich is #2 in the industry in Europe, producing over 100,000 machines and over 3.1B Euro in sales just last year.
But how did they get there?
From deeply analyzing the installed base, customer segments, and market landscape as a basis of capturing market potential and identifying opportunities, Stefan walked us through each step the team took to make this change and take a strong position in the market to the next level in after-sales service.
The first goal was to grow the installed base by entering more new machines into the market. In setting this goal they realized that while they were currently growing install base growth, they were declining in net sales. They knew that to succeed, they would need to put a target in place to outperform the install base growth in net sales by at least 2% per year.
Here are the five steps they took to break down their after-sales service process:
- Analyze the install base. To activate opportunities and boost aftersales revenues, they needed to understand the market landscape. And, defining their competitors was no easy task. If Jungheinrich wasn’t fixing their own trucks, who was? Where else were their truck customers going for service?
- Crunch the data. Analyzing service potential per machine across a truck’s lifecycle (about 16 years) served as their benchmark. By analyzing every truck, along with how many parts and service you put in along its lifecycle, you can see the full potential or your after-sales revenue.
- Embrace tools. By using a service sales monitor as a key enabler to drive service and contracting a share of the installed base as an essential lever to outgrow the market, they were able to heat map their customers to identify potential service opportunities – and ultimately identify where they should attack next.
- Find new honey holes. Now that they knew what kind of service potential they were facing, and where they should go next, the opportunities for new revenue were endless. The question now became: What can you do across the full lifecycle of a truck to leverage new opportunities in service?
- Own your targets. The final step was an initiative to not just set local targets, but to have the organization as a whole own those targets, as well. They decided to cascade growth targets down to every single sales unit, group and department, instilling unity among teams as targets set in divisions across the world.
You see, the ultimate success of this shift in the company process was for the entire organization to share common corporate leadership values to support the change process. This sparked a change in management and international leadership, shifting a worldwide service organization from consolidation to organic growth.
Now, after the first two years of focusing on their after-sales service revenue, the Jungheinrich team has already exceeded their install base for 2015 and 2016. Performing service on over a half million machines with more than one million trucks in the field and 4700+ service technicians worldwide, the company has achieved 98% parts availability for over 100,000 unique parts.
The biggest challenge? According to Stefan, it was switching a family owned business, an otherwise stable situation, to a fast-growing, risk-taking organization. “The mentality of the change in management was the hardest,” said Stefan, who admitted the “we’ve been doing it the same way forever? Why should we grow now…what is in it for me?” mentality was their biggest blocker.
But, change has to come from the top down. By listening to your people, adapting your plans, and then presenting those plans back to your people, you’re going to gain their trust through respect. Change can be harder than rolling out a brand new process, but it’s support that is the most important part of leading people through the change, and sustainable change starts by connecting people with process.