I came across a fantastic presentation (under Conference Videos) from the Field Service 2011 show in April of this year, by Larry Walsh, president of global services for TRANE, a global HVAC provider, discussing how to build and sustain world-class service in an equipment-centered company.
Noting that in today’s environment, the service business can account for over 50 percent of a company’s total revenue, Walsh talked about creating a roadmap for your organization, the benefits of a services to original equipment manufacturers (OEM), developing compelling service offerings and driving cultural change so that service is a core strategy at your own organization.
It’s an interesting talk that highlights the changing landscape a lot of companies have to face as they get bigger: If not a total change in the company’s core DNA, then certainly a massive shift in priorities and attitudes toward effective service.
Walsh set the context for his talk, titled “Developing a Services Center Culture in an Equipment-Centered Company.” He said he’s heard from service managers that the customers know their company for their equipment, not their services, and the equipment side of the business is often seen as the endgame instead of the starting point for recurring and future revenue growth. By giving away service to lower margins, companies are devaluing service and turning themselves into a profit center and removing themselves from the customer.
Below are some additional key takeaways from Walsh’s talk. The entire speech is embedded below (in four parts).
Brand leverage: Businesses create two sides to their company (services and equipment), however the common unifier is the company’s brand. Brand gives you permission to talk to customers in broader value proposition and allows you to leverage years of equity. For every dollar of equipment sold, you create leverage in enhancements or services over lifecycle of product (future services = 8x equipment cost over the equipment’s lifetime).
Benefits of services to OEM:
- Unrivaled installed base of equipment or products to service
- Ability to create customers for life in a sustained model – you know where they are and have access to them
- Increase customer satisfaction with brand and “experienced:” customers readily acknowledge loyalty to “brand”
- Ability to recession-resist your business – upgrades, asset extension and new offerings
- Pull through opportunities for equipment or product when leading with services (everyone wins)
How to build a services business:
- Create a competency roadmap to achieve world-class performance
- Develop compelling service offerings and migrate to solutions selling
- Build services leadership
- Drive culture change