Today, most service executives have a revenue growth target. After having delivered cost reductions for decades, the switch to delivering revenue growth is easier said than done. Where cost control stays within the current paradigm, growing revenue requires an entrepreneurial mindset.
When sales people need to grow revenue, their first response will be, “Give me a new product, with more features at a better price point. And, yes, we need a marketing budget too.” Let’s transpose this mindset to the service domain.
Give Me a New Product
Take a look at your current services portfolio. When is the last time you reviewed this portfolio? How did the services in your portfolio come to be? Was it an internal push or did you have a dialogue with your customer to develop these services?
There are several areas to take into consideration when developing that portfolio:
- Customer behavior
- Business objectives
With that portfolio in mind, we need to acknowledge two significant trends:
- Moving from focusing on product output to outcome-based services
- Moving from reactive to condition-based and predictive services
Give Me More Features
At home, you may have products laden with features that you do not use. Those features have been added by the supplier to cater to a multitude of use cases. You may have a comparable situation with the “features” on your services portfolio.
In growing revenue, the most important thing is to have a dialogue with your customer to change the feature push into a feature pull.
Consider a preventative maintenance example, which can be split into three pieces:
- The execution of preventative maintenance
- Creating a report on the findings and activities completed
- Communicating about the job
Many customers see the execution of preventive maintenance becoming a commodity. They expect to get a free report but will acknowledge its value increasing from a compliance point of view. The eye-opener may be communication. When offering choices like email, telephone, video conference or on-site communication, a growing number of customers will choose the latter. With equipment becoming so complex, customers want an expert to be available to discuss it. Often this visit turns out to be the largest cross selling and upselling opportunity.
We see two growth levers:
- By adding communication “features,” suppliers create a dialogue of value and drive new revenue streams.
- By adding features enabled by service and digital transformation, suppliers are more connected to their customers, which leads to more sustainable revenue.
And Give It to Me at A Better Price Point
We’ve heard asset operators say, “Less service is more.” In other words, the less frequently equipment requires servicing, the more the operator can drive value from its use.
We also hear OEMs that provide basic break-fix and preventative maintenance services, saying that these services are becoming commoditized and are under severe price pressure.
Of course, you should continue your efforts to improve internal efficiency and curb your costs, but the move forward is to develop services higher up in the value chain. We see a shift from price to total cost of ownership (TCO) to value-based proposals.
We Need a Marketing Budget
In sales, revenue growth is driven by touch points, leads and conversion of those leads into a sale. In service we have plenty of touch points and are already driven by customer satisfaction.
- We drive incremental sales while performing a maintenance job
- We use customer satisfaction to the benefit of higher renewal rates and attach rates after the point of sale.
Though these two actions do increase revenue, they build on existing customers in the service domain. To grow revenue further, you need to tap into a base beyond your existing service customers.
- Sell services at time of product or equipment sales
- Sell services to adjacent and competitor equipment
To convince these “new” customers, you need to articulate how good and valuable your services are.
For more information about ServiceMax from GE Digital please visit www.servicemax.com.