Editor’s note: This article previously appeared on Diginomica.
Resellers operating in dealer networks have been on a rollercoaster ride since the 90s in the search for margin in products and services. They likely recognize a phenomenon described by Alexander Olsen, associate professor in the Department of Psychology at the Norwegian University of Science and Technology (NTNU). According to Olsen, the human brain uses both a proactive system and a reactive system to manage daily decision-making tasks. He found that the reactive system kicks in when something unexpected happens. This can lead to anxiety and a need to rip up old plans and quickly develop new ones.
When it comes to servicing customers, resellers typically encounter multiple pain points. From unbilled overtime and parts inventory to recovering warranty costs, reducing technician costs, and keeping customers happy, field service has traditionally been a burden to the business. With the growth in machinery rentals and service leasing disrupting the historically simple sale of a ‘product’ and attached service contract, resellers must feel as though they are being pulled from pillar to post just to make a decent living.
Two Reasons for Change Now
Nevertheless, many have made a decent living from service contracts. So it may not come as a surprise that there is a widespread mood among dealers that if it isn’t broken there is no need to fix it. Why spend money on changing processes and procedures that have been in place for years? There are two reasons.
The simple answer is because everything is already changing around resellers and this will only be accelerated by the post-Covid-19 economy. OEMs are already looking to improve their overall visibility of machinery in the field. They are looking at changing SLAs towards preventive maintenance and whole economic models are evolving around servitization—selling products and services based on outcomes rather than just a contract that covers the expected lifetime of the equipment.
The second reason is that there are systems today that can give resellers the ability to predict change, improve customer service quality, and guarantee revenue.
Admittedly, servitization is like a round peg to a square hole for traditional dealers. Old manual processes just cannot cut it when it comes to managing the sort of product and service contracts that are emerging in the market. The increase in rentals is a good example of this but instead of just renting equipment, OEMs are looking to sell an outcome, such as 100% uptime. It’s less about the machines and equipment and more about the services that are wrapped around the machines. Although that is traditional dealer territory, without ongoing visibility of equipment status and performance and an optimized field service structure, dealers will not be able to cope with the demands of servitization.
How to Regain Control
This is where implementing a digital field service system allows dealers to regain control. Having an organized overview of customer assets and entitlements enables the dealer to predict change, to see where customers are not getting the best out of machinery or where potential equipment problems may impact the SLAs. With customer visibility, dealers can make informed decisions that directly improve their service quality and therefore customer satisfaction. Service dispatchers would be fully aware of all service jobs and importantly be able to dispatch the most suited engineer, with the right skills and parts to the right jobs, reducing costly truck rolls and improving productivity and efficiency.
The bottom line is that this not only guarantees a regular income stream, it will also reduce the costs associated with managing services. Field service engineers become more accountable and more engaged. A field service management platform enables customers to self-service, at least for minor configurations or installations, reducing costs further and helping cash flow. Job visibility ensures nothing falls through the cracks, whether that’s billing overtime or returning rentals to OEMs fully serviced. It also enables a proactive mindset, which, if Professor Olsen is to be believed, would also mean less anxiety and no nasty surprises.
For resellers, the status quo mindset of ‘we’ve always done it this way’ leads to a dead-end. The digital expectations of OEMs will only increase and in a rapidly changing market, the window is closing for dealers to adapt.