It’s not an exaggeration to say that every product organization that offers aftermarket services is evaluating ways to grow that part of their business.
It’s a driving force for organizations in verticals as diverse as appliance and electronics, industrial machinery, automobile, and IT technologies like servers, networking equipment, data storage, cellular phone towers, and more.
And all of these companies are looking for ways to drive services growth by conducting break-fix repairs, installing hardware and (increasingly) software upgrades, reconditioning equipment, carrying out inspections and day-to-day maintenance (proactive and reactive), and providing technical support, consulting and training.
It makes sense: For many companies, services offer the best opportunity for mid- and long-term growth for both new and existing clients. And there are several options, including introducing new service-focused business models, tiered service offerings with tiered pricing structures, subscription-based services and even pay-per-outcome models.
The challenge facing these organizations is that the success of these re-imagined services depends heavily on having a deep understanding of customers wants and needs, effectively utilizing real-time data and insights derived from IoT-engineered products or new connected ones, the development of advanced service tools, and perhaps modification of the current operating model.
In this fast-paced digital-first environment people don’t just buy the product or service, they also buy the experience you deliver.
Most organizations are good at providing data to their customers. This data is marginally converted to insights and produced in the form of reports or necessary data access APIs. And even those insights are general and absolute: They do not take into account a particular customer’s situation, nor do they learn about customer-specific events.
It is up to the customer to take this data and turn it into insights. And it is not surprising then to see the churn in service contracts and difficulty for sales teams to up-sell or cross-sell to existing clients. That is because the customers have yet to receive the perceived value from their investment in the organizations’ services.
The way to deliver the value is through investing in what I call “Smart Service Experiences.” These smart services continually stay connected, understand the actions customers should perform and drive higher experience value by suggesting next best actions. The higher the degree of impact of these actions, the greater the ability to charge more for these re-imagined services.
To successfully launch smart service experiences, the entire organization must come together. It starts with a board-level, top-down commitment to changes that may affect business and operating models. And it continues throughout the organization.
The risk of launching new smart service experiences is that there are many moving parts. The roles of connected and embedded technologies and the cloud have to be decided, along with how to utilize analytics and which insights to deliver to customers. A monetization strategy must be determined. And an honest assessment must be made of the organization’s ability to manage the significant internal changes required to deliver a successful transformation.
A solution is a methodical approach to organizational transformation driven by customer experience opportunities, one that is understood and grounded through research and voice of the customer. Investing in creating a Customer Experience (CX) Center of Excellence benefits the organization by continually providing the right focus for investments.
Another area of investment is in conducting a Service Design that maps the to-be customer journey to the operating model. A Service Design blueprint provides knowledge of gaps that exist and investments that will be needed in the operating model to deliver on the customer experience.
Aside from immediately gravitating towards creating prototypes that confirm the inner workings of the technology, the focus first should be on translating customer feedback into sustainable service offerings that have already been vetted by friendly customers. Making the case then to invest in a prototype and move to a production schedule gets much more comfortable and is grounded in facts.
The technology consideration exercise has to take place. Even though technology is making implementing smart solutions easier, the speed of change in this technology itself makes it difficult to pick.
One way to reducing risk is to reduce the number of potential partners that must be managed.
The best way to reduce the number of partners is to find partners that can deliver multiple pieces of the project puzzle. Or, even better, find a partner to manage the entire project and a team of specialized resources.
The Productive Edge consulting approach operates like a general contractor on a construction site. Not only do we take on the project management role, we provide specialized services for some of the requirements discussed above, and bring in specialist “subcontractors” as necessary. This drives down risk significantly, frees the client to focus on managing internal change, and substantially accelerates processes, helping the client go from concept to prototype to production faster.
At this point in time, when there is an imperative to bring connected smart service experiences to market, Productive Edge understands the complexities and risk of the endeavor, and works tirelessly to remove risk barriers and ensure your success. Get in touch and let our experts help you create a connected enterprise.
Adapted from “Using IoT & Connected Products to Accelerate, Manage and Scale Aftermarket Services Growth,” by Raheel Retiwalla. To read the complete article on LinkedIn, go here.