Why do people buy your products and services?
People buy your products because they need the outcomes they get from using them, not because they want to use your service eventually. They traded their cash for your product because they expect the business outcome they enjoy from using your product will exceed the cost of the product plus all associated fees. This concept was discussed in a previous blog post, How Do You Monetize Peace of Mind?
Customers buy your services for one or more of these reasons:
- Ensure uptime – use your product when they have a need
- Control costs – have an Op-Ex that is fixed for a fixed amount of time
- Get peace of mind – reduce the job stress from trying to work around a non-functional product
- Remove hassles – the stress from trying to get a purchase order, explaining why something is broken “again,” manipulating accounts, etc.
Why customers hate needing service
Customers rightly believe that every time they have to call your service team, the equipment you provide is not creating enough value for them – it costs them money. They also know that some downtime is inevitable, and they would love to schedule it when it minimizes how much money they will lose. They would instead not need to see or talk with anyone that distracts them from doing their primary job, but they are realists.
Remember that your customers are generally experienced owners or users of equipment like yours. They know that eventually, there will be a compelling reason to reach out for equipment service, probably at the worst time in their schedule (it usually does). For example, let’s say the company shut down between Christmas and New Year’s Day. When they reopen, the employees find a backlog that must be cleared quickly. Just as they start working, your product fails. What a crappy way to start the New Year! Tempers are short, and situations tend to degenerate quickly.
How to prevent service calls
There are three styles of service delivery:
1. Reactive (descriptive) – this term combines two different ideas:
a. Descriptive – What happened?
b. Diagnostic – Why did it happen?
When something fails, you send a part, an engineer, or both to restore good operation. This is like when your car overheats without warning, and you take it to a repair shop.
2. Predictive – What will happen, and when will it happen? Your system uses sensors, historical data, machine-to-machine communications, and software to answer these questions. This combination is called the Industrial Internet of Things, like the “service engine soon” icon lighting up on your dashboard.
3. Prescriptive – What should we do now? Building on the results from the predictive stage, your system tells your customer and your support desk what steps to take and when to minimize a potential product failure. This is like your car displaying a message saying, “Replace the water temperature sensor.”
In some systems, like with tractors/trailers, the system knows your current location from the onboard GPS, knows the location of the nearest authorized repair facility, checks the availability of a spare sensor and that a technician and repair bay will be available, makes an appointment for the repair and notifies both the driver and dispatcher. To read more about this system, as it existed in 2013, click here.
Prescriptive maintenance combines predictive maintenance and the intelligence and experience of a human or software tech support engineer.
Here is an excerpt from an article in Food Engineering Magazine that summarizes the prescriptive service delivery style. (To read the complete article, you must provide an email address, but they are very respectful and do not bombard you with offers.)
Unlike in the past, most machines built today will come with condition monitoring systems built in or added for a modest additional charge. Why? Because, coupled with a data historian, predictive maintenance (PdM) system and Internet-based technology, the status of a machine can be monitored by the machine builder or the end user—anywhere, anytime.
Knowing when a machine will fail and for what reason, a food processor can plan maintenance at an opportune time rather than incurring unscheduled downtime. What’s more, the machine builder will often be spared an expensive trip across the country or the world. These all equal big savings.
This graphic from IDC shows how businesses are progressing through the service operational journey.
It shows that both break/fix (reactive) and preventative maintenance (usually based on historical data) to replace parts are losing favor and being replaced by predictive and prescriptive maintenance.
Why should your business start this journey?
If your company is internally focused, there are two business reasons to start moving down this journey:
- Your competitors offer this capability, and your lack of it impacts product or service sales.
- If you offer this technology before your competitors, they will be at a competitive disadvantage and have to work hard to catch your company.
In either case, offering more timely service improves your competitive position.
However, suppose you put your customers ahead of your business and believe that creating value for your customer is the prerequisite for creating value for your business. In that case, there are many reasons to move forward. Here are a few of the most significant customer value creators:
- Minimize the amount of out-of-spec products produced and delivered
- Improve customer productivity and employee safety
- Customer can adjust their schedules when maintenance is required
- Equipment and processes can be reconfigured remotely, in real-time, to adapt to failures
- Improves customer status communications with their customers
- More likely that people will buy your products and services
How will your prospects feel about doing business with a company that can offer a list like this about the tangible benefits they will receive from buying your products and services? I bet it helps blow your competitors out of the water.
Impact of proactive service on service profitability
Here are some of the benefits your service business will enjoy:
- You can offer a high-value premium service at a higher price than with your traditional reactive service
- Repeat visits and expedited parts shipments are eliminated because your ability to forecast spare parts increases
- Dispatching the “best” person to repair the product will be more accessible.
- If you also implement augmented reality equipment, then troubleshooting will be more accessible, and you can shift your field team from being technical gurus to being competent people with excellent customer skills. This will increase customer retention and give your team a better opportunity to upsell and cross-sell services and even products.
These benefits will help pay for the costs associated with implementing proactive service.
Your next steps to help people buy your products and services
The job of the Head of Service is to prevent your customers from having to call your organization for remedial service. Getting to this state may mean lobbying/selling Marketing, Product Management, Finance, Engineering, Sales, and the C-suite to add sensors, processors, and communications to your products. You will also lobby for retrofit kits your team can sell and install on existing products. Your team will have to develop new skills and products to profitably help your customers significantly improve the uptime of your equipment. In other words, you have an enormous task ahead of you. But it is worth undertaking this task because the alternative is pretty gruesome. You and your business will die slowly because your customers will shift their loyalty to your competitors who offer these services. You will struggle to downsize your department while trying to keep your ever-diminishing customer base happy.
Not a happy prospect.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization improve customer outcomes, please get in touch with us or check out some of our free articles and white papers here.