17 December 2015

Servitization customer experience and sales

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The quality of the servitization customer experience is what ultimately moves customers to your services model—or not

How do you prepare your existing customers for your transition to a service business? Some of them might understand the value of servitization immediately, while others are reluctant. You need to show them how your planning and delivery of an outstanding servitization customer experience can deliver a much higher value than they have seen from you so far. Your early communications with them are essential in making the transition work. You also need to make sure your employees, investors, and other stakeholders are on board.

Communications to ease cultural change

Because servitization involves a thorough change in the company culture, you need to engage with your employees, investors, and customers to prepare them for the transition and assist them in understanding its advantages and impacts. Your communication strategy can make all the difference in building support from your stakeholder groups and ensuring a good comfort level with the changes to come. If you don’t handle this well, servitization will look like the loss of a proven, product-based business model, to be replaced by a subscription service that costs customers more over time, always requires them to make payments, and they won’t even own the product—whereas in actuality they can probably gain a lot more from servitization than they did under the traditional approach to meeting their needs.

Highlight the benefits customers can expect

When it’s time to ready existing clients for the enhanced servitization customer experience, expect at least some of them to be a little wary. Ironically, they may be more resistant if their past experience with your company’s equipment and machinery products and your resolution of breakdowns and maintenance issues has been positive. Why would they want to depart from a successful practice?

That’s when your understanding of your customers has to flesh out the servitization value story. You need to tell them how your services will address their pains, using the most advanced technology and resources available. Previously, when a machine or another asset failed and needed to be repaired or replaced, it took a customer request to initiate the correction. No matter how prompt the company’s response, there was likely a period during which the customer did not have the benefit of the product. The customer’s own customers may in turn have experienced delays or service-level compromises. That does not need to happen anymore: When you connect equipment, vehicles, or machines to the IoT, you can keep tabs on their workloads and performance, repairing or replacing parts, components, or the entire asset before an outage takes place. Under servitization, your customers can receive a higher return from the assets you provide, and their costs will be predictable and controlled.

Ready your infrastructure for an optimal servitization customer experience

As you introduce the services model, you will need to set service-level commitments that fit your customers’ needs, and you have to deliver to or above those standards. Your account and field service managers will play a key role in helping customers see that the service model is real and works to their advantage. They need to maintain a strong supporting presence with customers. Some companies we know achieve this by means of education and guidance on how best to use a machine or other asset to achieve its performance potential, using IoT data to hone in on specific aspects in the running of individual machines and subsystems. They also use the data—often combined with the results of customer feedback surveys—to inform regular business reviews with their customers, improve their engineering design, and take advantage of every opportunity to create a better servitization customer experience. Often, they also share industry best practices and useful news with customers, help them understand and address developments and issues that affect their industry and machine utilization, and use process optimization and automation to ensure that service contract renewals happen smoothly.

Even so, some of your clients might not accept servitization for a long time, or never. Track the metrics on these accounts and make sure they are profitable. If that is no longer the case, you might need to refer them to another vendor.

Other posts in this series:

If you’re interested in discussing the servitization customer experience and any of the issues the transition to servitization brings up, or have questions and feedback, I would love to hear from you. get in touch with me or contact To-Increase.

Luciano Cunha,
Luciano Cunha,
Chief Executive Officer (CEO)

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