Customer Relationship Management

1) Companies are moving from product focused to a service focused model.

Owing to decreasing revenue and margin contribution from new product sales and stagnating new product demand, manufacturing companies are increasingly focusing on post sales service for market differentiation as well as revenue generation. Increase in installed asset base and life of the assets generates demand for maintenance activities over the lifetime of the assets. Therefore, services for these installed assets are becoming very lucrative.

2) Revenue via services is growing as a % of overall revenue.

Companies have begun to derive a greater proportion of their overall revenue from Services owing to the following:
• Revenue from services is more steady, predictable and counter-cyclical to product revenues.
• The profit-to-revenue ratio in services is higher than in the traditional products business, given the eroding margins on products from increased competition.
• Customer potential spend on services and consumables is far higher than the initial sales price of the equipment.

3) Companies are leveraging service channels to increase revenue. 

Customer service is being seen as a channel to cross-Sell/Up-Sell and increase revenue and profitability as below:
• Multi-layered service contracts help win long term business from customers as these assure the customer that all their service needs will be addressed by the company.
• A customer service rep with a 360 view of the customer is in a position to understand customer needs and make recommendations about other products/services that are of relevance to the customer. Customers are more receptive to this message as it is communicated at the time of service delivery and would be seen as ‘tying in’ to their requirements.

Specific to Field Service channel, these trends can be extended as below:

4) Field service is transforming from a cost center to a profit center.

Companies are no longer looking at field service as a ‘necessary evil’. They are enabling their field force with processes and technologies to provide quality service that will help transform the service function to a profit center as below:
• High quality service delivery can act as a tool for customer retention and therefore increased revenue in the long run.
• Efficient service delivery in terms of having the ‘right technician at the right place at the right time with the right parts and tools’ can help increase the profitability of the service function.
• Proactive repair and maintenance of assets can reduce costly SLA violations and warranty charges down the line.

5) Mobility has become a key to field service delivery.

Organizations are providing their Field force with mobile devices that give them access to real-time data on the field and keep them active, productive and efficient. Mobile solutions for Field Service can achieve the following:
• Eliminate Manual and Paper work
• Provide ability to get real-time customer data
• Provide access to product and inventory data
• Provide ability to invoice on-site and reduce the daily sales outstanding
• Provide ability to cross-sell/up-sell service

In my subsequent posts, I intend to explore how these trends have influenced IT solutions for Field service and how these solutions can be leveraged to enable the field force deliver better value to their customers. Would love you hear your thoughts and observations before proceeding.

About the Author

Shyamalee is a Lead Consultant with the Enterprise Solutions unit. She has end-to-end implementation  experience in CRM modules spanning sales, marketing, service and analytics. She has successfully managed a transformational CRM program at a global logistics provider and is currently anchoring a CRM solution initiative. Shyamalee will blog on various aspects of CRM, specifically around service and mobility solutions.