Is Your Service Organization Turning a Profit? It Should Be.

“I’m sorry, that part is not in stock. We’ll have to order it.”

“Our service center is closed. Please call back tomorrow.”

“A door latch is malfunctioning. We’ll have to move you all to a different plane. Thank you for your patience.”

Sound familiar? These are just some of the customer service phrases echoing around the globe—in all languages—and into the ears of all types of consumers from business travelers to homeowners to heavy equipment operators.

No one wants equipment downtime, whether it’s a plane, a washing machine, or a crane. For the traveler it’s an inconvenience. For the homeowner it’s the reputation of the brand at stake. For the crane owner it’s lost time and money.

You could say the same for all – it’s a costly pain that affects not only the customer, but the manufacturer as well.

Customer satisfaction levels directly impact the bottom line. When a manufacturer loses a customer it loses the opportunity to generate revenue through repeat purchase, up-sell and cross-sell.

In fact, improving service profitability has become a board-level initiative and a chief concern of most executives. The quality of customer service is only part of a much larger picture. Their goal is to strategically improve the entire service organization to ultimately drive revenue.

Sumair Dutta, Service Management Research Director at the Aberdeen Group, explains it this way: “Manufacturing executives look at service strategies to differentiate themselves from their competition and to ultimately drive profitability within the services side of their business.”

In his recent keynote at Aberdeen’s Chief Service Officer Summit, Dutta pointed out that “fifty three percent of manufacturing companies manage service as a profit center, and 63 percent of companies generate a profit margin on service.” He noted that, “this is a significant trend if we look back five years to when companies were purely cost-centric in service and now they’re profit-centric.”

In fact, 30 to 50 percent of a company’s profits can come directly from service part sales.

Manufacturers are investing in improving the quality of their service information—which includes parts information, user guides, warranty plans and maintenance manuals. If this information is out-of-date or hard to access, there is a direct correlation to product support issues and profit loss.

Winning manufacturers must improve information accuracy, provide configuration specific information and communicate with a product support ecosystem that often spans geographic boundaries. They must invest in advanced service information solutions which can give everyone the right information, at the right time.

Improving the quality, accuracy and usability of service information is a key strategy service organizations are implementing to drive profits. How is your company getting the right service information into the hands of those who need it most?

This entry was posted in Best Practices, Service Lifecycle Management and tagged , . Bookmark the permalink.

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