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Service offering development key success factors

Customer Business Orientation – It is important that customers perceive your service offerings as supporting their value creation. It is not enough simply to explain the technical excellence with which you will maintain their equipment. Each customer has their own view on what he should do himself (“make”) and what he should outsource (“buy”). This strategy is rarely guided by customer segments, but by individuals. You will probably want to support your customer throughout the lifecycle of the equipment and you want to make it obvious to them that, whether they decide to do a lot themselves, or to buy more or less everything, you always have the offering that will improve their value creation. The portfolio should also be set up in such a way that it is obvious to the customer that it is beneficial for him to buy more, rather than less. Note that performing service on “things” is certainly not the only value to be provided to a customer, the customer himself needs to be serviced. When done the right way, this will drive your service revenues and increase your service business growth.

AlignedTo be effective, your service portfolio needs to be aligned with company strategic intent, with your knowledge about competitor offerings and with the capabilities of the different service sales “channels” and of the delivery organisation. The portfolio needs to be adjusted or created to suit its sales channel – your product sales will not sell the same services as your technicians and your partners will not sell the same services as you promote on your website. A perfectly aligned service portfolio is optimized and tailored for your specific situation to provide maximum support to your service sales and delivery organisations.

Leverage Your Size – One of the cornerstones is building a strong alternative to the customer’s “do it yourself” option, or their option to buy from local service providers. It is important that you leverage your size and create unique advantages that are only available from you because you are much bigger than the customer or the local service provider operation. This will probably be in the area of offering features, economies of scale, or risk management. This is your opportunity to create unique sales points for your offerings as compared with most of the customer’s alternatives.

Portfolio Structure – The portfolio guides the way services are sold and delivered. Each service in the portfolio needs to be broken down into a commercial view, a technical view and a delivery view. Customised and standardised services need to be treated differently. Also, project and recurrent services have some basic differences that need to be guided by the portfolio structure. This will make it easier to manage and use.

Price & Profitability – Price model and price level are “features” of all offerings. They let you control pricing in different markets and control the packaging of several service products. The price model is an important tool for aligning customer value creation with the service fee. The price follow-up is procedure by which you regularly follow up on contracted prices and make necessary adjustments to price lists. We see many companies spending a lot of energy saving dollars in their service delivery machine, but with no control over the top line – the price – which is a strong contributor to the service business’ margin.

Specified in detail – It is clear to the customer what he gets for the price, it is clear to the service sales people what they sell and it is clear to your organisation how it should deliver the service. Mandatory and optional parts are explicitly explained. Specified services make it easier for you to understand when you are over- and under-delivering. It is extremely important when managing customer satisfaction that you know if you are delivering according to your contract.

Best Practice – The offerings are organisation-wide best practices governed by the service management organisation. These will help you explore sales and delivery synergies between the service units. These best practices are continuously improved by the service offering lifecycle management process (“Service R&D”), where you consolidate feedback from front-line service units in an organised way.

Service R&D – Involves how services are created or changed, how new equipment is added to a service as well as how services are continuously improved. An implemented Service R&D will make the service business agile so as to continuously develop and improve the portfolio to remain on top.

Ability to Change Your Way of Selling – To achieve the expected service business growth, you need to change the services offered and the way they are sold in your subsidiaries. This requires a change mandate and a methodology for implementing the change.

 

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