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Why Manufacturers Need To Think Service

Why Manufacturers Need To Think Service

What do IBM, Dell, Adobe, and Rolls-Royce all have in common? Each of these companies moved away from being mainly hardware manufacturers or product-based business, and created new high-value services--such as maintenance and consulting-- to offer their customers. This helped these forward-thinking businesses grow revenue and separate themselves from the competition.

Recently, China, the second-largest economy in the world has seen the industrial sector’s growth slowing down to 6% in 2015 from 7.4% in 2014. On the other hand, services grew to 8.3% up from 7.8% in 2014. Now, for the first time, services make up more than half of the Chinese economy at 50.5% up from 48.1% the year before, while manufacturing’s share fell down to 40.5%.

So now China is restructuring their manufacturing industries to be more in line with the service-centric economy. Here’s some reasons why manufacturers should think service:

Service Over Product Means Ongoing Revenue

The days of having customers buy a product or piece of equipment and then sending them on their way-- perhaps never to be heard from again-- are over for manufacturers that want to be successful. Nowadays, making sure the customer continues to interact with your business after the product sale and installation is critical. If you can provide value to your customers through service, you can meet their demands, beat the competition, and open up the door to chances of making ongoing revenue.

Compared to products, services boost margins for businesses. Furthermore, providing great service also helps manufacturers sell more products since customers will be satisfied and more open to purchasing additional equipment that will complement the products they already have.

Giving Customers What They Want

Today, customer satisfaction is more important than ever. A great way to achieve higher levels of customer satisfaction is to build a solid customer relationship by providing value to your customers. Service, not products alone, is what helps create higher customer satisfaction levels. Customers want more value from your business, but the value doesn’t come from products, since products have become a commodity to customers. For service-centered manufacturing organizations, the number of products sold is less an indicator of success than creating a service experience that your end-customers find valuable.

Business Growth from Service

Since focusing on service means creating a stream of ongoing revenue, it also means that being service-centric contributes to business growth. Instead of the customer buying one product and moving on, the lifecycle of the customer relationship becomes longer. And there are few things that help a manufacturing business grow quite like customer loyalty. Customer’s like being able to come back to the same business for their needs, and may even refer other customers or new customers to the manufacturer.

How Manufacturers deliver Valuable Services

The focus of a service-centric manufacturer should be delivering valuable services. In order to do this, businesses should keep the following things in mind:

  1. If you give your service technicians mobile tools you allow them to know what your customers need in real-time, and therefore they can provide individualized service that delights customers.
  2. Moving from a product-based business to a service-centric one does not only rest on the shoulders of your technicians who come face-to-face with your customers, but the whole team from the back office to the C-level needs to have it as a goal to provide great service.
  3. The best manufacturing companies use customer data to provide personalized services that go beyond selling products and truly add value. Only the manufacturer of the customer’s equipment can have the kind of insight to be able to provide that intricate of a level of service, therefore making them stand out from the competition.
  4. Make sure the relationship between the customer and your business goes both ways by utilizing the direct connection between the service techs and the customers to bridge gaps and get feedback on how customers are using your product, how the product can be improved, and anticipate when the customer will need new equipment.

Transitioning from manufacturing to service is beneficial in so many ways. According to the Aberdeen Report, “The Road for Manufacturers Goes Through Service,” customer satisfaction is at 87% for leading service companies compared to 83% for manufacturers. And leading service companies saw an 8% improvement in service revenue while only 5% of manufacturers did. The shift from being product-focused to service may be difficult to make, but pays off in the long run through customer satisfaction, customer loyalty, and increased revenue.


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