[Pending] How to transform your field service department from a cost center to a profit center?

Today, there is growing awareness that substandard service costs money. Moreover, the risk of losing customers is real after a bad experience with customer service or field service. Companies also realize that field service personnel, and not necessarily the sales team, are often the only point of contact with a customer. They are there at critical moments when the customer needs help, is looking for knowledge, or even looking for a new product.

Service is also playing an increasingly important role in the business model of companies. According to a recent study by ABN Amro, large machine manufacturers such as ASML (high-tech), Marel (food), Philips (medical), and Vestas (wind energy) now derive 20 to 40 percent of their revenue from services. Some organizations go even further and focus on servitization, offering additional services as a complement to the product. Sometimes customers simply buy a result instead of a product. An example of this is Philips offering LED lighting as a service to retail customers.

The benefits of servitization can be significant. Service contracts form (in addition to traditional product and machine sales) a stable and predictable source of income and ensure a natural long-term relationship with the customer. A report by enterprising bank NIBC shows that the average EBIT profitability (operating result after depreciation) of services at many companies is 2 to 5 times higher than that of their products. A small caveat: in our recent study on Digital Maturity in manufacturing and supply chain companies, it turned out that only about one-fifth of respondents intensively embrace the 'as-a-service' model. So there is still some growth to be expected.

But how do you make a service department profitable?

The first way is to make your service work more efficiently, partly by using new technologies. Because technology improves the customer experience. In addition, service professionals need to take on a different, more central role.

Technology improves the customer experience

Technology that makes service more efficient? That smells like the old low-cost model, as described above. However, there is a big difference. Today, technology is not (only) used to handle interventions faster, but mainly to significantly improve the customer experience.

A few examples:

• IoT sensors continuously send critical operational parameters via the cloud, allowing technicians to anticipate when maintenance is needed.
• Augmented Reality (AR) allows product specialists to guide and instruct technicians remotely via an AR headset.
• Field service management software not only enables organizations to digitize work orders but also to plan resources, ensuring the right expert and parts are available for an intervention.
• Online or mobile access to machine history and other supporting documents enables field technicians to find the right solution to a problem faster.

In practice, a better customer experience often goes hand in hand with cost savings. Remote collaboration tools, for example, not only ensure that an expert can provide advice to a customer faster from a distance. It can also mean that you don't have to fly the only expert in your company around the world (and thus incur high travel costs) to help a customer on-site.

A new role for service professionals

Technology alone does not make your service department a profit center. As long as the focus remains on firefighting, ticking off lists, and emptying the inbox as quickly as possible, there is not much profit to be made. But if you start to see service professionals as advisors who help customers get more value from their product or installation, then you are on the right track. Moreover, such a mindset is essential to make your service a profit center.

Field service thus takes on a more central role in the company. Service engineers can partly take over the role of sales, as they are best placed to spot opportunities or do cross-selling. In addition, field service plays an important role in product development. They receive crucial feedback from the customer that is invaluable for further product development: what are the biggest problems with a machine? Which features are used the most? Which are actually redundant?

The new role for service has quite an impact on IT and the overall organization. It mainly means that field service systems must be integrated with the rest of the company, including ERP, inventory management, invoicing, CRM, and much more.