What are the digital services manufacturers can offer?

What are the digital services manufacturers can offer?

Thrive during disruption by growing new digital services

Posts by Jan van Veen
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With today’s disruption from Covid and the economic downturn, continuing services innovation is paramount to survive and thrive. Customer needs are changing, and new competition is entering your industry. Some of the critical success factors are service R&D, service product management and sensitivity analysis. Jess Kindler (Epiroc) and Jan van Veen (moreMomentum) discuss the development of Digital Services at Epiroc.

Manufacturing companies have a tremendous opportunity to grow and thrive through digital services if they escape from business-as-usual. For most manufacturers, the growth will come from other digital services than predictive maintenance or remote services. There are many different types of digital services. In this article, I describe the 8 different types of digital services which can help you and your teams grow your service business and thrive.

Introduction

Digital transformation and digital services have been a hot topic for a while in most manufacturing industries. Besides the various technologies, like AI, smart glasses and digital twin, most dominant topics today still seem to be predictive maintenance, remote diagnostics and remote resolution.

There are many more types of digital services that solve other customer problems, which have more potential to grow your business and help you thrive in these disruptive times.

Manufacturers run the risk of being stuck in business-as-usual, falling behind the competition and new entrants and ultimately miss out on today’s opportunities. That is why the moreMomentum Services Community captures, shares and applies new best practices of digital services and radical business innovation. This article is part of a series of articles about Digital Services by Manufacturers.

What are digital services?

Digital services in manufacturing are solutions to your clients’ problems which involve one or more of the following elements:

  • Digital technologies and capabilities to deliver the service, like automation, data and algorithms.
  • Digital channels to deliver the service, like software (on-premise or hosted in the cloud), through connected devices or online interaction with users.


Digital offerings, where the solution itself is digital or related to digital challenges of clients.

what are digital services

In this article, I will focus on 8 different types of digital offerings.

8 types of digital services by manufacturers

Digital enhanced equipment

Digital services: Digital Enhanced Equipment

Equipment is often enhanced by software for additional functionality, automation and control to improve the way it functions and performs. The result could be fewer incidents, higher efficiency, reduction of energy usage, lower consumption of consumables etcetera.

These functions can run on board of the equipment or in the cloud.

Examples

Potential impact

Most often, these innovations address the expected next step improvement in an industry, which are being pursued by most manufacturers in that industry. It’s all part of the dominant logic in the industry. Hence, these are sustaining innovations which often may be required to defend your market position and your “license to operate”.

Although these digital solutions are not a service, they can have an impact on the expected services like:

  • An increasing need for software and networking support.
  • An increasing demand for performance-based service contracts, reducing disruption of your clients’ operations.

An increasing need to connect or integrate with other IT and networking service providers to offer a complete and remarkable solution to your clients.

Digital enhanced maintenance Services

Digital Services: Digital Enhanced Maintenance Services

By using more automation, data, connected assets and remote support, you can increase the effectiveness and efficiency of maintenance:

  • Less planned and unplanned downtime, less disruption of the operations of clients.
  • Better and more stable condition of assets, leading to better performance of the equipment.
  • More options for distributing the roles and activities between the asset-owner, user and service provider.
  • More efficient maintenance operations.

Examples

This is the type of digital services many manufacturers are working on and have the dominant focus on when it comes to digital services.

  • One of the most common examples is how Rolls Royce’s aeroplane engines send an ongoing stream of data during flights to have the next maintenance prepared before touchdown. They do all maintenance during the off-loading and on-loading and are ready before the plane has to leave for the next flight.
  • ThyssenKrupp predicts any issues with their elevators before they occur and plans the necessary maintenance and replacement of components in a well-planned manner before failure. This minimises unplanned downtime and makes the service delivery operations more predictable and efficient.
  • Remote resolution of software issues.
  • Remote assistance for self-service, where your clients’ employees perform interventions on the equipment with support via simple communication channels like a video call or more advanced techniques with smart glasses.

Potential impact

In essence, there are two major driving forces in play here:

  • Reducing the disruption of your clients’ operations by reducing mean-time-to-maintain, mean-time-to-repair, mean-time-between-maintenance, unplanned downtime, increasing uptime and the like.
  • Reducing the cost of the maintenance for the client and you as a service provider.

The name of the game is simplifying maintenance through smarter maintenance and enhanced serviceability of the equipment.

In most industries, this will be a sustaining innovation, following the expected journey of continuously improving uptime and reducing cost. The service-fees will most likely decrease in time – not increase.

Data-driven asset management

Digital Services: Data Driven Asset Management

With sensors, location trackers, software and networking, you can provide useful data and actionable information to the asset-owners or users about:

  • Condition.
  • Location (which can be valuable when owners/users have a high volume of mobile equipment).
  • Performance.
  • Utilisation.
  • History.
  • Upcoming interventions for maintenance.
  • Suggestions to improve performance or utilisation.

This can be offered through a hosted dashboard which sends actionable notifications. It could also be a data-stream into your clients’ ERP-system, where further processing and algorithms take place, together with many other data from other equipment and data sources.

Examples

  • Hilti offers Fleet Management Services for construction companies to manage their total assortment of power-tools. Their platform provides useful insights into:
    • All the tools they lease from Hilti.
    • With which employee each item is.
    • The condition, age and history of each tool.
    • Insight in utilisation rate so project managers easily can see when they (temporary) need additional tools.
  • Caterpillar offers Construction Equipment Fleet Management services, including experts to help clients analyse the date for valuable and actionable insights.

Potential impact

More than the first 2 types of digital services above, the value proposition is significantly expanding from only providing good equipment in good condition towards helping customers to improve productivity, efficiency, utilisation and risk-reduction. These services solve other customer problems, which have different owners in your clients’ organisations. It will also involve a closer collaboration with clients, integration of operations of clients and service providers.

This will have a significant impact on your:

  • Value proposition to clients.
  • Customer loyalty and lock-in.
  • Revenue potential.
  • Required capabilities and mindset.

Digital education

Digital Services: Digital Education

Most manufacturers already have some sort of customer training for operators, users and maintenance departments. You can expand the scope of your education services to address your clients’ challenges like:

  • Scarcity of well trained and educated staff.
  • Increasing pressure on performance is putting pressure on the competencies of their staff.
  • Ongoing digitalisation changes your clients’ operations and requires more digital capabilities.

Education in general is going through a major shift at the moment. People have been changing the way they learn and solve problems using all kind of sources and media at their fingertips.

This is a vast domain in itself. A few important trends are:

  • Blended learning (mix of channels and formats).
  • Anytime, anywhere, 24/7.
  • On the job, related to the job.
  • On-demand, just-in-time.
  • Customisation based on data and smart algorithms.
  • Bite-sized, micro-learning.
  • Online, mobile.
  • Social learning.

In essence, training and education are shifting to online, remote and becomes more data-driven to increase effectiveness and efficiency.

Examples

Based on data coming from the truck’s sensors, other data like weather, historical data from the truck and the truck driver, MAN Trucks offers live training in the truck cab in order to:

  • Provide immediate feedback and tips to the truck driver on how to improve the way he drives.
  • Assess proficiency levels of the truck driver.
  • Provide individual and tailored training.

The value for fleet owners is fuel savings, reduction of CO2 emissions, lower maintenance cost, fewer accidents, no downtime of drivers due to training.

Potential impact

The effort and investment in developing advanced training content and methods and in staying up to date will increase.

There is a serious opportunity for growth of revenue streams, customer experience and loyalty as many clients need new competencies and capabilities for their new ways of working.

Join peer-discussion for best practices to grow your digital services


Data-driven process optimisation

One of the significant impacts of digitalisation is that your clients are going through a transformation. Their operational, tactical and strategic decisions are becoming more data-driven. This affects any business function, like supply chain, marketing, sales, asset management, maintenance, service delivery, manufacturing, R&D and finance. Your clients will be building the necessary capabilities and will be looking for new solutions and services to build these capabilities or outsource part of the capabilities.

As a manufacturer, you can play a role for your clients in their endeavours to optimise operations, reduce waste and more.

Digital Services: Waste Reduction

Examples

Potential impact

As these kinds of service emerge, the impact is significant:

  • Manufacturers need to advance their value proposition, brand, mindset and capabilities. They will need to engage other stakeholders in their clients’ organisations with pretty different content.
  • Clients will be looking for new solutions and services, which will be offered by system integrators and data-native service providers as well. These new players can push manufacturers down in the “food-chain” and take over the customer relationship.

This is a unique opportunity to enrich your value proposition, expand your customer value and generate new value streams to thrive in the future.

Platform Solutions

Digital Services: Platform Solutions

The last decade we have seen quite a few market disruptions coming from new digital platform-offerings which provide easy and high-volume access to – and interaction with – the market, solution providers and peers. This involves connectivity of things, software, data, people and businesses.

Examples

  • We all know the usual suspects like Apple, Netflix, Airbnb, Uber and the like.
  • Siemens’ industrial IoT-as-a-service (Mindsphere) that connects a multitude of different devices, instruments and machines on which multiple equipment providers, software providers and service providers connect their offering and hence provide complete and integrated solutions.

Potential impact

For most manufacturers and service providers, the solutions they provide are not complete solutions for a more significant customer problem. Alone, these offerings do not solve the problem and hence do not add value. For example:

  • A paint manufacturer will only be able to optimise its production process when combining the data and algorithms from all equipment from all vendors. One vendor cannot make much difference.
  • Also, when all these equipment manufacturers need a connection and pull out data from their clients’ systems, the paint manufacturer will have a new – unsolved – problem, which is an uncontrolled myriad of connections, security vulnerabilities and complexity to manage.

A few of the opportunities could be to:

  • Partner for connected solutions.
  • Connect to emerging platforms.
  • Offer such a platform, potentially in partnership with other technology and service providers.

Consultancy Services

Digital Services: Consultancy Services

The digital transformation is a significant challenge for any business. Also for your clients. It does not only involve rapidly changing digital technology and industry-specific proprietary technology. It also affects their processes, people, operating model, business model, strategy etcetera.

This is a unique opportunity for existing consultancies a new niche-consultancies. Also, manufacturers have the opportunity to offer their internal development and consultancy capabilities to their clients.

Examples

  • Philips Innovation Services positions itself as the R&D and engineering partner in bringing innovations of their clients to the market. They ensure a smooth end-to-end development process which is required for complex medical or high-tech innovation.
  • Seco Consultancy is a business unit of Seco Tools, a manufacturer of tools for metalworkers. They support their clients in particular challenges around Industrial Internet of Things to maximise production performance in the digital age, High Mix, Low Volume (HMLV) manufacturing and other production methods.

Potential impact

The opportunity is to become a trusted advisor and build deep customer relationships with multiple stakeholders in your client’s organisations. Also, it will help to position your company as a thought leader, making your brand more attractive and improving your position to partner with other (new) players in a rapidly changing industry. When well-managed, these activities can be at least financially self-supporting, if not profitable.  

Product-as-a-service

Digital Services: Product-as-a-Service

Product-as-a-service offerings are often seen as the holy grail of any servitisation-journey. These are services offering your clients the value from a product without them having to own and operate the product themselves. They outsource (part of) the operations around the product.

This is much more than financing the product combined with smart maintenance services, supporting your client to shift from CAPEX to OPEX.

Examples

  • Data storage in the cloud.
  • Print-on-demand services.
  • Siemens offers Public-Private Partnership models, in which the operation of a project is taken on by a company that brings together expertise, personnel and capital from both Siemens and the local authority or the public sector in general.
  • Fresenius, a kidney dialyses instrument manufacturers, runs complete dialysis departments for hospitals. The nurse helping the patients is an employee of Fresenius, not the hospital.
  • Signify’s Lighting Services offer managed services where they design, build, manage and operate the lighting infrastructure of their professional clients.

Potential impact

In some industries, the market is increasingly asking for these kinds of managed services. It radically changes the overall value proposition, business model, operating model and financial model of a manufacturer.

Conclusions

Digital services in manufacturing are much more than predictive maintenance and remote support. There are many opportunities to extend the types of customer problems you solve and to enhance your value proposition and business model. The big opportunity to grow your business and thrive during the digital and disruptive transformation is beyond the predictive maintenance and remote support offerings.

However, launching new smart maintenance and support offerings probably is critical to maintaining your position in the market and your license to operate.

In today’s digital disruption and economic downturn, the leading manufacturers that thrive will be adopting a broader range of digital services, enrich value proposition and business model. Leaving those stuck in a transactional product-centred approach behind, wondering how the leaders did it.

Which brings me to the question: With which digital services will you grow and thrive?

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Thrive during disruption by growing new digital services

Posts by Jan van Veen
New call-to-action

Join us in the upcoming virtual events about advancing services

The moreMomentum Services Community will be contributing with interesting discussions about

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Join us in the Field Service Asia Virtual Event

Interview with Jess Kindler, Epiroc Group by Jan van Veen, moreMomentum

With today’s disruption from Covid and the economic downturn, continuing services innovation is paramount to survive and thrive. Customer needs are changing, and new competition is entering your industry. Some of the critical success factors are service R&D, service product management and sensitivity analysis. Jess Kindler (Epiroc) and Jan van Veen (moreMomentum) discuss the development of Digital Services at Epiroc.

Introduction

It is easier said than done:

  • To lead the transition of your industry, enabled by new technologies.
  • To drive innovation for future success.
  • During an economic downturn.
  • Without having the crystal ball to know the uncertain.

It is essential for all of us to get this right.

From previous crises, we have learned that the discrepancy between leading innovators and stagnating laggards increases during and after a crisis. These are the moments for market disruption, with new winners and losers.

Recently, I had an exciting conversation with Jess Kindler of Epiroc, a worldwide provider of solutions for the mining and infrastructure industries (more about Epiroc and Jess at the end of this article). We discussed how to maintain momentum with service innovation and thrive during a disruption.

We’ve covered several important topics:

  • Being data-driven.
  • Shifting customer needs and value propositions.
  • Managing innovations and uncertainty.
  • The risk of new competition in our industries.

Innovating Digital Offerings

Jan van Veen: We see an acceleration of adoption of digital technology in all industries, which has a major impact on how your clients work. How is this affecting your industry?

We see a continued demand and push for autonomous solutions – equipment that doesn’t have an operator. You need a control room, communications infrastructure, change management and everything else that goes along with transitioning from operator-run machines to control room or computer-run machines.

Of course, this has a significant demand on the service team to commission and look after those autonomous solutions. Coming into the crisis, we knew more or less what our capacity was, and we were still building our capacity. And now it looks like we’re really under capacity because I think even more demand now comes for autonomous solutions.

What do we do then to speed up? We have pretty aggressive training plans in place to grow people, organically, but it’s not fast enough. That leads us to acquisitions and evaluating what’s going to be available now as this crisis develops and unfolds. End state being, we want more capacity to deliver to our customers.

Services extending beyond mechanical functioning of equipment

Jan van Veen: Do you also see your value proposition moving from “providing equipment” to “providing an integrated solution” where the value is about an efficient process for your clients? And do you have the technology, data and capabilities to optimise the ongoing operations of your clients continually?

There’s a significant portion of the service business that is no longer related to the mechanical function of the machine but to immediately seeing what’s going on underground. It’s more related to the digital enablement and the infrastructure on the site, like operator pods, Wi-Fi networks and good, high quality, high definition, low latency video solutions. There is a whole chunk of services that we were not used to providing in the past. We have learned over time, let’s say five years, how to handle that in a better way.

Two shifts that I see.

One shift is around overall optimisation of the mine site – optimising the operation of equipment and the use of available hours of the equipment. This requires more data and tracking underground to know which machines are sitting where, and why they are sitting there.

And then the other big shift is around reliability. Reliability is about minimising all the unplanned downtime, stretching the length of time between planned stops and sweating the assets in a better way. This involves aspects like:

  • Statistically analysing the breakdowns.
  • Understanding if issues are related to a component or the operations.
  • Designing the problem out and then make the component last for a longer service interval.

So two different kind of activities are happening now, in a bigger way than they were in the past.

Services Product Management for Commercial Success

Jan van Veen: This requires serious service innovation, developing your offerings and capabilities. One of the common challenges for manufacturers is to develop viable services for commercial success.

A big thing for me is that it’s okay to experiment. But at the end of the day, we also need to make money. When we started this Service Division 8 years ago, we learned that you have to establish service products. You have to take service offerings and turn them into products. These have to be managed by a product manager that understands commercially how to monetise this service offering. 

The last thing you want is having highly skilled, highly competent, highly trained people and giving your services away for free. So that’s why it’s essential to have a product behind all these activities. 

For example, when it comes to reliability, we established a new product called Total Cost of Ownership. The name says we want customers to experience the lowest total cost of ownership on our equipment. That comes from stretching maintenance intervals and doing reliability analysis.

And when it comes to the overall optimisation of the use of the equipment, then that’s a different agreement type, and it’s more of a consulting arrangement and comes more into our telematics product line.

If you don’t make it a product, then you live and die by the day rates or the hourly rates of your technicians. But if you establish services as a product you guarantee a certain amount of utilisation of your service technicians.

Jan van Veen: Let’s say you have to write a brochure for your service. You don’t want to say, “we have the best-trained engineers, and we have these tools”, because these are all features. Your clients don’t care about features but want to understand the value they will get. What problem are you solving for your clients? What is the result they will get? For example: “we typically see a productivity improvement of x%, and these are the engagement rules, the processes and how we interact with each other”. Once that value is clear, your price will be considered fair too.

We learned earlier on what the benefits of an autonomous fleet are regarding productivity compared to a non-autonomous fleet. This is our main value proposition to the customer, whether it’s a 20% improvement in productivity or 15% improvement on the maintenance cost or a reduction on breakdowns. It’s all about speaking to that instead of arguing about the hourly fee for a technician.

Join peer-discussion for best practices to grow your digital services

Sensitivity Analysis to Manage Uncertainty in Innovation

Jan van Veen: Today, on the one hand, business and innovation are under pressure and on the other hand, we see several trends accelerating. How do you manage the uncertainty when deciding on your innovation portfolio?

Often, product managers skew to the optimistic scenario. That is why it is essential to run a sensitivity analysis: if the business goes away by 50%, is this product still viable? If the business goes up 50%, do we have the capacity in the supply chain to deliver it?

Mining companies plan on a 20-year horizon. In those 20 years, everything can happen. Commodity’s prices can go up, they can go down, wars can happen, depressions, recessions, expansions, all those things can happen. When you go to invest your money into a project, it’s important to know what the chances are that you’re going to be profitable. We have learned to use sensitivity analyses for this.

Everybody can write a model that shows a positive NPV (net present value). You can just play with the cells in Excel until it pops out positive, but that’s not what we are after.

Jan van Veen: I think many business leaders and service leaders do too little of this sensitivity analysis. This is one of the capabilities which will enable them to defend innovation in these uncertain times and also do it right.

Strategic commitment for services innovation

Service leaders must have some R&D function. I think, with many businesses like ours, it was always the capital guys keeping all the R&D on their side. But we learned a couple of years ago, when it comes to eliminating the single-source dependency on suppliers, and designing out costs in the machine, it’s vital that the service group has some R&D capabilities as well. 

Usually, on capital equipment, you have R&D being driven by the marketing guys. On our side, on the service side, we have R&D being driven by the sourcing team. When the sourcing team has problem suppliers or just structural issues where they can’t get the cost any lower, they engage the R&D team to design two or three solutions to get more competition for our spend.

It’s important to defend that to your board and to the group. You must have innovation in the service group instead of using resources at the capital division or somewhere else.

 

Service leaders must have an R&D function

 

Jan van Veen: One of the things I’ve learned is that if you want to defend something, or convince somebody or engage people, don’t sell the solution first. First, sell the problem or what is at stake. And ideally, this is a bigger game than just the solution you are aiming for.

What is the bigger game round getting service innovation on the agenda? What is at stake? Why should a CEO bother?

I try to paint my stakeholders a picture. So I give them some real poignant examples of success and failures. I tell that story, and then I tie it into what the landscape looks like today. Where are the chances that we can either have great strategic success or failure if we’re not careful?

I paint them a picture of projects that are happening right now. And then reinforce the reasons why it’s important to protect investments in these innovations or the acquisition. 

That is another point; a growth strategy has to contain both organic growth (innovation) and inorganically (acquisition). So if I can paint a poignant enough and vivid enough picture of what it looks like out there, then when I come with some acquisitions, I point back to that story that I told them and say, “Hey, remember I showed you guys this picture, and this is where that acquisition fits.”

New – digital native – competitors

Jan van Veen: We talked about new solutions, new value propositions and new capabilities for mining companies. What you typically see when your clients change the way they run and manage their assets and their operations, is that they are becoming more data-driven. They are developing their digital and data capabilities. They will use more and more services of system integrators and digital native service providers.

Potentially, you run the risk that these other service providers become the partner of choice for your clients to optimise and manage the whole operation, including the assets. I can imagine that the real market disruption here could be manufacturers being pushed down in the food chain. Manufacturers may deliver the spare parts and the equipment only. Is that a fair picture?

That’s a completely fair picture. We have a big focus on making sure this doesn’t happen. We know who’s innovating around our equipment, we go for partnerships, we go for acquisitions, and we go for organic solutions in that space. We know that the longer-term game is around productivity and overall optimisation of the equipment. So, there’s all kind of things that we’re doing to make sure that we stay on top of it.

Jan van Veen: Is it also a matter of changing the attitude of your entire company? What is really your core business and value proposition? Are you a manufacturer of great equipment or………..?

Our VP of Marketing for Services is the Head of the Marketing Council for the group. They have been driving this discussion for two years now. Really getting everybody to understand what our value is. Why do customers want to buy from us? And how do we want that going forward? So yes, absolutely, those discussions are happening. And it’s important. 

Jan van Veen: What kind of questions do you raise in that kind of discussions? How do you open new perspectives? You have to ask the right questions and get the right insight from the outside-in to trigger those thoughts.

I think it is around understanding what is winning us tenders today and what is going to win us tenders going forward.

It’s a generational shift over the last 20-year horizon. Over the last 20 years is has been less about relationship sales and more and more about productivity sales and the counsellor sales approach or the consultative sales approach. So that’s a big change for all marketing guys.

Conclusion

A few takeaways are:

  • Customer needs are changing at a fast pace.
  • Ongoing service innovation is crucial to remain valuable to your clients.
  • This requires a service R&D team.
  • The future is uncertain. We do not have the crystal ball. We need to use adequate techniques to better manage this uncertainty, like sensitivity analysis.
  • And be aware of new competition that is trying to serve your clients too.

Now, my question would be: What will drive the success of your company as a whole as you industry evolves?

I hope this was useful to you. 

About Epiroc

Epiroc is a worldwide provider of innovative equipment, consumables and service for the mining and infrastructure industries. It used to be part of Atlas Copco and has been separated since around mid-2018. It consists of five divisions which are Surface, Underground, both offering equipment like drilling tunnelling, loaders, mine trucks and ventilation systems and what have you. Then thirdly, the Technology and Digital Division, which drives the automation, digitisation, and interoperability expansion for Epiroc, including consulting and engineering services. And then we also have Tools & Attachments, which offers all kinds of rock drilling tools and hydraulic attachment tools and related services. And finally, we have the Parts & Services Division, which is being headed by Jess.

A few facts and figures:

  • Overall revenue is nearly 4 billion euros.
  • Approximately 14,000 employees.
  • EBIT-rate is about 20%.
  • Revenue from service and parts is nearly 40% of the overall revenue.
  • Headquartered in Sweden.
  • Website: epirocgroup.com.

About Jess Kindler

Jess is president of the Parts and Services Division, which provides a complete range of services with the aim of maximising customers’ productivity. The division focuses on spare parts supply, professional services, support solutions and training.

Jess has been with the service business of Epiroc for about 20 years now.

 

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Developing digital solutions @ Epiroc

With today’s disruption from Covid and the economic downturn, continuing services innovation is paramount to survive and thrive. Customer needs are changing, and new competition is entering your industry. Some of the critical success factors are service R&D, service product management and sensitivity analysis.

Jess Kindler (Epiroc) and Jan van Veen (moreMomentum) discuss the development of Digital Services at Epiroc.

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Stay up to date

Receive the latest insights and updates from our articles, interviews with your peers and ongoing research into best practices.

Upcoming events

Join the moreMomentum Services Community and Fast-Track your Digital Services
If you liked this article, you may also like the following articles, on the same topic.

Why it is important to monetise services

Value propositions in manufacturing are becoming more data-driven and more service-oriented. It is critical to generate and capture the new value.

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A common mistake is to solve small problems of customers. These are necessary improvements, but will not bring any growth or opportunities to monetise.

Better Articulate the Value to Monetise Services and Data

Too often we see that (new) services, solutions or features are promoted without connecting the dots to their bigger problems.

Key note: Missing Links in IoT Strategies

We should focus more on new value offerings which are highly compelling for our customer. Predictive maintenance, product-as-a-service are the capabilities.

Panel discussion: How to transform your field service into a profit centre?

Success depends on the level of collaboration and support from all stakeholders.The name of the game is establishing a shared concern and goal first.

Panel discussion: Drive service revenue and growth with personalised services

New technologies offer great opportunities to improve customer experience and perceived value. When done in a differentiating way, this can drive revenue.

Technology is not the key challenge of digitalisation – Momentum is

More and more manufacturing companies are trying to lead their employees to drive innovation and change. A clear direction reduces uncertainties and aligns actions.

Remove Obstacles for your Clients to use your New Offerings and Monetise your Services and Data

If your clients fear or experience too many obstacles to use your new offerings, they will not see your offering as a viable and valuable solution. This will block your commercial success.

Build Internal Momentum to Monetise Services and Data

Launching new advanced services is innovating your business model. This requires internal momentum to monetise these services and data-driven solutions.

Build Your Advanced Service Sales Model

Common transactional sales models do not work for advanced services and solutions with a recurring revenue model. Build your advanced sales model.

Stay up to date

Receive the latest insights and updates from our articles, interviews with your peers and ongoing research into best practices.

OUR VISION and MISSION

More and more manufacturers are growing their digital services. This requires strong and repeatable business innovation capabilities.

With our community, we continuously develop, share and apply new best practices for digital services and radical business innovation.

Services innovation enables manufacturers to thrive and solve our global problems.

Innovate your way out of the Covid-Crisis

Innovate your way out of the Covid-Crisis

Thrive during disruption by growing new digital services

Posts by Jan van Veen
New call-to-action

Join us in the upcoming virtual events about advancing services

The moreMomentum Services Community will be contributing with interesting discussions about

  • The Customer Value of Digital Services
  • Remote Services
  • Custotomer Self-Service
Join us in the Field Service Asia Virtual Event
The biggest mistake we can make is being stuck in business-as-usual and operational thinking. The big opportunity to thrive during and after this crisis is to fast track digital innovation.

Summary

Recently, I have been speaking with many service leaders in the moreMomentum Services Community and others about the impact of Covid-19 on their service business.

We recognise three categories of service business. Those who are:

  1. Still in fire-fighting mode, trying to mitigate the direct impact of Covid-19 in a reactive and ad-hoc way.
  2. Establishing new routines to cope with the ongoing impact of Covid-19 and new service delivery models with digital tools.
  3. Moving on to a more strategic view, looking at the mid-term and longer-term impact on their industry, clients, value offerings and business models.

Together with the leading service leaders (category 3 above), we believe:

  • the biggest mistake we can make is being stuck in business-as-usual and operational thinking.
  • the big opportunity is to fast track digital services innovation now and thrive during the accelerating digital transformation.

This is why we conducted a research in June-July 2020 – in collaboration with Field Service Asia and Field Service News – into “Innovate your way out of the Covid-Crisis”

View the summary presentation

During the Virtual Summit of Field Service Asia, Jan van Veen (moreMomentum) and Kris Oldland (Field Service News) presented the summary of the findings. 

Exchange practices and challenges with your peers

In September, October and November, we will be further discussing challenges and best practices to fast-tracking digital services innovation.

In several 1,5-hour online discussions with 4-5 service leaders, moderated by Jan van Veen (founder of moreMomentum) we will elaborate on the various topics covered in the research report “Innovate your way out of the Covid-Crisis”.

Are you interested, than:

  1. Click the button below to express your interest, so we can invite you.
  2. Schedule a quick discovery call with Jan van Veen, to discuss your specific interests and needs.
  3. Accept the invitation for the discussion session which best fits your interests .

Learn more from like-minded peers

Join the moreMomentum Services Community and Fast-Track your Digital Services

Related Articles

Innovate your way out of the Covid-Crisis

The biggest mistake we can make is being stuck in business-as-usual and operational thinking. The big opportunity to thrive during and after this crisis is to fast track digital innovation.

Build a Strong Customer Story in 7 Steps

Many service innovations fail because they do not have a substantial and desired impact for clients. Often, customer insights and value propositions are limited to a description of features and benefits, without considering the outcomes clients desire.

Diversify your innovation to boost growth

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Upcoming events

If you liked this article, you may also like the following articles, on the same topic.

Why it is important to monetise services

Value propositions in manufacturing are becoming more data-driven and more service-oriented. It is critical to generate and capture the new value.

Solve Bigger Customer Problems to Monetise Services and Data

A common mistake is to solve small problems of customers. These are necessary improvements, but will not bring any growth or opportunities to monetise.

Better Articulate the Value to Monetise Services and Data

Too often we see that (new) services, solutions or features are promoted without connecting the dots to their bigger problems.

Disrupt or be Disrupted – is that the Question?

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Panel discussion: How to transform your field service into a profit centre?

Success depends on the level of collaboration and support from all stakeholders.The name of the game is establishing a shared concern and goal first.

Panel discussion: Drive service revenue and growth with personalised services

New technologies offer great opportunities to improve customer experience and perceived value. When done in a differentiating way, this can drive revenue.

Remove Obstacles for your Clients to use your New Offerings and Monetise your Services and Data

If your clients fear or experience too many obstacles to use your new offerings, they will not see your offering as a viable and valuable solution. This will block your commercial success.

Build Internal Momentum to Monetise Services and Data

Launching new advanced services is innovating your business model. This requires internal momentum to monetise these services and data-driven solutions.

Build Your Advanced Service Sales Model

Common transactional sales models do not work for advanced services and solutions with a recurring revenue model. Build your advanced sales model.

Innovate your way out of the Covid-Crisis

The biggest mistake we can make is being stuck in business-as-usual and operational thinking. The big opportunity to thrive during and after this crisis is to fast track digital innovation.

Stay up to date

Receive the latest insights and updates from our articles, interviews with your peers and ongoing research into best practices.

OUR VISION and MISSION

More and more manufacturers are growing their digital services. This requires strong and repeatable business innovation capabilities.

With our community, we continuously develop, share and apply new best practices for digital services and radical business innovation.

Services innovation enables manufacturers to thrive and solve our global problems.

3 Steps to Overcome Common Obstacles for Successful Servitization

3 Steps to Overcome Common Obstacles for Successful Servitization

Thrive during disruption by growing new digital services

Posts by Jan van Veen
New call-to-action

Join us in the upcoming virtual events about advancing services

The moreMomentum Services Community will be contributing with interesting discussions about

  • The Customer Value of Digital Services
  • Remote Services
  • Custotomer Self-Service
Join us in the Field Service Asia Virtual Event
Servitization, outcome-based services and product-as-a-service are hot topics. However, we see little examples in the industrial sectors. Too often, there is a gap between the theoretical framework and the real practice. Here are 3 critical steps to boost the success of your servitization journey.
You can also watch the video

Summary

We hear a lot about servitization, outcome-based services and product-as-a-service business models. However, we see little examples in the industrial sectors. Many manufacturers face serious challenges while developing and launching new service offerings:

  • Clients do not see the value, have many objections and are not ready for it
  • Lack of strategic support to invest in necessary capabilities and to develop their business model

3 of the root causes are:

  • The gap between academic terms like servitization, outcome-based services and product-as-a-service and the practice is not being closed yet
  • Poor definition of the critical business problems of clients which will be solved with the new offering
  • The impact on the manufacturer’s business is not clear yet

In this article I share some of the best practices for designing advanced offerings which will help you to overcome these challenges:

  • Build deeper and broader insights in your clients business challenges and pain points
  • Focus on specific customer segment, based on their needs
  • Approach your business models more holistic

The Problem

Just as an increasing number of manufacturing companies, you may be looking for ways to thrive during disruptive change in your industry. This is an exciting journey of enhancing your business models with digital solutions and advanced services.

Some of the major trends that make this mission critical for your future success are:

  • Digital technologies
  • Digitalisation of clients’ operation
  • New emerging business models
  • Shifts in the value chain / ecosystem

The vision behind these innovations is:

  • Develop advanced services and solutions to develop new and recurring revenue streams and increase long-term differentiation.
  • Develop better performing and more efficient predictive maintenance services.
  • Meet a broader scope of (latent) customer needs, beyond availability and condition of equipment like operational performance solutions.

Most service leaders and innovators, solution providers, academics and consultants use broad and abstract concepts to describe their vision, strategy, innovations and new offerings with container words like:

  • Servitization
  • Advanced services
  • Outcome-based services
  • Remote services

I often hear from service leaders and innovation teams that they struggle with challenges like:

  • Clients do not see the value of the new offering or solution
  • Clients see many obstacles and risks
  • Clients are not willing to pay more for the new solutions
  • Clients are not ready for the new solutions
  • Lack of support from strategic stakeholders and other functions in their organisation

In essence, all boils down to the following 3 problems:

  • The new solutions and services do not solve (new) critical business problem of the clients. The value or impact is not clear (other than potentially lower prices for the maintenance services).
  • It is not clear how these services contribute to the overall business challenges and vision of the company as a whole.
  • The service vision is too abstract for internal stakeholders to understand and endorse. Words like servitization, outcome-based services, remote services and product-as-a-service are too theoretical and do not clearly articulate a vision and strategy.

 

 

This is pretty frustrating, isn’t it?

The Solution

In this article I share critical frameworks which many service teams miss in their service innovation strategies. These are:

  • Build deeper and broader insights in your clients business challenges and pain points
  • Focus on specific customer segment, based on their needs
  • Approach your business models more holistic

Build deeper and broader insights in your clients business challenges and pain points

To be truly outside-in and customer driven, you need to have a deep insight in the challenges and problems your clients are facing in their business. Deep customer insights should:

  • Go beyond their requirements about uptime and maintenance of their assets
  • Cover a time window of 3-7 years
  • Be thought provoking eye-openers for your clients

You and your colleagues already have most information at hand. It is a matter of turning this information and knowledge into a compelling customer story, for irresistible advanced services.

You can read more about this in “Build a Strong Customer Story in 7 Steps and Launch Irresistible Advanced Services

 

Focus on specific customer segment, based on their needs

One size does not fit all. Different clients have different visions and strategies, different challenges and therefore different needs. When defining the (latent) customer needs for today and the near future, it is crucial to have some sort of segmentation of your important clients based on their (future) needs.

This segmentation will help you to develop a robust strategy which defines which customer segments you will target, with which new service offerings and which business models you will develop.

There are many ways to segment clients based on their needs, largely depending on the specific industry. I will share two generic patterns for customer segmentation which can be useful for you to take as a starting point. They are based on segmentations of innovative and successful manufacturers and service leaders.

Two often used patterns for customer segmentation are:

  • Maturity – Willingness to outsource of a business
  • Maturity – Complexity of a business

This could be a useful pattern in industries where many of your (potential) clients tend to do most functions themselves instead of outsourcing the activities (like maintenance of equipment).

Along the vertical axis you can separate segments based on the maturity of their core capabilities and processes.

For example, in the industry of metalworkers this could be:

  1. Traditional craftsmen
    The entrepreneurs personally (together with their employees) manufacture the metal products themselves, love part of the manual work and working with their machines and tools. This is their pride. Little of the activities are put into structured processes.
  2. High tech workshops
    The entrepreneurs have invested in state-of-the-art tools to improve quality, consistency and efficiency. Their main focus is still on the technical side of the profession. Probably there is more structure in the workflow and processes, predominantly organised from a technical point of view. From a more economical point of view, the structure is not efficient yet.
  3. Lean manufacturers
    The entrepreneurs have a more economic view (or hired an operations director with economic competencies) and are working on efficient processes, workflow and organisation. They follow lean-six-sigma or similar approaches to optimise human resources, capital investment and materials.
  4. Value chain optimisers
    These entrepreneurs have a broader scope and are looking to their added value in the entire value chain, partnerships, vertical integration or specialisation. They may also develop more advanced value propositions to their clients like inventory management and delivery of the components they manufacture in small packages in the production line of their clients.

This is a very brief description. You should probably also look into functions like sales, marketing, engineering, internal logistics, inventory management, tools management, financial management, human resources management etcetera. You get the picture.

Along the horizontal axis you can segment your market into clients that tend to do as much as possible themselves versus clients that outsource many functions which are not part of their core-process. Clients in the first category probably have various dedicated departments, competence centres or teams for functions like process optimization and maintenance.

 

This pattern could be useful if you have clients with different types of operations with different levels of complexity.

The vertical axis is the same as in the “Maturity – Willingness to outsource” pattern.

Along the horizontal axis you segment your market into clients that have short and simple value chains versus clients with longer and more complex value chains. For example, again in the industry of metalworkers this could be:

  1. Jobbers or workshops that fulfil specific tasks like welding, cutting, bending, drilling etcetera and that manufacture intermediate components or semi-finished products
  2. Component manufacturers which perform several tasks to manufacture components, like engine blocks for the automotive industry
  3. Product manufactures, which manufacture complex products
  4. Machine manufacturers

Whatever pattern you use with these segmentations, you now have 4 (or more) segments in a logical structure. For each segment you can:

  • Find a descriptive name
  • Further describe their specific needs
  • Define their characteristics to recognise them

For each segment you should:

  • Decide whether you want to serve them or not. Or at least define which segments have your focus
  • Develop a customer insight or customer story
  • Develop specific messages to use in your marketing, sales and service delivery
  • Develop and map specific services, offerings and delivery models
  • Develop a specific commercial approach

When you are still in the early stages of developing advanced new service offerings, it often pays to focus on one specific segment first.

    Worksheet to build your customer story

    This worksheet will help you and your teams to capture all relevant ideas and knowledge and to structure this into a compelling and strong customer insight.

    With this insight you can:

    • Validate the insight with other colleagues
    • Validate the insight with your best clients
    • Specificy a customer research
    • Brief your marketing teams to prepare compelling marketing and sales messages

     

    Approach your business models more holistic

    As soon as your advanced services go beyond the maintenance and the condition of the equipment your company manufactures and sells, you will be reconfiguring or extending the business model of your company as a whole. This means, you need to have a strategic dialogue and innovation process with strategic stakeholders.

    To make this a fruitful and coherent process, you should avoid a discussion about product versus services. It starts with:

    • A shared concern about developments in the industry
    • The threats and opportunities for your business as a whole
    • A vision about the future state of your entire business and what needs to change to achieve this

    This will result in a few strategic priorities, one of which (hopefully) is services innovation.

    Now I would like two share two useful frameworks that help to take the development of the business models to a more holistic – company wide – level:

    • Generic types of business models for products and services
    • Types of service value propositions

    Note that these frameworks are not limited to services or products alone. They address the overall value proposition, which can be a combination of products, software, data and services.

    In the matrix above, you can describe changes of your business model along two aspects.

    Along the vertical axis, you differentiate value propositions:

    • From stand-alone offerings (like single products or services)
    • To comprehensive and integrative solutions which cover a broad scope of needs and solutions

    Along the horizontal axis, you differentiate highly standardised offerings from highly customised offerings.

    This results in 4 types of business models, which I will further describe with document printers as an example: 

    • Product Business Model
      • Only printers, probably including service contracts
      • A wide portfolio of different models to choose from
      • Additional equipment for folding documents, putting them in envelopes etcetera
      • Getting the printer for free and paying for the ink only
      • Predictive and remote maintenance
      • Cloud storage solutions and Microsoft Office 365 still fit in this model, even though you pay a small fee per month
      • Retail banking 
    • Project Business Model
      • An assessment of the entire business, to define how many printers, which type and where
      • Connecting the printers to the network, configuring security systems
      • Designing, building and commissioning an entire print room for high volume printing and mailing of documents
      • Designing more effective and efficient processes
    • Solution Business Model
      • Taking over the entire print room from clients, which could still be at your clients’ locations
      • Connecting the Salary Administration system to the print room to print all salary slips at the end of the month, put them in envelopes, and send them to the postal services
    • Platform Business Model
      In the printer industry the example may become a bit theoretical, anyway.
      • An online platform where clients can upload templates, designs and lists of destinations and pay for the job. The platform will split this in smaller jobs for various connected and certified print facilities across the world and process the financial transaction. (I am not sure if this kind of service ever existed).
      • In the Additive Manufacturing sector, we do see initiatives in this direction to allow manufactures to print metal spare parts anywhere in the world close to the customer
      • Other examples of today are Apples Appstore, iTunes, Spotify, Amazon, Uber and Airbnb.

     

    This framework will help you to better articulate the kind of value and related business models you are aiming for.

    In this framework you can define your value proposition along the horizonal axis based on the scope of the services. There are several ways to add value to your clients (deliver outcome if you like). I will use the commercial truck industry as an example:

    • Better products
      For example, improve fuel efficiency of the truck and engines.
    • Better availability
      Your services can maintain and improve the availability and condition of the equipment. This could be quite advanced with real time data, smart diagnostics predictive analytics or supported self-help offerings using AR.
      For example, predictive maintenance to improve availability (and maybe also improve fuel consumption).
    • Better application or use
      Your services can drive the output or performance of the equipment you delivered to clients by improving the use, configurations, settings and ongoing optimization tactics. These services can be onetime projects or ongoing support.
      For example: Reduce fuel consumption by improving the driving behaviour of truck drivers.
    • Better processes
      Your services can also concentrate on the overall processes and operation.
      For example: Reduce fuel consumption (and other cost) by improving the route planning, combining jobs, choosing the right vehicles for each job etcetera.

    Along the vertical axis you can separate your offerings in

    • Effort based offerings
      You promise to do certain activities for which your clients pays, regardless of the result of the activities. It remains the responsibility and risk of your clients to manage the overall performance and take the right decisions.
    • Performance based offerings
      You promise your clients a certain result and get a fee depending on this result. In the example of commercial trucks, this could be:
      • Guaranteed uptime and availability of the truck of 99% and penalties if the performance is below 99%
      • A fee per percent-point of reduction of fuel consumption
      • A fee per transportation job

     

      Assess your Innovation power

      This Scorecard How to Navigate Disruption will help you and your teams to assess the capabilities and practices of your business to innovate beyond business-as-usual and navigate disruption in your industry.

       

        How to use these frameworks?

        Map your current business model(s) in one or more of the matrixes described above. Also map a few scenarios for the envisioned business model(s).

        This will help you and your stakeholders to have a more structured and neutral discussion about the major trends in the market, technology and competitive landscape as well as in what direction your value propositions and business models should develop. Any choice will have an impact on engineering, manufacturing, software development, marketing & sales and services.

         

        What is at stake?

        If manufactures cannot successfully adjust their business model, they run a serious risk of falling behind existing and new competitors.

        Clients are developing more and more digital capabilities in all their functions. As a result, they will have other needs for services and solutions.

        This is an important opportunity for manufacturers to grow their relevance for their clients and grow their business.

        But it is also a unique opportunity for digital native service providers and system integrators, which offer remarkable and complete solutions to the (new) problems of your clients. They are your new competitors.

         

        Benefits

        If you use these frameworks and embed them in your service vision, your innovation strategy as well as in your dialogue with strategic stakeholders, you can develop the:

        • Shared concern for the business as a whole
        • The strategic priorities for the business as a whole, one of which will be services
        • Shared vision for the business as a whole, which includes services
        • A specific shared concern for the services business unity
        • The strategic priorities for the services business unit
        • A shared vision for the services business unit

         

         

        Rome was not built in one day

         

         

        It is an iterative journey. It takes time and work. The frameworks above will help you to facilitate and structure this journey.

        Manufacturers and service leaders with successful advanced services have used these kinds of frameworks for a long time and still are. This allowed them to achieve quick, continuous and more radical innovations and thrive in disruptive times.

         

        Conclusion

        For quite a few service leaders, the journey of service innovation is a tough one. Their clients do not see the value of new advanced offerings, they do not want to pay for them, and internal stakeholders do not provide the necessary support.

        Some of the key reasons are: 

        • The critical business issues of the clients are not clear and are not addressed with the new offerings
        • The business value of the new offerings and business models are not clear
        • The envisioned business model(s) are not clearly described

         

        Litmus proof

        I would like to challenge you with the following questions.

        Can you describe your services vision and strategy in concrete words? Without using words like:

        • Advanced services
        • Servitization
        • Product-as-a-Service
        • Remote services
        • AR, AI, IoT

        Does your services vision start with a description of:

        • Major trends in the industry of your clients
        • How challenges and priorities of your clients are changing
        • How that will change their needs

         

        Recommendation

        If you want to be leading the transition of your business and industry, I would recommend the following:

        • Define a clear shared concern with your strategic stakeholders:
        • Together with your strategic stakeholders, consider various options for developing the business model(s) and assess how these business models would help your business to thrive.
        • Agree on the innovation strategy and next steps.
        • Iterate!

         

        Learn more from like-minded peers

        Join the moreMomentum Services Community and Fast-Track your Digital Services

        You can also watch the video

        Related Articles

        Build a Strong Customer Story in 7 Steps

        Many service innovations fail because they do not have a substantial and desired impact for clients. Often, customer insights and value propositions are limited to a description of features and benefits, without considering the outcomes clients desire.

        Diversify your innovation to boost growth

        Leading manufacturers cover a scope of innovations, searching for opportunities to improve the value they promise their clients, how they deliver the value and how they capture part of the value.

        Upcoming events

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        If you liked this article, you may also like the following articles, on the same topic.

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        Value propositions in manufacturing are becoming more data-driven and more service-oriented. It is critical to generate and capture the new value.

        Solve Bigger Customer Problems to Monetise Services and Data

        A common mistake is to solve small problems of customers. These are necessary improvements, but will not bring any growth or opportunities to monetise.

        Better Articulate the Value to Monetise Services and Data

        Too often we see that (new) services, solutions or features are promoted without connecting the dots to their bigger problems.

        How to have all employees discover the future

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        Case Study: How Engineers transformed themselves into Brand Ambassadors at Mars Drinks UK

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        Stay up to date

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        OUR VISION and MISSION

        More and more manufacturers are growing their digital services. This requires strong and repeatable business innovation capabilities.

        With our community, we continuously develop, share and apply new best practices for digital services and radical business innovation.

        Services innovation enables manufacturers to thrive and solve our global problems.

        Build a Strong Customer Story in 7 Steps

        Build a Strong Customer Story in 7 Steps

        Thrive during disruption by growing new digital services

        Posts by Jan van Veen
        New call-to-action

        Join us in the upcoming virtual events about advancing services

        The moreMomentum Services Community will be contributing with interesting discussions about

        • The Customer Value of Digital Services
        • Remote Services
        • Custotomer Self-Service
        Join us in the Field Service Asia Virtual Event
        Many service innovations fail because they do not have a substantial and desired impact for clients. Often, customer insights and value propositions are limited to a description of features and benefits, without considering the outcomes clients desire.
        You can also watch the video

        Summary

        The best practice is to have a compelling customer story and vision as a starting point. This customer story illustrates the challenges, common mistakes and best ways clients should solve these mistakes. Based on this insight, you can develop irresistible new advances services and compelling marketing and sales messages, even if you have limited resources.

        Do you still see that many ideas and new advanced services do not hit the nail on the head?

        • The pain points your teams discuss with their clients do not hit their nerves
        • Your clients are not eager to use the new services
        • Let alone that they are willing to pay extra for these services

         Even though you already did;

        • Voice of the customer projects
        • Customer journey mapping
        • Customer feedback like NPS
        • Develop a set of features and benefits, for example by using the value proposition canvas

         

        The good news is

         

        You are not alone.
        And it does not have to be like this.

         In this article, I describe 7 practical steps to build a compelling customer story. These are the best practices applied by leading manufacturers to successfully develop and commercialise irresistible advanced services.

        Here is the problem

        Your clients do not recognise which of their essential problems you are solving or how your services are offering a better solution. They do not see the positive impact they will get from your offerings.

         And often, this problem is a bigger game than just higher uptime of equipment.

        The Solution

        You and your colleagues already have most information at hand. It is a matter of turning this information and knowledge into a compelling customer story, for irresistible advanced services.

        The elements of a customer story

        Customer Story and Insights - Structure

        Note: problems can be about threats and risk to overcome as well as limitations to pursue new opportunities.

        For every customer segment, you should be able to describe the bigger picture;

        • The relevant trends which have an impact on the business and lives of your clients.
        • The ultimate fear for your clients, caused by 3-4 dominant problems.
        • 3-7 common mistakes your clients make, which cause the 3-4 dominant problems
        • Related to each common mistake, your vision or the best practices to solve this common mistake
        • The ultimate prise your clients will get, with 3-4 benefits

        You can use this customer story in many ways;

        • A pitch to your CEO or your client of 1 minute
        • A presentation of 5-10 minutes
        • 7-12 articles of 700 words each
        • Source of insights to develop new advanced services
        • Source for the marketing team to develop marketing and sales messages and marketing collateral

        Be aware of the common pitfall

        This customer story is all about your clients, not your company, products and services.

        I have done quite a few workshops and masterclasses to develop a customer story. In the beginning of these workshops, pretty much every team struggles to focus on the customer. The pitfall is to be stuck in;

        • Use of your equipment
        • Maintenance of your equipment
        • Performance of your equipment
        • Performance of your services

        Although these insights are useful for many improvement processes and initiatives, they do not contribute to developing and commercialising irresistible advanced services.

        On the contrary, these insights increase biases and keep your innovations being stuck in business-as-usual.

        Getting started

        The following 7 steps take you through each element of the customer story.

        Ideally, you form a small team to work on the 7 steps.

        Step 1: Define the niche/segment

        A customer insight or story should always be specific for a group of clients with the same characteristics that are relevant to the same challenges and needs they have.

        This could be a particular customer segment or your ideal client.

         At first, it can be challenging to define the specific customer segment. This is not a problem. In that case, just move on to the next steps. In step 3 and 4, you will notice that a lot of the customer problems are not relevant to all clients and how you could segment your clients into a few groups. By then, you can jump back to step 1 and iterate.

        Worksheet to build your customer story

        This worksheet will help you and your teams to capture all relevant ideas and knowledge and to structure this into a compelling and strong customer insight.

        With this insight you can:

        • Validate the insight with other colleagues
        • Validate the insight with your best clients
        • Specificy a customer research
        • Brief your marketing teams to prepare compelling marketing and sales messages

         

        Step 2: List 100 customer problems

        Having this customer segment in mind, start listing all the business problems you know or think they encounter or will encounter. If you do not have a clear definition and choice of a customer segment yet, just start with 1 or 2 relevant clients in mind.

        The objective is to build a long list of problems, at least 100. Use the following tactics to keep the flow of new problems going and to ensure you have a broad and open perspective;

        • Do not evaluate yet. Just write the ideas. Consider it a brainstorming practice.
        • Build on problems you have already listed and think of 4 directions to reframe (see the picture below)

        Reframing customer problems

        • Consider different stakeholders in the business, including the CEO and the field engineer

        Broader scope for customer insights

        • Address challenges and problems your clients will or may encounter in the next 3-7 years too
        • Also consider external stakeholders of your clients, like their clients, other vendors, partners and distributors
        • And again, avoid topics which are related to your products, services and organisation.

        Step 3: Cluster to 7-10 main problems

        Now start grouping all similar or related problems. You can do this in a spreadsheet. If you are doing this in a workshop with several people, you may want to work with post-it notes.

        You will probably see that there are different ways of clustering. That is perfectly fine. See what makes the most sense.

        Now, it is also an excellent time to evaluate if the customer segment you chose, still makes sense. Or, in case you did not select a particular segment, see if you can recognise some sort of segmentation. If so, you can iterate the process so far and start with step 1 again.

        Step 4: Further group to 3-4 dominant problems

        7 to 10 problems is a lot to memorise and to help to build and communicate a clear message. The magical number is 3. 4 is okay too. If you have more than 4, you will notice that colleagues and clients will not memorise all of them after a conversation.

        So, the next step is to further reduce the main problems into 3 or 4 dominant problems.

        Summarise these 3-4 dominant problems into one single ultimate fear, like “adapt or die” or “hard work for less financial results, with no perspective for better times”.

        Step 5: Define the 3-7 common mistakes

        Next step is to identify the 3-7 common mistakes you see your clients make that prevent them from solving the 3-4 dominant problems. These common mistakes are “wrong” thinking, actions and practices of your clients.

        For example, if one of the dominant problems is “too high operational cost”, one of the common mistakes related to this dominant problem could be that your clients have a “lack of understanding of their cost drivers and cost structure”.

        You may find some inspiration in the list of 100+ customer problems you identified in step 1.

        Step 6: Define the 3-7 solutions for your clients

        Now define your vision of how your clients should solve each of the 3-7 common mistakes. This is not about your solution or offering yet; you will cover that in one of the next steps.

        This is a relatively easy step. In essence, each solution is the opposite of a mistake. Further building on the example in the previous step, your view on the clients’ solution could be that they should “establish cost management practices”. They should gather and analyse data and step by step build a structure of their costs and cost drivers so they can monitor and manage their costs.

        Step 7: Define the benefits and outcome for your clients

        Finally, describe the 3-4 key benefits and the ultimate outcome for your clients if they address the 3-7 common mistakes and apply the 3-7 customer solutions you have specified.

        The 3-4 benefits are the opposite of the 3-4 dominant problems, maybe structured slightly different. And the ultimate outcome is the opposite of the ultimate fear.

        Next steps after this

        At this point, you already have a tremendously valuable insight, just using the information and knowledge you already have.

        Next steps to make this insight and your customer story rock-solid, are

        • Get feedback and additional ideas from
          • Colleagues in various functions (sales, marketing, R&D, other countries)
          • Partners, vendors
          • Distributor or dealers
        • Process the new information and update your customer story
        • Build variations of the customer story for the most important customer segments
        • Get feedback from your clients through open and in-depth conversations
        • At some point, you may want to initiate a customer research based on the insights in your customer story to validate and expand the insights
        • Adjust the wording and messaging to make your customer story more compelling and attractive for external and internal use.

        The benefit

        Now you have a robust and in-depth insight into your clients’ needs for today and the future which offers you an “unfair” competitive advantage. You can now;

        • Improve existing service offerings
        • Boost the innovation of advanced service offerings
        • Improve your marketing and sales messages and marketing collateral
        • Advance the conversations all customer-facing colleagues have with their clients
        • Improve your Customer Success practices

        Conclusion

        You are sitting on gold.

        You and your colleagues already have a massive amount of information and knowledge about your clients. You can turn that into actionable and compelling customer insights and a customer story to boost;

        • Development of your services
        • Engagement with your clients
        • Commercial success of your service business

        You can build a substantial competitive advantage, even if you do not have the budget and resources for intensive customer and market research.

        All this requires is to;

        Be open to new perspectives

        It is not about convincing your clients of the value of your services, but about letting them convince you what they need.

        Final question for reflection

        Which 3 common mistakes do you make when developing and using customer insights for service innovation?

         

         

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