The long-tail is where the next billion in service revenue is (Part 2)

In my last post, I covered the stakes in expanding the coverage of after-sales services to a wider customer base. Here is a Venn diagram that explains the current situation for the best run services businesses in the industrial machinery sector.

Install-base services coverage

Whom did we sell our machines to?

The majority of machinery companies that we spoke to had only started investing in install-base data management via CRM systems. In most mid-sized OEMs, such initiatives were less than 3 years old and many such initiatives were still ongoing. In most cases, they had focused on improving install-base data management for future sales (which is very sensible).

Who is using our machines?

Even in such cases however, few companies were making a difference between resellers, dealers and project engineering companies on one side and industrial operators on the other. This matters a lot for after-sales services because demand for services are most profitably handled when received from and delivered directly to the industrial operators themselves. This means that they are flying completely blind when a company calls them out of the blue requesting for a quote for spare parts or makes a service enquiry. What is missing is a capability and a motivator to allow industrial operators to proactively identify themselves and the equipment that they have installed before they need a service.

What can I sell to them?

Another challenge emerges when the first 2 steps are taken – one that should be anticipated and dealt with in advance. The service offer – and here I don’t mean “what is my service catalogue” – but “what might my customers need from me”. It is impossible to address this challenge without knowing what went into the machine that an industrial operator has installed – the Bill Of Materials (BoM). We have seen companies manage Equipment BoMs in Excel files with the serial number as the file name. It works very well for engineering. It even works decently enough to respond to customer enquiries but for companies that want to get ahead and create demand instead of responding to requests, not knowing one’s products is as much of a blocker as not knowing ones customers. And companies really should start with organising their equipment documentation: catalogues, manuals, parts lists.

Asset Relationship Management

In a nut-shell, the first step to expanding the install-base coverage is:

  1. Linking Parts & Documents to Serial Numbers of sold Equipment
  2. Linking Serial Numbers of Sold Equipment to End Users of the Equipment

No. 2 above of course means that most OEMs start with having 80% of their equipment serial numbers with no End User name attached. While this setup gives them a baseline to start targeting their end users more effectively with the right service offers, I am aware that this doesn’t straight away expand the customer base. At MachIQ Software, we understood this problem when we started in 2016. This is why we built MachIQ Seva to be connected to an “Open Customer Portal” MachIQ APM.

Incentivising End Users to self-declare their assets

“What’s in it for me” – we have all asked this question whenever we open a registration form on a website. Crossing this bridge requires mechanical behavioural engineering. I will discuss different incentives that we see having worked as well as draw parallels from the startup/app industries in my next post.

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