A significant Challenge – Revenue generation role for service engineers in the OEM manufacturing business.
Our interactions with our customers in the OEM manufacturing business have revealed a rather unique challenge. According to Industry Week, sales from spare parts comprise 40% to 60% of total manufacturer revenues. Thought leaders form Wharton-Stanford estimate it between 29% and 50% of their revenues by servicing products. To add to this customers want to reduce cost on service & spares. This revenue is expected to be generated from Service engineers, who front end customers after sales. This could be a perplexing challenge for the service team.
On the one hand, service is a fast paced job dealing with huge number of parts and ensuring business continuity for customers. They are responsible for maintenance, problem diagnosis and resolution, compliant handling, fire fighting amongst others… This is what they know and most of them are programmed for problem resolution. On the other, they are required to generate substantial revenues for the organisation requiring a very different mindset and capability. We have seen a huge disconnect while having a conversation with service engineers on revenue generation.
It is only logical for organisations to expect service engineers to generate revenue, but how?
A few thoughts on likely ways to encourage a revenue generation mindset in service engineers:
- As a start point we could replace the word revenue generation to spares generation. As this is in their realm they would most likely relate to it and be open to talk about strategies around it.
- Frequent access to the organisations big picture will result in buy-ins. Appreciating the need to generating revenues from spares and service will ease adaptability and adherence to processes and systems that assist in revenues generation.
- Encourage a solution mindset in service engineers rather than just after sales. This will persuade service engineer to understand customer’s life cycle and identify various touch points which could result in more revenues sources.
- Bring in a strong relevance between service quality and spares generation. Bad service would mean leaving opportunities for revenue generation on the table.
- Focus on developing relationship based selling skills in service engineers and nothing else.
We believe that this is a sensitive matter as after sales business is one of the few constant connections that customers have with a brand, and every interaction shapes their perception of its value. Keeping service engineers focused on customer outcomes and carefully building a structure around revenue generation could be critical. We are currently working with a manufacturing major on building a framework that will ease this transition.