Many of us have heard about the shift from cost-centric to profit-centric business models that’s spearheaded by services. There are lots of names for it, depending on what you’re doing, but most of us recognise it as outcome-based services.
I work for an international industrial printing manufacturer, Domino Printing Sciences plc (Domino). During the COVID crisis, we have been considered one of the essential suppliers to food, beverage and pharmaceuticals worldwide. Our equipment provides data coding, product marking, serialisation, variable printing, and labelling on items we use in our everyday lives, such as food and beverages, and pharmaceutical, beauty, and tobacco products. Our business, and indeed the whole industry, has had to respond to new customer demands around increased uptime, the elimination of waste, and the ability to flex on demand. One of the ways we have done this is by moving towards an outcome-based services model.
As someone who’s been through this journey (and is still in the process of shaping it), I have had to help adapt our processes and strategy accordingly. I want to share some of the insights and lessons learned along the way that may help you on your path. Many of the lessons learned apply equally to other industries, which might be useful in your move to advanced services.
1. Nail the Basics of Service First
If you sell equipment, you must service and maintain it – this used to be the ‘cost centre’ approach of using service technicians for break/fix service calls. About five years ago, we implemented the ServiceMax field service management platform to address issues with failed site visits. We found that problems were emerging during visits because technicians were unable to access information required to provide insight into customer needs and challenges.
We saw this as an opportunity to equip our service techs with better tools using a common platform and measuring against a common set of metrics, which improved first-time fix rate, first-time installation rate, engineer utilisation, NPS, and customer satisfaction. To achieve this, we implemented a common data platform via the ServiceMax field service management platform, which started our initial discussion around outcome-based services.
“Outcome-based models transition companies from selling a product or service through a transaction, to providing what the customer is truly seeking – an outcome…”
We also recognised that our engineers are uniquely positioned to gain first-hand insight from customers, on individual challenges, pain points, and opportunities for improvement. As such, we incentivised our engineers to identify, target, and create leads for future business. This has generated thousands of leads over the last few years, bringing in millions of pounds of revenue.
2. The outcome-based economy – look beyond your product
Simply selling customers your equipment and then servicing it when it breaks down is pretty much what every equipment-centric company has done in its corporate history. But the shift to outcome-based services is a new mindset, and it’s reliant on working in partnership with customers – which means looking beyond your product.
Outcome-based models transition companies from selling a product or service through a transaction, to providing what the customer is truly seeking – an outcome. This may require subtle changes in your product so that it is designed to monetise servitisation, rather than capital equipment sales. For example, building in connective features to allow for remote monitoring and predictive maintenance. Connected devices facilitate the creation of outcome-based businesses where customers pay you for the results a product or service provides, rather than the product or service itself. This shifts ownership, effectiveness, and maintenance responsibilities back to the provider aligning customer and provider interests.
Adopting an outcome-based approach in the coding and marking industry, for example, means looking at what products a customer can ship from their production lines using verified printed codes. This requires a mindset shift from traditional service and maintenance to ensure a clear code on existing produce, to helping customers to explore new revenue routes, looking beyond the printer itself. It’s important to note that not every part of the business must move at the same pace. At Domino, we have islands of success where automated, outcome-based solutions are providing value to customers in some sectors, but not yet others.
“Part of the discovery is the need to recognise towards what level of advanced services you want to move…”
Looking at our existing services and developing our Advanced Services offering across all our industries is a stated direction for us and no doubt different sectors and markets in your industry will move at different paces. These islands of success are a good way to start and can be brought together over time as various industries mature.
3. When the strategy changes, so do the skills requirements
Service technicians today are comfortable and knowledgeable about products and technology. But an outcome-based business strategy will require additional soft skills around customer communication. At Domino, we have a global training academy focused on nurturing the engineers of the future. We look at the specific skills, learning pathways and competencies that are key to supporting this approach. While tomorrow’s technicians will not be salespeople, they will be required to think differently.
Of course, some technicians will have a natural ability to communicate well with customers, while others may need training. Aside from the service technicians’ skills, ask yourself if you have the sales infrastructure to go from selling products/services to an outcome-driven offering. We have recognised this and we are aware it’s a change from the traditional sales approach to one of solution selling (e.g. it’s not about the printer but rather the various ways the printer delivers value to customers). It’s essential to look at how you can bring staff on that journey with you.
4. Advanced services is not a solution for everyone
Of course, one size will not fit all – and in some cases not at all. Part of the discovery is the need to recognise towards what level of advanced services you want to move. The key question to ask yourself is what is the perceived value of the service you’re providing? What does the customer see and what value and will they pay for it? For example, we have some customers that insist on 24/7 phone support but are not willing to pay for it because they believe it should now be the norm. Likewise, we have other customers willing to pay a cost to have a code printed on every single one of their products or devices but will only pay for verified codes as opposed to the capital expense of the machine that prints them. What services do your customers value and what else does your organisation need to put in place to deliver these services?
Take a balanced view of what’s right for your customer and good for your business. There’s a significant push to move to advanced services, but you need a level of market maturity, and not every customer will go on the journey with you. In some cases, you may have a mixed customer base with some only wanting a break/fix service from you, while others only want an outcome-based partnership. We see this in our customer base and have a tiered approach with service technicians able to switch modes as required.
5. Equipment data is like gold dust – but only if you do something with it
As you work more in partnership with your customers, supporting their outcomes through your product’s services, you’re able to gather and aggregate valuable data about how customers are using your equipment. There’s a lot of market noise about the value of equipment data, but it only has value if you do something with it. At Domino, we’ve changed our equipment so that it is designed for service at the research and development stage. This means we can extract big data to offer better insight for our customers.
Likewise, our ServiceMax platform gives us valuable ‘moments of truth’ not just from the data itself, but also from the service technician’s comments and notes, which we then analyse. We use these comments as an interesting by-product to see what we can bring back into the product design or operational processes to improve uptime, overall efficiency, and outcome intelligence. It also adds to our customers’ internal knowledge. Rather than buying a printer from us so they can put a code on a product, we’re now able to give customers valuable insight into the overall efficiency of their production lines, as they can’t ship a product without a code.
Want to know more? There is an Executive Briefing from this Field Service Think Tank Session which is available in the premium content library.