Jan Van Veen continues his latest exclusive Field Service News series on how companies can monetise their services and data by exploring how companies can remove the obstacles that are stopping them build momentum with their clients...

Catch up with the previous articles in this series How to Monetise Services and IoT and How To Monetise Services And IoT: Better Articulate Value now! 

Central question

Many manufacturers experience pressure on growth, revenue and margins.

Their products and services are being commoditised. Competition from lower cost alternatives are arising. On the other hand, there are huge opportunities with new technologies, value propositions and business models.

One of the important trends is that value proposition and offerings become more data-driven and more service-oriented. However, many manufacturers are product-driven businesses which do not fully appreciate the value that service has for their customers and own business.

So, one of the central questions is: How to Monetise Services and Data in order to Grow in a Disruptive World? The capability to monetising service and IoT is mission critical for sustainable performance and existence of manufacturing.

In a series of articles, we cover 4 critical steps that make the difference between success and failure in monetising Services and Data:

1. Solve bigger customer problems, which is about creating significantly more value for customers. 
2. Articulate the value
3. Build momentum with clients to adopt
4. Build internal momentum for monetisation

Common mistakes

Too often we see that with (new) services, the new solutions and features we launch are not always that easy to start using for our clients. If the obstacles to adopt are too big and not solved, less clients will use it or will delay using it significantly, and in the meantime will not see the real value, in turn creating more obstacles and resistance, resulting in limited commercial success.

If you encounter such signals, it may not always be easy to get a clear picture whether;

1. Your clients simply do not have the problem that your solution is trying to solve
2. Your solution is not adequately fixing the problem compared to other solutions
3. There are serious constraints in applying your solution, even if it is a good solution

So, caution is advised in these situations not to jump to wrong conclusions.

For the sake of this article, let us assume 1) and 2).

The obstacles in applying your solution can be categorised as follows:

Lack of money

The new solution you are offering appears to be too expensive for your client.

It is seen as too big an investment and/or recurring cost in relation to the value they perceive will be received.

It could be that the issue is more related to the perception of the value, how well that has been articulated (see previous article on ‘Better Articulate the Value’) or that you are not talking to the right decision makers in your client’s organisation.

Lack of skills

Using the new solutions are too complex and difficult for your client, as they are complex to use and require a lot of training to acquire the necessary skills.

Lack of access

Often, the new solutions can only be used and generate value in certain circumstances.

Commonly overlooked is that applying the new solutions and receiving value from it, often requires:

• A significant change in the way of working by staff, which triggers too much resistance
• A significant overhaul of the processes and information flow
• A change in the structure of the organisation and roles, with some staff even losing their role/ job

Lack of time

For many new solutions, it takes time and effort to make sure they are adequately used and embedded in the organisation. If the pressure from daily business and other projects is high, it easily happens that adopting the new solutions is put on the back burner and falls off the radar.

Risk

In essence, there could be two main sources of perceived risk:

• The risk that the solution does not work as expected and hence does not bring value
• The more social risk of sticking out your neck for change which might not be accepted by stakeholders
• Too often we focus on the technical part of our new solution or features, and do not give other client needs and obstacles enough consideration,  when:
• Gaining customer insight into their bigger problems
• Developing a remarkable solution to solve these bigger customer problems
• How and with whom we discuss the client problems, and promote and sell our solutions

An interesting example is a major metal wholesaler that is looking into adding extra value to industrial clients by not only offering standard trade sizes, but other services too.

They also offer services like cutting, drilling, bending and even picking packages for direct delivery into different locations in the manufacturing  for their clients. This really solves a lot of challenges for low-volume high-mix manufacturers.

However, using these services means that equipment and people doing the pre-manufacturing work becomes redundant or they have to change their role. It also means inventory goes down, which changes the (perception of the) stability and contingency in the production line, depending on an external party.

The result was that initially most clients did not buy the new offerings, regardless of the well-articulated (financial) benefits and business cases.

At some point, stakeholders started doubting the potential of the added value services and whether to abandon the initiative or not.

Some practical solutions

Manufacturers that are quite successful in launching and growing customer adoption of the new solutions and features, have the following good practices:

1. The have a broader view on the bigger customer problems and challenges beyond the functional requirements of equipment. They better understand the operational and change challenges and therefore have a more integral view on what it takes to improve on these problems and challenges. Important obstacles are included in the design instead of as an afterthought.

2. They develop a more concrete and remarkable solution to solve the bigger customer problems. Where needed, the obstacles (in using the new solutions) are already designed into the solution.

For example:

a. They focus more on simplifying the solution, making it easier to use with less training and implementation effort for their clients.

b. Their solution is more than a technical solution and includes support in implementing and maintaining a new way of working.

 c. They offer an ascending engagement model in which customers step-by-step can implement and use portions of the overall solution. This way they can mitigate risk, reduce the change challenge and allow their organisation to become familiar with the new way of thinking and working. Simplify the solution and ease of use.

3. They involve the right stakeholders in the client’s organisation – who have a stake in the problem being solved, in the decision-making phase and in the implementation phase.

Further to the metal wholesaler example above, the next steps of the added services portfolio were to:

• Organise open workshops for clients, discussing trends and changes in the sector, and some best practices and success stories.
• Workshops with the client’s key stakeholders to get a full picture of the journey of maturing their manufacturing operation, supply chain, plant layout, equipment, competencies and people. And then use the information to develop a road-map on how to step-by-step develop. It also helped to get stakeholders on the same page and engaged.
• Provide project management and change management practices and resources.
• Organise pilot tests, get used to new ways of working and building trust.
• Offering ongoing performance management dashboards to get full visibility and transparency of performance, progress and issues. This helped preventing blame for every incident, and also helped to feed a continuous improvement programme.

The Benefit

Manufacturers that are better in building momentum with their clients to adapt to their new solutions, see that their customers fluidly adopt new solutions and have a fairly high pace of scaling up.

Hence, these manufacturers generate more new revenue streams with higher margins and differentiate more from their competition.

Give monetisation of Services and Data an Impulse

If you want to accelerate the monetisation of your (new) Services and Data, join our upcoming Impulse Sessions on “How to Monetise Service and Data”.

These are full day interactive meetings with like-minded peers during which we will exchange experiences, insights and challenges.

Book your seat @ http://fs-ne.ws/5gyg30mWzze

Essence

Our value is not only in the developing and offering of great solutions to our customers’ big problems, it is about how our clients use and benefit from our solutions.

 Jan Van Veen is founder of MoreMomentum 

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