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Field service management software is transforming trade/ speciality contracting as more revenue comes from service contracts and maintenance...

IFS, the global enterprise applications company, has released a primary research study revealing that legacy software solutions used by speciality and trade contractors could prevent them from profitably delivering aftermarket services to their customers.

These contractors are finding aftermarket service an important source of revenue growth as project owners wish to outsource asset maintenance to the companies that constructed, fabricated or installed the asset on their behalf.

The survey of 200 HVAC (heating, ventilation and air conditioning), plumbing, electrical, building automation, low voltage electrical, signage, overhead door and other speciality contractors paints a picture of an industry in the grips of a digital transformation.

85 percent of study respondents said they have maintenance contracts with customer-specific terms, service level agreements (SLAs) and pricing, but only 14 percent said their software facilitated these contracts “very well.”

85 percent of study respondents said they have maintenance contracts with customer-specific terms, service level agreements (SLAs) and pricing, but only 14 percent said their software facilitated these contracts “very well.”Many respondent companies did not enable field technicians to improve the customer experience or drive new revenue. Only 38 percent said technicians could access information on the terms of the contract including customer-specific requirements. Only 15 percent of respondents have the technology to empower field technicians to upsell or sell new service contracts, only 25 percent could issue new estimates and 23 percent could get customer approval for an estimate.

89 percent of respondents said they use subcontractors, but just over 10 percent have adopted the current technology by giving their subcontractors a mobile app to interact with their field service management software.

Respondents reporting greater readiness for digital transformation—Digital Transformation Leaders—are nine times as likely to say their software prepares them well for the essential process of service contract administration. Only 30 percent of Digital Transformation Laggards were even offering customer-specific contracts, while Digital Transformation Leaders were more than nine times as likely to say their software prepared them very well to support these contractual obligations with specific requirements for each customer.

Our data shows that residential contractors seem to be ahead of commercial contractors when it comes to Digital Transformation.IFS Industry Director for Field Service Management Mark Brewer said, “These trade and speciality contractors are at an inflexion point with field service management software. Many of them have invested in some level of field service technology to support aftermarket service work. Often, this same software helps them manage construction crews during the initial project. But now they are at that point where they need to become more attentive to customer-specific SLAs. They need to upsell and drive more sales from each customer and improve the customer experience.”

IFS Senior Product Evangelist for Field Service Management Tom DeVroy added, “The adage is that the future is here—it is just not evenly distributed. This is true for trade contracting, where our data shows that residential contractors seem to be ahead of commercial contractors when it comes to Digital Transformation.

This is mostly the result of customer demands that have pushed them towards software that optimizes the field service schedule, enabling them to give an accurate estimated time of arrival and issue proactive customer alerting. They are further ahead on automated subcontractor management, automated parts ordering and fulfilment, and field-based, point-of-service payment processing. Contractors engaged strictly in commercial work need to catch up as their own customer expectations evolve.”

Download the entire study, Are Trade/Specialty Contractors Leveraging Field Service Software for Aftermarket Service? @ fs-ne.ws/MNNo30inF0F

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Bill Pollock, President, Strategies for GrowthSM tackles one of the biggest questions smart Field Service Directors are asking themselves today - how to make money from IoT based field service delivery...

The ability to monetise the IoT in field services is another variation on a theme of what has dogged the field services industry for decades! Every time there are advances in technology, the more progressive – and aggressive – Field Services Organisations (FSOs) adopt the technology to streamline their processes, reduce their internal costs, and improve their service delivery capabilities.

However, customers, for the most part, see the adoption of this technology as being

[ordered_list style="decimal"]

1. Strictly for the benefit(i.e., cost-benefit) of the services organisation itself, and not them and
2. means that should reduce overall costs for both the services organisation and its customers (i.e., themselves)[/ordered_list]

With subscription-based pricing, however, cost should no longer be as critical an issue to the prospects for moving forward with the desired FSM solution – however, do your CFO and Purchasing teams understand that? Or are they still entrenched in the traditional perpetual license mindset?

The mistake that many services organisations make is trying to sell the same services to customers, at reduced costs to themselves, but increased costs to their customers. Customers will typically see this apparent disparity and question their services providers as to why they should have to pay more for something that costs their vendors less!

What basically needs to happen is for the services organisations to move away from traditional Service Level Agreement (SLA) pricing, to an outcome-based pricing model, such as “power by the hour”, “airplanes in the air” or “x levels of output”, rather than “y hours of service coverage”. Remember the “bullion” pricing model (i.e., Platinum, Gold, Silver, Bronze)? It bit the dust (in most cases) years ago.

 

So, too, will traditional Service Level Agreements (SLAs) as they are replaced by outcome-based services agreements.

The best current examples of this are, as noted, are selling “uptime as a service”, rather than merely “throwing hours of support” at customers – a rifle shot, rather than a scatter-gun approach to selling services. Although many services organisations say they offer total Service Lifecycle Management (SLM) support, most still only offer Field Service Management (FSM) solutions in terms of field service and support, preventive maintenance, and standard parts and inventory management.

However, the IoT, in some cases for the first time, now empowers FSOs to provide “true” Lifecycle Management for their services customers – essentially “cradle to grave” support for all of their systems and devices, throughout all of their day-to-day usage and applications.

How does the IoT do this?

Basically, by automating the entire services management process, end-to-end, from data collection, through device monitoring, problem identification and resolution, routine and ad hoc maintenance services, predictive and pre-emptive maintenance, parts/inventory management – and even “end-of-life” product support! SLM is more than FSM – and the IoT can support all of the organisation’s SLM services processes.

The IoT is more likely to change the way in which services organisations deliver their services, first; and the way they package and price them, second.

By that, I mean that, first, the IoT will allow services organisations to perform more maintenance and repair service remotely, rather than on-site – and the growing use of predictive diagnostics will continue to reduce the need for on-site services (in some cases, at all) over time.

As a result, many services customers may not even know that their systems or equipment have been serviced, as everything that was needed was either performed remotely – or did not need to be performed at all (i.e., through routine monitoring and minor calibrations or maintenance “tweaks”, etc.).

Through the use of a customer portal, customers can typically gain full visibility of exactly what types of maintenance have been performed, on which systems, at what times, and with what results.

However, those customers not electing to utilise their customer portals (or if their services provider does not offer that capability) will have virtually no visibility as to the extent of the maintenance that has been performed.

This ultimately becomes problematic for some services organisations that must then report what they have done for the customer – and try to convince them that by doing so, there was added value provided.

 

Packaging this “new” way of providing services through an IoT-powered FSM, or SLM, involves an entirely new way of delivering services to customers. For example, instead of providing a certain number of hours of support, within a designated time window, and providing a “guaranteed” uptime percent (i.e., or you don’t have to pay your services contract fee that month), some organisations are now selling uptime – period.

Instead of throwing service contract hours at an aviation customer, they now provide “airplanes in the air” to this segment. Similarly, instead of selling a standard SLA to a wind farm customer, they are selling “power by the hour".

Instead of selling standard SLAs for extermination services, they’re selling a “rodent-free” environment. And so on.

However, this ”new” way of packaging services will be difficult for some services organisations to deliver – and for many customers to acclimate to – or price! It will take time, and it will not be an easy conversion for some. But, it is already the way of the present, in many cases – let alone the future.

 

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Michael Blumberg, President, Blumberg Advisory Group, reflects on the seven most crucial considerations for service managers tasked with driving additional revenue in today’s market...

Revenue growth is probably the single most important objective for executives who are responsible for managing their company’s field service organisation (FSO) as a profit center or strategic line of business. “I want to double my service revenue in the next 3-5 years” is an incantation that I hear constantly from business owners and executives.

That equates to a 20% or more growth rate per year.

Sure, this type of growth is easily achievable if the market is growing at this rate or faster. I’ve found that these high growth targets are often triggered by management’s desire to take back market share from competitors or increase the share of service revenue contribution to overall corporate revenue.

While high revenue growth in a mature or declining market is difficult, it’s not impossible. A little work is usually required to achieve this type of performance.

To understand where the emphasis is needed, let’s look at where service market programs may fall short:

#1 - Service Portfolio not meeting customer needs:

Quite often service providers fail to meet their revenue objectives because their service portfolio is no longer meeting customer requirements. In other words, they have failed to offer services tailored to their customer needs. For example, offering only next day response when customers require same day.

#2 - Pricing not optimal:

If service revenue is flat or declining, a service provider might want to look at their pricing strategy and tactics. Perhaps their service prices are no longer competitive.

On the other hand, they may be underpricing their services in relation to the value they provide.

#3 - Failure to understand competitive threats:

Many service providers, particularly those that are divisions of manufacturers, fail to understand the competitive threat of third party maintenance (TPM) companies and/or in-house service providers.

For example, they often under estimate the value that TPMs provide to their customer and/or fail to develop an effective value proposition to compete against them.

#4 - Failure to articulate value:

The single biggest reasons why customer don’t purchase service agreements is because they don’t understand their value. An FSO must ensure they have clearly articulated the value of their service offering to current and prospective customers.

Do customers the cost of downtime or the pain points that their services help solve?

It is important that FSOs not only articulate value to their customers but also make sure that their sales people understand it and sales people are provided with the appropriate sale aides and marketing collateral to support it.

#5 - Lack of communication & follow-up:

One way to increase service revenue is by improving contract renewal rates.

These rates often decline though lack of consistent communication and persistent follow-up about the value of services provided, when contracts are up for renewal, special incentives for renewing, and information on when they are about to expire.

Customers are likely to forget about their experiences even if they are positive ones after 30 days. That’s why it is important to follow-up once a month.

#6 - Not asking for referrals or testimonials:

A recent study by HubSpot, a marketing automation software provider, found that 85% of companies who achieve year over year revenue growth do so because they ask for and receive referrals from their customers. Referrals are the best and least expensive source of generating new business.

The problem is most FSOs forget to ask for them. Remember customers speak to each other. They may be involved in the same networks and trade associations, or call on each other for advice and guidance. Why not enlist them in your business development efforts, even if it is to influence their peers in other companies who already know about the services you offer.

#7 - Lack of customer appreciation:

Your customers will remain loyal to you and purchase more from you when you let them know how much you value and appreciate them.

It’s the simple things like a courtesy phone call/visit, thank you card, small gift (i.e., rewards program), or exclusive offer that let them know you value their business. These seven focus areas have one thing in common, they all benefit from market research.

Whether its information that will help redesign a service portfolio or modify pricing, market research provides an unbiased and unfiltered perspective on what customers are thinking and doing. More importantly, market research, when designed effectively will uncover valuable market intelligence that may not have otherwise been captured from a sale’s call or courtesy call made by a company executive.

By implementing all seven approaches to revenue growth, as outlined above, on a highly disciplined and consistent manner, an FSO can expect to achieve a 30% to 120% increase in sales in just one year alone.

 

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Ahead of this years Field Service USA event in Palm Springs, The team at WBR have put together this great infographic which takes a look at some of the key areas that will be under the lens this year...

 

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Want to know more? There is also a more detailed white paper that accompanies this infographic which you can access by clicking here (note: external link with registration required) 

 

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Field service professionals can subscribe now for free here and then simply email the subscriber benefits team on subscriber.benefits@fieldservicenews.com to get your relevant discount codes!

 

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