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The LAER Effective Company
The rise of the Internet of Things (IoT) and smart, connected products disrupts the whole customer life cycle in industrial equipment. As part of TSIA’s research activities, we track the latest trends affecting the industrial equipment sector, which includes automation technology, machines, instruments and components, and solutions providers leveraging industrial equipment. In this post, I’m going to be sharing how these trends affect customer life cycle management.
These changes happening in the industry are forcing industrial equipment organizations to rethink their current customer life cycle management process. Such factors behind this need include:
TSIA's LAER model
So, what does the LAER model when applied to the industrial equipment customer life cycle look like?
Today, IE companies want to attach information services with the initial product deal. To achieve this, service specialists needs to be involved in the initial deal to show the value of smart, connected products/smart services and to build trust to motivate customers to get connected and share data.
Product support is evolving toward customer success. To optimize the usage of smart, connected products, technology suppliers need to enhance their focus on the processes and the ecosystem in which the equipment is embedded.
As the software and analytics part of equipment is increasing, IE companies need to monetize these services and include them in support contracts, especially software maintenance and upgrades, which can be included in service offers.
This creates opportunities to provide and monetize adoption services.
(Click image to enlarge.)
Examples of adoption services you can monetize.
Examples of adoption services you can monetize.
Today’s focus on helping customers achieve specific outcomes, along with the capabilities of consumption and customer experience analytics, are creating opportunities for providing customers with tailor-made solutions and offers. Such offers can come in the form as spare and replacement parts, new or adjusted contract features, training recommendations, or equipment and software upgrades.
Those IE companies offering information services and software solutions, or even IoT platforms, are using their accounts to connect and service both their own products as well as third-party products. This creates huge opportunities to expand the business with existing accounts.
Today, product, process, consumption, and customer experience analytics provide the opportunity to address customers at the right time with the best offer and recommendations to ensure their renewal is tech-assisted, or at least partially automated. The renewal phase is strongly linked with the adoption phase. The more successful your adoption services and expansion activities are, the higher the stickiness of your customers to your solutions, and the higher your renewal rates.
To manage these phases in an effective way, you need to become LAER Effective.
It is the goal that customers achieve consistent, measurable, and extraordinary outcomes throughout their entire journey with your products and services.
Give up the silos. All customer interactions with smart, connected products require intensive collaboration between Sales and Services. Establish handshakes between Sales, Customer Success, and Services to optimize the customer life cycle value. Also, be aware that Services interacts with the customer 5-15x more than Sales, giving them unrivaled insight, and valuable data, on how to match products and services with the outcomes customers want to achieve.
TSIA benchmarks show that industrial equipment companies have a support attach rate that is far below other industries. Closing the gap represents significant potential for revenue growth and reliable revenue streams in the long run, with high renewal rates for contracts.
Driving adoption is important for all customer interaction. TSIA Field Services Benchmarks show an improvement in renewal rates up to 7 points when field service engineers took the initiative to drive adoption vs. engaging only in break-fix maintenance activities.
When the customer is using your products and services intensive and successful it makes that customer account more sticky. To reach this you need to…
A customer success plan is what you are doing for the customer to help them achieve their business objectives. Such a plan includes activities to analyze the customer’s usage of products and services to enable the CS team to improve customers’ awareness of the capabilities of the solution, its skills, and usage.
Driving adoption is the key to making your customer successful in using your products and services. Effective adoption drives opportunities across the whole life cycle.
Monetizing some of the customer success activities that customers have come to value is an important step toward becoming LAER Effective. Equipment manufacturers offer information services to help customers use and adopt the equipment more successfully. As these services are often not yet mature, it is difficult to monetize them as standalone offers. IE companies have the opportunity to bundle in such services in premium support tiers.
Help current customers expand their spending as their usage of your products and services increases.
A systematic customer success approach and an enhanced focus on expansion of existing accounts create additional benefits through upsell and cross-sell of products and services. And, last but not least, it circles back on improvements of the renewals.
If you want to learn more about how to become LAER Efficient, be sure to join us at TSW Las Vegas 2018, October 15-17. There, we’ll have lots of compelling sessions by industrial equipment companies and TSIA researchers on topics such as:
There’s still time to register. I hope to see you there!
Read more posts in the LAER Effective Company series:
Post Date: August 23, 2018
Professor Harald Kopp, is director, Industrial Services Research, for TSIA, as well as a teacher in a MBA program for sales and service engineering at Furtwangen University, Germany. His focus is chiefly on services in industrial automation, equipment, instruments and technology companies. He has 20 years of experience in the areas of research, consulting and management in industrial services, supply chain management, and IT-Management in industrial equipment, automotive and enterprise IT industries.
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