At first glance, selling services in hourly units appears to be advantageous for both sides. However, both provider and customer miss out on the opportunity to find more efficient solutions and waste valuable technician resources. How you can escape this hourly dilemma...
Hours are the easiest unit to measure in the service business. In the role of the provider, but also in the role of the customer, they give us one thing above all: a sense of security. As a provider, I transfer the risk of unforeseeable circumstances to my customer as far as possible. As a customer, I get a feeling of transparency and predictability. In addition to the feeling of security, however, there are also unequal expectations.
The pressure of these expectations usually rests on the shoulders of the technicians. If they complete their task too quickly, they have to explain themselves to their employer. If they don't work fast enough or take longer than planned due to unforeseen circumstances, there are discussions with the customer. Their goal is therefore to complete the agreed services within the predicted time.
Why is this inefficient use of technician resources a serious problem for providers and their customers? Because it is becoming increasingly difficult to find young technicians, especially in Europe. The consequences are serious. Long waiting times for technician assignments are already becoming a stumbling block for growth on the supplier side and hinder the efficient operation of machines and systems on the customer side. The good news is that there are ways and means of reducing this problem.
Customer integration into the service process
IKEA has shown us how it's done - we are happy to take the Swedes' products from their warehouse, transport them home ourselves and assemble them there. We are thus fully integrated into the process landscape and take on services that we can simply perform more cost-effectively and more scalably than IKEA.
Of course, a production machine is not a Billy shelf that anyone can tinker with without hesitation. But there are certain services, such as maintenance components, that qualified customer personnel can carry out themselves after appropriate training. Money can also be earned by certifying and recertifying the customer's employees for such activities. It does not always have to be the case that maintenance is carried out by the customer's own personnel.
Bringing third parties on board
Local providers can also be qualified for such services. This is particularly advisable if you have a low regional density of customers, but involves the risk of losing the support of these customers completely to your local partners in the medium term.
Unfortunately, both strategies only shift the dilemma to other parties involved. They do not resolve it. Let's go back to the actual goal of all parties involved: to achieve the agreed result at the end of a service. And in many cases, this requires a rethink. We don't sell hours, we sell results. The result is measurable and therefore a real alternative to the unit "hours".
Clearly defined scope of services
The definition of included services and customer obligations creates a great deal of clarity for providers and customers. The associated standardization and a fixed price for the service are unfamiliar at first, but the advantages are obvious. The risk of unforeseeable circumstances shifts from the customer to the provider. In return, the provider has the opportunity to significantly reduce the resources used thanks to the standardization and subsequent optimization.
Standardizationoptimization, Automation and other technical aids reduce effort and complexity and therefore the susceptibility to errors. This decouples sales growth from growth in the number of technicians for the first time. Attractive working conditions for executive roles also ensure better access to new workers. The result is a win-win-win situation for providers, customers and technical staff.
Thinking a little more long-term - a matter of interpretation
The lack of availability of qualified service technicians also puts the spotlight on a longer-term option for reducing the hours dilemma. If machines are developed with optimum serviceability in mind and the number of variants is deliberately reduced, the service effort is significantly reduced. This form of standardization is the perfect basis for clearly defined service scopes and ensures a further leap in service efficiency.
A touch of science fiction
Finally, let's take a look into a hopefully not-too-distant future. In combination with Predictive maintenance clearly defined service offerings will unfold their full effect. Imagine that you can then sell not maintenance (hours), but the uptime of the machines and plan your active service technician assignments weeks, perhaps even months in advance and time them optimally.
The exact work that needs to be carried out and the qualifications, tools and spare parts required for it are clear before the assignments. Long-term planning allows route optimization, which leads to a significant reduction in travel times for service technicians. Well-trained, certified customer technicians can also serve as first-level self-support and thus cushion short-term deployments in the event of repairs.
The one right way
There are no limits to creativity when it comes to resolving this dilemma. Unfortunately, there is no one right way. Through hypothesis-based experiments, you will learn which approaches work in your environment. Always keep the goal of the win-win-win situation described above in mind - it is a unique differentiator and opens up completely new growth paths for you.
Georg Hofstadler
Georg Hofstadler is Director Client Service Excellence at Smarter Ecommerce GmbH. In previous years, he worked as a product and lean manager in the industrial after-sales service environment. Today, he is intensively involved with XaaS business models, experimental innovation based on services and the scalability of services.
