Creative approaches can lead to a win-win-situation. Major actions/changes are proposed before the customer forces the issue. Proactively seek ways to add value to the customer in order to avoid the pitfalls that occur by reacting too late
Ways to new value for your customers!
What can be done? What are possible new values that can be created for the customer? The list is long and clearly site and customer specific. Having studied over 100 Service contracts over a 3 year period I found some common possibilities:
Information about cost, open book vs. Closed book, Think about manpower charges including holiday & sickness cover, support contracts including call-out costs, spare parts: Buy-back, consignment stock, supply chain management, provision of spares within the price, finance charges, recruitment & re-recruitment costs.
Engage in a dialog with the customer in order to find out what is of value to them, what might have change since the start of the contract? Have their market changed?
Likewise engage in dialog with the service people who work at the site, and find out what they know. Your service people should in this respect be your greatest date and information asset.
Think also about what can be done with respect to Infrastructure and tools. What new possibilities does technology give e.g. new improved conditioning and/or remote monitoring. You can think about the entire structure of the contract i.e. risk reward incentivise KPI`s so that the customer pays you more when the equipment can produce more or have a higher through put Finally I am inviting you to think about new/other ways of doing not only service business, but business in general. Think about what value you are creating for all involved, and what additional values can be created. Also please do so before the customer or your competition forces you to react.
Cutting your margins and see how you can take additional cost out of your operation is not a long-term recipe for creating value. You always need to have your cost under control it is however not enough. Only doing that is a downward spiral that is accelerating the value added erosion. And it’s not rocket science nor is it something that accidental falls into your lap. It is hard and diligent work every day. The good part about it is that you create value for all involved!!!!!!!!!