By Hilbrand Rustema
With commoditisation and decreasing growth rates on product sales, the service business is now seen as the new area for revenue and profit growth for manufacturing companies. However, recognising the need for a new business model and actually implementing the change are two different matters. So, the question is, how can you best deliver on these expectations and turn services into an area of sustainable growth and profits? The answer is Service Thinking.
What is Service Thinking?
Service thinking is a mind-set. With this mind-set the focus is no longer on making something (a unit of output), but rather on assisting customers in their value creation processes. The value of services is not solely created by the manufacturing company, but instead it’s created through a co-constructive process together with the customer, by applying technical or business knowledge to improve whatever it is the customer is trying to achieve.
The Importance of People
People are critically important in the service business. People represent 60 to 80 percent of the operational costs of a service operation and, in the end, it’s people who have the biggest impact on the customer experience and the satisfaction level of the customer. To apply Service Thinking, it is imperative that your people become ‘trusted advisors’ to your customers. Apart from technical or business knowledge, this also requires the ability to create a relationship with the customer, built on communication, trust, flexibility and adaptability.
The Challenge that Organisations Have to Face
The big challenge for organisations is that nearly every change, improvement or transformation requires change in behaviour and attitude of your people. The first step in doing this, is making sure that each layer of your company knows what the strategic change means and understands why it is needed. The next step would be to develop the required skills, knowledge and attitude people need to fulfil their role in this new situation.
What Can The Organisation Do?
In this route for applying Service Thinking, an organisation can do the following:
- Create awareness and explain why Service Thinking is so important to the organisation and what it means for its employees.
- Help its people to change their behaviour and develop their skills, by providing them with training for acquiring new skills, as well as with tools and coaching.
- Improve customer insight to get a deeper understanding of real customer needs by putting yourself “in the shoes” of your customers.
- Design your desired customer experience instead of leaving it to chance.
Furthermore, technicians and support employees should also be guided into developing their customer skills. This means their ability to communicate, build relationships, sense customer and company needs and so on. Developing these skills and attitude is something an organisation can begin to do internally. However, it is often more effective to kick start such a program by using an external more experienced facilitator who can bring real-life examples and case studies to accelerate staff engagement. Furthermore, changing the mind-set of sales people is also very important. Selling products is definitely not like selling services. The intangible nature of services requires that their value is articulated and linked to customer challenges and customer outcomes. What is required is to develop a new sales approach focussed on services, which includes training sales people, develop customer insight, provide support in developing sales tools to increase sales effectiveness, and define the sales strategy and performance management. All in all, it is clear that there is an enormous potential in services and companies which choose to take the path of unlocking this potential have to start applying service thinking. A prerequisite for this is a change in people’s behaviour and mind-set such that your company becomes truly customer centric. Read more about how Noventum can help you unlock your full potential with regards to Service Thinking, as well as People Development.