Guest Column | April 19, 2021

How The Shift To Servitization Will Impact Your Service Team

By Paul Hesselschwerdt, Global Partners Training


The way field service teams operate and deliver service is changing, and this rapid pace of change is being driven by new customer expectations, advancing technologies, IoT, and what some are calling “servitization.” No longer is service a reactive practice – today, customers expect proactive attention from their field service provider. This creates opportunities for forward-thinking providers to establish themselves as valuable partners in each client’s mission to succeed.

But what exactly does servitization mean, and how is it impacting field service teams across manufacturing and beyond?

Understanding Servitization

Servitization, otherwise known as outcome-based service, has been defined both formally and in layman’s terms. Dr. Howard Lightfoot, author of the book “Made to Serve” and manager of the Operations Excellence Institute at Cranfield University, defines servitization as “a portfolio of integrated products and services, with the provision of product-centric services providing a main differentiating factor in the marketplace.”

Servitization for manufacturing, or any industry for that matter, encourages companies to refocus their energies on their customers, prioritize their customers’ needs and goals, and also reshape their internal operations to provide a reimagined field service offering.

There are three levels of servitization a field service company can provide, and with each ascending step, the level of service advances.

  1. Base Services: Covers basic product provision.
  2. Intermediate Services: Coverage of product repair, condition monitoring, field service, and customer help desk.
  3. Advanced Services: Would include all of the above as well as pay-per-use, fleet management, availability contract, and integrated solution.

Because servitization calls for service organizations to change both internal and external operations, the way service is managed will have to change as well. There are four things that a service organization can expect when shifting to a servitization model.

  1. Technicians Can Be Lead Generators & Upsell: In traditional manufacturing businesses, the service department was viewed as the cleanup crew, or simply as the “cost of doing business.” But after shifting to a servitization model, field service teams now have the tools and customer face time to become vital lead generators for their company.

In a servitization partnership, the customer relies on the service technician to act as a trusted partner. The service technician is equally invested in successful business outcomes and has fostered a positive and close relationship with the customer. Because of this level of trust, technicians now have an enhanced ability to upsell. The customer trusts that the technician is acting in their best interest because they are.

  1. Increased Utilization of Industrial Internet of Things: As servitization agreements evolve to include more advanced service requirements for increasingly connected products, field service will become more dependent on the Industrial Internet of Things (or IIoT). The Industrial Internet of Things refers to the use of connected devices powered by IoT capabilities in industrial sectors. With the capability to track products remotely and take preventive repair measures, manufacturers will rely on IIoT to inform and improve their service efforts.
  2. Required Mobile Management Systems: To make proactive service possible, more manufacturers and service teams are utilizing IoT technologies. This means service companies must rely on mobile field service management software solutions. Servitization depends on high-quality customer support, which therefore requires high first-time fix rates and immediate help when machinery downtime occurs or needs fixing. The easiest and most effective way to consolidate and manage data, monitor remote equipment, and oversee complex workflows is through a central field service management system with robust mobile capabilities.
  3. Improved Customer Satisfaction: In the aforementioned servitization book, “Made to Serve,” Dr. Lightfoot highlighted three ways the customer and service technician relationship will improve in a servitization model. They are:
    1. Customer Intimacy. Combining detailed customer knowledge with operational flexibility, to create the best total solution for the customer.
    2. Operational Excellence. Controlling processes to effectively deliver the best total cost to the customer.
    3. Product Leadership. Selling the best product on the market.

Businesses and service teams that work together in the framework of servitization are both working toward a common goal. Because customers feel supported by their service rep, they are more likely to have a favorable view of their service. Furthermore, when service technicians feel empowered to do their jobs and are not burdened by excessive customer demands, they can provide optimal service. Because it improves outcomes for both the service provider and customer, servitization is a win-win for everyone involved.

 About The Author

Paul has been a senior executive in consulting and industry for more than 20 years. He has worked with companies in the Americas, Europe, and Asia. Together with the Global Partners team, he has designed and implemented programs in leadership, management development, sales and marketing, and project management across a range of industries, including pharmaceuticals, biotech, retail, chemicals, consumer products, electronics, and high technology. Paul’s career began in finance and accounting and half of his professional life has been as a Finance Director and Chief Financial Officer for industrial, life sciences, and global media companies.

Paul also leads Global Partners’ Community of Practice in Business Acumen, where he combines his diverse experience in the financial world with his consulting and training know-how to enable clients to improve their business results significantly and sustainably. Paul is a frequent conference speaker and published author in many areas, including Business Acumen, Lean Six Sigma, and sales and marketing.

Paul is a graduate of Boston University and Babson College. He is passionate about people, Holland, music, and travel.