By Coen Jeukens And Katharina Streater, ServiceMax
At Maximize we discussed the topic of enhancing the commercial maturity of your services business. In that conversation we spoke about ‘the Gap’. The Gap between your current service revenue and the maximum revenue you could achieve when every unit sold would have an associated ‘gold’ contract. This Gap is rather simple to calculate, and it won’t surprise me if the size of the Gap becomes a compelling reason to act.
Why is it so important to acknowledge and quantify the Gap? If we don’t want to be like Alice in Wonderland, we need to know both our point of departure and the desired future state.
We see more and more service executives having a revenue growth target. In the grand scheme of both service transformation and margin contribution, this makes perfect sense. As much as it makes sense, a growth ambition of eg. 20% is ‘only’ directional and not linked to a potential. To make your service revenue growth ambition actionable, you need handles; metrics to monitor, levers to pull. The benefit of defining the Gap is, it is SMART -specific, measurable, actionable, realistic and time-bound.