Performance-Based Service Contracts Require More Than Business As Usual

By Ivan Moore, COO,  Jolt Consulting Group

Business owners and executives in the service industry, like any industry, are always looking ahead to the “next generation” of how to elevate customer service to drive more business and increase profit. It’s a challenge for any industry to remain up-to-date with changing customer expectations and behavior.¹  However, there are ways to engage, delight, and exceed customer expectations to remain top-of-mind in today’s competitive environment.

With 5G networks on the horizon and IoT becoming more mainstream, soon devices, cars, systems, and entire cities will be connected, making everything “smarter.” The possibilities of keeping connected devices working properly are limitless and one way to accomplish growth today in service is to focus on performance-based contracts to increase company performance and elevate value.

Performance-based contracts are results-oriented and focus on the outputs, quality, or outcomes of deliverables by your company; but before drafting up these types of contracts and dispatching technicians based on the usual service schedule, you’ll have to lay some “predictive” groundwork first. One of the first steps in achieving success with performance-based work is to integrate predictive analysis into your operations, enabling you to more easily monitor, track, and maintain machinery while simultaneously fulfilling the service contract and keeping your costs down.

According to Aberdeen, increasing adoption and use of connected devices provide service leaders with insights such as product utilization and service needs. Coupled with predictive analytics, companies can use these insights to become more productive in the service industry – a necessity to excel in today’s marketplace.²  To raise the bar on customer service and become an industry leader, you’ll want to find out exactly how your customers’ systems work. It will be imperative to keep current customers happy and impress prospects by collecting data within their organizations plus providing recommendations. You’ll also be able to minimize reactive dispatches and prevent machinery from breaking. The latter point is especially important to customers since every minute of inactive machinery is money out the door for the end-user.³ A service firm that can offer equipment uptime and prevent costly failures is a valuable partner to the customer.

Predictive maintenance processes also provide service leaders and field technicians with the ability to cross-sell and up-sell. Employees will be able to discuss their method of keeping a customer’s equipment operating and how the service business uses integrated, intelligent systems opening lines of communication for everyone involved building a stronger, collaborative partnership. For example, a field service company can guarantee, as part of a performance-based contract, that the uptime of a machine will be 99.9 percent. The company will be able to charge the client a premium for this service and by utilizing predictive analysis can more efficiently service the machine prior to breakdowns while avoiding unnecessary service calls; this is a win-win for both the customer and service company.

Companies who want to offer performance-based service contracts and truly optimize their operations processes will need to work their way up the “Service Excellence Curve℠” vying for “best-in-class” status. This means that your cloud-delivered applications and integrated enterprise systems can anticipate service events proactively. Greater information sharing leads to more successful contract fulfillment, period. This level of service also gives the customer confidence in your expertise and keeps operational costs down. The best-in-class performance is what all service leaders should strive to achieve.

Conclusion

We’re living in a consumer-driven world where savvy clients expect a certain level of service, but by elevating the customer-excellence experience, service companies can bank on better relationships, more profitable contracts, and repeat business. This “win-win” for both sides can only be accomplished when everyone can ask “what’s in it for me” and get a tangible answer. For customers, they’ll have access to performance and uptime based maintenance contracts to keep equipment operating in optimal conditions with little to no downtime; for the service companies, they’ll be able to charge a premium for contracts and function efficiently and effectively by integrating predictive analytics into their operations. The more sophisticated a company becomes regarding predictive operations, the more they can surprise and delight their customer while increasing profits. To achieve “best-in-class” success, service companies must simply work smarter…starting now.

Ready to integrate performance-based contracts and best-in-class service into your business? Contact Jolt Consulting Group to develop a (predictive) roadmap to achieve success.

¹ “Use Predictive Analytics to Drive Field Service Excellence.” Aberdeen, June 2017.
² “Use Predictive Analytics to Drive Field Service Excellence.” Aberdeen, June 2017.
³ “Use Predictive Analytics to Drive Field Service Excellence.” Aberdeen, June 2017.