When a product is sold, it is typically delivered with OEM warranty, protecting the buyer from any unforeseen circumstances for a relatively short period. However, once that warranty runs out, a period with uncertainty starts for the buyer. With an additionally offered package, this uncertainty can be covered. Manufacturers nowadays put more and more focus on growing service revenue, and many organizations recognize that extended warranty and extended service programs can be of strategic value.

Offering additional service is a trend seen in almost all industries. Its customer demand-driven and perceived by corporations as sharpening their competitive edges. This growing trend for enterprises to shift their focus away from selling products towards building revenue via services is called servitization. Many organizations are making the shift from merely selling simple products to selling a full-fledged service. Rather than buying a product, customers are buying the outcome, a well-known example of this is Spotify that delivers media as a service. Companies should definitely make this shift, but it can only work if their sales and service organizations are well aligned.

There are a couple of important reasons why organizations should care about this trend:

  • Customer Engagement
    Selling a service means a longer relationship with your customer, often combined with remote monitoring of your customers’ equipment. Valuable data is shared directly from the field, which gives a better insight into the use of the equipment as well as useful data for your R&D department.
  • Financial Stability
    Long term service contracts guarantee regular revenue streams. Service revenue will be more secure than when only selling products; sales quantities will vary over time.
  • Solution Selling
    Nowadays, customers expect more than just a good and useful product. To win from competitors, companies also need to offer more than a lower price. Customers are looking more and more towards the TCO (Total Cost of Ownership) of equipment. To become be a trusted partner, it essential to advise customers throughout the complete life cycle of the equipment. When organizations make the shift to selling solutions, they can offer much more than just the product itself. Companies who only focus on the product will eventually lose to a competitor on total price because they cannot provide a complete package.

This spotlight article describes how Dynamics Service Management aligns both Sales and Service departments, to enable the shift to become a service orientated organization.

Integrated Service processes

It is vital to inform the customer as early as possible about additional available service packages. To connect sales and service, which are usually separate departments, Dynamics Service Management provides service contract information directly on the Sales Order. From the Sales Order, a sales representative can create a new Service Contract proposal explaining the customer which options are available.

Object Item relation

To assure a smooth hand-over between Sales and the Service department, it is possible to automate the install base record. Install base records are vital for any service organization. When an organization is selling many items a month, you want to avoid every sold item needing a manual update. With the Object Item relation, it is possible to automate this; when a product (item nr) is sold via a Sales Order, this can automatically lead to the creation of a Service Object.

Equipment List

Not every organization would create a Service Object as soon as something is sold. To control this process more, it is also possible to create an equipment list record. This assures your install base record does not get overloaded with many objects, but it does give the option to create a service object when needed. On the equipment list, the sold to customer, serial number and ship date are stored. With this information, it is possible to create a Service Object. This can even be done with the original transaction dates such as the actual shipment date, which can be important to determine correct warranty terms.

Service Contracts

The service contract is the active agreement between you and your customer. The contract contains all the agreements made, to ensure they can be checked automatically by the system. Service agreements contain the agreed coverages with customers such as the covered equipment, the Service Level Agreements and the covered services.

Automatic Renewal of Contracts

When service organizations have many service contracts, it can be a challenge to keep all agreements up to date and running. One challenge that arises frequently is the extension process of an agreement. With Dynamics Service Management, it is possible to automatically generate new contract proposals for agreements which will expire within a specific time frame. The system creates new proposals with a new expiry date and this can be used to share with your customer and hopefully activate the agreement as your next step. This functionality helps to prevent agreements from simply expiring, which results in missed service revenue. It also helps by to keep your customer relationship active by creating a contact moment to reach out to your customer and check in with them.

Connected Field Service

Connected field service, or IoT, is vital for service orientated organizations. On the one hand, it’s providing critical information about the use of the equipment and sends alerts if something goes wrong. On the other hand, it gives insight into the status of equipment and if service is needed in the near future to prevent things from going wrong. Especially if Service agreements with tight SLA’s and guaranteed uptimes are active, it is only possible to manage them with real-time data coming from the actual equipment.

As customers continue to expect additional benefits and long-lasting relationships with their service partners, it will become more and more crucial to add service contracts to product sales. The industry keeps growing in complexity, highlighting the need for a mobile management system and reliable customer service. Dynamics Service Management can help organizations overcome these challenges and give them competitive advantage by using the latest Microsoft technology to be more successful.

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