At our recent Aftermarket Business Platform we heard from Rosella Risso, Vice President of Global Parts and Service Agriculture and Customer and Dealer Experience at CNH Industrial, about this exact fear. She outlined how CNH was able to start their servitization journey and actually boost customer engagement and loyalty.
The Path to Smarter Iron
CNH has been operating under the mantra, “We used to produce iron, we want to produce solutions.” This guiding light has led them to focus on making smart machinery that anticipates the needs of their user base. This requires them to
- Better Understand Their Customers’ Needs – Upgrading their customer segmentation and profiling
- Building on a Strong Foundation – By working with dealers and connecting with their loyal user base, they can get the data they need
- Bringing New Tech in Through Partnerships – CNH was able to acquire new partners with experience and growth in the technology sphere
- Understanding the Autonomous Farming Cycle – The company knows the ins and outs of what their customers need from them and can focus technological advancements on what is valuable
With these core tenets in place, they were able to start the process of upgrading their machinery and creating solution-oriented products.
The Journey to Servitization
There are several phases to a complete servitization journey. As you move from phase to phase, becoming more mature, you need to take the time to ensure your customers are on board and understand the benefits these changes can bring to them. This planning and communication will build their loyalty over time.
Phase One: Reactive
Before starting their servitization journey, most companies will be operating their service departments reactively. This means that when something breaks, you then start the process of fixing it. This causes problems because the customer is often in the middle of important work when machinery fails, and every minute that passes until it is fixed will lead to more issues.
This setup is easy for manufacturers because it’s simple to manage and the skills required to keep things up to date are common knowledge. This means dealers can handle issues without needing to get the manufacturer involved for the most part.
Key factors of this phase include
- Base and Extended Warranty
- Maintenance Plans
- Field Management
- Farm Management
Ultimately, this phase is characterised by providing basic service, and focusing on products.
Phase Two: Proactive
When organisations start shifting their focus toward servitization, they first look at proactive maintenance. This stage usually boasts lower maintenance and repair costs, and allows users and companies to plan, schedule, and coordinate their service needs.
It becomes more challenging to bring dealers into service maintenance without extensive training, because this strategy requires more advanced knowledge.
To fully capitalise on this phase, companies will need
- Vehicle First Setup
- Analytics Data
- Proactive Maintenance
- Fleet Management
Without any of the existing infrastructure, this stage can be quite intimidating. However, taking steps towards this level of proactive maintenance will make the future phases of servitization maturity that much easier.
Phase Three: Preventative
Beyond proactive maintenance, a preventative structure allows companies to keep customers in the loop about potential service needs. It requires a deep understanding of what customers need and want from your products, and ultimately leads to higher utilisation and levels of customer care.
Moving to this step of servitization maturity requires companies to provide
- Proactive Breakdown Support
- Software Monitoring
- Vehicle Diagnostics
- Fluid Sampling
- Inspection Programs
As you loop customers into the servitization process, you start to train them and prepare them for more advanced services down the road.
Phase Four: Predictive
When you’re able to jump to more data driven services beyond simple product maintenance, you’ve reached the next level of maturity. This kind of shift will allow you to optimise customer and business operations through digitization, and lead to higher usage and retention.
You customers will see the benefits of your service offerings, and have higher satisfaction and engagement. This kind of connection allows you to upsell them and bring them into the future, a more hands-on relationship with you and an XaaS mindset.
To guide your customers towards this kind of set up, you should be able to offer
- Predictive Breakdown Support
- Predictive Maintenance and Scheduling
- Automatic Parts Replacement Orders
- Performance Optimization Setup
- Predictive Data Lab
With this framework in place, you’re able to start looking at selling customers on uptime rather than products alone.
Phase Five: Uptime
Convincing your customers of a shift towards uptime guarantees can be difficult, especially when you’re in a slow-moving industry like farming, but if you’ve laid the groundwork in previous phases, it should be easy to show them the benefits. With boosted uptime and minimal customer maintenance costs, it’s clear why customers would be interested in this kind of shift.
Your team should be prepared to introduce innovations like
- War Room Tools
- Automatically Triggered Uptime 48h Processes When Alerts Occur
- Replacement Unit Program
- Uptime Guarantee
- 100% Uptime Coverage on Autonomous Units
This shows your customers you’re willing to show up whenever they need you in order to keep their businesses on track.
Phase Six: Pier-2-Pier
The ultimate goal of servitization is a move towards ecosystem services. This allows your team to orchestrate a multi-sided ecosystem system and offer everything your customers could possibly need.
This phase can be thought of as a one-stop platform where dealers, customers, and manufacturers can all connect with one another and get the expertise they need when they need it. It blurs the lines between customer and service provider, and allows full synergy, engagement, and loyalty.
Customer Loyalty: Fleet Monitoring Use Case
By utilising the technology that is already available, CNH was able to set up a control centre in Brazil to monitor their fleet of machinery and stay on top of issues even before they occurred.
For example, one machine was down due to transmission issues. The control centre instantly received an alert and was able to mobilise the dealership to arrive on site with the right tools and information as soon as possible.
Ultimately, the customer was back to work on their farm far faster than they would have been with a more traditional system. Instead of being down for an average of 132 minutes, they were back in action in only 12.
By having systems in place to get everyone back on their feet so quickly, they ensure customers are happy and loyal in the long term.
If your team is hoping to drive customer loyalty through transition to a service-based model, there are a few things you need to focus on. With quality products and innovation, as well as a seamless customer experience and continued anticipation of their needs, you can keep users satisfied and engaged.
Remember, digitization and innovation are only helpful if they can make a tangible difference for your customers. By showing that you understand them and want to improve their own work, you can be sure they’ll stick around for life.