Coen Jeukens is vice president of global customer transformation at ServiceMax. He works with customers and prospects to fully unlock the true value and potential of their service organizations. Prior to joining ServiceMax, Coen was the services contract director at Bosch where he implemented an outcome-based business model, with highly impressive results. Coen is also a regular keynote speaker at prominent field service conferences around the globe.
While blueprinting an after-sales organization earlier in my career, I asked a sales executive, “What do we tell our customers about life expectancy and maintenance costs when we sell the product?” His puzzled expression said it all. For effective cross-selling and upselling in the after-sales domain, it’s crucial to know what value was promised at the point of sale. This is where the service manual and Service Bill of Materials (BoM) come into play.
This blog is part three in a three-part series:
- Part 1: How the Service Bill of Materials Links Engineering to Service
- Part 2: How the Service Bill of Materials Drives System of Record Across the Platform
Establishing the value promise in product sales
Complex capital equipment sales often focus on engineering specifications and output capabilities, but key information is often missing. Here are essential questions often left unasked in sales:
- How long will the product sustain its specified output levels?
- What is the expected wear on performance given the customer's usage?
- What maintenance is required to maintain performance standards?
Typically, the buyer receives a product’s operator and service manual upon delivery. These documents outline the maintenance efforts needed to use and sustain the product. If total cost of ownership (TCO) is important to the buyer, the after-sales team steps in to address the operational expenditure (OpEx) portion.
Defining total cost of ownership (TCO)
Total cost of ownership represents the cumulative costs of sustaining a product over its lifecycle while maintaining performance standards.
The service manual as a foundation for TCO
As covered in [Part 1], the service manual captures the maintenance strategies needed to keep products running. To customers, this means, “If you follow these instructions, we guarantee the output performance of your product.” This provides a foundation for estimating OpEx, a critical piece of TCO.
Navigating ownership and title passage
With capital equipment, title passage typically means the risks and rewards shift to the buyer. After the sale, buyers gain ownership rights, including maintenance autonomy, and must decide how (or if) they’ll adhere to OEM guidelines. Yet OEMs still want to sell maintenance services after the sale.
The challenge of enticing service sales post-sale
Post-title passage, OEMs cannot require the buyer to purchase services; they can only attract them by offering value-added options. Buyers may:
- Adhere to, ignore, or modify the manual’s guidance.
- Perform maintenance independently or outsource to a third party. To maximize cross- and upsell opportunities, OEMs need a strategy that differentiates standard ownership expectations from added service benefits.
Key steps in cross-selling and upselling Services
Step 1: Establish a baseline
Clarify what’s included with the product sale versus what requires additional services. For example, while a warranty may cover product function, it may not account for maintenance needs resulting from normal wear and tear.
Step 2: Discuss usage profiles
The next step is a conversation on usage. For products used precisely as engineering envisioned, the service manual’s baseline maintenance guidelines will suffice. But if usage differs, consider offering service packages—for example, Bronze, Silver, or Gold levels—depending on usage frequency and intensity.
Step 3: Define responsibilities
Finally, define who performs the maintenance. This decision involves a cost-risk analysis where buyers decide whether they’ll handle maintenance themselves or outsource it. Companies with trained technicians may choose to manage tasks internally, while others might value OEM support for specific needs, from preventive maintenance to complete service contracts.
Mastering this conversation, and using the intellectual capital in the Service BoM and service manual, will enable you to meet customer needs and optimize cross- and upsell outcomes.
Learn more about service bill of materials
An SBOM serves several critical functions, all of which impact the successful service of a product.
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