Secrets to Remote Service Customer Adoption

Many manufacturers have yet to understand how customers best adopt new remote service offerings. They get so hung up on, “will our customers let us do it?” The real question is, “How do we communicate the value so our customers want it?”

Even if the first introduction of remote service is about efficiency and cost reduction, which is often the case, there are many aspects that benefit the customer. In fact, one of the best things about remote service is that just about anything a service organization does to reduce costs with remote service, there is a corollary effect that has measurable benefit to the end-user.

For example, let’s say a manufacturer uses remote service technology to diagnose a problem before dispatching a technician. In some cases, they may even be able to avoid the dispatch altogether and save significant costs.

The end-user in this case just got the equipment back up and running in record time. In fact, you can measure the difference in “time to equipment recovery” with and without the remote service capability. This difference translates to an increase in your customer’s productivity – or, whatever they deem is valuable to having running equipment.

A big key here is that the new remote offering is focused on “support” and not really a “value-added service.” From a best practices standpoint, this is as it should be.

When it comes to increasing equipment uptime, I argue most end-users are more than willing to accept being connected to the vendor. Some even demand it. The mistake manufacturers make is overlooking the importance of properly communicating the value of the “support” offering to customers. This is especially true when the primary motivation for doing remote service is reducing service costs.

I can count three manufacturers off the top of my head who are stuck with deployment because the end-users want discounts on the service contract because the offering only appears to benefit the vendor. What is so appalling is that they give in and offer discounts for the connection. Obviously good services marketing is missing in these cases.

A question I get quite often is, “Fee or Free? Should we give the offering away or charge a fee for it?” The answer is very clear if the nature of the offering is to reduce your service costs – GIVE IT AWAY!

It is not a good strategy to commit to cost reduction within your organization that depends on your customer to purchase something from you. If they choose not to buy, you have just shot yourself in the foot to reduce your own costs.

Remove all barriers to acceptance, communicate what it means to the end-user, and get as many customers connected as possible. No matter how good your offering is, you won’t deliver any results if you are not connected to a large percentage of your installed base.

Save the value-add (fee based) services for when your customer has become comfortable being connected and has had a chance to experience the goodness of remote support. By this time, you will already have them hooked.

Only then will they be ready to “hear” about new services that can benefit them even further.

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3 Responses to “Secrets to Remote Service Customer Adoption”

  1. Tom Ellwood says:

    I have often heard customer requests for lower support charges resulting from vendor deployments of remote support. It is true that remote support capabilities can lower a vendor’s direct support costs; however, the design, deployment and support of these technologies are not free. Vendors have historically failed to articulate the investments they have made in their support technologies; investments aimed at not only supporting their respective products but more importantly focused on ensuring the smooth operation of the customer’s business. Vendor support organizations are typically ‘Break/Fix’ focused and have difficulty expressing their offerings in terms of value-added services. It is difficult to understand why so many seemingly bright service execs seem to miss the value-added component to support.

    I actually know of one large company who states that their support fees are based upon the customer allowing remote support. The support contract states the vendor can apply a 30% surcharge if the customer fails to enable call home and remote access. (I don’t think they ever did though. Sales would have objected)

    I find it interesting that customers do not seem to request a reduction in support fees when a vendor rolls out e-support. It seems this would have the same effect on lowering direct support costs as would remote support. I believe the reason for this is that e-supprt is less intrusive and requires virutally no customer resources to implement.

  2. Anders Buch says:

    Jack

    This post hits right down into a discussion I recently had!

    Your views above are without doubt valid and correct, but what if your focus of your base offering is on providing value internally as well as externally? And if an offering is free, does it (at least as perceived value) provide any value to the customer at all?

    My rule of thumb: Free means no value! Switching from free to cost based is impossible!

    From your experience; what different pricing scenarios are used by best-in-class implementers of remote services?

  3. Jack Levin says:

    If your “internal benefits” are to reduce service costs, I think it is very important to separate what you are doing to improve service efficiency (cost reduction, time to repair, etc.) from any fee based service offering (other than annual service contract type of offerings).

    If your mission is to both reduce service costs and increase service revenue, you risk failing at both if you bundle them together. That is, if your customer chooses not to buy your offering, you have just eliminated your chance to reduce your own costs.

    If you begin by “giving away” the portion that reduces your service cost, there are usually intrinsic benefits for the customer that gives them reason to allow you to install the service (get connected). And when I say, “give away”, I really mean to include in a service contract of some sort. The benefits necessary for the customer to allow you to connect is what we call the “minimum acceptance criteria” and is the basis of creating the value proposition when we work with clients launching a new service. Yes, you are giving away that value but it is the necessary trade off for your customer to allow you to connect. Any benefits you create that go beyond that “minimum acceptance criteria” should be reserved for a value added offering subsequent to getting connected to the install base.

    If reducing service costs is not the priority (or you are beyond this and ready to sell a fee based service), then the approach is different. Assuming the offering is truly value add for the customer, then it is necessary to quantify the value of the offering and communicate that value in terms the customer can understand. Most companies screw this up and is often an area where we help.

    Creating a value based pricing scheme is the best-in-class method here. The key to being successful with this is understanding your customer’s costs well enough to put a pricing mechanism together that your customer believes in – and you can prove it to them. There are of course many other challenges with value based pricing such as how to sell it. But it all starts with being able to calculate the value (real money) the service adds and then just negotiate how you are going to split it up.

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