Transforming from "Break/Fix" to "Recurring Maintenance Contract" in a More "Traditional" Mfg. Org?

Alex Gershman
Alex Gershman Director of Strategy, US Services Founding Member | Scholar ✭✭

This is very much related to the other question I asked recently...

A vast majority of the revenue we generate from 1/2 of our Services business is tied to an on-asset based service model -- it's "traditional" start-up and commissioning of equipment, maintenance, break-fix/repair work, and equipment modernization. On the other hand, the vast majority of the revenue we generate from the other 1/2 of our Services business is tied to post-warranty maintenance contracts.

We are all well aware of the benefits of driving the "recurring service" model into the former part of our business. We've worked on the customer benefit, value proposition, etc. -- and in an increasingly IoT/Outcome based world, it's definitely a more compelling argument.

But I'm very interested to learn from companies who've made the transition from primarily repair-type services to more recurring maintenance contracts -- especially those in a more "traditional manufacturing" background (where recurring maintenance contracts haven't been the standard)... What have been your most critical insights, learnings, failures, etc.

Answers

  • Spencer Hancock
    Spencer Hancock Senior Member Success Manager Moderator | mod
    edited June 2020

    @Alex Gershman the journey from break/fix to a recurring service model is very important for many companies. TSIA's 2020 State of Service Revenue Generation research paper address some aspects of this support transformation.

  • Carlos Alves
    Carlos Alves Services Director Founding Member | Scholar ✭✭

    an example you may leverage from IT or Insurance industries is "support": add some reports and proactive discussions around data extracted from the customer contract may be found valueable, and you may charge it monthly (annuity).

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