Driving Top- and Bottom-Line Growth Through the Service Organization

Tactics that deliver real business impact within the Life Sciences, Analytical Instruments, Clinical Diagnostics and Medical Products industries

In the unending quest to deliver incremental top- and bottom-line growth, revenue leadership rightly starts by examining the Marketing and Sales organization. The Service organization investigation begins only after exhausting any Marketing and Sales opportunities. However, the untapped opportunities within Service are often as lucrative and more accessible as gains promised through investments in Marketing and Sales.

The Life Sciences, Analytical Instruments, Clinical Diagnostics and Medical Products industries often deploy field- and phone-based support resources to install and repair capital equipment, ensure customer success and provide general customer support. These organizations can be as large as (or larger than) the combined Marketing and Sales organization. They represent a cost of doing business but also an opportunity to establish new streams of revenue and profit to the business.

Below Are Eight Tactics to Drive Top- and Bottom-Line Growth Through the Service Organization:

1. Establish a Service Charter – Condition Service leadership to (1) maximize gross margin (2) drive operational excellence and (3) enable top-line growth. Create a culture of continuous improvement, scalable processes and infrastructure investment and airtight alignment with Marketing and Sales.
2. Deploy Dedicated Service Sales Specialists – Instead of leaving service as another line of business for sales to cover, deploy dedicated specialists. Charter the team with driving attach rates, upselling contracts and capturing all sources of service revenue (e.g., installations and professional service). Additionally, create value by training the core sales team on maximizing the lifetime value of customers through service (e.g., selling the right types of contracts and understanding the impact of giving away service revenue vs. capital discounts).
3. Analyze Resource Deployment – Develop an in-depth workload model to understand the effectiveness of the current mix of direct (field and inside) and third party resources. Consider desired backlog volume, availability of third parties for low margin or routine service and potential of alternative channels (e.g., phone-based or self-serve options). Develop a profit maximizing deployment, and iterate based on what customers are likely to accept.
4. Optimize Field Service Territories – Analyze the current installed base, historic work-order volume by type (service time requirements), as well as forward-looking sales pipeline (where the installed base will be expanding). Understand how field resource home location and associated drive time impacts efficiency. Structure territories that minimize average drive time. Keep geographically dispersed accounts out of primary territories and centralize dispatching work orders to these accounts.
5. Centralize and Standardize Administrative Processes – Scheduling, installation coordination and quoting activities commonly sink revenue-generating capacity. Off-load administrative activities, and optimize efficiency through a well-designed algorithm or decision tree. Prevent customers, managers and service team instinct from dictating response to service needs.
6. Leverage Financial KPIs – Add financial metrics (service/spare parts/professional service revenue, installations, leads converted and others) to scorecards and sales incentive plans. Maintain classic quality (operational) metrics such as first time fix rate, utilization, on-time work order close rate, backlog age and others.
7. Formalize Service Lead Generation – Create a culture of collaboration with Sales. Use Service business analysts to mine the installed base for leads (age of instrument/equipment and competitive presence). Assess the contract portfolio. Ensure customers have the most advantageous offering. Train the Service team to monitor competitive encroachment (e.g., loss of consumable streams, new site builds, budget availability and other indicators). Develop formal programs and incentives to pass leads to Sales.
8. Invest in Incentive Compensation – Introduce variable sales compensation plans. Keep pay mixes at 90/10 as not to deter from core operational role. Focus on incentives on no more than three measures aligned with annual business priorities. Limit upside potential, and cap to limit risk.

A company’s Service organization represents a significant opportunity to deliver measurable impact to top- and bottom-line growth. Smart launch tactics include shifting resources to maximize billable time and deploy a more profitable mix of jobs and channels, optimizing territories to protect margin, and leveraging high-impact management levers to focus the team on value-creating activities such as lead generation.

Are you maximizing your Service organization’s potential to drive top- and bottom-line growth? Contact an Alexander Group practice leader today to learn more.

Read more Alexander Group insights on Revenue Growth Strategy within the Life Sciences industry.