Starting situation – squandered EBIT potential as the result of shabby treatment of service operations
The profitability of our client, an internationally active mechanical engineering and technology group, was well below the level of its competitors. This ran counter to the shareholders’ ambitious EBIT targets. The result was that, on the one hand, shareholders’ expectations grew, while on the other the threat loomed of a weakening of the economic basis for future-oriented investments. Expanding high-margin service operations, which up to then had been viewed as secondary products, offered one way to improve the EBIT.
Project approach – identification of strategic opportunities without losing sight of the core business
In global working groups, strategic projects were identified with which service operations could be realigned. Potential in areas such as innovation and technology was evaluated and transformed into strategic targets. Based on a service KPI system, the review of objectives achieved and service quality was transparently assured for the Board of Management. Implementation was accompanied by strict project management, with anchoring of the new service awareness in the form of a group-wide, internal marketing campaign.
Finding – every little bit counts!
Even if direct sales from a service agreement are substantially less than those from the new installation of complete industrial installations, this additional sales potential should not be wasted, most especially if it can help to achieve disproportionately high earnings growth. Long contract terms hold out the prospect of continuous cash flows. Follow-up projects can be secured through enhanced customer loyalty. On occasion, a focus on services is the key to success.
- Stronger awareness of services on the part of all organizational units, thanks to a permanent global service team
- A group-wide service strategy was defined and laid down with a short- and long-term action plan