Service as an Opportunity - why you should focus on your service department in 2025
Mr Weber, Managing Director of a medium-sized mechanical engineering company, is facing a challenge: the order books for new systems are thin and his biggest customers are hesitant to invest.
One of Mr Weber's customers is Mr Schulz, an industrial plant operator. He is struggling to justify new investments due to the current economic situation. Instead, he decides to optimise and maintain his existing machines through maintenance, retrofits, and repairs. His feedback: ‘The service from my supplier is invaluable. It helps us remain productive with fewer resources.’
Max is one of the service technicians working for Mr Weber. He also notices how satisfied and relieved the customer is when an urgent repair is completed within a day and the machine starts up again.
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During the service team's next meeting, Max reports on his experience at Mr Schulz's, and the team agrees that such service operations are profitable and guarantee a stable turnover in uncertain times. Service plays a crucial role in maintaining the company's reputation and fostering customer loyalty.
‘Can't we focus more strongly on service?’ Mr Weber asks his service manager.
Why Service Will Play a Key Role as a Growth Driver in 2025
The IW (Institut der deutschen Wirtschaft) projects the third year in a row without significant economic growth. ‘No economic turnaround in sight—just a continuation of stagnation’ comments Mr Hüther, Director of the IW.
Source: Tagesschau
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Source: www.produktion.de
The forecasts for the new installations business in mechanical and plant engineering is still not promising for 2025, with sales figures stagnating. Mr Weber is therefore right to look for alternative sources of revenue and internal potential.
To date, many companies have focussed on the new installations business to gain market share and generate high turnover. The expansion of the service business is only possible thanks to this installed base. It can now offset revenue declines during periods of weak order intake. The answer to Mr Weber's question about the potential in the service business can be clearly stated: ‘Yes, we should focus more on service!’
Mr Weber's Service Team Identified Three Key Levers for Growth in Service:
Customer Satisfaction
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Good service keeps customers! The basis of trust is established, strengthened and maintained in the long term through regular on-site service.
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A high level of knowledge and trust is difficult to copy in the marketplace. This makes it an underestimated competitive advantage.
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Good service is often crucial when deciding on re-investments.
Employee Effectiveness
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Everyone's talking about the skills shortage, and it's expected to become even more difficult to find the right people in the future. A well-thought-out service strategy and a move to more efficient workflows and processes can enable scalability even with the same number of staff.
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Service hours should be used for delivering value, rather than wasted on unproductive tasks (e.g. waiting, travelling, administrative tasks).
Profitability
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Reliable, recurring service revenue enables revenue growth despite stagnant new installations business.
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Profit margins increase, the share of service revenues grows, and overall service costs are reduced.
How did Mr Weber turn his service department into a profit centre? Why is digital service order processing a fundamental building block for the success of his service department? We will be happy to answer these questions in a personal conversation.
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