Why Capital Equipment Is Leading in IoT but Trailing in Customer Experience
When it comes to technology adoption and operational efficiency, capital equipment manufacturers (CEMs) are leaders. More than any other vertical, CEMs have adopted the Internet of Things (IoT) to monitor asset condition, track parts, predict failures, and empower techs with relevant insight. Because of this, they have been able to maintain a higher than average first-time fix rate. According to Aberdeen, while other industries have a 5.3% year-over-year change in first time fix rate, CEMs are leading with 11.4%.
But when it comes to improving customer experiences, CEMs are falling behind other industries. This is a problem, especially as positive customer experience has become a competitive differentiator for service industries. According to Forrester, 63% of U.S. consumers have stopped doing business with a brand due to poor customer service. And poor customer service translates into an estimated $62 billion in lost sales in the U.S.
You might be wondering why CEMs are trailing in customer experience despite being leaders in tech adoption and first-time fix rates. Here are some challenges that capital equipment manufacturers are facing.
Translating Operational Success into Customer Experience Success
The modern-day consumer has higher expectations for customer service. According to ClickSoftware’s recent research on the Uberization of Service, customers today expect and demand a level of real-time communication, visibility, and convenience. More than a quarter of consumers across all countries surveyed rated direct and live communication about their booking and service visit as their top expectation for field service. Live tracking of the technician came in a close second.
Although CEMs are excelling in operational efficiency and first-time fixes, this hasn’t translated to customer experience. According to Aberdeen, while other industries improved their annual customer satisfaction rates by 8.5%, CEMs only improved 7.9%. And while all other customer retention rates went up 6.6.%, CEMs fell behind at 5.3%. Fortunately, they have been early adopters of the technology that can help them improve. Most CEMs are ahead of others in maturity of using IoT capabilities.
According to Aberdeen, 78% of CEMs use IoT capabilities to track serviceable assets, but only 11% use it to monitor service vehicles. Customers today want to know where their techs are, so they aren’t wasting time for them to arrive. Though they’ve been using IoT to quickly diagnose and resolve issues, they’re missing out on an opportunity to improve customer experience. By tracking service vehicles, CEMs can provide customers with greater transparency into the tech’s location, and allow for timely adjustments to service appointments if the tech is running late.
Managing a Changing Business Model
Historically, CEMs have been product-centric businesses, but have recently made the switch to service-centric to keep up with rising customer expectations. Though service has become a competitive differentiator for all industries, it's especially important for CEMs because their products are mission-critical to their customers' businesses. Whether it’s a heating, ventilation and air conditioning (HVAC) system, an ATM, or an MRI machine, unplanned downtime is not an option.
But this shift hasn’t been easy. According to Aberdeen, 55% of CEMs say they operate with a reduced service workforce, which is likely because they are still adjusting to the changing business model. This, in addition to a high volume of support requests and a greater complexity of customer demands and assets, makes it difficult for CEMs to compete with other industries.
Think about it. CEMs already face pressure from their customers to keep their businesses running. Now they need adjust to a service-centric business model, which will require determining skill sets, hiring and training new service employees, and forecasting demand.
So What’s Next for Capital Equipment Manufacturers?
Capital equipment manufacturers may be trailing in customer experience, but they certainly have the ability to improve. They already excel in IoT adoption and operational efficiency. Now it’s only a matter of mastering the tech they already know, and shifting to a more customer-centric mindset. Here’s what CEM’s should work on.
Think about what’s best for the customer
Thanks to on-demand services such as Uber, customers have high expectations for service. Operational efficiency is important, but CEMs can’t just focus on perfecting back office systems. They will need to balance their operational mindset with a customer-centric focus. Customers appreciate first-time fixes, but they also want streamlined communication and transparency into their service.
Master how to use IoT effectively
Technology adoption is a step in the right direction, but mastery of the technology should be the end goal. To many, IoT is an unfamiliar concept—especially to aging technicians. CEMs should train their employees on using IoT in the context of their jobs. And they should implement processes to ensure they’re getting the most out of the technology investments.
Likewise, CEMs should focus on getting more out of the technology they have. They’re already using IoT for predictive capabilities and monitoring asset condition. They should also think about how to use this technology to improve customer satisfaction. They could implement things like location tracking, notifications, streamlined appointments, and automated follow-up surveys.
Because of their operational success, capital equipment manufacturers are well on their way to improving customer experience. If they can shift their focus to customer experience and leverage their existing technology, they should have no problem competing for customer satisfaction.