Developing a service business is a very attractive opportunity for most industrial goods companies, but one that remains largely underexploited. Performance within the sector is already impressive: services generate between 20% and 25% of revenues for many European industrial goods manufacturers, accounting for half of the sector’s profits and growing steadily at 5% annually. Even so, considering the full potential of their installed base, industrial companies typically reach only 10% to 25% of potential revenue—and many companies don’t even know where they stand with their service potential.
A new study by Bain & Company, “Service now! Time to wake up the sleeping giant,” introduces Bain’s Service Excellence Framework. In it, we show proven steps for building a more efficient and profitable service business and describe the successful transition to becoming a customer-focused service provider—a challenging endeavor, but one that offers great rewards. Depending on the industry, an effective service line can generate more than 50% of revenues. In a challenging economy, service remains one of the biggest growth opportunities for the industrial goods industry, one that shouldn’t be left to competitors.