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Business and Technology Insights

Higher Profitability for Manufacturers with New Methods of Engagement

 
October 26, 2017

In general, manufacturing operates on aggressive margins, so the opportunity to drive efficiencies to improve margins is top of mind for industry leaders. In addition to becoming more efficient, manufacturing also seeks to add new revenue models to its portfolio.

With regard to industry efficiency initiatives, TCS is advising our clients to take a hard look at their channel management to evaluate their customer interaction strategy. Our position and advisement is for clients to enhance the digital experience they are offering while creating the environment that allows for customer empowerment, but implements the necessary checks and balances to ensure appropriate business decisions.

Digital experience removes direct human interaction from the process life-cycle. In other words and in its most simplistic form, it is the replacement of traditional communication methods such as a phone call to get information, to seek approval, order a product, obtain advice, etc.

In an effort to create the digital experience, but still engage in a high-touch interaction, cognitive processing via Einstein and the implementation of BOTS are ways to remove the human from the process equation, but still give the sense of a high-touch interaction. The implementation and strategic enablement of these technologies, whether for engaging a customer in chat, providing recommendations, assisting sales and service reps, are areas of focus for the manufacturing industry as these initiatives create efficiencies, improve margins and generate revenue opportunities.  Further, TCS recommends our clients enhance their self-service offerings through improved e-commerce, dealer portals and implementing and integrating both external and internal sales vehicles with a configure, price and quote (CPQ) product.

We see CPQ as a focus of many manufacturing companies as it addresses both the efficiency aspects clients are looking to achieve, but also provides the business checks and balances needed to run a business via the implementation of approval workflows.  Far too often, we have heard stories of the lack of efficiencies in managing the quoting process fueled by multiple phone calls and playing phone tag so that a human-to-human conversation can take place. Compounding the situation are discounts offered outside of the corporate guidelines that have resulted in unprofitable deals or worse, the need to explain to a customer that the discount offered was done in error and cannot be honored. Both of these scenarios drive inefficiencies and damage our clients’ brands and have a direct and indirect impact on their margin.

In addition to CPQ, we advocate customer and dealer portals, and solutions for warranty and incentive management, and others. These kinds of initiatives amplify the concept of the digital experience to drive efficiencies in their operations. The automotive industry is especially looking at enhancing the portals they provide both to customers and the dealers by enhancing the richness of the data available via their portal because a poor portal experience has a direct impact on the brand, which indirectly translates to an impact on revenue.

Both customers and dealers demand and expect an integrated, content-rich omnichannel experience where they start the dialog in one channel and then move to another channel while expecting to maintain the conversation as a single, continuous conversation regardless of channel.  The internet and technology-laden consumer products have contributed and created an information-dependent customer that demands access to their data when they want it regardless of time, day and location.  When data is not available when the customer wants it, it’s a problem.

As we shift this conversation from generating efficiencies in the operations to discussing new revenue models, there is one in particular that is an emerging model in manufacturing and warranty discussion- the concept of servitization. Manufacturing companies are looking for different ways to make their product available to the marketplace, similar to the software industry which shifted from “buying” and “installing” software to providing software as a “service.” The manufacturing industry is looking at applying the same principles.

Consider this example. Today we buy the tire, use it and replace it. In the future, you may buy the tire as a service and are charged usage by the mile made possible via IOT to track tire usage, a portal to allow “customers” to view their usage and subscription billing to generate the invoice and allow customers to make payments.

Here we can see how the digital experience concept extends beyond customers on their own without the need of interacting with other humans to the creation of a new revenue model where products are not sold as products but are offered as services.

Which brings us to my last point-end customer intimacy. Since manufacturers use distributors to sell their product via an indirect channel, knowing the end-customer is a challenge with which manufacturers struggle. Who are the customers, what are their behaviors, what are they looking for and what should we recommend? These are all questions that need answering to help manufacturers earn more of their customer’s and dealer’s wallet.

Servitization offers a different revenue model, but it also provides the vehicle to learn more about the customer’s, dealer’s, distributor’s, franchisee’s likes, dislikes, and preferences. Warranty management is another vehicle that gives visibility of who bought the product and where. Portals and analytics inform the manufacturer on customers interests and what is top of mind, and how to engage and segment them.

The digital experience is more than thinking of operational efficiencies to drive margins, it’s about creating different revenue generation avenues. It’s about knowing the customer better, giving them what they expect and letting the customer operate independently.

TCS is helping customers navigate these paradigm shifts – to learn how you can benefit, engage your customers and partners, and maximize operational and revenue opportunities, and technologies like the Salesforce platform to support them, register to meet with us during Dreamforce 2017, November 6 – 9 at our executive lounge in the Trace Restaurant at the W Hotel in San Francisco.

Paul is a Business Development Director in TCS’ Global Salesforce Practice. Working closely with TCS’ clients in Manufacturing and other industries, Paul brings to the table more than 20 years of experience in helping clients improve business and operational performance.