Increasing service revenue at little additional cost.

Objective

Develop a marketing and sales strategy for growing a $40 million service and spare parts business, and do it without adding additional cost.

Background

Based in Fremont, California, Mattson Technology designs, manufactures, and markets semiconductor wafer processing equipment used to fabricate integrated circuits.

Although Mattson Technology has an excellent reputation for quality and customer service, the company was not taking full advantage of revenue potential in the service and spare parts sectors of its business.

Company executives asked Maher Marketing to develop a marketing and sales strategy to secure an improved position in this market. The goal? Boost revenue and profitability without adding additional costs.

Assignment Overview

Because the company’s objectives called for capturing additional revenues using resources currently in place, we worked extensively with the VP of Global Sales and Service to develop a successful strategy that could be introduced to the sales organization at Mattson’s annual global sales meeting.

The strategy included several key tactics:

• Train the sales force in how to sell service products
• Introduce new, more customized service offerings
• Enhance service organization morale by reducing travel and relocation requirements
• Lower the cost of delivering services and improve pricing and margins of several offerings

After evaluating  the organization, the industry, and the nature of the company’s customer base, we recommended adopting a High-Value/High-Quality service strategy with corresponding premium pricing, because a “gain market share at any cost” approach would erode profit margins and diminish the value of service from the customer’s perspective.

Working closely with the sales and marketing teams, we developed programs that offered specific service performance and results at fixed prices – a significant departure from the industry-standard approach of billing for the number of hours or days worked.

As part of this assignment we also developed a new incentive plan that compensated people not only on new business, but the profitability of that business – a more effective approach than paying commissions based strictly on revenue.

Results

The strategy was adopted and implemented, and within 12 months, the company had boosted its revenues by several million dollars and added more than $1M of profit.

Lessons Learned

Some manufacturers view service as an afterthought, and fail to take advantage of the high value that customers place on knowing that their equipment will not only perform, but do so at a predictable cost. For these customers, specific performance agreements at fixed, predictable prices can add significant value.

Although companies may be tempted to offer solutions that serve all customers through a few standard offerings, the end result can be costly in terms of lost revenue and profit. In many cases, manufacturers actually save money, improve customer satisfaction, and boost revenues by offering services and pricing tailored for each customer.

What’s more, service can a lucrative source of additional revenue, but it’s essential that sales teams be trained correctly and compensated adequately to sell it.