Synopsis: Power Transmission Equipment — Segmentation Based Service Growth Strategy

Our client was a leading manufacturer of power transmission equipment. A significant portion of the company’s profits came from its service business. QDI was asked to help develop a growth strategy targeting this business.

The core to the service business was a component repair / rebuild capability.  Our client saw an opportunity to grow this business but was not sure which market approach would be most successful.  QDI focused its research on understanding the end-user’s behavior and then understanding the behavior of the channels who sold these services.

The end-user research provided several key insights.  The first was that users segmented into “quality” levels.  Some customers wanted “Highest OEM Quality” which typically took up to three months to complete the rebuild.  For many others, “OEM-like quality” was acceptable and most customers expect repairs completed within a month.  Some of these customers expect the repairs to be completed in as little as two weeks.  For the customers when they have a unit that is down speed maters far more than quality.  Repairs had to be done in four to forty-eight hours and were generally done by the plant’s in-house capability or a local vendor.

QDI’s research identified two primary weaknesses in the company’s offering:

  • Speed – our client only offered Original OEM Quality which had 3 month turn-around times – and this was only acceptable to about 20% of the market
  • Market presence – a large portion of customers – close to half of all customers – did not consider our clients offering, this was accentuated by a recent down-sizing of the sales force which had reduced the number of specialist who sold this service.

With this information in hand, QDI recommended initiatives to expand the product coverage to 60% of the product opportunity and expanding service improvements that could provide quality sales presence to almost 2/3 of sales.  The combination of these initiatives had the potential to increase sales by 400%.

Using this strategy and QDI’s data to support the strategy the client was able to convince management to provide the investment capital that would enable them to increase their addressed market and market presence.

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