ENGINEERING & CAPITAL GOODS

Companies in the engineering and capital goods sector traditionally generated their competitive edge through engineering and technical services. Yet this expertise is increasingly becoming little more than a must have. The dynamics of the markets, changes in customer demands and requirements, and shorter innovation cycles call for new ways of generating  sustainable competitive advantages.

This is blurring the boundaries between the value chains of engineering firms and capital goods manufacturers and those of their customers. Furthermore, customers' demands of product and service portfolios are rising concurrently. Whereas developing an installation or manufacturing capital goods used to be the main requirement, it's now all about providing end-to-end solutions – the installation itself or the capital goods are just one part of the equation.

These new market requirements have resulted in a paradigm shift: the sale of engineered installations and capital goods is being replaced by the sale of integrated solutions. Companies need to challenge established commercialization processes and conventional product and price logics if they want to continue to exploit their market and corporate potential to the full.

Faced with this sea change in the market, it is crucial for providers to have a comprehensive understanding of what their customers need, the value they add, and the processes they run. The ability to translate these needs quickly and precisely into the product and service portfolio is becoming a key success factor.

The fact that most engineering firms do not make the bulk of their profit by selling machinery and installations – and have not done so for a long time – is a sign of this trend. Industry-average EBIT margins in that area are as low as 5-8%. In the parts and service business, on the other hand, typical EBIT margins are in the range of 25-35%. It goes without saying that this attractive margin could be exploited to improve a company's profit position – by increasing the share it accounts for in overall revenues and by developing suitable pricing models (with a focus on system prices).

KEYLENS has spent many years supporting companies in the engineering and capital goods sector in successfully aligning their commercialization methods to customers' needs. Always with a functional outlook and a precise understanding of the specific situation in the new and spare parts markets and the service business.

Some of the aspects our consultancy focuses on:

  • Image building and growth strategies
  • Brand positioning
  • Sales strategy, processes, and organization
  • Key account management
  • Customer relationship management
  • Service programs

SELECTED KEYLENS PROJECT EXAMPLES

Engineering firm

ENGINEERING FIRM

Issue:
Performance review of key account management

Objective:
Analyzing the cooperation between the engineering firm and one of its key accounts and initiating ways of improving it 

Results:

  • We systematically analyzed the process on the customer and provider side
  • Conducted a globally standardized survey of the two companies building on this understanding of the process on both sides
  • Derived the potential for optimization from the survey findings 
  • Facilitated discussion of the findings and worked with the client to formulate a plan of action


KEYLENS success levers:
Established methodological expertise in key account management and analyzing customer processes, and sensitive facilitation of the process between the two parties

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