Flaws in Customer Service Slowing Aerospace and Defense Industry

What is big in the aerospace and defense industry?

One is the relatively large number of airplane orders major manufacturers booked during the recent Paris Air Show. Another is the solar-powered airplane, a true novelty and big story at the event.

But beyond these is another big story gathering steam: generating more revenues and profits by providing new, value-added, and differentiated services. This increasingly important story will have huge industry repercussions during the next several years. 

Services offer a plethora of lucrative business opportunities for aerospace manufacturers. They include field service maintenance, repairs as a managed service, spare parts optimization, order and warranty management, workforce management, and business process outsourcing.

To capitalize on these opportunities, manufacturers need to re-model their businesses and fundamentally shift how they invest in and conduct the service side of their enterprises.

Room For Improvement in Customer Service
At the core of all these opportunities is the need for manufacturers to provide, in a broad and comprehensive way, more economical, more reliable, and easier to use customer services. While in concept the industry agrees on this, as it turns out, there is a lot of room for improvement when it comes to making this happen.

Although improvements in customer service rank among the highest priorities for aerospace and defense executives, a series of industry disconnects are preventing these improvements from materializing, according to a new Accenture survey. These disconnects include a lack of current and planned collaboration such as alliances and business partnerships with other companies to operate customer service; limited integration of customer service with sales service operations; and a significant gap between the awareness of the importance of customer service and the actions taken to deliver that service.

The survey, which polled industry executives in 12 countries, found that more than half (56%) said that developing a customer service mindset among employees will be the number one challenge to achieving their company’s customer service goals in the next three years. However, three-out-of-four companies (75%) do not currently use collaboration such as alliances, partnerships or other third party providers to operate their customer service, and 72% do not expect to increase them in the next two-to-three years. Consistent with this, only slightly more than a third (38%) of the executives indicated they had integrated the company’s sales service operations. To retain control, nearly three-fourths (73%) keep customer service in-house. 

Although 75% of the respondents rate the importance of providing competitive service in the next three years as critical, only 53% said their companies have a clearly defined customer service strategy in place.  And 85 percent acknowledge they are required to achieve at least some progress in their customer-specific improvement plans.

Rather than seeing customer service as providing new revenue oppor¬tunities, respondents cite more defensive reasons for focusing on customer service. In descending order, they ranked staying competitive (59%), differentiation from competitors (53%), and customer retention (41%) as the top three reasons. Only about one-fifth cited other reasons for investing in customer service, including expanding into new geographies (22%), driving incremental margin (22%) and acquiring new customers (19%).

Final Thoughts
The research revealed major flaws in the way some aerospace and defense customer services are designed and implemented with limited integration consid¬erations for other key functions such as sales, supply chain, and engineering. A wide gap exists between actions and intentions. On a conceptual level, the criticality of customer services to drive high performance is well understood, yet the steps to drive theory into practice are less well defined. The shift to better customer services in this industry on multiple levels is a massive trend, and companies need to invest more in this arena to become high performers.

Damien Lasou is a global managing director of Accenture’s Aerospace and Defense group. He can be reached at Damien.lasou@accenture.com.