2014 EUROPEAN
SERVICE PARTNERSHIP FOR COMPRESSORS
COMPANY OF THE YEAR AWARD
Company of the Year
Award
Service Partnership for
Compressors
EUROPE
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Background and Company Performance
Industry Challenges
The European compressor services market has witnessed the emergence of numerous lowcost service providers who operate in a specific geographic region and sometimes specialize
in providing services for specific end-user industries. These low-cost service providers
provide benefits to customers such as lower maintenance and service costs and quick
responses to customer needs. While a majority of these low-cost service personnel are not
equipped with the capability to provide advanced services, there is increasing end-user
preference for service providers to perform basic maintenance and repair activities.
Consequently, the European compressor services market is expected to witness increased
fragmentation, which would have a direct impact on the profitability of major compressor
manufacturers with a global presence.
A key challenge faced by compressor manufacturers is the length of time required to train
newly hired service personnel; these service personnel are the face of the organization
and are required to have frequent interaction with customers. Customers across end-user
industries specifically state that they prefer working with extremely knowledgeable, highly
skilled service personnel; this increases the emphasis compressor manufacturers place on
effectively training their service personnel. The time to competence, which is a reflection
of the time taken to bring the service personnel to the desired level of proficiency, needs
to be minimized. Compressor manufacturers constantly look to adopt new strategies to
reduce this time to a minimum, thereby reducing the overhead and associated training
costs of the organization.
Major compressor manufacturers also face the challenge of lack of end-user awareness of
the importance of the total cost of ownership. In the aftermarket segment, customers are
generally concerned about maintenance costs, and that is a key reason for their
preference of low-cost service providers; however, energy costs have the biggest impact
on the total cost of ownership of the compressor. The focus on maintenance costs is also
linked with the conservative mindset of end users; they are generally resistant to the
adoption of technologically advanced services unless their benefits can be explicitly
displayed. Consequently, major compressor manufacturers need to interact with their
customers regularly and explicitly explain the benefits that a reduction in energy costs can
provide in terms of the total life cycle and operating costs of the compressor.
In this market environment, companies that leverage aftermarket strategy to address the
aforementioned challenges stay ahead of competition and enjoy high levels of recognition
within the European compressor services market.
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Customer Value Excellence and Visionary Innovation of Atlas
Copco
Brand Equity
Atlas Copco, founded in 1873, is a well-known and respected brand within the compressor
market not just in Europe but also on a global scale, and the company is known
particularly for developing sustainable solutions. Atlas Copco’s compressors are known for
their high quality, reliability, and environmentally friendly aspects. The service division of
Atlas Copco strives to ensure the establishment of long-lasting relationships with its
customers by effectively providing value-added services. The close partnership, coupled
with the strong focus on delivering on promises, ensures a high satisfaction level among
customers, and it is a key reason for the high brand loyalty that customers exhibit for
Atlas Copco. The clientele of Atlas Copco, which includes the biggest companies in the
world, such as Nestle, Pepsi, Coca-Cola, Procter & Gamble, is also a validation of the
brand equity experienced by Atlas Copco.
The company has more than 4,000 service
personnel operating across more than 180 countries; this worldwide presence enables the
company to have a presence close to each of its customers, thereby further enhancing the
company’s brand reputation.
Service Experience
Atlas Copco’s service value proposition takes a holistic approach to catering to the diverse
requirements of its customers across end-user industries. The company has established a
customer feedback mechanism called the net promoter score, which is a 10-point scale (1
is low; 10 is high) wherein the customers are asked to rate their level of satisfaction in
recommending Atlas Copco to other potential customers. The company, based on initial
assessment, sets a benchmark score in every country/region and continuously monitors
whether customer ratings improve or remain stable. This feedback mechanism also serves
as an effective platform for customers to inform Atlas Copco about their thoughts on the
various aspects of the company’s service offerings.
Atlas Copco conducts a detailed analysis of the feedback gathered every month to
understand
how
to
tweak
its
service
offerings
to
effectively
exceed
customers’
expectations. A case in point is that the customers have historically been extremely
satisfied with the quality of the company’s service personnel, which is a key requirement
as these personnel serve as the face of the organization during their interaction s with the
customers. However, based on the close relationship with the customers and analysis of
the feedback, the company understands the increased degree of importance given to
immediate provision of spare parts, the necessity of a first-time fix, and so on.
Consequently, the company has taken immediate action to open new distribution centers
and also incorporate changes into its sales and service process, thereby ensuring that its
customers have the best possible service experience with Atlas Copco.
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Purchase Experience
A key differentiator for Atlas Copco in the aftermarket segment in comparison to its
competitors is the purchase experience that the company provides to its customers.
Whenever a compressor is sold or installed at a customer’s facility, the company aims to
establish a service contract or a service plan which enables it to enter into a long -term
partnership with the customer. Customers are made aware of exactly the type of services
that would be provided and the overall cost of the service. This enables the customers to
focus on their core business activities while Atlas Copco’s service personnel handle all the
maintenance, repair, and overhaul activities associated with the installed compressors.
As part of a research undertaking examining the European compressors services market,
Frost & Sullivan interacted with maintenance and facilities managers across end-user
industries; all of them were unanimous in the opinion that the major aspect that they
wanted to avoid was unexpected breakdowns which would result in the loss of
productivity. With the establishment of the service contract, Atlas Copco continuously
monitors the installed compressors; therefore, the company is equipped with the required
capability to proactively perform the required maintenance activities, thereby ensuring
that the compressors operate at their optimum levels.
Total Customer Experience
Atlas Copco’s strategies pertaining to the aftermarket segment are exactly in line with its
vision of enhancing the overall customer experience. The aftermarket business of Atlas
Copco witnessed a significant boost with the establishment of a separate service division.
This division was created specifically to cater to the specific requirements of individual
customers; the assignment of dedicated employees to the aftermarket business resulted
in growth of the aftermarket segment even during the European sovereign debt crisis
which resulted in an economic slowdown.
Atlas Copco also strives to enhance customer experience by focusing strongly on the total
cost of ownership of a compressor, rather than just the maintenance costs and the
purchase price involved. The company’s energy and air consultant engineers conduct
energy audits that enable the identification of potential energy savings areas; the
implementation of energy-saving accessories results in minimizing energy and operational
costs, thereby resulting in a reduction in total life cycle costs. A total customer experience
is achieved with Atlas Copco’s focus on enhancing the profitability for its customers
through high availability of installed equipment at minimal total life cycle costs.
Catering to the Unmet Needs of the Market
The conservative mindset of customers across end-user industries results in a majority of
customers focusing their attention on the reduction of maintenance costs. This makes it
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ideal for smaller compressor manufacturers and low-cost service providers who have the
capability to provide only the most basic maintenance and repair activities. However, this
trend is witnessing a change, with end users now ready to adopt advanced solutions that
enable the reduction of energy costs, which have the biggest impact on the total cost of
ownership of a compressor. This has resulted in the need for compressor manufacturers
who have the capability of providing the required advanced services that can result in a
reduction in energy costs; Atlas Copco has effectively capitalized on this trend by
providing a series of devices that can save tremendous amounts of energy.
The trend among end-users across Europe is to outsource the maintenance and service
requirements
pertaining
to
compressors;
however,
a
majority
of
compressor
manufacturers have not effectively capitalized on this trend. Atlas Copco has placed a high
degree of emphasis on shortening the ‘time to competence’ of a new service technician;
the service personnel of Atlas Copco are extremely knowledgeable and can conduct
necessary maintenance and repair activities in a timely manner, which is a key
requirement of customers in end-user industries such as food and beverage and
pharmaceutical.
Pioneering Best Practices
A pioneering best practice adopted by Atlas Copco is that the company continuously
monitors thousands of installed compressors, thereby enabling it to be continuously aware
of the status of the various compressors. The company is able to identify energy saving
opportunities, predict when the compressors would require service, and proactively
conduct maintenance activities. This ensures that the company does not need to rely on
customers sharing details; instead, Atlas Copco’s service personnel, equipped with the
required information, can reach out to their customers and perform the necessary
services. This ensures that customers do not have to keep track of the installed
compressors and can focus their attention on their core business activities.
Atlas Copco’s offerings for optimizing energy consumption are another best practice
followed by the company. The company’s energy recovery unit enables the improvement
of the overall efficiency of the compressed air system, and the incorporation of advanced
control systems enables the company to maximize energy savings at the customer’s
facilities.
A key differentiator for Atlas Copco within the European compressor services market is the
approach the company adopts while interacting with its customers. Atlas Copco strives to
conduct a majority of service requirements directly through its service personnel and
technicians. The company has established relationships with distributors, but that is
primarily for compressors of smaller sizes. This direct approach enables the company to
have a close relationship with its customers, thereby enabling it to proactively conduct
required maintenance and service activities.
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Conclusion
Atlas Copco’s technical expertise and establishment of a proactive service culture have
enabled the company to be viewed as a solution provider capable of developing reliable
products coupled with high-quality services. The company’s wide service portfolio, direct
approach to the market, strong focus on ensuring a significant reduction in the total life
cycle costs, and establishment of long-term partnerships with customers are key factors of
Atlas Copco’s successes in the European compressor services market. Driven by the
company’s view that the aftermarket segment can serve as a key differentiator in Europe
and can boost overall company profitability, Atlas Copco is expected to significantly
expand its presence in the European compressor services market in the coming years.
Significance of Company of the Year
To win an award like Company of the Year – to be recognized as a leader not only in your
industry, but among your non-industry peers as well – requires a company to demonstrate
excellence in three key areas: demand generation, brand development, and competitive
positioning.
These areas serve as the foundation of a company’s future success and
prepare it to deliver on the two criteria that define the Company of the Year Award. This
concept is explored further below.
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What It Means To Be Company of the Year
As discussed on the previous page, demand forecasting, branding, and differentiation all
play a critical role in delivering unique value to customers.
This three-fold focus,
however, is only the beginning of the journey and must be complemented by an equally
rigorous focus on the customer experience. Best-practice organizations therefore commit
to the customer at each stage of the buying cycle and continue to nurture the relationship
once the customer has made a purchase. To accomplish this goal, successful organizations
never stop innovating around their products, their service model, or their marketing.
Creativity brings about customer value excellence, and customer value excellence
reinforces the spirit of creativity.
To achieve and sustain such a standard is a rare and significant accomplishment, and that
is why we celebrate it with the Company of the Year award.
Recipients of this award
represent the top 10 percent of their industry: the other 90 percent just can’t keep up.
Frost & Sullivan’s Global Research Platform
Frost & Sullivan maintains more than 50 years in business and is a global research
organization of 1,800 analysts and consultants who monitor more than 300 industries and
250,000 companies. The Company’s research philosophy originates with the CEO’s 360
Degree Perspective, a holistic research methodology that encourages us to consider
growth challenges, and the solutions companies employ to solve them, from every angle.
This unique approach enables us to determine how best-in-class companies worldwide
manage growth, innovation and leadership. Based on the results of our research in
entrepreneurial excellence, Frost & Sullivan is proud to present the 2014 Europe Company
of the Year Award for Service Partnership in Compressors Market to Atlas Copco.
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The Intersection between 360-Degree Research and Best
Practices Awards
Research Methodology
360-DEGREE RESEARCH: SEEING ORDER IN
THE CHAOS
Frost & Sullivan’s 360-degree research
methodology
represents
the
analytical
rigor of our research process. It offers a
360-degree-view of industry challenges,
trends, and issues by integrating all 7 of
Frost & Sullivan's research methodologies.
Too
often,
growth
companies
decisions
understanding
make
based
of
on
their
important
a
narrow
environment,
leading to errors of both omission and
commission. Successful growth strategies
are founded on a thorough understanding
of market, technical, economic, financial,
customer, best practices, and demographic
analyses. The integration of these research
disciplines into the 360-degree research
methodology
provides
an
evaluation
platform for benchmarking industry players and for identifying those performing at bestin-class levels.
Decision Support Scorecard and Matrix
To support its evaluation of best practices across multiple business performance
categories, Frost & Sullivan employs a customized Decision Support Scorecard and Matrix.
This analytical tool compares companies’ performance relative to each other. It features
criteria unique to each award category and ranks importance by assigning weights to each
criterion. The relative weighting reflects current market conditions and illustrates the
associated importance of each criterion according to Frost & Sullivan. This tool allows our
research and consulting teams to objectively analyze performance, according to each
criterion, and to assign ratings on that basis. The tool follows a 10-point scale that allows
for nuances in performance evaluation; ratings guidelines are illustrated below.
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Best Practice Award Analysis for Atlas Copco
Decision Support Scorecard: Customer Value Excellence
The Decision Support Scorecard, shown below, includes all performance criteria and
illustrates the relative importance of each criterion and the ratings for each company
under evaluation for the Company of the Year Award. The research team confirms the
veracity of the model by ensuring that small changes to the ratings for a specific criterion
do not lead to a significant change in the overall relative rankings of the companies.
Finally, to remain unbiased and to protect the interests of all organizations reviewed, we
have chosen to refer to the other key players in as Company 2 and Company 3.
DECISION SUPPORT SCORECARD FOR COMPANY OF THE YEAR AWARD (ILLUSTRATIVE):
CUSTOMER VALUE EXCELLENCE
Measurement of 1–10 (1 = poor; 10
= excellent)
Customer Value Excellence
Total Customer
Experience
Brand Equity
Purchase Experience
Ownership
Experience
Service Experience
Weighted Rating
Award Criteria
Relative Weight (%)
20%
20%
20%
20%
20%
100%
Atlas Copco
9.0
9.0
9.5
9.0
9.5
9.2
Company 2
8.5
8.0
9.0
8.5
8.5
8.5
Company 3
8.0
6.5
7.0
7.0
7.0
7.1
Criterion 1: Total Customer Experience
Requirement: Customers receive exceptional impression at every stage of the purchase
cycle
Criterion 2: Brand Equity
Requirement: Customers have a positive view of the brand and exhibit high brand loyalty
Criterion 3: Purchase Experience
Requirement: It is as simple for salespeople to sell the product or service as it is for the
customer to buy the product or service
Criterion 4: Ownership Experience
Requirement: Customers are proud to own and use the company’s product or service
Criterion 5: Service Experience
Requirement: Customer service is accessible, fast, and stress-free
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Decision Support Scorecard: Visionary Innovation
DECISION SUPPORT SCORECARD FOR COMPANY OF THE YEAR AWARD (ILLUSTRATIVE):
VISIONARY INNOVATION
Measurement of 1–10 (1 = poor; 10
= excellent)
Visionary Innovation
Unmet Needs
Use of Mega Trends
Pioneering Best
Practices
Blue Ocean Strategy
Aspirational Ideals
Weighted Rating
Award Criteria
Relative Weight (%)
20%
20%
20%
20%
20%
100%
Atlas Copco
9.5
9.0
9.5
9.5
9.5
9.4
Company 2
8.5
9.0
8.0
8.0
8.5
8.4
Company 3
7.0
8.5
7.0
6.5
8.0
7.4
Criterion 1: Unmet Needs
Requirement: A clear understanding of customers’ desired outcomes, the products that
currently help them achieve those outcomes, and where key gaps may exist
Criterion 2: Use of Mega Trends
Requirement: Ability to incorporate long-range, macro-level scenarios into strategic plans,
thereby anticipating and preparing for multiple futures that could occur
Criterion 3: Pioneering Best Practices
Requirement: A nothing-ventured-nothing-gained approach to strategy implementation
that results in processes, tools, or activities that generate a consistent and repeatable
level of success.
Criterion 4: Blue Ocean Strategy
Requirement: Proven track record of creating new demand in an uncontested market
space, rendering the competition obsolete
Criterion 5: Aspirational Ideals
Requirement: A willingness to look beyond the simple goal of generating a profit to
embrace a more powerful ideal of bringing greater value to customers or the planet
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About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth
and achieve best in class positions in growth, innovation and leadership. The company's
Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined
research and best practice models to drive the generation, evaluation and implementation
of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in
partnering with Global 1000 companies, emerging businesses and the investment
community from 31 offices on six continents. To join our Growth Partnership, pl ease visit
http://www.frost.com.
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