New Shift to Customer Service for Aerospace and Defense

An Accenture Aerospace and Defense customer services study

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A quick scan of the sky gives a very vivid picture of one reason why service is an increasingly important element of the aerospace and defense industries: the number of aircraft in commercial service has doubled in the last 10 years. And it is set to double again over the next decade. But the shift to customer services is driven by more than simply the sheer volume of equipment that needs to be maintained. Aerospace and Defense (A&D) players’ business models also have to respond to new and rapidly changing customer requirements.

Defense procurement in developed economies is under severe budgetary pressure, alongside the pressing need to maintain availability of equipment to globally deployed forces, with the result that procurement processes and contracts are increasingly defined to meet those dual needs. Emerging economies are a fast-growing proportion of total A&D revenues, but buyers in those markets frequently require greater support and technology transfer as part of any acquisition.

Low-cost airlines’ business models’ tight financial modeling demands accurate projections from their suppliers of a fleet’s likely costs over its lifetime, including scheduled and unscheduled maintenance. All across the industry, customers’ needs and expectations are changing fast. The question is how rapidly the industry can adapt their customer services models to meet these needs.

The importance of this shift to customer services and away from traditional manufacturing models is well understood by most—if not all—companies in the sector. The majority see the need to increase customer satisfaction as their No.1 priority for service. How well-prepared they are to respond and take advantage of the service opportunities before them is rather less clear.

In fact, recent Accenture research (research carried out on behalf of Accenture in February and March 2011 with 32 executives of leading Aerospace and Defense companies across global markets) suggests that many companies in the A&D industry have yet to take the transformational actions that will allow them to fully capitalize on new opportunities and serve customers in new ways to increase customer satisfaction and drive revenues and profitability.

Our customer services research shows a clear disconnect for many companies between their awareness of the importance of service in the future and the steps they are taking to build the business models that will enable them to get there. Some 75 percent of companies surveyed rate the importance of offering competitive services to their clients in the next three years as critical. But only half (53 percent) of the companies surveyed say that they have a clearly defined service strategy in place.

The results of our survey show that businesses in the A&D sector understand that customer service is critical for their growth and profitability. But how to build the business model, capabilities, organization and culture that will enable them to fulfil aspirations remains difficult. However, as the customers they serve increasingly demand new ways to achieve their own business objectives, those businesses that succeed in becoming true service providers will reap the rewards.