Instrumentation Service Contracts: Opportunities for Differentiation

We’re very excited about our latest report.  We’ve known for a long time that scientists consider service to be an integral part of all of the products they purchase.  But this is especially true with capital equipment.  With many service models to choose from—in-house, original equipment manufacturer (OEM), multi-vendor, etc.—service providers must innovate to find new ways to demonstrate customer value. To competitively position maintenance and service contracts, life science suppliers need to understand how scientists use their instruments and the contribution such equipment makes toward sustaining laboratory operations. Just as instrument technology is evolving to meet the changing needs of labs everywhere, so too are the dynamics of instrument service as labs search for a better way to balance risk, quality, and costs.

Instrumentation Service Contracts: Opportunities for Differentiation was designed to help companies evaluate and optimize their maintenance and/or service contract offerings to better respond to the needs of today’s life science labs. It demonstrates that a single maintenance and/or service contract may not be a good fit for every customer. In support of this critical finding, the report provides an in-depth market overview and competitive analysis of the most common types of contracts offered in today’s life science market.

Data in this report suggest that, in addition to dependability and responsiveness, customers prefer personalized service that offers maximum flexibility. While almost one-half of maintenance and/or service contracts are with the OEM, other models, especially in-house and multi-vendor, are viewed as attractive alternatives. While customer satisfaction with and preferences for service contracts are presented collectively, profiles for five major OEMs: Agilent Technologies, Applied Biosystems, Beckman Coulter, Bio-Rad Laboratories, and GE Healthcare are included. Significant differences by market segment are also highlighted in the report.

Among the key findings:

•    Real-time PCR and HPLC instruments most frequently have service and/or maintenance contracts
•    49% of maintenance and/or service contracts are for a single-year duration
•    One-third of service contracts are around 10% of an instrument’s purchase price
•    36% of scientists who are disappointed with service would give contract providers a second chance and request a contract extension
•    Senior lab personnel typically procure maintenance and/or service contracts
•    41% of respondents are interested in consolidating maintenance and/or service contracts with a single OEM

In order to maintain a competitive edge, life science suppliers should proactively manage their customers over the entire duration of the contract. Knowing how best to structure one’s maintenance and/or service contracts will help to not only serve customers better and increase customer satisfaction, but also enable suppliers to manage such contracts more profitably. Specifying the fine print in a maintenance and/or service contract can prove challenging, but with proper management, contracts can be a major source of revenue for suppliers.