RFM customer analysis for product-oriented services and service business development: an interventionist case study of two machinery manufacturers

Abstract

This study examines how original equipment manufacturers (OEMs) can segment their product-oriented services customers with the help of a recency, frequency, and monetary value (RFM) analysis of service consumption. The study is an interventionist case study that uses two large OEMs as case companies, both seeking profitable growth in the area of services. The originality of the paper is threefold. First, the research extends the RFM analysis using four product-support-service-specific variables, and it outlines the similarities and differences between the industrial service and consumer business contexts when using the RFM analysis. Second, by applying and modifying the RFM model to better suit the product-support-service context, the study contributes to the literature on the governance of product-oriented services in manufacturing. Third, the paper contributes to the literature on management accounting supporting service business development, by introducing a method that can use installed base and customer information to measure, analyze and govern the business potential of an industrial machinery “fleet”. In all, the paper is particularly helpful for service management and accounting academics and practitioners who wish to understand product-oriented service governance in environments in which there is a vast installed base of products at the customers, with remarkable potential for extending service business.