Background: OTIS was a market leader in both the aspects of elevator industry i.e. sales and services. However, the services industry despite being very stable had become very competitive due to entrance of many small players since services involved higher margin on profits, which attracted many entrants in the field. An elevator service company would be typically invited on the basis of responsiveness, quality and price. OTIS was able to charge premium for its products because of its established name but it had to maintain the quality and customer satisfaction high to get new installation contracts (more sales) and service contracts. It all started for OTIS with a companywide cost reduction program in 1981. Key reasons for the program were: 1. A centralized customer service system was deemed desirable because getting new contracts would only be adjudged based on through responsive call-backs by the company. 2. Reduction of response time which only a centralized system would make possible to do. A centralized system would enable the company to accept calls even during non primetime. This didn’t work efficiently for the company through local answering services due to non alignment of interests. 3. Get timely feedbacks from the customers on service quality. 4. More aligned cost effective solution was needed.
5. The response on call-backs till now varied across locations and it was felt to make it more effective to enhance customer satisfaction, the company needed to be more effective across all locations. 6. Of the 2300 service mechanics employed by NAO in 1985, most handled both call-backs and preventive maintenance. According to NAO OTIS could save up to $5 million by reducing call-backs which centralized system could make possible achieve Q2: How was value created in this model?
OTISLINE proved to be greatly beneficial to the company in terms of following value propositions- 1. Responsiveness:
Fact: Reduced response time...