Why Service Revenue Remains Untapped (Even When Everyone Has a Strategy)

Manufacturers have long known that after-sales and field service can deliver higher margins than new equipment sales. Service contracts, predictive maintenance, and digital services provide recurring, resilient revenue streams.

According to McKinsey, aftermarket services often generate 25–50% of total profits in industrial sectors yet most companies capture only a fraction of the opportunity.

As I explored in The State of Field Service in 2025, leaders understand the potential. But awareness doesn’t equal execution.

The Untapped Promise of Service Revenue

So why do service revenue strategies remain stuck on paper? In my work with global manufacturers, five recurring execution gaps stand out.

First, organizational misalignment and fragmented systems consistently undermine progress. Service revenue requires sales, service, and product teams to collaborate, yet incentives often diverge. At the same time, ERPs, CRMs, and service tools rarely integrate cleanly. Field teams can’t see contract entitlements, sales lacks service insights, and leadership struggles to measure performance. The result: great ideas trapped in silos.

Why Execution Falls Short

Second, chasing AI without readiness has become a common trap. From predictive analytics to generative AI assistants, the hype is enormous. But without clean data, governance, and workflow integration, these projects rarely move beyond pilots. They create buzz but not scalable impact. This reflects a broader trend that a majority of the AI pilots fail to scale due to these reasons.

Finally, change management and ownership are underestimated. New tools and strategies are launched with enthusiasm, but frontline adoption is often an afterthought. Reskilling technicians, training sales teams to position services, and embedding new behaviors require long-term commitment. Large organizations often compound this with overloaded project teams and unclear accountability. When no one feels true ownership, leadership sponsorship fades and momentum stalls.

If these themes sound familiar, it’s because they echo the broader transformation traps I unpacked in 5 Strategic Mistakes Sabotaging Field Service Success in 2025

95%

AI pilots fail - not from lack of innovation, but from weak data foundations and poor execution

Forbes

Despite these hurdles, some organizations have managed to turn strategy into revenue. One HVAC manufacturer I worked with made a bold pivot during the COVID era. Instead of focusing solely on equipment maintenance, they asked: “What do our customers need right now?”

The answer was clear - solutions to enable a safe return to offices. By realigning their service offerings around customer needs, they unlocked double-digit service revenue growth and strengthened loyalty with their commercial clients. Organizational alignment and customer-centricity were the keys.

What Has Worked

Not every initiative succeeds - and that’s not always a bad thing. A diversified manufacturer I worked with ran a promising AI pilot for service revenue expansion. The technology worked, but leadership made the prudent decision not to scale. The reasons? Data quality issues, infrastructure gaps, and change readiness concerns.

Instead of chasing hype, they preserved credibility by admitting the timing wasn’t right. In hindsight, this decision saved millions in wasted investment. Sometimes, not scaling is the smartest form of execution discipline.

What Hasn’t Worked (And Why That’s Okay)

Start with customer needs, not org charts
Customer-first alignment is the real unlock for service revenue. When offerings are built around what customers value such as uptime, safety, or efficiency, Revenue follows naturally. Internal alignment becomes much easier when teams rally around solving customer problems instead of protecting departmental boundaries.

Lessons for Manufacturers

Fix data foundations before chasing AI
Scattered and inconsistent service data makes scaling impossible. Clean, connected, and governed data is the backbone that turns analytics from reactive problem-solving into proactive decision-making.

Prioritize change management
Without frontline adoption, even the best strategy never leaves the slide deck. This means reskilling technicians, giving sales teams confidence to sell services, and helping leaders at every level understand why service matters. Sustained change management turns strategy into a lived behavior across the organization.

Assign clear ownership and sponsorship
Service revenue cannot be “everyone’s job”, it requires leaders with focus and accountability. Clear responsibilities and escalation paths prevent initiatives from stalling when issues arise. When leadership visibly sponsors service growth, it signals that this is not a side initiative but a core strategic priority.

Think scale, not pilots
Pilots are useful, but success should be judged by how well solutions embed and expand across business units. Too many organizations celebrate pilots that never translate into sustainable impact. The goal should always be scaling what works into the mainstream business, not collecting proofs-of-concept.

Service revenue remains one of the biggest untapped opportunities in manufacturing and after-sales. The strategies exist, the boardroom slides are ready, and the potential is proven. But until organizations address execution gaps such as alignment, data, AI readiness, change management, and ownership, the opportunity will remain under-realized.

If 5 Strategic Mistakes showed us the transformation traps to avoid, this article underscores the execution disciplines required to finally unlock service revenue.

The question for leaders isn’t whether the opportunity exists: it’s whether they can close the gap between vision and reality.

Final Thoughts

What do you see as the biggest blocker to unlocking service revenue: data, change management, or something else?

Please share your thoughts

Author Info

Written by Mihir Joshi

After 15 years working with leading manufacturers, I created SmartServiceOps to share practical insights for the field service industry.