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So I have just replaced my battery on my iphone 6s and when I battery performance it says that it need to be serviced. I was wondering if I got a defective battery or is this normal. I also might have missed a step if there was any firmware change necessary.

I would suspect a bad battery first as there are lots of poor quality batteries in the supply chain. Try ordering one from a different (and reputable) vendor. Replacing a battery requires nothing more than the battery itself, as explained in this iFixit guide.

I had similar problem with a iPhone 8 plus. I can testing it with a baku regulable power source and a sunshine activator cable. This video maybe can help you. How to test and charge iPhone 8+ battery with BAKU 305d power source and sunshine SS-909 cable