Improving First-Time Fix Rates

A Field Service Manager’s Guide

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In my last blog, I discussed the importance and impact of high First-Time Fix rates for the field service industry. (If you have not already read it, catch up here.)  Knowing that a high First-Time Fix rate leads to greater customer satisfaction, higher renewal rates, and lower costs for your company encourages management teams to want to improve this Key Performance Indicator (KPI). And making those changes does not have to be difficult or costly. On the contrary, making this KPI a priority will increase profitability and can make your organization flow more smoothly.

Here are 5 keys to increasing your First-Time Fix Rate:

  • Triage
  • Training
  • Dynamic Scheduling
  • Parts Planning
  • Knowledge Tools

Call Triage:  This is where it all starts.  Your customer calls in with a problem. The team on the front line needs to have the right technology and systems in place so that when a call comes in they can screen the call, understand the issue, and understand what skills and which parts may be needed to resolve the issue. Some calls may be able to be resolved over the phone if you have given the Call Triage Center the technology and systems to evaluate the call properly then no dispatch is necessary, saving time and money for you and your customer. If this is not the case, knowing as much as possible up front will help in the decision making process for the next step – dispatching the correct Field Service Engineer (FSE) with the right skills and equipment to have the highest chance of fixing the problem the first time. Is there a FSE in the physical area? Does that technician have the skills and parts to repair the problem? If not how can the FSE get the needed parts? And how do you achieve this in the time frame you have promised to your customer?  Your call center needs to know who is available and what skill set and equipment they have to make the best decisions for both your customer and your field service organization.  By conducting upfront call triage, you can provide the FSEs with the information they need to know in order to resolve the issue right the first time. Having the right systems and technology will help facilitate this process.

Training:  While it may seem like an obvious thing, you must have highly trained and well qualified FSEs available for dispatch.  Make the investment in both hiring and training your existing team of FSEs.  The more skills they each possess, the greater chance that the one closest to your customer at the time needed will be able to make the First-Time Fix happen.   How do you make this happen? First, have consistent and periodic training. Second, training should take place both in the classroom and in the field. Third have continued skill assessment and evaluation, that is evaluate your technicians and see how well they perform, then go back and do more training in the areas needed. In summary train, let them do, evaluate, and train more.

Dynamic scheduling: This means using advanced technology to identify and assign the best technician who has the skills, is available, can get there in time frame promised to customer and has or can get the required parts. Again, it may seem obvious, but if the FSE does not have the right part to fix the problem then a second trip to the customer is a given.

Parts: Parts management must be a part of any profitable Field Service Strategy.  What are the most commonly needed parts for the most common issues your FSEs encounter? What are the parts that have the highest failure rate? How do you make decisions about what each FSE carries with them for every call? And what is the availability for the parts that are not included in those most common service requests?  All of these decisions impact your organization’s First-Time Fix rate.

The fifth aspect of creating a high First-Time Fix rate is enabling your technicians to be more efficient to troubleshoot while in the field. There are several ways to achieve this:

  1. Give FSEs access to mobility solutions to access knowledge bases while in the field.
  2. Provide access to a Telephone Technical Support center they can call while in the field.
  3. Implement collaboration tools that allows FSEs to use their mobile devices to query and collaborate with other technicians who may have faced the problem and know how to solve it.
  4. Rely on augmented reality technology so that your technician can learn in real time while in the field what they need to do to solve the problem.

Investing in people, technology and processes make a high First-Time Fix rate achievable. By utilizing time and resources to have a well-run Triage Center; Train and re-train technicians; use Dynamic Scheduling to make the process efficient; implement effective parts management; and giving your FSEs the tools to be successful while at your customer, your First-Time Fix Rate will enhance the profitability of your Field Service Organization.

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First-Time Fix Rate: The DNA of Field Service

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First-Time Fix is one of the most frequently measured key performance indicators (KPI) used by Field Service Organizations (FSOs).   It is a very powerful metric to track.  This KPI measures the percentage of times field service engineers (FSEs) are dispatched to a customer site and have the skills and parts with them to resolve the issue on the first visit.  It is a powerful metric because it provides an indication of the FSO’s financial and operational health.  In this sense, it is like the DNA of field service.

Why is this so?  First, FTF is a measure of service quality and customer satisfaction.  Resolving an issue the first time demonstrates to the customer that they are dealing with a quality organization.  As a result, FSOs that deliver quality service will typically have higher customer satisfaction ratings than those that do not.   Second, FTF impacts revenue because customers are less likely to renew service contracts or purchase additional services if they are unhappy with the quality of service they are already receiving.

Third, FTF provides a measurement of field service productivity.  FSOs that experience high FTF are by definition more productive.  This is because they are able to resolve more service calls per day.   If FSEs are more productive, the FSO essentially can do more with less. In other words, the FSO does not have to hire as many new FSEs to handle additional work if service demand increases.   Assuming the additional work brings with it additional revenue, revenue per FSE also increases.   As this metric improves, so do gross margins and operating income.

Finally, companies with a high FTF experience lower operating costs than those with a low FTF. This is because if a call is not completed on the first visit, a second dispatch is required. Sometimes the call is not completed on the first visit due to lack of a spare part, in which case the FSE must travel to pick up the part or return when the part is delivered to the customer by courier.  In a recent survey conducted by our firm, we found that Best-in-Class companies experience an FTF rate of 98.3% compared to the industry average of 77.8%.   With service calls ranging in cost from $150 to $1,000 per event, the expenses for making repeat visits can be astronomical.  Assume, for example, an average cost per call of $150 and total service visits of 100, 000 per year.  If 22.2% of these calls are due to repeat visits then the FSO is incurring an additional $3.3M in expenses from its FTF of 77.8%.

There are of course a number of strategies and tactics an FSO can pursue to improve FTF.  First, FSOs can improve FSE skill sets through better training.   Second, they can perform better screening and diagnosis at the time of initial request so that when an FSE is dispatched he/she understands both the nature of the problem and the resources (i.e., skills, parts, etc.) needed to resolve the issue. Third, they can utilize intelligent scheduling to ensure the availability of both skilled FSEs and correct parts.   Fourth, they can provide FSEs with access to better knowledge and information in the field through knowledge tools or access to technical support personnel.

We’d love to learn about strategies your company has pursued to improve FTF.  Please share them with us in the comment section of this post.  If you need help building a business case to improve FTF contact us today for a free consultation.

Make Way for a New Marketing Power:

Service Marketing

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In this week’s blog post, I am sharing an article that first appeared in Field Service Digital on July 15, 2016.  The article was written by Derek Korte, editor at Field Service Digital and a senior editor at Original9 Media.  

Thanks to technologies like the IoT, and enticed by the promise of more revenue and a cozier relationship with customers, traditional manufacturers are now getting in on the service game. It’s a shift that not only blurs the lines between manufacturing and service, but also how companies market those products and services.

Sure, tried-and-true product marketing strategies are still relevant, but service marketing is a different beast entirely, says Michael Blumberg, president of the Blumberg Advisory Group. Below, he explains service marketing’s growing importance — and why it’s so hard to do well.

Is service marketing now more important than product marketing?

It’s not that product marketing is less important, it’s that service marketing is becoming more important. There are several reasons why: First, many companies have made it a strategic priority to build and grow their service businesses. Second, they recognize that services can be sold independently from products and, in some cases, in lieu of products. Third, they recognize that service marketing is different from product marketing and a different approach is need. Fourth, they understand they have to step up their marketing game if they are going to generate more service business.

So products might sell themselves, but that’s not necessarily true with services?

That’s true. You can sell a product by showing the customer the great things it can do because it has cool features, such as the IoT and augmented reality. On the other hand, service is intangible.

There is nothing you can show or demonstrate to the customer before they buy it. Just because a product has certain features, doesn’t necessarily mean that they will buy the service and support that comes with it. This is different sale all together.

How do you convince customers to invest in an unfamiliar service — especially if they don’t immediately know why they need it?

You have to focus on the economic value to the customers of having (or not having) the service available when they need. When you understand that, you can start selling services around that value proposition. Companies that struggle with service marketing can’t explain this benefit to the customer. Instead, they talk about service as an insurance contract. That’s a very general term. It doesn’t tell them anything about how the service will be provided, when it will be provided, or what outcomes it will produce.

What are the biggest differences companies should consider when marketing services, rather than products?

In a product sale, you sell the customers on the form, fit, and function of the product:. You basically sell them reality: what it does, how it works, its dimensions, etc. When selling services, you also have to sell customers on perception: the outcome or defined level of service they can expect. Bear in mind, you also have to sell reality, which is also known as the actual capability to serve, by describing or showing all resources that make it possible to deliver that level of service.

Is it fair to say service marketing is a lot harder — and a lot more work — than product marketing?

It’s a lot harder for a couple of reasons. First, service is an afterthought for many companies. They think that because the customer owns the product, they’ll buy the services, too. That’s often not the case.

Secondly, you can’t market a service like you would a product. Marketers talk about the four principles or Ps of marketing — product, place, promotion and price. But those principles are product-oriented. They don’t work with services marketing. Why? Services are intangible, and it’s hard to market something that’s intangible. To market services, companies need a new mix — the Seven Principles.

Are new technologies changing how companies market their services?

Service technologies like IoT, Big Data, and even field service software enable companies to collect and analyze very granular data about service events, product usage, failure rates, etc.

This information enables them to offer very tailored and customized solutions to their customers in terms of service coverage, response time, pricing levels, etc. The technology also helps companies be more precise about who they market to, when they market to them, and what they market.

Any standout companies that are doing this well?

Siemens, GE, and Philips are doing a pretty good job in marketing their service. They’ve made service marketing a priority because they understand services’ strategic value to their bottom line. They have carefully designed their service portfolios and pricing strategies to meet customer needs and requirements.

Their service marketing and sales people are adept at articulating the economic value of their services, and they are properly trained and incentivized to sell those services. They are effectively leveraging technology to find new market opportunities and exploit existing ones.

Are you interested in growing your service business? Check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing ™. As a starter, I’ve put together a brief video that describes the course content. You can access it here.

Got a question? Click here to schedule a free consultation

The New Field Service Workforce

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There has been a dramatic shift over the past 5 to 10 years in the way work is performed in the U.S. and Europe as more and more workers join the gig economy.  By definition, a gig economy is an environment where temporary positions are common and organizations contract with independent workers for short-term engagements.  In other words, people are increasingly taking on freelance work.

According to the US Bureau of Labor Statistics, 53 million Americans are currently working as freelancers.  By 2020, 50% of the American workforce will be engaged in freelance activity. Furthermore, a study published by the Freelancers Union and Elance O-Desk indicates that freelance work contributes $750 billion annually to the US economy.

The gig economy has played a significant role within the Field Service Industry.  It is driven by the trend of many companies to implement variable workforce (VWF) models. This is a business model in which a field service organization (FSO) relies on a contingent workforce to manage peaks and valleys in labor demand.  Earlier this year, Blumberg Advisory conducted an extensive research study to examine the impact of VWF models on the Field Service Industry. The study, sponsored by Field Nation, revealed  that 8 out of 10 FSOs have implemented VWF models to manage over one-half (53%) of their workforces.

One of the ways that FSOs implement the VWF model is through a Freelancer Management System (FMS).  This is an integrated software platform that includes functionality for Vendor Management System (VMS), Human Capital Management System (HCMS), Service Ticketing System, on-line recruitment tools, and reporting & analytics. Approximately two-thirds of survey respondents use this type of solution to manage their contingent labor pool of field technicians.

The single biggest benefit of using an FMS, as reported by 70% of survey respondents, is scalability.  In other words, the ability to scale the workforce up or down based on service demands.   A majority of respondents also perceive access to a vibrant marketplace of freelance technicians (61%), the flexibility that an FMS has in managing W2 and 1099 employees (56%), and lower cost of overhead (54%) that results from using an FMS, among the top benefits.  Just under half of the respondents (46%) viewed lower direct labor cost as a benefit of using an FMS platform.

In addition to these benefits, FMS platforms have a measurable impact on field service financial and operating performance.  Indeed, companies that use FMS platforms report having observed a 6% or more improvement in field service key performance indicators (KPIs) such as field service productivity (i.e., # of visits per day), labor utilization rates, SLA compliance, recurring revenue, and gross margins.

Obviously, the gig economy has had a positive impact on FSOs who rely on the VWF model and FMS platforms.  However, many opponents of the gig economy believe that freelancing models take advantage of workers and therefore are bad for individuals.  The facts point to the contrary. In 2015, Field Nation, a leading FMS platform provider to the field service industry, conducted a survey among freelance workers to understand their attitudes and perceptions of freelance work.  An overwhelming majority indicated that the freelance lifestyle is both a personnel choice (88%) and their primary source of income (73%).  Almost all the respondents were satisfied with the work they do (97%) and the career choice they had made (95%).

These findings suggest that the nature of work within the Field Service Industry has changed for good. The days of individual commitment to a single employer and vice versa are long gone.  Freelancing is not a passing fad within Field Service .  Furthermore, Freelancer Management System (FMS) platforms make it possible for FSOs to achieve positive, measurable results from implementing a Variable Workforce Model. Clearly, the gig economy is here to stay.

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To obtain a copy of our new ground breaking report on benchmarks and best practices in field service staffing click here.

Excellent Advice About Leadership

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In this week’s blog I am sharing an article written by Suzen Leen. She is Head of Marketing at Kap Computer Solutions Pvt. Ltd.,AP, a pioneer in BULK SMS Solutions.If you are interested in writing a guest post for my blog, please check out my Guest Posting Guidelines

Following your instincts when it comes to leadership is a good thing to do, but you also must continue to learn and know what a good leader does. It goes both ways, and this article will help you figure out what it takes for you to be the leader that is required. Not only will you improve as a leader, but you will help other people.

Make sure to engage people as a leader. You must learn how to motivate, involve, and excite others. Inspire them to engage their passions, strengths, skills, and creativity in the tasks at hand. Do what you can to acknowledge and appreciate each person’s contributions and efforts. You should make them all feel like they did something to move the project forward.

Effective leaders are inspiring. You need to develop the ability to inspire those who work under you, motivating them to work toward a common goal. You can use public speaking to achieve this, but there are also videos, blogs, articles and other methods to convey your uplifting message to your audience.

Good leaders know how to nurture growth in other people. Take the time to support other people. You can do this by learning their strengths, work styles, and passions. Try encouraging them to seek new possibilities and challenges. Remember that every person has the ability to expand the potential of the company.

As a leader, you must have confidence. This will, in turn, instill confidence in your team. If your team sees you doubt yourself, they will begin to doubt you too. Always act deliberately and do not waver, but do not be afraid to change your mind. A good leader is flexible.

One of the most important aspects of any leader is the ability to create a sense of trust among their employees. Employees who trust their supervisor are willing to do more to help the company succeed than those who do not trust their supervisors. Always be truthful when dealing with employees.

Be sure to finish everything you start or you risk losing the respect of the people that work under you. Even if something seems particularly difficult, you should give it your all and see it through to the end. No one will look at you the same if you turn into a quitter.

Be a communicator. Communication is a major aspect of what makes great leadership. If you can’t communicate your goals and vision, then what is there for your employees to follow at all? If you have a tendency to “loan wolf” at work, break out of that habit and begin communicating with your teams.

You should also use Bulk SMS Marketing for instant results, so that you can communicate with thousands of people with a single click https://kapsystem.com can provide you the best Bulk SMS Marketing, even you can also use our API to use it anywhere in any software.

Are you interested in growing your service business? Check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing ™. As a starter, I’ve put together a brief video that describes the course content. You can access it here.

I’d love to hear your feedback or answer any questions you may have.

What Do Pokémon Go and Service Lifecycle Management Have in Common?

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Augmented Reality (AR) became a physical reality earlier this month when Nintendo launched its Pokémon Go application. This is the first example of a consumer based, augmented reality application that can be downloaded free on any Android or iOS device.  According to Vox Examiner, “Pokémon Go is a game that uses your phone’s GPS and clock to detect where and when you are in the game and make Pokémon “appear” around you (on your phone screen) so you can go and catch them. As you move around, different and more types of Pokémon will appear depending on where you are and what time it is. The idea is to encourage you to travel around the real world to catch Pokémon in the game.”

Many analysts believed that consumer applications for AR would not hit the market until 2017.   Nintendo was ahead of schedule.  Pokémon is taking the world by storm and fueling the market for  AR applications, a market that Digi-Capital reports will reach $90 billion by 2020.  Goldman Sachs estimates that 60% of the AR market will be driven by consumer applications, with the remaining 40% of the market attributable to enterprise usage.

In case you have not been paying attending to technology trends, AR provides a live direct or indirect view of a physical, real-world environment and then augments (or supplements) this view with computer-generated sensory input such as sound, video, graphics or GPS data.  The technology functions by enhancing one’s current perception of reality.  AR improves  users’ experience by enabling them to interact and learn from whatever they are observing.

Prior to the launch of Pokémon Go, AR applications where limited to the enterprise market.  I saw an example of a real-world-use case for AR at PTC’s LiveWorx ’16 last month in Boston.  At this conference and exhibition, PTC provided a proof of concept of how AR can be utilized within the context of Service Lifecycle Management.  In conjunction with their customer FlowServe, a leading manufacturer of pump and valves for process industries, PTC demonstrated an integrated solution which provides users with a better experience when it comes to operating, maintaining, and managing centrifugal pumps.  Sensors on the pump identify when an anomaly is detected.  Using AR, a virtual representation of the machine is placed on top of the device to expose the root cause of the problem.  AR is then utilized to identify the exact steps that need to be taken to resolve the problem.

By implementing AR solutions, companies can expect to realize significant improvements in key performance indicators related to Service Lifecycle Management.  For example, AR can help equipment operators anticipate and/or avoid machine failures and thus increase equipment uptime.  AR can also facilitate repair processes, thereby reducing both repair time and downtime while improving first time fix.  In addition, AR can improve the learning curve of novice field technicians, enabling them to become more proficient in diagnosing and resolving problems.  Furthermore, the contextual knowledge that is made available through AR enables equipment owners to make smarter decisions about operating the equipment, which  in turn can help extend the equipment’s life.

These results are only possible if field service technicians embrace AR and actively utilize it.  How likely are technicians to embrace this technology? This of course is the big question on people’s mind.  One scenario is that AR adoption will be very high, so high that technicians will become dependent on it.  The implication is that technicians will lose their domain expertise and be unable to resolve problems without it.  This could pose a challenge if for some reason the AR interface is not working properly and the machine still has a problem that requires resolution.  This outcome can be avoided through ongoing education, training, and skill-assessment drills.

A more likely scenario is that adoption rates will occur gradually.  Although technicians may embrace the use of AR in consumer applications, they may have some resistance to using it in a technical environment.  This is because AR requires technicians to modify their workflow and perceptions of themselves as problem solvers.  Technicians have been conditioned to rely on their own experience, intuition, and “tribal knowledge” to solve problems.  AR changes that basic premise.  Technicians will have to remember to activate AR applications when they are in the field and rely on the information that is presented to them to complete the task at hand. They’ll also need to become proficient at analyzing and acting upon the information they observe.  These activities are not second nature and may take some getting used to for veteran technicians because it represents a different way of working and a challenge to their conventional way of thinking.  Companies that want to leverage the value of AR can overcome these challenges by managing technicians’ performance against key performance indicators (KPIs).  They can observe who on their team is using AR and evaluate the impact on performance. They can in turn incentivize and reward good performance as well as identify who needs more training and coaching on the use of AR.

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3D Printing and The Digitization Of Field Service

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This blog post has been reprinted with the permission of Field Technologies Online.

3D printing has received a great deal of attention by the media in recent months as this technology is rapidly being adopted in a broad array of market segments. Also known as additive layer manufacturing (ALM), 3D printing creates items using computer-aided design (CAD) and then builds them by adding thin layers of powder, melted plastic, aluminum, or other materials on top of each other. 3D printing requires fewer traditional raw materials and produces up to 90 percent less waste then traditional manufacturing. As a result, 3D printing is less costly. Furthermore, 3D printing enables companies to compress the supply chain and cycle time associated with bringing products to market.

The Role Of 3D Printing In Field Service
Indeed, 3D printing is a hot market. According to Canalys Research, the global market for 3D printers is estimated to reach $20.2 billion by 2019. This represents a sixfold increase from 2014 when the market was only $3.3 billion. Fueling this growth is the fact that 3D printers are becoming more affordable and mainstream. Given this trend, it is no wonder that the field service industry is quickly developing use cases for this technology. One example is Siemens, which uses 3D printing to make replacement parts for gas turbines. Rather than waiting weeks for an ordered spare part to arrive, Siemens can print the part and ship same day. As a result, Siemens has lowered repair time by 90 percent, which means less downtime per customer when it comes to gas turbines.

Another use case that has been proposed involves equipping service vans with 3D printers, permitting field engineers to print replacement parts on demand. This may not be practical or feasible. Many companies are moving toward variable workforce models and cutting back on company-owned vehicles. Even though 3D printing is faster than traditional manufacturing, it still requires a lot of time to print certain types of parts. This means that service calls would be extended, leading to longer customer downtime and lower productivity for the field service organization (FSO). 3D printing is also not a one-size-fits-all solution and can’t print complex parts. 3D printers vary according to the types of additive manufacturing methods employed, the types of materials utilized, and the size of the product manufactured. Unless all replacement parts have the same specifications, an FSO would need to install multiple printers in each van, which would add to the balance sheet and overhead expense structure of FSOs.

Despite these shortcomings, the concept of pushing the 3D printing closer to the customer and shortening the supply chain is very compelling. To capitalize on this idea, UPS has launched a full-scale, on-demand 3D printing manufacturing network. This network will leverage UPS’ existing global logistics network by embedding the On-Demand Production Platform and 3D Printing Factory from Fast Radius in 60 of UPS’ U.S.-based The UPS Store locations. UPS will also partner with SAP to build an end-to-end offering that marries SAP’s supply chain software with UPS’ on-demand manufacturing and global logistics network. This will simplify the production process from parts digitization and certification, order-to-manufacturing, and delivery. Now UPS’ customers can manufacture parts in the quantity they need, when they need them, and where they need them.

One of the most fascinating aspects of this solution is that instead of trying to force innovation (i.e., 3D printing) into our traditional way of thinking about spare parts management (i.e., in-house parts networks), UPS has turned service parts logistics into an on-demand economy business a la Uber. Under this model, the value for the FSO is not in the physical assets it manages (e.g., parts, 3D printers), but in the digital assets (e.g., designs, drawings, etc.) it owns. Eventually, developments in nanotechnology will enable 3D printing of all types of parts, even complex ones like microprocessors and capacitors. This creates the potential for FSOs to transform themselves into asset-light businesses. As a result they can deliver a better return on investment, lower profit volatility, greater flexibility, and higher scalability, things that weren’t possible a few years ago. UPS is of course an early entrant to the on-demand market for 3D printing. Look for more companies to offer similar solutions in the near future.

Have a question? Click to schedule a consultation.

Are you interested in growing your service business? Check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing ™. As a starter, I’ve put together a brief video that describes the course content. You can access it here.

Turbocharge Your Service Business

Maximize Revenue through Market Research

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In my last series of blog posts I wrote about what it takes to build a Successful Service Marketing™ program.  To review, I described the strategic concepts of service marketing and introduced you to the 7 Ps. These are of course very important concepts. However, there are a few more concepts you’ll need to master if you are going to win at service marketing. If you’re going to be successful at service marketing or any kind of marketing, even if it is product marketing, you have to have good knowledge of your market.  You get that knowledge through market research. If you know who buys, what they buy, and why they buy then you can sell more to them and get them to buy more often.

Market research also provides the insight needed to communicate effectively with your current and prospective customers. It helps determine what messages, what images, what ideas will resonate with them and get their interest to want to buy from you.  Marketing is about taking a need and converting it into a want. You may need a watch to tell time but you want a Rolex because of the status and prestige associated with owning one.  So when you have really good market research of who buys, what they buy and why buy, then you can construct your message in such a way that you turn a need to a want.   In the field service world, you customers may need to know that they can get service on their equipment when it is down but what they really want is a guaranteed Service Level Agreement with a 4-hour response time.

Good market research not only helps in creating a service portfolio your customers really want but it helps in developing an optimal pricing strategy for that portfolio.  Chances are that you are familiar with cost plus and competitive pricing strategies. With cost plus pricing, you calculate what it costs to deliver service and then mark it up by an amount to cover you profit.  With competitive pricing strategies, you conduct market research to find out what your competitors are charging and then price your services at a lower amount.

A third type of pricing strategy is called value-in-use pricing. It basically involves measuring the economic value or loss to the customer of not having the service available in a timely manner.  This can be significant.  For example, a manufacturing facility may lose millions of dollars every hour its machines are down.  Therefore, they may be willing to a pay premium for faster service.  Market research can help you understand your customers’ value-in-use and determine whether or not you should pursue a cost plus, competitive, or value-in-use pricing strategy.   You’ll need to understand all three pricing strategies and how to effectively leverage market research to maximize service revenue and optimize profits.

The final aspect that you have to master to win service marketing is called ‘‘Invisible Selling”. This is based on the premise that you win business not by pushing your offers onto prospects, but by pulling customers towards you. One of the ways you pull customers to you is through indirect marketing as opposed to direct selling.  What’s an example of indirect marketing?  It’s an article or white paper that demonstrates that your company understands the problems that companies in your market are experiencing and that you have solutions to these problems.  It’s about using social media and public speaking opportunities to influence others to want have a conversation with you to learn more about what you do, and how you can help them.   It’s about positioning you and your company as experts and trusted business partners.   By the way, seeding your thought-leadership content with market-research data is a sure-fire way to build credibility with current and prospective customers.  Once you establish credibility they follow you and then it’s only a matter of time until they become your customers.

When you put all the elements of a Successful Service Marketing™  program together, when you fully understand the strategic concepts of service marketing, when you effectively apply the seven principles of service marketing, when you learn how to optimally price your services, when you use market research effectively, and implement an invisible selling strategy, you’re going to experience incredible results.  Your marketing program will be extremely successful, your sales will take off, and your business will skyrocket.

If you are really interested in achieving extraordinary results, then check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing ™. As a starter, I’ve put together a brief video that describes the course content. You can access it here

Got a question? Click to schedule  a consultation.

The Service Marketing Mix

Understanding the 7 Principles

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One of the reasons service executives struggle when attempting to grow their businesses is they try to apply product-marketing concepts to service marketing. This is like trying to hammer a square peg into a round hole.  The 4 P’s marketing mix is one such concept that works great for products but not for services.  It’s based on the theory that the success of a company’s marketing program is based on how well the company manages strategies and tactics related to product (i.e., design, form/factor, etc.), price, promotion (e.g., sales, advertising, etc.), and place (i.e., distribution).

The problem is that these 4 P’s do not apply to services. First, service products are intangible and difficult to describe.  This begs the question, how can you promote something that is difficult to describe?  Another problem for service marketers is that place has a very fuzzy connotation in service marketing because there are multiple entities involved in service distribution. Sometimes they cooperate, other times they collaborate, and still other times they compete.  Services can be offered by one entity, ordered through another, and delivered by a third.  Without well-defined product, promotion and place strategies, all that is left is price and that becomes a slippery slope for service marketing.  Sales and marketing can never be just about prices because customers will always find a way to negotiate price.  In product marketing, the 4 P’s makes it possible for a seller to justify the price.

For the past 20 years, I’ve devoted a great deal of time and resources to understanding this dilemma, in the process developing my own theory about service marketing.  I determined that a Successful Service Marketing™ mix is actually based not on 4 but on 7 key principles.  These principles are:

  1. PORTFOLIO: Often described in terms of a service-level commitment, such as 24/7 with a four-hour response time. The more distinctions you can make to define your service portfolio, the more likely you will be to fulfill the needs of prospective customers.
  2.  PROVIDER: Tangible elements of your service infrastructure, such as your call center, self-service portals, enterprise systems and service technology that make it possible to deliver on the promise of your service portfolio.
  3. PROCESS: The steps your customer must take to request the service, and the tasks that occur to deliver the service. For example, performing front-end call screening and diagnostics before dispatching a field technician.
  4. PERFORMANCE: Evidence that you can deliver on your promise, such as KPIs, customer satisfaction results and customer testimonials.
  5. PERCEPTION: Your ability to win business and retain satisfied customers is based on your ability to influence their perception of you. This goes beyond simply promotion through advertising, branding, and communications. It gets to the essence of who you are, what you stand for, and how you portray yourself in the market.
  6. PLACE: Services distribution channels can be complex.   Quite often, consumers can purchase service from one place, order or request it from another place, and have it delivered to them at a third place (e.g., onsite, depot, remote, etc.).  Sometimes it’s the same company delivering this service. Other times it’s not.  Regardless, the service marketing mix must deal with these complexities.
  7. PRICE: Of course, there is always the issue of price. The important thing to remember is that price is a function of value in use and perception that consumers have about your company (i.e., expertise, experience, capability).

Many people have asked me why I haven’t included “People” as one of the Ps in my service marketing mix.  While people are important to the success of any endeavor, I feel very strongly that their ability to deliver exceptional results is a function of the 7 Ps that I’ve identified above and not the other way around.  Ordinary people can achieve extraordinary results when there are great strategies and tools in place.

Please let me know what you liked about this blog and your key takeaways.  If you’ve found this blog of value and think your colleagues or business associates could benefit from it, kindly share it with them.

If you are really interested in achieving extraordinary results, then check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing™.As a starter, I’ve put together a brief video that describes the course content. You can access it here

 

Strategic Concepts that Fuel Revenue Growth

The Basics of Service Marketing Theory

Fuel Growth

It probably comes as no surprise that service executives are often focused on finding ways to increase top line revenue, boost profits, and expand market share. Indeed, these are usually among the most important initiatives that service executives pursue when it comes to charting the future of their business.

In order to achieve results, service executives need to master three fundamental or strategic concepts about service marketing.  It is important to understand these strategic concepts because they form the underling theory of service marketing, and – as you will read below – theory is what forms the basis of our reality.  By understanding service marketing theory, you can shift your perspective from product marketing to service marketing. Without this shift you can never expect to implement a Successful Service Marketing™ strategy.

One of the most critical strategic concepts of service marketing is that perception is just as important as reality.  Ultimately, the perception that a customer has about a service provider is what influences their decision to work with that service provider.  In other words, customers buy both perception and reality.  As a service provider, you must influence their perception of your capabilities.  Customers need to trust that you have the capacity to deliver service before you actually deliver it.  It’s not just the actual service that they are buying that creates value; it’s your ability to manage their perception that creates value.  Perception is what sells; your performance is what keeps them coming back.  Reality must equal perception otherwise you will have an unhappy customer on your hands.

A second strategic concept that service marketers need to understand is that customers pay more for services over the lifetime of a product than they do when purchasing the product itself.  In fact, they may pay as much as 8-10 times more for services than what they originally pay for the product. This may seem like an absurd statement at first glance. However, consider the fact that the customer may own or operate a piece of equipment for five to ten years or more.  Over that period of time they may require a broad spectrum of services ranging from installations, to remote support, to field service, to replacement parts, to training, and so on.  Clearly the dollars can add up over time.

The third concept has to do with understanding the relationship between “value in use” and time.  Value in use is about understanding the cost to your customer in absence of the service.  This is typically a function of time. Some services are mission critical.  If they are not performed in a timely manner, the customer may lose a lot of money by not having the service available.  You need to understand value in use in order to effectively price your services and articulate the value of what you can provide.  Most services are valued in terms of time. That’s because downtime equals money lost in the service world. The longer it takes to obtain service, the more costly it becomes for the customer.  The quicker the service is performed, the more valuable it is to the customer.  By understanding your customers’ wants from the standpoint of time, you can develop service offerings that meet these needs.  Furthermore, if you can meet the strictest of time requirements, than you can command a premium price for your service particularly if it is on a mission-critical product or application.

By mastering these strategic concepts you will begin to observe a shift in the way you think about service marketing.  This shift will help you become more effective in implementing marketing strategies that lead to higher revenues, greater profits, and increased profit share.  If you are really interested in achieving these outcomes, then check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing. ™ As a starter, I’ve put together a brief video that describes the course content. You can access it here.  I am also providing a $100 discount on the purchase of this course during the month of May.  To take advantage of this discount, enter code SMK100 when you register.

Please let me know what you liked about this blog and your key takeaways.  If you’ve found this blog of value and think your colleagues or business associates could benefit from it, kindly share it with them.