Why The Customer Experience Should Be At The Heart Of Marketing and Selling Services

Consumers now reside in a digital world where instant gratification is the new currency. The rise of Spotify, Netflix, Amazon Prime Now and Uber ensures they can avoid any pain points and get what they want and when they want it in a new on demand economy.

However, the ‘we want it now’ consumer continues to evolve and now expects a personalized experience too. If online services know what their favorite movies, TV shows and music they like, surely retailers will know what they like too.

Tech savvy users are looking for businesses to lead the way with new technology that continues to treat them as unique individuals. A generic marketing e-mail with their name pasted at the top in a different font is no longer going to cut it.

The evolution of the customer experience has even given birth to the phrase Martech which is the blending of marketing and technology. Industries across multiple industries are all facing the same problem as the digital transformation of everything gathers pace.

Keeping up with all the latest trends across the digital landscape is no longer an option it should be compulsory for anyone serious about the future of their business. The good news is that you are not alone and the fact that 76% of field service providers were reportedly struggling to achieve revenue growth should be the only wake-up call that you need to take this seriously.

However, there are numerous field service winners here too. For example, in 2017 there are many organizations providing seamless digital experiences and delivering faster resolution times. It is often said that technology works best when it brings together and here is a selection of great examples.

The Value of Improving the Customer Journey

Personalization is much more than just another industry buzzword but a reaction to the demand driven by consumers. Providing the right experience at the right time is an art that many are still learning to master. But, the ability to increase 15% percent of revenue and lower the cost of serving customers by 20% is a language that every member of the boardroom will understand.

Do Not Underestimate the Importance of Customer Service

According to Microsoft, an incredible 97% of consumers advised customer service is critical to their choice or loyalty to a brand. But it’s also crucial to remember how this is across self-service, social, phone, mobile and a plethora of devices.

The divide between offline and online is disappearing. No matter what device we have at hand, wherever we are located and if we are using our keyboard, touchscreen or even voice, the experience should be the same.

Poor Customer Service Will Be Punished

It is well understood that it costs businesses more to acquire a new customer than it does to keep an existing one. Savvy consumers will happily shop around for the best deal. Ironically many companies seem to treat their current clients with contempt arrogantly and assume they will stay with them regardless.

The reality here in 2017 is that 64% of consumers have switched providers in at least one industry due to poor customer service according to Accenture. We no longer suffer fools gladly, and a lack of patience or frustration will ensure most consumers will switch providers after only one negative experience.

In this digital age, loyalty must now be earned rather than taken for granted. The only question that remains is what are you doing about it?

Time Is Money

An Amazon Prime account makes one-click ordering and delivery within 2 hours a reality. Maybe, we shouldn’t be too surprised how our time is becoming increasingly valuable. Forrester recently advised that 73% of consumers will happily admit that their time is the most important factor where businesses need to focus.

Pain points such as long-winded automated phone menus, cumbersome online chats or waiting around between 9 am and 6 pm for somebody to call you will no longer be tolerated. Organizations need to manage the expectations of their customers and remove friction to offer a truly simplified service in a timely manner.

Make Way for The Internet of Things (IoT)

With 50 Billion internet-connected devices by 2020, the time to take IoT seriously is right now. Consumers do not care about your product roadmaps; they now expect the same experience with any of their devices.

There is already a long line of competitors offering similar services. Failing to keep up will leave your brand looking like a tired Sears or J. C. Penney store that failed to keep up with the speed of hyper change across the digital landscape.

OVERALL

Advances in machine learning, deep learning, and artificial intelligence have already made real-time personalization a reality. A dramatic rise in expectation levels means that users of all ages now demand the same experiences across multiple platforms.

Mainstream audiences are looking for businesses to lead the way and provide the wow factor through technology based solutions. However, sometimes, they just want greater digital interaction and to be treated as a unique individual from a fellow human being.

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Customer Service Success or Failure

customer service

Any company wishing to succeed must strive to provide great customer service.  With today’s culture demanding instant gratification, customers do not hesitate to take to social media to inform everyone of a company’s failure. So how does an organization arm itself not only to provide great service but to know what to do if they fail?  Here are some articles which discuss both success tactics and also give examples of failures and how to avoid them.

10 Reasons Organizations Fail To Deliver Great Customer Service
By Shep Hyken

Customer success or failure starts from company leadership.  This includes the company’s vision of how to provide great service, the training process including onboarding and ongoing training, and how employees are treated. In addition this article discusses the importance of hiring the right personnel to carry out the mission of great customer service and then celebrating their successes.

How Service Companies Can Earn Customer Trust and Keep It
By Leonard L. Berry

In this article Leonard Berry focuses on the idea of customer confidence which can be lost through poor customer service. Berry specifically cites the recent United Airline customer service incident which clearly failed on all accounts. He goes on to discuss ways to gain and to keep trust and also how to recover  that trust when it may be lost. He stresses the idea of being aware of and meeting a customer’s “perceived contract” and not just the actual contract.

NIGHTMARE: 7 Customer Service Blunders That Went Viral
By Patricia Laya

Patricia Laya outlines 7 customer service failures of both worldwide and regional companies who deal directly with consumers. She outlines how the companies responded and in many cases how their response changed after these consumers took to social media to get their story out to the public. Specifically she details the case of a musician who continued to write songs and make music videos about his terrible experience long after the incident.

The Power of Prevention In Customer Service
By Len Markidan

Len Markidan’s premise is that most customer service failures do not happen just once. If you are able to recognize the issues that recur and not only fix the individual situations, but also look for and fix the root problem, then you will experience greater success. Doing so gives your customers a better experience and saves your company time and money in the long run.

Why reactive service is a thing of the past?
By Sarah Nicastro

Historically, “service” had been viewed as something provided as a reaction to a problem identified by a customer.  More recently, we have seen a move to proactive service.  This article, first published on Field Technologies Online, was posted as a guest post from Sarah Nicastro on my blog site.  In the post she specifically discusses the importance and advantage of Machine to Machine (M2M) and Internet of Things (IoT) as tools valuable to both the service provider and the customer.

First-Time Fix Rate: The DNA of Field Service
by Michael Blumberg

In this blog post, I discuss the importance of First-Time Fix Rates, (e.g., the rate at which a field service company can resolve or fix an issue on the first attempt). This important Key Performance Indicator can not only make or break the relationship with a customer but also have a tremendous impact on the company’s cost of providing the service. I also discuss ways to improve this rate.

I welcome you to join the discussion. Do you have any customer service failures or successes to share? What lessons did you or your company learn? How have you been able to make changes to give your customers a better experience?  If you are looking to evaluate your own company’s customer service capabilities or looking to find ways to improve your service, contact me and schedule a free 30 minute consultation.

What’s on Service Director’s Minds

Nick Frank is a Co-Founder of Si2 Partners and this article is based on one first posted in Field Service Matters.

With customer expectations on the rise, field service organizations are constantly fighting to keep up. The service industry has shifted from a cost-centric and reactive approach to a value-centric and proactive approach. But aside from more demand from the customer, the transformation has also opened up new opportunities for service technicians, process, and technology.

Recently, I met with service and operations directors from the United Kingdom’s biggest organizations gathered at Field Service Summit. Field service leaders from manufacturing, telecommunications, and utilities met to exchange ideas and discuss opportunities and trends. Here are the most important topics they addressed.

On dealing with near-impossible expectations

Thanks to on-demand services such as Uber, customer expectations are higher than ever. Your customers want faster resolutions, more visibility into their service, and real-time communication with their technicians. But disruptions happen, and sometimes the customer wants more than you can give them at that moment. Here’s how the experts are managing customer expectations:

Set realistic expectations & don’t over promise

What do you do when the customer wants more than you can handle? Start by setting expectations. Before the service visit, know exactly what the customer wants accomplished and when. You always want to strive for a quick, first-time fix. But don’t over promise if you can’t deliver.

Let’s say a customer wants a tech to fix their washing machine the same day they call, but your techs are already booked for the day. Since it’s not an emergency situation, let the customer know they’ll have to wait, and schedule them for a different time slot. They might be upset that you can’t help them as soon as they’d like, but they’ll be more upset if you’re unable to deliver on a promise.

Let the customer set their own (controlled) expectations

Better yet, give your customer a range of options so they can set their own expectations. Most field service directors at the summit found that their customers want to be partners during the service process. Involve customers by allowing them to set their own expectations for the service visit. Just make sure to do so within in a controlled environment.

For instance, give them open time slots to choose from before they decide on their own. And if they want a higher level of service that will take more time and labor, let them pay more for it. This way you’re giving the customer more control throughout the process, but maintain manageable expectations.

On developing service technicians

Most of the experts at Field Service Summit agreed that the people side of the service delivery is crucial. In other words, your techs, along with their attitudes and capabilities, determine the successful delivery of solutions for your customers. Think about it. Your techs make up most of your company’s interactions with your customers. As the face of your organization, it’s important that the tech makes a good impression. Here’s what the experts advised for developing technicians:

Help your techs become brand ambassadors

It’s crucial for technicians to have the right technical skills, but attitude and image are just as important. Coach your techs on how to represent the brand and company values during their service visit. They should be courteous, engaged, and dressed appropriately. Your customers should feel confident in their tech’s ability to solve their problems and think of them as trusted advisors.

Make customer feedback part of the service process

The best way to learn how your techs are performing is by asking the customers. Consider making customer feedback part of the field service process. Send your customers a survey immediately after the service visit so they can respond with the visit fresh in mind.

If the feedback is positive, send it directly back to the tech. In addition to learning what he or she did right, the tech will also feel good to know they had a positive impact on their customers. If the tech gets a negative review, have a manager deliver feedback. Set a meeting to discuss their performance and talk about ways they can improve for next time.

On the importance of service value over price

As products are commoditized, quality service and positive customer experiences become main competitive differentiators. Field service directors at the summit noticed that customers today are less competent technically, and care more about the outcome. Being said, it’s important to constantly communicate the value of your service, especially if you have not been as visible to the customer. Make sure they know what’s been happening in the background, and throughout the service process.  Here’s what the experts advised:

Demonstrate value with proof

As your company grows, be sure to document a service portfolio. Get your customer support team on board with your company’s value propositions and demonstrate them. Work with your customers to build case studies (with numbers) to use as proof points for potential customers.

Be a business partner

Just as customers should see techs as trusted advisors, they should see your company as a partner invested in their success. Customers are looking for more than just a fix — they want solutions. And they want advice on their assets in case the problem arises again. Let them know you’re always there for them, even when they’re not due for a service visit.

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Driving Revenue Growth without Losing Sight of the Customers

CUSTOMER SATISFACTION

Several months ago, Derek Korte, the editor of Field Service Digital solicited my opinion for article titled “Expert Roundtable: Never Lose Sight of Customer Satisfaction”.    The basic question that Derek asked was “How do service leaders ensure the important work involved in managing a service business get done while still keeping the needs of customers involved?”  After all, Derek pointed out, Field Service leaders have a lot on their plate. They must continuously balance the need to improve the quality, productivity and efficiency of service operations with the strategic objective to drive revenue and growth; all while never losing sight of keeping customers happy.

This dilemma is a challenge facing all businesses not just Field Service.  When it comes to practical advice, Peter Drucker said it best, “the goal of any business is to get and keep customers.”  This quote provides a good lesson for Field Service leaders.  Driving revenue and growth, and maintaining customer satisfaction is not an either-or proposition.  They are one in the same.

To achieve superior outcomes in these two areas, Field Service leaders must view themselves as business owners.  They must view themselves as owners of a business franchise called “service” whether they are equity owners or not.  In other words, they must adopt an “ownership” mindset.

To succeed as business owners, Field Service leaders must first have the right “seats on the bus” otherwise known as the right functions that manage their service business.  This includes functions such as service delivery operations (i.e. dispatch, field service, parts management, etc.), accounting & finance, sales & marketing and others.  Without the right functions, the business cannot perform.

Second, Field Service leaders must make sure they have the right people in those seats. This means they must find talented people to manage these functions.  The people can be groomed from within the organization or recruited from outside.  Regardless, field service leaders must develop performance standards by which personnel must adhere.  These standards should consider the characteristics, skill sets, experience and behaviors that service personnel must possess.

Third, Field Service leader must have clear outcome of where they are heading.  If they are going to drive growth, then they must have a map to help them reach their destination.  In business, another term for a map is a strategy and/or plan.  Without a clearly defined strategy or plan to follow, a business can’t go very far.

Fourth and finally, Field Service leaders need to make sure their bus (i.e., their organization) is running efficiently. That it has a clean engine, good tires, etc. They also most make sure they have a GPS or dashboard to help them monitor their performance, the direction in which they are heading, and the speed at which they are going.  The engine, tires, etc. are a metaphor for state of the art service delivery infrastructure and related technologies that make superior service possible.  The GPS and dashboard are the Key Performance Indicators (KPIs) and operating benchmarks that help Field Service leaders keep course on their direction.

Now it’s your turn to answer the question: “How do service leaders ensure the important work involved in managing a service business get done while still keeping the needs of customers involved?”   What have you found that works and doesn’t work? If you’d like to read about other experts’ perspectives on this topic then read Derek’s online article.

Please also feel free to schedule a free strategy session with me today if you need more insight and guidance on how to improve service operations and drive revenue and growth while maintaining a high level of customer satisfaction.

Still looking for answers?

 

 

4 Ways Service And Support Adds Customer Value

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This is a guest post by Sam Klaidman. He is a consultant focused on Service Marketing and Customer Experience. You can read his blog and follow him on LinkedIn. If you want to guest post on this blog, email me at michaelb@blumberg-advisor.com and write “Guest Blog Guidelines” in the subject field.

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service and support

Today, customers are looking to receive more value from their partners than ever before. The two primary reasons are:

  1. Customers are “crazy busy” and need relief because they are drowning in problems, opportunities, issues, and challenges. This relief is one form of value added by the supplier (partner).
  2. Partners see many “similar” situations at their customer’s locations and so should have a good idea about what will work to help the customer and can be implemented with little effort or risk, with a high likelihood of success.

Almost sounds like the customer wants the supplier to solve their problems and expect no more that a “thank you.” The first part of the sentence is correct but not the second part; smart customers are perfectly willing to pay for value added services if they understand the benefits they will gain.

Who is best suited to deliver value-added services?

For a number of reasons, service organization are best situated to deliver value-added services to existing customers. Here’s why:

Of the two primary customer-facing organizations, the “sales” department is generally charged with selling products. Their compensation plans are based on closed business; they have marketing breathing down their necks pushing them to turn leads into orders and their nature is to be hunters.

The other group, services, is totally different. Their role is to make the customers successful; they enjoy helping customers, frequently have little or no revenue objectives, are totally familiar with the products and, organizationally, have seen all the customers and how they have attempted to solve their problems

How can Service and Support add value to customers?

  1. Technical people understand their product’s capabilities and limitations. When they are talking with individual customers they should be asking questions like:
    1. What exactly are you trying to do with our product?
    2. What do you wish it could do but have not found a way to do it?
    3. Where in your process is our product helping you? Slowing you down? Making it impossible to do everything you need to do?
    4. Do you know of any other products that help you do your job?

 

As they get a better understanding of the customers jobs-to-be-done, they frequently can teach the customer how to use the capabilities they already paid for and did not know existed.

  1. When we see how our product is integrated into the customer’s job stream, we frequently can identify unnecessary steps. By sharing this with the customer, we add value because we help them do their job quicker and easier.
  2. Many hardware owners are totally concerned with uptime; they bought our product because they needed to use it when they needed to use it. However, the person who sold the service contract, or the one who actually purchased it, may not have discussed the critical uptime requirements and so only discussed the standard plan. When the Service Marketing person works closely with the equipment owner, there are frequently creative ways for the customer to increase uptime (for an additional price) while the service group provides unique services that can be integrated into their workflow.
  3. Finally, if your service and support people identify a value adding opportunity but do not know how to actually accomplish the customer’s needs, they should get the case into the hands of the product manager. He can then research the feasibility of adding the feature, assess the market size and implementation cost, and potentially move ahead in a future upgrade.

 

Your service and support team has a number of separate roles to play. Here they are:

  1. Fix the customer’s problem. This is Job #1. Helping them get full value for money for their purchase is critical; without it there is no business relationship.
  2. Collect information about product performance and put into a useful format for your Engineering or Manufacturing departments to use to improve the products.
  3. Identify opportunities for the business to add additional customer value. The front line service and support professionals should always be thinking about ways that your customers can squeeze additional value from their purchases. When they find opportunities they must not only help their immediate customer implement changes but must also spread the word throughout your company so other customers can take advantage of these new findings.

 

If not already in place, these behaviors must become part of your company’s culture. People must be able do these things as though it were it standard operating procedure so that everyone wins!

Is it time for a mid-course correction?

mid course correction2

 

The summer is here and with it brings the beginning of the second half of the year. This is great time for re-evaluating progress in meeting our business goals.  It represents a half-way point to determine if we are on track for the year, if we need to change course in direction, or simply act with greater resolve and urgency to achieve our outcomes.

One thing that we uncovered in our recent Readership Survey is that a large percentage (47.7%) of subscribers desire to learn about strategies for achieving better results. The most frequently occurring response when respondents were asked about what they want to achieve in their business over the next 3-5 years in “growth”.  I think that it is safe to say that many of our readers can benefit from strategies that will help them achieve higher levels of growth.

In my attempt to provide readers with more of what they want, let me give you some action steps to follow if you find that your actual growth for this year is not in line with your original target.   First, remember that the trend is your friend.  This means that you need to periodically evaluate your market to determine if the trend is working in your favor.   You’ll want to get a handle on the size and growth rate of the market you serve, the level of competition, industry dynamics, buyer behavior, and purchasing criteria.   You can uncover this information through internet research, market surveys, analysts, and other secondary sources of data such as articles, press releases, annual reports, etc.

Assuming you’ve concluded that the market you serve is large and growing, then you need to ensure you have the right marketing strategy in place to capture your share of this opportunity.  Think of your marketing strategy in terms of a triad.

market strategy triadAt the base of this triad is your company’s performance.  The ability of your company to deliver on its promise is critical to keeping customers. If they are happy with your service, they will tell others and you will gain word of mouth referrals.  The second side of the triad is the value your company provides to customers. Is it defined in a way that the value is clear and compelling to current and potential customers?  Value is often defined by the quality of your offering and the little things you do to win over the customer.  For example, are you providing them with options so they get exactly what they want?  It also includes offering great service and support before they buy.

The third side of the marketing strategy triad is your tactics.  You want to make sure that you are implementing tactics that will drive customers to you and encourage them to do business with you.  Tactics to consider are pricing, social media, advertising, promotion, etc.  Most importantly, the tactics you use must be consistent with the other elements of your triad.  In other words, your advertising and pricing tactics must align with the value you provide and the performance you deliver, and vice versa.

This triad provides a good framework for evaluating the results of your marketing efforts. Like most frameworks, they are only effective if use them as an analytical tool.  If sales are not where you want them to be then look at your marketing strategy triad. Use it to evaluate how effective your performance, value, and tactics are in attracting and keeping customers.  It will provide you with insights on how and where to improve.  If used consistently, it will enable to you win more than you fair share of business.

The Impact of IoT on Enterprise Service Management – Part II

interent of things

As follow-up to last week’s blog post, I wanted to share some more answers to Frequently Asked Questions (FAQs) about the impact on IoT on Enterprise Service Management (ESM):

  1. What new skills sets are required to support an IoT environment?   IoT generates an extensive amount of real time data, some of which of is unstructured. In order to make use of this data in any meaningful way, a service provider will need to employ “data scientists”. These are individuals skilled at analyzing and interpreting data through predictive analytics.
  2. What impact will IoT have on Call Center personnel? The always on nature of IoT and its ability to send automatic alerts to the service organization will reduce the demand for personnel that handle basic call handling and dispatching procedures. However, there will be a greater need for remote support personnel with the ability to monitor service events in real-time, apply predictive analytics, and initiate corrective action.
  3. What will be the role for Field Service Engineers (FSE)? IoT has the ability to improve the percentage of service events that are resolved remotely without dispatching a FSE.   This does not necessarily equate to a diminished role for FSEs. In fact, the need for FSEs will increase. First, FSEs will be required to deploy IoT solutions. Second, FSEs will be needed to provide onsite diagnostics and troubleshooting when remote resolutions prove ineffective. Third, FSEs will function in the role of onsite consultant in helping the customer obtain maximum benefit from the technology operating at their site.
  4. How will IoT impact the Supply Chain?  Most people agree that IoT will enable Supply Chain personnel to proactively ship a replacement part or consumable to the end-customer before the customer is even aware of their need. The reverse logistics supply chain will also benefit from IoT in the sense that it will gain better visibility into events occurring at the field level that impact demand on return center and depot repair operations.

I know that these answers barely scratch the surface of the questions people have about the impact of IoT on Enterprise Service Management (ESM).  In the weeks and months ahead, I will continue to share my insights on IoT and ESM.  As always, I am interested in other people’s perspectives on this subject.  Please feel free to post any comments, thoughts, or fun facts that could help advance the body of knowledge around this subject.

Seven Ways to Win at Service Marketing

Market-Research1

Revenue growth is probably the single most important objective for executives who are responsible for managing service as a profit center or strategic line of business.  “I want to double my service revenue in the next 3-5 years” is an incantation that I hear constantly from business owners and executives.  That equates to a 20% or more growth rate per year.  Sure, this type of growth is easily achievable if the market is growing at this rate or faster.  I’ve found that these high growth targets are often triggered by management’s desire to take back market share from competitors or increase the share of service revenue contribution to overall corporate revenue.

While high revenue growth in a low growth market is difficult, it’s not impossible. A little hard work is usually required to achieve this type of performance.  To understand where the emphasis is needed, let’s look at where service market programs may fall short:

  1. Service Portfolio not meeting customer needs: Quite often service providers fail to meet their revenue objectives because their service portfolio is no longer meeting customer requirements. In other words, they have failed to offer services tailored to their customer needs. For example, offering only next day response when customers require same day.
  2. Pricing not optimal: If your revenue is flat or declining, you might want to look at how you price your services. Perhaps you service prices are no longer competitive. On the other hand, you may be underpricing your services in relation to the value you provide.
  3. Failure to understand competitive threats:   Many service providers, particularly those that are divisions of manufacturers, fail to understand the competitive threat of “mom & pop” third party maintenance (TPM) companies and/or in-house service providers.  For example, they often under estimate the value that TPMs provide to their customer and/or fail to develop an effective value proposition to compete against them.
  4. Failure to articulate value: How well have you articulated the value of your service offering to current and prospective customers? Do they understand the cost of downtime or the pain points that your services help solve? It is important that you not only articulate value to your customers but make sure that your sales people understand it and provide them with the appropriate sale aides and marketing collateral to support it. 
  5. Lack of communication & follow-up: One way to increase service revenue is by improving contract renewal rates. These rates often decline though lack of consistent communication and persistent follow-up about the value of services provided, when contracts are up for renewal, special incentives for renewing, and information on when they are about to expire. 
  6. Not asking for referrals: Referrals are the best and least expensive source of qualified prospects. The problem is most service providers forget to ask for them. Remember your customers speak to each other. They may be involved in the same networks and trade associations, or call on each other for advice and guidance. Why not enlist them in your business development efforts? 
  7. Lack of customer appreciation:    Your customers will remain loyal to you and purchase more from you when you let them know how much you value and appreciate them. It’s the simple things like a courtesy phone call/visit, thank you card, small gift (i.e., rewards program), or special offer that let them know you value their business.

 

These seven areas have one thing in common, they all benefit from market research.  Whether its information that will help you redesign your service portfolio or modify pricing, market research provides you with an unbiased and unfiltered perspective on what your customers are actually thinking and saying. You will learn things that you may not otherwise from a sale’s call or courtesy call made by a company executive.

Before you conduct research or make any changes, it is important that you have a baseline assessment of how well you service marketing program is working. You may want to consider an audit from an independent and objective industry consultant.     Schedule a free consultation today to learn more.

The building blocks to Servitization

servitization1

The “Servitization” of Manufacturing is taking the High-Tech Industry by storm!  By definition, Servitization is a transformation from selling products to delivering services.  It typically involves two components:

  1. The idea of a product-service system – an integrated product and service offering that delivers value in use.
  2. A “Servitized” organization which designs, builds and delivers an integrated product and service offering that delivers value in use

In more practical terms Servitization turns the product–service offering into a “utility” that the customer pays for on a subscription basis.   Under this model, the customer pays a monthly or annual fee equal to the amortized cost of the equipment plus the value of services provided for a specified period of time.

The concept of Servitization is nothing new. As early as the 1950’s, manufacturers provided their customers with the option to lease equipment with services attached to the lease agreement.  In the late 1990s and early 2000s, companies like ABB and GE begin to offer tperformance based service contracts to their customers.

Servitization is more than just a pricing strategy.  It is an overall business model that attempts to maximize and monetize value in use to the end-customer. This requires a manufacturer to proactively identify all the services that an end-customer may require over the lifecycle of equipment operation, understand the value that the customer assigns to these services, build this value into the subscription pricing model, and then deliver on that promise.

The trend toward Servitization has picked up steam in recent years for a number of reasons. First, market participants (i.e., OEMs and End-customers) have a greater appreciation of the strategic value of service to their overall business models.  Second, manufacturers recognize that service can generate more revenue over the lifecycle of the equipment than the actual purchase price of the equipment itself.  Third, the Great Recession forced many manufacturers to rethink the economics associated with how their customers justify the acquisition of new equipment.  Fourth, service tools and technology are now available that facilitates the design and operation of an integrated product-service system in a cost effective and real-time basis.

Ultimately, it’s the technology that is having the greatest impact on advancing Servitization business models.  There are some basic building blocks that any company will need to implement in order to deliver on the promise of Servitization. First, they’ll need a state-of-the-art service management system. It needs to perform the basic activities involved in managing a service organization (e.g., dispatch, scheduling, parts management, etc.). Second, they’ll need to have a way to connect with and monitor the condition of equipment within their serviceable installed base.  They will also need to integrate this information into to their back-end service management system. The third step is a mobility solution to communicate with people in the field. Finally, analytics are needed to evaluate what’s happening. Most companies will probably benefit by using a big data solution, as well, so they can look at unstructured data from their installed base and the customer’s environment at large, and start to analyze, predict and forecast.

In summary, Servitization is a transformational process that requires manufacturers to rethink all aspects of their business from marketing and sales, to pricing and financial management, to service delivery infrastructure.  The benefits of Servitization are great including the ability to build a multiyear annuity stream, gain account control, and create deeper and longer lasting relationships with customers.

I’d love to get your thoughts on Servitization.  Let me know if your company is pursuing Servitization.  What benefits do you expect to achieve? What obstacles remain in the way to realizing these benefits?   Last but not least, if feel free to schedule a strategy session with me if you want to discuss how Servitization could impact your business.

Key Performance Indicators and their impact on your business

kpi1

I gave a presentation a couple of years ago to a group of service managers and executives on the subject of key performance indicators (KPIs).  I was surprised by the fact that most of the audience could not give an accurate explanation of what a KPI is.  Most people thought it was a data point that was used to measure business performance.   However, this is not entirely accurate.

The true definition of a KPI is that it is a quantifiable measure of how successful an organization’s strategies are in meeting their goals.   To be effective, KPIs must be specific to your business needs, align with strategic goals, and bring overall benefit to your business.  Most importantly, it must inspire you to set new goals.

Unfortunately, many service managers confuse KPIs with industry performance benchmarks.  They are not the same thing.  In contrast to a KPI, a benchmark is a point of reference against which things may be compared or assessed. While a company might want to benchmark their KPIs against competitors in their industry, they shouldn’t assume that they must adopt the same KPIs as their competitors.  They might want to do this if their goal is to outperform competitors on every KPI they measure.  This may be neither practical nor feasible if their business needs and strategic goals differ from those of their competitors.

Let’s look at this from another perspective.  While there maybe dozens of different field service or reverse logistics activities that your company can measure, you’ll find that there are only a handful that ultimately drive the success of your company’s business strategy.  You’ll want to make these specific measurements your KPIs.   For example, your strategic goal may be to consistently meet your customers’ expectations for timely service.  There could be multiple factors to consider when measuring this outcome like response time, wait time, resolution time, call drive time, etc.  However, you may determine that SLA Compliance is the KPI that best measures your success or failure in meeting this strategic goal.  On the other hand, your strategic goal might be to deliver high quality service to your customers.  While this could be determined through factors like trunk stock fill rate or calls closed incomplete due to lack of parts, you determine that First Time Fix Rate is the best KPI measuring service quality.

When establishing KPIs, it is important that you answer these four questions:

  1. How will I know when my goals are reached?  This is a quantitative target that you want to establish for your KPI. It could be expressed as a raw number (i.e., 4 hour average response time), a progress measure (e.g. 98% SLA compliance), or incremental change (i.e., 10% improvement in Customer Satisfaction).
  2. What are the key success factors in reaching this goal?   A description of the core functions, activities, or business practices that must be performed in order to reach this goal.
  3. What critical actions do I want to take from the KPIs? It is important to anticipate how your company will react to the KPI measurement that it actually achieves. What steps do you take if you miss your target? What if you meet or exceed it? For example, hire more resources, retrain personnel, improve processes, implement new systems, etc.
  4. What results do I achieve through these actions?  Examine how these actions will impact your business.  In what timeframe will they impact your KPI and at what cost?  Are there other aspects of your business that will be impacted?

 

By answering these questions, you’ll have a strategic road map for achieving operational excellence in your business.  It’s all about getting clear about your goals, making sure you measure the right things, tracking results on a consistent basis, taking corrective action when needed and, of course, celebrating success. Do you want to learn more about how to achieve geometric results in your field service or reverse logistics business?  Schedule a free strategy session today.