5 Barriers to Digital Transformation

Howard Tiersky is the President and Founder of FROM, The Digital Transformation Agency. He has a deep passion for digital innovation and helping each of client find success. This blog first appeared on his website.

You may be struggling to drive some sort of change, innovation, or digital transformation within your organization right now.

Why is it so hard? And what’s the secret to getting big companies to successfully transform?

There are five main barriers that large enterprises face when trying to innovate: change resistance, knowledge of customers, risk management, organizational agility and transformation vision.

Change resistance
Change is uncomfortable. Even if a change sets us up for a great future, most people won’t warm up to it quickly. To successfully drive change within an organization, create a burning platform for change so that failing to change is more painful than the change itself. Offer a compelling vision of the future once the change is complete, give people the confidence of success, and provide the opportunity to help create the change (instead of falling victim to it).

Knowledge of customers
You may think you have the answers, but how well do you actually know your customers? To incorporate your customers’ voice into your product development, you can use these five tactics:

  • Humility: Truthfully, we don’t even know ourselves that well, so it’s important to recognize that understanding someone else well enough to predict future behavior is no small feat.
  • Specificity: Figure out exactly what you need to know about your current or potential users that would make a difference to your product development. Use questions like: “What do you they like or not like about your product?” and “What are their unmet needs?”
  • Involvement: Get your whole team involved in customer research to allow the entire development process to include an understanding of the customers’ world and their current reality.
  • Iteration: One round of user testing is not enough — You need to continually study your customers to see how they’re reacting to your product and how their needs are changing.
  • 4D listening: Try to see past the surface of what your customers are saying to what they’re truly asking of you. Your customers may not be able to envision the more practical solutions that your product team conceives.

Risk management
Is it risky to transform your enterprise? Of course! The key to success is creating the expectation that innovation efforts are an iterative process. Successful innovation requires experiments, learning, persistence and, most importantly, the willingness to fail. Once you have alignment around the idea that some level of risk is necessary and appropriate, you can gain confidence from enterprise funders by envisioning the different types of risks your efforts might face and developing remediation strategies to combat those risks.

Organizational agility
As quickly as you can adapt, the digital world changes. Organizational agility is key to keeping up in the digital arena. There are five specific types of agility that are important for success in digital:

  • Sensing: This means knowing what’s going on around you so you can be aware of what actions might be required. How are customers, competitors and industry regulations changing, and what new technology exists that could impact your digital experiences?
  • Technology: Moving quickly from idea to live solution is important in supporting and growing your digital experience. Does your enterprise have technology stacks that are adaptable and easily maintained? Are your content and presentation capabilities accessible to your product owners and content managers?
  • Decision-making: Capital approval processes that take months to reach a final decision don’t work with the speed of digital. The people running your innovation projects need the autonomy and authority to make decisions on the ground-level so that they happen with the speed necessary to keep up with the digital world.
  • Strategy shifts: Embrace and expect that your innovation projects will go through a process of trial-and-error on their way to the kind of digital transformation success that you’re seeking.
  • Teaming: Despite a persistent myth, there is no one structure in which all digital work can be done by a single team of people operating under a single executive. The key to teaming agility is creating a culture with alignment across divisional silos, so that mobilization of the right people happens quickly and efficiently.

Transformation vision
Many organizations have a basic vision for growth: Optimize what already exists or expand upon current offerings. But to create a true transformation vision, one that encompasses your entire organization, you need to determine how the world is changing and how that will affect your customers’ needs. Only then can you determine what new products and services you can bring to market and the different channels you’ll need to deliver on them. You may even decide that the imminent changes will shift your focus to an entirely new set of customers! To be successful in the long-run, think in terms of transformation time so that you can get a few steps ahead.

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The Most Empowering Question You Can Ask

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Have you ever felt stuck when it comes to growing your service business? For example, you feel that things are stagnant or perhaps just not going as well as you’d like.  If your answer is yes, then chances are that you have been doing the same thing over and over again and expecting a different outcome.  That’s called insanity!!

You know you need to make a change but you are not exactly sure how.

All of us in business have at one time or another felt this way.  Most people in this situation ask themselves…”What should I do?”  “What should I do to get better results?”   The truth is this is a poor question to ask.  It is a poor question to ask because it is a disempowering question.

Disempowering questions seldom give us new insights or perspectives that lead to real change.  This is because our mind always tries to find a way of answering our questions. When you ask yourself “What should I do to increase service sales?” you come up with a million different answers.  One answer may be advertising, so you spend money on advertising only to find that it doesn’t help. You may again ask yourself, what should I do to increase sales, and your mind answers…”invest in Search Engine Optimization (SEO)”.  You invest in SEO, yet still you observe little or no improvement.

You continue to ask yourself the same question over and over again and get answers like do more networking, do thought leadership marketing, do price discounts . . . but still no improvement.  Soon you find yourself running around in circles doing different things. You keep doing more and more different things in hopes of getting better results but nothing happens. That’s crazy!  If you keep this up, soon you are likely to hear a small voice inside your head say “Woe is me, what should I do, I don’t know what to do, poor me!”

Poor you is right!

Can you see why asking yourself “What I can do to increase sales?” is a disempowering question?  Asking this type of question creates a vicious cycle that you have to break before it breaks you.  You can break it by learning how to ask empowering questions.  The most empowering question you need to ask and answer if you are trying to grow your service business is, “What value does my company bring to the marketplace?” In other words, what is you value proposition?

The truth is you can’t improve your sales until you are clear about the value you provide. Without a clear value proposition, spending money on advertising, incentives, networking, and other forms of marketing is throwing good money after bad.

In order to define your value proposition you have to answer 3 additional questions:

  1. Whom do I serve?
  2. What problem do I help them solve?
  3. What results do I help them achieve?

These answers provide input to the value proposition formula, which goes something like this…l help X, solve Y, so that Z. Here, X is the answer to the question, whom do I serve; Y identifies what problem you help them solve; and Z clarifies the results you help them achieve.

For example, my value proposition is, I help service managers and executives gain access to new perspectives, strategies, and insights about service management so that they can increase sales, boost profits, and delight their customers.

Once you determine you value proposition and consistently apply it you’ll achieve better results:

  • You’ll gain clarity about whom you help
  • You’ll be more certain about how you help them
  • You’ll be more effective in finding more people like them
  • You’ll find yourself working with people who really understand and appreciate the value you provide them
  • You’ll close more sales

Remember, if you are feeling stuck in your business or career, and nothing seems to be working, you are probably asking yourself disempowering questions. Break the cycle of despair by asking empowering questions, instead!

Now it’s your turn.  Complete the value proposition formula (I help X, solve Y, so that Z) and share it with us in the Comments section.  We’d love to learn what you’ve developed and how you think it has helped or will help you company get more business.  If you need ideas about what to do now that you’ve developed your value proposition, schedule a free consultation today.

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

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.

Got a question? Click to schedule  a consultation.

3D Printing and The Digitization Of Field Service

3D Printing

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.

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

 

Why Businesses Need to Adopt Mobile Marketing Plans Today

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This guest blog post was written by Sophorn Chhay. Sophorn is the marketing guy at Trumpia, the most complete SMS software with mass mobile messaging, smart targeting and automation. Follow Sophorn on Twitter(@Trumpia)

Each year, mobile marketing grows stronger. The world currently hosts over 3.65 billion unique smartphone users. Industries are expanding rapidly, facilitating the consumer’s need for deep, dynamic mobile connectivity.

To stand out, companies need to rework communicative and marketing outreaches to play upon mobile’s far-reaching impact. Creating a winning campaign takes time, but actionable plans certainly exist. Check out the following reasons companies are opting for smartphone support, and double-check your brand’s strategy for a watertight platform capable of harnessing the power of mobile.

One: Mobile Interaction Boosts Reaction

In the past, Internet-based content was vital to a modern marketer’s toolkit. Businesses now, however, are relying on mobile contact for interaction. 58 percent of consumers experiencing one-way communication tell their friends and family about it. Dynamic feedback has become the norm, and real-time SMS strategies, strategically media outreach and mobile web support are laying the future’s foundation.

Two: Mobile Coupons are Highly Redeemable

In 2015, SMS-delivered coupons experienced an open rate 10 times higher than printed coupons. Mobile coupons are highly convenient, and their discounts are commonly sought by day-to-day consumers. Because SMS, again, is a two-way street, brands can create custom-tailored offers. Mobile coupons both attract and retain customers, opening the doors to ongoing loyalty rewards.

Three: Mobile Apps are Taking Over

Mobile apps have become preferred engagement platforms in recent years. In fact, 20 percent of American buyers are considered to be “mobile app addicts.” They install, on average, 17 apps per month. The mobile marketing industry’s inclination to boost customer involvement via apps is telling of the mobile world’s overall health. Mobile apps are quickly becoming advertisement breeding grounds, and companies holding an app-centric course are prospering.

Four: SMS is a Preferred Communication Platform

Over 205 billion emails are sent daily. Unfortunately, they’re being ignored for text messages. While email open rates vary by industry, most companies experience an average open rate of 20 to 40 percent. Texts, however, experience an astounding 90 percent open rate. Consumers are reading texts, and they’re engaging brands at deep, intuitive levels. After 2016, brands unable to enchant buyers by way of text will be more than a few steps behind. Sure, email is still a viable marketing tool, but it fails to compete against SMS’s inherent communicative power.

Five: MMS is Even Better than SMS

MMS messages strike more conversations than SMS messages do. Many mobile marketers are redefining their strategies upon media-centric engagement strategies. Viral videos offered through Facebook and YouTube might be effective—but few platforms can compete with texting.

MMS content is highly shareable. It’s preferred by mobile marketing’s biggest fan-base, too. Millennials are viewing, sharing, voting on and even creating mobile video content. While Snapchat sparked much of the MMS craze, it’s currently unable to content with several of the business world’s creative initiatives. Branded SMS messages have a limit of 160 characters, while MMS messages can jam-pack thousands of words within a single video. Check out this article, and find out how your MMS strategy compares to baseline SMS approaches.

It’s important to understand the mobile world’s trajectory. The Internet of Things, alongside much of the business world’s contingency on immediacy, has made smartphone-centric marketing incomparable. Your brand, your workers, your strategy and your consumer base need mobile connectivity. The smartphone has created a paradigm shift, and it’s hitting the professional world hard. Double-check your strategy, find a gap for mobile and expand a smartphone-centric plan from within.

What’s Next?

What do you think of what I’ve covered so far? Will you adopt mobile as your tool for marketing?  I would love to read your comments below.

Jumpstart your business by grabbing your free copy of Sophorn’s powerful Mobile Marketing Success Kit.

Big Data & Analytics – A Transformational Journey

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Last month I had the good fortune to attend the Reverse Logistics Sustainability Council (RLSC) and Warranty Chain Management (WCM) conferences.   Big Data & Analytics was a topic that gained much prominence at both of these conferences.  Indeed, this is a subject that is gaining much attention in business and academic circles these days.  Interestingly, there is a general consensus among academics and industry thought leaders that Big Data Analytics is one of the most misunderstood and misused terms in the business world.  For some business professionals, the term analytics applies specifically to performance metrics, for others it has to do with unstructured data sets and data lakes, while still others think it relates to predicting the future.

Big Data refers to the volume, velocity, and variety of data that a company has at their disposal. Analytics applies to the discovery, interpretation, and communication of meaningful patterns in data.  The truth is that there are actually four (4) different types of Big Data Analytics that firms can rely on to make business decisions.

  • Descriptive Analytics: This type of Analytics answers the question “What is happening?”  In a field service organization (FSO) this may be as simple as KPIs like SLA compliance or First Time Fix rate.  The exact measurement tells an FSO how well it is doing when it comes to fixing problems right the first time and meeting customer obligations for response time.
  • Diagnostic Analytics: Understanding what is happening is important, but it is even more important to understand why something is happening.  This is how managers and executives can identify and resolve problems before they get out of hand. Diagnostic Analytics provides this level of insight, for example by pin-pointing why First Time Fix Rate is low.  Maybe it’s because the company is making poor decisions about which Field Engineers (FEs) are dispatched to the customers’ sites.  Or, perhaps selected Field Engineers do not have access to the right parts when they arrive on site and must return for a second visit.
  • Predictive Analytics: Ok, so now we know why something is happening. Wouldn’t it also be good to know what is likely to happen next?  Predictive Analytics provides this level of insight. In other words, it provides a forecast about what may happen if a company continues to experience a low first time fix rate.  For example, it could show the specific impact on customer satisfaction or the measurable effect on service costs and/or gross margins.   In this case, Predictive Analytics helps a company understand with a high level of statistical confidence how long it may continue to maintain the status quo before financial problems may arise.
  • Prescriptive Analytics: The final component of analytics is Prescriptive A This level of information helps a company understand at a granular level of certainty exactly what it should do to resolve a current situation and avoid future problems.  For example, Prescriptive Analytics may reveal that a company must ensure the field engineer has the right parts on hand prior to being dispatched to arriving at the customer site.  The Analytics can show which parts must be available and where they should be located.

In summary, Analytics takes the guesswork out of decision-making.  Instead of relying on intuition or prior experience, service executives can make sound business decisions based on objective analysis of data.  As a result, the probability of making the right decision increases.   Relying on Analytics to drive business decisions involves a transformational journey.  As innovative as it seems, a company cannot just start using Predictive or Prescriptive Analytics. It must first become proficient with Descriptive Analytics before it can leverage the power of more advanced analytic models.    This journey is not just about the data.  Many managers mistakenly believe that they must have enough of the right data to make Analytics work.  The truth is that we all have a wealth of data at our disposal.  Our challenge is finding the tools and technology to process the data, making Analytics a winning business proposition.  This begs the question: does your service organization have an optimal system in place to harness the power of Analytics?  If you are not certain, it may be time to conduct an audit and assessment of your infrastructure.  To learn more, schedule a free consultation today.

Strategies for Reducing Warranty Costs

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Warranty obligations represent both an expense and a liability to Original Equipment Manufacturers (OEMs). As a result, anything that an OEM can do to minimize warranty expenses and liabilities will have a significant impact on the balance sheet and bottom line. In the high-tech industry, warranty coverage often includes repairing defective products as opposed to crediting or replacing them. Warranties of this nature involve three (3) cost components: 1) Warranty Terms & Conditions, 2) Service Delivery, and 3) Product Reliability and Maintainability.

Service Delivery represents the largest of these three components and comprises approximately two-thirds of warranty costs. Approximately 55% of service delivery costs are attributed to repair activities. The remaining 45% of costs are evenly distributed between parts, logistics, and overhead (e.g., customer service, IT, etc.).

Among the three (3) different categories of warranty costs, service¬–delivery costs are the most difficult to manage and improve. By comparison, costs associated with warranty terms and conditions and product reliability and maintainability are easier to manage. OEMs can reduce warranty expense and liabilities by adjusting terms and conditions to make them more favorable from a cost-burden perspective. OEMs can also design and engineer better products thus reducing product reliability and maintainability costs. In addition, the time frame and investment required to plan and implement these types of improvements are smaller when compared to service delivery. On the other hand, these improvements may have a limited life span. In other words, an OEM needs to revisit terms and conditions as well as product reliability and maintainability issues with every new product release.

In contrast, a significant amount of time and investment is required to improve costs associated with service delivery. For example, it may take months or years of planning and hundreds of thousands of dollars of investment to realize service-delivery cost savings. However, the improvements are sustainable over a longer period of time because they don’t just affect costs associated with one-time product launches. Instead, they benefit subsequent product launches over a multi-year period.

The reason it takes more time to implement and greater investment to achieve cost savings in the area of service delivery is because it typically requires improvements in processes, infrastructure, and people (i.e., training). Examples of the types of strategies for reducing service delivery costs include but are not limited to:
Automating warranty claims-management processes to reduce warranty processing costs
Improving call management procedures to validate entitlement, troubleshoot and diagnose calls remotely, and avoid costly field service visits
Implementing dynamic scheduling software to improve field-engineer productivity and reduce travel costs
Adopting a Variable Workforce (VWF) model to lower field-service and associated overhead labor costs
Utilizing knowledge-management tools to improve resolution times, reduce No Fault Found rates, increase first time fix rate, and improve labor efficiency
Implementing advanced planning and forecasting tools to optimize spare parts stock levels and reduce inventory costs
Making it easier for field engineers to identify, locate and order spare parts thereby improving service efficiency and avoiding repeat calls due to lack of parts

In summary, the challenges associated with reducing service-delivery costs should not prevent a company from making the necessary systemic and procedural improvements since the gains in cost savings, service productivity, operating efficiency, and customer experience can be significant.

Attract New Investors With Your Business Plan

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This blog post is presented courtesy of Everingham & Kerr, a merger and acquisition advisory firm that specializes in providing intermediary services for lower middle market companies and entrepreneurs. The article is reprinted from their 2015 year end newsletter.

If you think business plans are only for young companies seeking initial financing, think again. A business plan can also help established companies make strategic decisions and communicate with lenders and investors when they seek new capital infusions. A good plan that clearly and succinctly outlines the company’s purpose, profitability, industry, competition, management and personnel generally takes between four and eight weeks to prepare. Pulling together accurate financial projections often is the most difficult business plan–related task for management, but such financials are critical to attracting new investors — including business buyers.

Your plan should provide its readers with a realistic perspective of all aspects of your business operations. This includes details about:

• Product and service offerings,
• Market factors and strategies,
• Industry trends,
• Competitors,
• Management and staffing,
• Pricing and marketing strategies,
• Business risks and what might mitigate them,
• Strategic and financial goals, and
• Historical financial statements and a financial forecast.

While the purpose of your plan may dictate its length and level of detail, the best business plans generally are concise and targeted to their specific audience. For example, lenders are concerned about your ability to repay loans. Therefore, a business plan targeting lenders should focus on financials showing adequate collateral, a history of steady cash flows and an ability to reach future financial objectives. The plan should also specify loan requirements, how your business intends to use the funds and how it plans to repay them. Private investors will be concerned with all facets of your business.

When addressing potential investors, your business plan should specify three important things:

1. How much equity are you offering in exchange for what amount of money?

2. How will your business use the money?

3. What return on equity can investors expect?

Major investors typically put a high premium on the experience and quality of a company’s management team, looking for individuals with a history of successfully implementing a business plan in the specific market and achieving financial goals. Investors will also be interested in your market research and analysis of business opportunities. So be sure to discuss potential barriers to bringing your products to market, such as government regulations, competing products, disruptive technologies, raw material costs and high product development costs.

The information conveyed in your plan is crucial for an investor’s valuation of your company and the terms and conditions necessary to attract additional funding. If, for example, your business’s most valuable asset is its intellectual property, you need to convincingly convey the value of patents, licenses, trademarks and trade secrets.

Financial statement projections can show that you understand how your ideas and objectives translate into tangible results. While a certain amount of detail is important in substantiating the projections, don’t add too much detail in your business plan. The finer details often are best discussed during face-to-face meetings. These personal interactions between management and investors will showcase your understanding of the business. Even if you draft your basic business plan internally, consider engaging outside advisers to prepare financial statements. (Note, however, that it’s never a good idea for a business to allow outside advisers to write the entire business plan without significant input from management.)

Not only will your business plan help you communicate with lenders and investors, but it will also come in handy as a comprehensive overview when you decide to exit your business. In fact, consider including your exit strategy — whether it involves selling to another company, selling to your management team or passing your business to family members — in your business plan. Even if your plans change over time, including an exit strategy in this important document helps to promote stability and value.