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!

Strategies to make service more affordable

strategic service pricing

In my last blog post I discussed the strategic importance of continually finding ways to reduce cost of operations while enhancing service quality. A company can benefit from their cost savings in the form of higher profits or by passing them on to customers in the form of lower prices. Most rational business owners and executives would probably choose higher profits over lower prices unless of course lowering prices is a matter of survival. However, cost reduction is not the only strategy for achieving this outcome.

As I mentioned in my last post, there are a number of market focused strategies that a company can pursue that can result in offering customers services at a more affordable fee. Let’s examine them:

  • Standardization The establishment of standard, well-defined service modules or portfolios can lead to reduced cost through the ability to control the human element and ensure consistency in the service delivery process. McDonald’s is a good example of a company that employs standardization in their service strategy.   In the High-Tech Service & Support Industry, standardization may take the form of offering the customer a bronze, silver, and gold service package.
  • Use of alternative delivery systems To reduce investment and operating costs a company can find alternative ways to deliver service to their customers. In other words, they can make it possible for customers to be more involved in the service delivery process. Electronic banking, including bank-by-phone and the use of ATMs, are examples of this type of service strategy. In the High-Tech Service & Support Industry, this may take the form of an internet portal that allows customers to issue work orders directly to Field Service Engineers or perform troubleshooting on their own.
  • Market segmentation and focus on price sensitivityThere are, of course, significant service sub-market segments, some of which are price-insensitive. However, price-sensitive service market segments also exist. In general, those customers who are more price-sensitive will tend to do a greater portion of the service themselves, including self-maintenance and delivery functions, which might normally be done by the external service vendor at an added cost. IKEA, a furniture distribution organization, is an example of service directed toward the low-priced customer base. As such, they leave services such as picking, delivery, and assembly up to the customer. Medical Device companies do this by offering parts only service contracts.
  • Changing service response and completion times. A final tactic that could be utilized to reduce costs or increase margins is to change or lengthen the service response time and delivery characteristics. In essence, some customers are simply willing to wait longer to reduce service costs), than others. (Some customers want and need rapid response and are willing to pay a premium for such service.

 

Companies seeking to make service more affordable to customers can pursue any or all of these options and still achieve healthy profit margins. Now it’s your turn. Do you have a segment of the market that is price sensitive? Which option would you implement to better serve them? Please share with me you thoughts or experiences you’ve had when it comes to this issue. Still searching for answers, schedule a free consultation today.

Four Principles for Overcoming the Biggest Challenge in Your Business

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We recently conducted a market survey among 250 service managers and executives on critical trends facing the Field Service industry. As part of this research effort, we asked respondents to indicate which issues where the most challenging to their company. Reducing the cost of service delivery was at the top of this list. Over two-thirds of the survey population indicated that this issue was either somewhat (40%) or very (29%) challenging for their organizations.

The truth is that taking a disciplined approach to reducing costs is critical to a business’ long term growth and sustainability.   One way to ensure high profits, year after year, is to consistently find ways to reduce cost by at least 10% per year. They are not simply cutting expenses haphazardly by laying-off people, taking short cuts, asking vendors for price concessions, or making do with less. Those tactics have negative consequences on morale, productivity, and quality which ultimately hurt rather than help a business.

Instead, world class companies take a strategic approach to cost – cutting. They pursue an approach that leads to long term growth, improved market share, and an enhanced reputation among customers and employees.   In other words, an approach that makes them the type of company that makes people want to do business with, work for, or invest in.

Here are a couple of key principles to keep in mind when  applying a cost cutting strategy to your service operations:

  1. It never ends – Just because you were able to find a 10% savings today doesn’t mean that costs will remain the same next year. Your operating expenses will always find a way to creep up on you. There will always be a learning curve associated with rolling out new technologies and launching new services. Even when it comes to delivering existing products and services, waste and inefficiencies will multiply if left unchecked
  2. Know your numbers – There are two old adages that you need to remember when managing a service business – 1) quality is not free and 2) you can’t improve anything that you can’t measure. That’s why it is important to keep an eye on key performance indicators that impact both quality and cost such as First Time Fix Rate, Utilization Rates, Repeat Visits/Repairs for the same problem, No Fault Found, and Dead on Arrival. Continually find ways to improve your performance in these areas and cost savings will follow.
  3. Pursue process and systems improvements – It goes without saying that cost savings can be achieved by streamlining processes and deploying technology to automate manual processes.   For example, a company can achieve a 25% or more improvement in operating efficiency by implementing a disciplined approach to call management, remote resolution, and technician dispatch through reliance on advanced technology such as knowledge management tools, mobile communications, and dynamic scheduling solutions.
  4. Seek alternative delivery models Outsourcing has traditionally been viewed as an effective alternative for reducing costs without jeopardizing quality. However, new advances in crowdsourcing platforms and sharing economy business models offer another alternative for companies to gain economies of scale, improve operating efficiency, and maintain high levels of service quality by contracting directly with independent contractors. In effect, take out the middle man and enable a self-service model. Check out Essintial Enterprise Solutions, an independent services organization (ISO) who uses a Freelancer Management System (FMS) developed by Field Nation to make this type of business model possible.

 

These four principles focus on the internal operations of your business. Follow them consistently and deliberately and you are guaranteed to reap rewards. There are of course market focus strategies that you can pursue to control or reduce the cost of service which we will explore then in our next blog post. In the meantime, schedule a free consultation with me today if want more ideas on where to find cost saving in your service business.

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.

Service in the Sharing Economy

share

The sharing economy is on the rise as more and more consumers conduct business transactions through platforms like Airbnb to find lodging and Uber for transportation services. These companies have experienced explosive growth in the last couple of years and their financial value is skyrocketing among the investor community.  Indeed, Airbnb’s valuation is at $25.5Billion in their attempt raise an additional $1.5 Billion in funding and Uber’s valuation of $50B is higher than 80% of the S & P 500 companies.

A sharing economy platform is one that leverages information to empower individuals and organizations with information that enables distribution, sharing and reuse of excess capacity in goods and services.

Sharing economy platforms take many different forms, including:

  • Product-service systems – privately owned goods that are shared or rented out via peer to peer market places.
  • Redistribution markets – pre-owned good are passed on from someone who does not want them to someone who does.
  • Collaborative lifestyles – people with similar needs and interests banding together to share and exchange less-tangible assets such as time, space, skills, and money.

 

I also think of a sharing economy platform as having a number of basic elements. First, it uses technology to create a peer to peer marketplace.  Second, they are “open” meaning anyone can exchange goods and services with anyone else.  Third, goods and services are available on demand.  Fourth, payment in full is often made only after the service is delivered in many sharing economy platforms. Fifth, fixed costs are converted into variable expense through the sharing of resources.

The success of Airbnb and Uber has not only led to the emergence of competitors in the lodging and transportation market but also the creation of sharing economy platforms in other industries.  “Uberized” has become a commonly used buzz word in the business world by industry analysts and thought leaders.  This word is often juxtaposed within the question… Is our industry the next to be Uberized?

To a large extent, High Tech Service & Support is far along the path to becoming Uberized. For example, product – service systems like Rolls Royce’s “power by the hour” form that basis of the “Servitization” trend which is gaining appeal in the High Tech Industry.   In addition, redistribution markets have existed for decades within our industry; just think about all the businesses in the IT, Telecom, and Medical Electronics industries that trade used and refurbished equipment.  Collaborative lifestyle solutions are provided through companies like Field Nation, Work Market, and PC-SOS that enable individual field service engineers and small businesses to become a contingent workforce for larger companies.

However, in many ways the High-Tech Service & Support Industry is not truly “Uberized”.  For example, the platforms/solutions I’ve identified above are not truly peer to peer.  They typically involve an intermediary or aggregator that manages the redistribution of products and services. Equipment owners (i.e., end-users) are not leasing or renting unused capacity to other users.  Second, some of these models are not truly open.  There is often a thorough vetting process involved in becoming a member or user of these platforms and solutions.  On the other hand, the on-demand, pay for performance, and conversion of fixed cost to variable expense elements of the sharing economy do exist today within the High-Tech Service & Support Industry

Regardless of where you think our industry is on the sharing economy spectrum there is certainly room for new innovation.   Now it is your turn.  I’d love to get you answer to this question…. Is our industry (i.e., field service, reverse logistics) the next to be Uberized? Please cite examples and share your thoughts on why or why not the sharing economy can work in our industry.  You can also feel free to schedule a strategy session if you have a great idea you’d like to vet or discuss with me in more depth.

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Enterprise Service Management System Trends

 

enterprise-service-management2There has been a lot of attention given in recent years to the need to automate field service and related logistical processes through the implementation of Enterprise Service Management (ESM) systems.   Although the benefits from improved automation are well documented, there is still a segment of the market that is facing challenges to achieving measurable productivity and efficiency gains associated with key service performance metrics.  This shortcoming is due in part to lack of integration between Field Service and Reverse/Service Logistics functions.  The growing trend toward remote support combined with the increasing reliance on spare parts in the service resolution process places even greater demands on equipment service providers to ensure their field service and related logistical process are both integrated and optimized.   We conducted a survey among a cross representative sample of companies in the High Technology Service & Support Industry to validate these assumptions.  Over 250 respondents participated in the survey.  The survey results reveal a number of very interesting trends:

  • Greater reliance on Remote Support: The survey results support the fact that more and more service requests are being resolved remotely without the need to dispatch a field service engineer. More importantly, a large percentage of these remote activities are resolved by sending a replacement part to the customer site.
  • Best of Breed Solutions outperform Integrated Solutions: Despite the breadth of functionality found within integrated enterprise systems, our results indicated a higher level of satisfaction with Best of Breed solutions than with Integrated ESM platforms. We believe this is because best of breed solutions are more focused on the detailed processes and transactions involved in managing a field service and/or reverse logistics operation.
  • Perceived Gaps in Reverse Logistics functionality: Many companies perceive their ESM solutions have gaps in the ability to deal with Reverse/Service Logistics issues particularly when it comes to depot repair activities.
  • Integrated Automation is critical to success: The level of integrated automation between Field Service and Reverse/Service Logistics functionality has a direct impact on ESM effectiveness. More importantly companies with a high level of integrated automation perform better on key service performance metrics than those who do not.

 

In summary, our research findings reveal that companies who have been able to successfully integrate Field Service and Reverse/Service Logistics processes report a higher level of service performance than those who have not.  The most effective integrated solutions are those that incorporate best of breed functionality for both Field Service and Reverse/Service Logistics processes.  More importantly, the data reveals that these integrated solutions are not only highly effective in managing ongoing service requirements but essential to overcoming critical business challenges.

We’d like to thank IFS, a leading provider of Enterprise Service Management systems, for sponsoring our research study.  IFS has made available the results of our study in a 14 page whitepaper.  To better understand the implications of these findings to your organization or to define requirements for a best of breed, integrated solution, schedule a free strategy session with us today by clicking here.

The Five Most Important Trends Impacting the ITAD Market

Recycle

In my last blog post, I provided a high level summary of key findings from the recent market research study we conducted for Arrow Electronics on the topic of IT Asset Disposition Trends.   Now that I’ve piqued your interest, I thought I’d share five important data points from the survey results:

  1. 9 out of 10 companies in 2014 have a formal end-of-life ITAD strategy
  2. Nearly 2 out of 3 companies surveyed choose to have a 3rd party service provider manage their end-of-life assets
  3. The most important factors in selecting a 3rd party service provider are adoption of compliance standards, well documented chain of custody, and high quality reporting
  4. 95% of companies feel that R2 and/or e-Stewards are the most important environmental standards related to ITAD
  5. Nearly 9 out of 10 companies feel that R2 and e-Stewards should be combined into a single standard

 

These findings validate the fact the ITAD has gained increased attention among not only IT Managers but C-suite executives as well.  However, these findings reveal that most companies do not view ITAD as a core competency.  Instead they choose to outsource it to 3rd Party Service providers.  This explains the increased level of competition within the ITAD market as more and more companies enter this space.  It is not just start-up specialized ITAD vendors that are pursing this opportunity but well established IT Service providers and distributors like Arrow Electronics who view ITAD as a natural extension of their product and service offerings.

Given the large playing field of competitors, end-customers are becoming increasingly selective about who they choose to conduct business with.  Among the most important factors are compliance standards, documented chain of custody, and IT reporting and analytics.  It is interesting that while R2 and e-Stewards are perceived as the most important environmental standards, an overwhelming majority of end-customers believe that they should be combined into one, single standard. This suggests that these standards are used interchangeably by end-customers.  Possessing one or both of these industry standards is simply not enough for an ITAD service provider to differentiate itself in the marketplace. While many companies can lay claim to a well-documented chain of custody and superior reporting capabilities, we believe that its additional industry standards such as RIOS, ADISA, NIST, and knowledge of best practices to minimize risk, reduce waste, and maximize recovery values that set one ITAD vendor apart from one another.  If you haven’t read the Arrow IT Asset Disposition Trends Report, we suggest you obtain a copy, click here.    To discuss the implications of this report on your company or business, feel free to schedule a free 30-minute strategy session with us today.

A Strategic Analysis of ITAD Trends

ITAD

The data is now in from our large scale market survey conducted on behalf of Arrow Electronics on the subject of IT Asset Disposition (ITAD) trends.  The results validate a popularly held view among IT industry practitioners that ITAD considerations continue to be a top concern for all size companies.   In fact, knowledge of ITAD best practices continues to evolve and improve among C-suite and IT Executives.  However, as one might expect the issues and concerns between the two groups vary somewhat.

Our research also indicates that all companies, regardless of size, are more likely today than in the past to budget for the ITAD process.  In addition, corporations are becoming more aware of penalties arising from improper disposal of IT assets, which has led to an increased implementation of formal ITAD strategies.  While the most important factors for creating an ITAD strategy have remained the same over the last few years (data security concerns, commitment to “Green” business practices, and mitigating legal and financial risks), companies are far less likely to apply their ITAD strategy outside of North America.  It is also clear that companies who have developed a formal end-of-life ITAD strategy are far more likely to have an ITAD provider handle their IT assets when compared with companies who do not have a formal ITAD strategy.

Companies using a 3rd party service provider to manage their end-of-life IT assets are currently very satisfied with their providers.  When choosing these providers, ISO industry certifications are particularly important, with R2 and e-Stewards being the most important environmental standards.  Due to their equal level of importance and credibility, most companies feel that R2 and e-Stewards should be combined into one standard.

While most companies have a data security policy regarding their end-of-life assets, data security concerns are still prevalent.  Data security concerns are particularly high among companies with a formal ITAD strategy as well as companies who use 3rd party service providers.  Most companies use multiple tactics to alleviate data security concerns, which includes using 3rd party service providers.  However, with nearly 2 out of 3 companies selecting a method such as “Delete the file directory on the hard drive” which does not fully eliminate the potential for data security breaches, there remains some uncertainty as to which methods are truly effective.

With most companies adopting a BYOD policy that allows employees to bring at least one device to work, there has been a dramatic increase in the implementation of policies to ensure that company data on BYOD devices is secure during active use.  The vast majority of companies are also implementing policies to ensure that company data on BYOD devices is eradicated once those devices are no longer active on the company network.

Corporate social responsibility/sustainability has also become increasingly important, with approximately 93% of companies expected to have a program in place by the end of 2015.  Companies who currently have a corporate social responsibility/sustainability program in place typically report their program’s progress in their annual report and/or other forms of corporate communication, both public and private.

The cloud is having a significant impact on the purchase of IT assets, with a majority of companies purchasing more assets to support the cloud.  Some of these additional assets purchased likely include tablets, whose use continues to increase.  As a result, ITAD practices and policies will continue a critical topic among C-suite executives and ITAD Managers.

Details of our survey results can be found in the Arrow IT Asset Disposition Trends Report. To obtain a copy, click here.

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.