Strategic Service Management

It’s that time of year again. MillwardBrownOptimor have published their Top 100 Brandz ranking, and corporate marketers are either celebrating or justifying in boardroom around the globe.

But should marketers alone take in these findings? Or does customer perception break down any barrier between Service and Marketing that may exist on Org Charts?

If you are in either Marketing or Service, I recommend you take in the “Trends” on page 10 of the report. What are its key SSM implications?

As people stay in during the recession, home shopping / home services are on the rise. Not only does that mean more deliveries, but also a greater need for repairs as users invest, for example, in coffee machines to cut down on trips to coffee houses. Do you deliver? Have you optimised your routing and scheduling? Is your parts planning reliable? Do you have the required visibility to exceed your customers’ expectations in your management of vans and technicians?

People buying equipment for home use, or putting off major new investments (which goes a long way to explaining the 22% hit suffered by the car segment), opens up an opportunity for service parts pricing. How are you positioned to take advantage of it?

Apple grew 14%; BlackBerry 100%. Where once we had phones, now we have… handheld life organisers. This trend is supported by growth in network brands: Vodafone is up by 46%, AT&T by 67%, O2 by 36%. We are increasingly connected, which (when managed…) benefits our efficiency (in and out of the office). But it also means our expectations rise. Why can’t a delivery be scheduled more accurately? Why can’t a tech turn up with the right part? We are all more aware of technology’s potential – and accept no excuses for failure to leverage it.

Such increased technical sophistication also means we are often happy to fix minor problems ourselves – a scenario that expedites repair time and dramatically reduces costs for all involved. Do you have the technology to remotely support your customers?

At Servigistics, we have long underlined product commoditisation. Branding is a critical path to differentiation. Is it achieved through good marketing? Is it achieved through good service?

Let’s look at it this way: I would challenge anybody to achieve differentiation in 2009 without good marketing or good service. Which is why SSM goes beyond managing your Service operation, and encompasses your entire business. And, in your quest to win and retain customers, you create fictitious barriers between Service and Marketing at your peril.

best,

g.o.s.

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

The good news is… looks like I’m not alone.

The bad news is…

Well, come on – people shouldn’t be dreaming dreams in 140 characters, or dream of the new iPhone hardware as they ponder whether to splash out or not. That’s not what the resting hours are for.

This is what happens to us when we overdose on technology. It happens to all of us, at some point – and the effects are clear to see. Because, fundamentally, we are hunter/gatherers, not e-mailers or twitterers. And, at least in our sleep, we should revert to our fundamental nature.

Our fundamental nature… are there aspects of it that we may want to dust off for the workplace? Or would that simply go against centuries of evolution theory?

Some of the most successful sales people I’ve worked with don’t appear to have embraced the great technological revolution. Their world doesn’t appear to move any faster now than it did five, ten years ago; they still listen and observe, like old-fashioned hunters. But wise hunters, who know that it will be easier to gather the prey when it approaches them rather than to chase it round in circles. (And they have embraced the good technology bits, by the way – just not the distractions.)

In a world where the divide between sales and service is increasingly blurred, similar key considerations apply. Sure, techs have to be more proactive. But, in getting the job done, they should never jeopardise the possibility to take in the environment around them, and consider how they may turn it to their advantage.

If today we live in the iWorld, then the ‘i’ can often be seen as standing for ‘instant’. And when great service is instant, everybody is happy – especially the customer. But, when a compromise has to be made between great service and instant service… compromise on quality at your peril. And, once you’ve got job done as quickly as possible, to keep your customers happy – why miss out on an opportunity to spend five minutes finding out what’s going on at a site? Why not try and gather further info that will increase your colleagues’ (and company’s) effectiveness?

If that’s what being hunters and gatherers is all about, then a “back to basics” approach (supported by technology for storage and analysis) is not necessarily a bad thing…

By Shannon Rentner, Director, PR, Servigistics

Interactive Marketing is cool, innovative, slick, forward-thinking, and creative.  B2C companies that employ interactive marketing on their websites, in their ad campaigns, marketing collateral, etc. make companies with static websites and non-interactive collateral [what is the opposite of interactive?] look like Sunday school teachers from the 1970’s using flannel boards to illustrate Bible stories.

Consider some of these inventive examples of interactive marketing:

• Real women’s stories about financial planning for Wachovia Securities. What a refreshing way to present the client case study: http://www.planforwhatsnext.com/
• Remember Harold and the Purple Crayon? UPS tapped this magical marker idea for their whiteboard campaign where the long-haired guy illustrates what “brown can do for you”: http://whiteboard.ups.com/
• What if you live to be 100? How will you take care of yourself? Genworth Financial created the Genworth100, a website that featured the oral history of several centenarians as a way to pitch their financial planning services.

It’s entertaining, eye-catching, fun and informative.

But for B2B transactions, turn off the talking head.

When I’m sitting at my computer at the office doing research or evaluating potential vendors, I want the flannel board approach - let’s be old school: get me right to the point - something I can quickly read and process. Clear, Concise, and Direct.

Don’t make me sit there and listen to some dumb talking head spewing fluff. When I want a client case study, I’ll click on it and then it better be a good story illustrating what the potential vendor can do.  Otherwise, I’ve lost patience and will move on to the next vendor.

How does this relate to service?

The other day I was driving home from work and saw a car with ricohteknoforce emblazoned across the side and rear. So, when I returned to work, I decided to visit the website to see if this was another Geek Squad post-sale service play.  The answer: yes and no - more of a B2B IT outsourcing play.  Nevertheless, I was completely rattled by the talking man. I just wanted to navigate the page to see what Ricohteknoforce offers. http://www.ricohteknoforce.com/

Seriously, no one listens to it. So just save him for later. If I want to hear someone speak to me, allow me to click on it - don’t throw him at me while I’m sitting in an open office and pressed for time.  Consumers, on the other hand, have the time and privacy away from work to enjoy such leisure viewing and listening activities. I don’t.

But I also rip off the wrapping paper from my presents rather than slowly untying a bow, unpeeling tape, and neatly unfolding the pretty paper. Those people drive me nuts.

What do you think?

By Shannon Rentner, Director, Servigistics

We’ve been saying it ever since I started working here: post-sale service can not only be a competitive differentiator, but it can also be a source of revenue. Yeah, yeah, and I sound like a broken record - oh wait, people under the age of 30 may not understand that reference to records….

In fact, service made the cover of BusinessWeek once again – but as fellow service blogger John Wild points out – “What was missing was the Business to Business sector in which extreme customer service is so important now.”

Wild also reminds readers that “the end business customers (those that rely on the equipment they’ve purchased or leased to remain performing or to be service ready) are a fickle bunch. They’re paying for performance (up time) and expect it. Let them down, and they’ll start looking elsewhere for products that perform better or that are serviced better. So this challenge hits right at home in the field service and service parts logistics environment.”

That means that the right part better arrive with the right technician at the right time at the right location…or else you’ll miss your SLA or the client will simply do business with someone else in the future.  

Why some many business publications fail to mention B2B post-sale service is perhaps due to the fact that it’s just not sexy.  After all, the fun comes from buying – not maintaining or repairing, right?

Wrong. Post-sale service  is sexy. It’s sustainable, socially responsible, profitable and catching on. Hope your business is ready!

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

Earlier this month, we looked at the Convergence Economy – and how the paths of Manufacturing and Service are uniting to differentiate successful OEMs from tales of woe. That was less than three weeks ago – so what’s happened since?

Regardless of where you are reading this, some companies will have gone bust. Others will have made the headlines for their request for state assistance. When did interventionism suddenly become acceptable again?

There are fundamental economic issues, as well as moral, discussions to be had here – only ‘here’ is not the place. Servigistics’ concern, both as individual corporate citizens who now indirectly own a stake in some of the world’s leading brands as well as a corporation dedicated to helping leading global players, is that the companies who today benefit from State Aid will tomorrow benefit the countries supporting them – through taxation, innovation and employment opportunities. It is an aspiration which belongs to no political affiliation, but again illustrates how these are times of convergence.

State Aid that is not linked to a fundamental shift in strategy is unlikely to yield the long-term results required – and may only serve a political purpose (although, in the automotive industry, the concept of a “domestic car industry” is now blurred – or at best emotional). It is widely accepted, for example, that many problems in the automotive industry, while exposed by the downturn, were not caused by it – not least its tendency to run at full (and expanding) capacity regardless of the state of the economy. Sooner or later, something would have to give – and, boy, has it given. Which is why there is a sound argument (put forward by, inter alia, the likes of “The Economist”) for not supporting manufacturing – if all it is going to do is manufacture items nobody currently wants at prices nobody can currently afford.

Those “ifs” are the key to the argument. If State Aid enables long-needed business transformation and refocus on principles (e.g. R&D into alternative fuels, as is the case in the UK), then it goes beyond the purpose of a short-term band aid. Alternatively, it may be prolonging the agony at the expense of more creative organisations.

This is not the place for company-specific considerations. But, as we raise our heads above the water and consider what the post-downturn model may look like, here are some generic thoughts for you to dwell upon:

·         Companies that have mastered flexibility in both manufacturing and service are faring better in these troubled times;

·         OEMs that meet the convergence criteria in offering products and services are less likely to make the headlines for the wrong reasons;

·         When it’s genuinely customer-focused and market-oriented, innovation pays. Companies that have reached the top through innovation in their field should continue to enhance their proposition by focusing on core capabilities while enhancing their secondary capabilities through best-of-breed partners

by Shannon Rentner, Director, Servigistics

In a recent article in Manufacturing Business Technology, “Brains and Brawn: Manufacturing has a future in the U.S.,” AMR Research analyst Bill Polk discusses the future of US Manufacturing, or to be more exact, whether or not the US has a future in manufacturing.  This was a topic I reported on over 10 years ago as a technology reporter at the Austin Business Journal, but the focus was on wafer, or semiconductor, manufacturing.

At the time, Austin was trying to recruit more fabs, or wafer fabrication facilities, which was a big boon to the local economy. However, fabs were already going overseas in droves. And was that necessarily a bad thing for the American economy? After all, so the discussion followed, as long as the design remained in US-based companies, the US could maintain its leadership and places like Taiwan or Singapore were much more cost-effective than locations in the U.S. or Europe.  And workers could turn to service-related jobs.

However, it appears that the discussion has once again shifted dramatically. Perhaps it’s no longer about geographical and political boundaries - .ie. where a product is made or designed. After all, the new catch-phrase is GLOBALIZATION and most companies employ people of all nationalities - all the way down the proverbial food chain from C-Level Executives to Fab workers. Therefore, corporate entities often exist beyond country borders.  Here at Servigistics, a US-based company, I work with colleagues in Asia, India, Europe, and South America. We have the same goal: to deliver the best solutions and the best service for our clients, regardless of nationality or country origin.  And at the end of the day, we want our company successful because it’s what helps feed our families.

Now consider Sematech - the Austin-based Consortium that played a vital role in revitalizing semiconductor manufacturing and development in the U.S. at its inception. Today, it’s no longer about bolstering US semiconductor companies but now serves as the “world’s catalyst for accelerating the commercialization of technology innovations into manufacturing solutions. By setting global direction, creating opportunities for flexible collaboration, and conducting strategic R&D, SEMATECH delivers significant return on investment to our semiconductor and emerging technology partners.”

How does this relate to Polk’s article on American manufacturing? As another well-known analyst is known to say, “Manufacturing will continue to go East and service will head West.”  The problems in supply chains will continue to occur, but it’s simply a matter of growing pains. But post-sale service on those goods is another supply chain story and that will most likely remain regionally-based.

However, his final point concerning U.S. manufacturers’ “heritage of craftsmanship,” using Harley Davidson motorcycle as an example of US-based manufacturing, appears more of a marketing discussion than a manufacturing issue. Harley embodies an American concept, an American image of freedom and individualism on the open road. Would that change if some of the components were manufactured in China or India? What’s even more significant, IS every last piece on a Harley Motorcycle made here in the US?

That being said, we still want to be in touch with our own culture, our own region, our own locale. So Polk’s call for “products that are innovative in design and function, and of unquestioned quality” is a salient point.  But apart from food or local arts and crafts, the origin of where a product is manufactured seems moot.

But where do I go if it’s broken?

Selling global strategic service management solutions requires worldwide travel. So in addition to our blogs about post-sale service and the related solutions, we also want to offer our readers valuable hints and tips about places that meet the necessary standards for cleanliness, Wi-Fi connectivity, and thriftiness - all the while ensuring you can actually tell when you’re in Amsterdam rather than Düsseldorf, Paris rather than London – off the beaten “chain hotel” path. You’ll also find information on local eateries, running locations, and offer transportation tip for the cost-conscious but curious business traveler.

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

ACCOMMODATION

Amsterdam is, unsurprisingly, awash with chain hotels - both in the centre and near Schiphol Airport. But the centre also features a number of small hotels built within traditional Dutch buildings. They lack the size and scale to command great star ratings, but how long are you going to spend there? Our favourite is the Bellevue, a recovered building with Wi-Fi throughout where the rooms offer comfort you’d expect for a lot more than the €77/night we paid (the beds alone just about warrant that…). But the hotel’s biggest asset has to be its location - just a few minutes’ walk from Dam Square, and literally two minutes across the road from Central Station. Breakfast is served from 7am on weekdays - when we were in town, the selection was broad (from cooked to staple Dutch ham and cheese), although the more time-constrained amongst you may need to allow for an extra few minutes as there was never more than one staff on hand.

FOOD

You won’t struggle to find a cuisine of your liking in Amsterdam. Indonesian and Argentine restaurants are all over the place, and there are even a few Italian and… er, Dutch places, too. On our last trip, we opted for an Indian meal at Moti Mahal, just five minutes from the hotel en route to Dam Square - and our hunch was rewarded with a fine selection.

After enjoying your meal, you won’t be short of options should you care for a pre-bedtime drink - either in a traditional Dutch bar, or in a more ‘international’ environment (the city’s not short on Irish or British-style pubs, which can be useful if you’re missing a sporting event). Just remember that “Coffeeshops” are not the best places for a coffee…

GETTING IN AND OUT OF THE CENTRE

When arriving via Schiphol, Amsterdam’s ring road is no smoother than most others in Europe - hopping in a cab can cost time and money. Since trains connect Schiphol and Central Station every quarter of an hour and take between ten and twenty minutes, costing just over €3, the railways offer best value on all fronts. It is also the reason why we prefer to stay centrally and travel in the morning rather than stay near the airport, if we have to make that choice - with additional savings on hotel costs.

MIND MY BIKE

You have little to fear from car drivers in the Netherlands. But watch out for cyclists! They will rarely stop, and could come at you from any angle. The Dutch pedestrians have little problem with this - each and every one of them has been, or still is, a cyclist themselves. But, if you’re not used to it, make sure you take every care.

RUNNING OPTIONS

To maintain your fitness, get on over to Vondel Park - in the south-west of the city. It’s not bike-free, but it’s a safer option than most.

OTHERS

Oh, one could write a whole book on this section… But we won’t bother. Just enjoy the canals. And, if your watch has GPS and indicates sea level, don’t look - or you might get a sinking feeling.

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

Everybody’s talking about it… and most people are doing it, more or less overtly. Are you?

 Consolidation (or its precursor - collaboration) is on everybody’s lips. Let’s take a snapshot of the automotive sector, where FIAT and Chrysler are heading down a route that covers both consolidation and collaboration, with the US giant handing over 35% of its equity in exchange for access to greener technology. Separately from this deal, FIAT have been rumoured to be in merger talks with French group PSA - talks both parties have denied, nevertheless enjoying a healthy rise in share prices as a result.

 Is the landscape much different in other industries? Hardly. From airlines to financial services, from recruitment to IT (where it is viewed as the “CIOs’ Top Priority for 2009″), whether you’re making stuff or selling services, the world around us seems to be experiencing a reverse tectonic shift.

 Determining the extent to which the trend will benefit consumers would keep the conversation flowing at many academic dinner parties. For the time being, we are still a comfortable distance from danger; and the times demand the type of knowledge-sharing in which some corporations are proactively engaging, and to which others are being called by government, such as the UK automotive sector, whose financial aid is subject to investment in green technology.

 Consolidation is changing the rules. What are its implications for Strategic Service Management?

 As with most challenges, it offers opportunities. Manufacturers can share common service parts and manage both those and their bespoke parts through common tools. Even before the commoditization of product, while the end results that we deploy at home and at work may be unique, the individual components rarely are - the art lies in their combination (and marketing), but a bolt is a bolt just like a 60Gb hard drive is a 60Gb hard drive. And, regardless of the logo on the machine on which you are reading this, your brand of hard drive or processor may not be dissimilar to that of the guy two floors below you, checking the weather forecast on a totally different machine.

 Creativity is also expanding outside of R&D departments, and into the CFO’s office. Is owning your own inventory compulsory? No - providing you are still able to deliver first-class service. And if you can do that by pooling your inventory with other companies in your field… who loses out?

 There is nothing blasphemous about this. Times of crisis often bring sworn enemies together for the greater good. Over the coming months, this will often keep M&A lawyers busy - with the emphasis more on ‘acquisitions’ than ‘mergers’, regardless of the press releases. But, now that the technology enables it, keeping conflict at bay, there remains ample scope for cost-efficencies through collaboration.

Shannon Rentner, Senior Manager, Servigistics

Driving home from work the other evening I was listening to the radio and heard a commercial for AT&T’s new service: ConnecTech. Now, when I first heard the announcer say ConnecTech, I honestly thought he was saying “Kinetic” but with an initial “o” sound.  So it’s a difficult to pronounce name, it goes to show that service is selling.

Forget about Target partnering with Zip Express. The new belle at the ball who claims to “out-Geek” Best Buy’s Geek Squad (forgive the mixed metaphors) is AT&T’s ConnecTech, which is now available for residential customers in all 50 states, whether they use AT&T or not. Customers can request home theater installation, computer and home network setup, and a host of TV, computer, and network repairs - all right at home.

So, I may not need AT&T as my cell phone carrier and I may already have a DSL provider, but I certainly will need help at some time for a malfunctioning computer or a broken plasma TV that I won’t want to lug into the local electronics store.

So once again, it comes down to the service - especially when spending for new products is almost nil.

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

Long-term… How do you define long-term?

Whatever your answer, I have little doubt that it is a shorter timeframe than the one you’d have volunteered five years ago - and equally so that it is a greater timeframe than the one you might volunteer in five years’ time. On the most basic of graphs, we can imagine an inverse relationship between how we perceive “long-term” and the impact of uncertainty - in itself, rising:

Fig. 1: The Growing Burden of Perceived Uncertainty and Short-Termism

This, in itself, is nothing new -

jump in a time machine and you’ll find the graph holds true throughout history. That’s why I cautiously talk about a ‘perception’, rather than a reality - and show those two components plateau out, as beyond a certain level they cannot continue their respective paths. However, some argue that, whereas in the past periods of disruption were followed by stabilisation, as keeping up with the pace of progress set by revolutionary advancements was simply impossible, we have now entered “the age of constant disruption” - with technologies continuously evolving at a constant rate. Add into the mix the speed at which information can flow and people be mobilised, the interconnection of our financial markets, and you have to seriously question whether “long-term certainty”, as prior generations understood it, will ever return.

So - why bother with strategic planning? Why not live from one day to the next? After all, whether you’re an outgoing US President, an embattled UK Prime Minister or any other world leader, you’re probably blaming the state of the economy on factors beyond your control. And if the White House and Number Ten aren’t in control of their destiny, what chance have you or I got?

Do not be mistaken - the overwhelming strength of external forces is no justification to abandon ourselves to their pull. Quite the opposite: now more than ever, strategic planning is fundamental to success. Equally critical, however, is the ability to plan with flexibility - and review individual components on a daily basis without compromising on the bigger picture.

That is why Strategic Service Management (SSM) is critical during a downturn. SSM brings together the tools to measure progress towards goals for “old school long-term” and daily, indeed hourly, operational KPIs - the performance that matters to customers, more concerned with your ability to meet 4-hour SLAs than 3-year grand plans. Companies that lock those grand plans in a cupboard for a thousand days are unlikely to succeed not only in the current downturn, but also in subsequent periods of growth (hold on tight, they will come) - for they too will be uncertain, and require swift action. Where yesterday rapid reaction sufficed, today preemptive action is necessary - and that’s what Servigistics’ solutions enable, across all levels of management, delivering tangible results.

From having the right part to pricing it correctly, from having the right technician on the job to optimising the flow of information and enjoying a holistic view of your service business, even when it seems as if the world all around you is crumbling there are plenty of key components of the jigsaw you hold securely in your hand. Servigistics provides proven SSM tools to place them in the right place - and claw back some of the certainty for which you so rightly long.

By Sebastian Urbina, Product Manager, Servigistics

With the worst economic crisis in decades, it is understandable that companies, and people, for that matter, are looking for all ways to reduce expenditures, too bring costs down.  However, is this the best of ideas? 

However, there is a flip side to this.  Consider this situation.  You are choosing between two plumbers, both seem to be equivalent in terms of skills, knowledge and functionality; however, one is 15% more expensive than the other.   But what happens when you your toilet backs up at midnight after you are paying for the night of bad Mexican food?

Who is most likely to show up quickly before the water exits the bathroom onto the bedroom carpet?  The plumber that charges an average price to or the one that charges above average prices.   Remember, both can get the job done.   Since both you and the expensive plumber know that you could get it fixed cheaper, you’d expect the expensive plumber will provide better service to ensure repeat business.

This phenomenon has been studied in terms of paying employees more.  Efficiency wages have been discussed extensively since deciding to pay $5 a day, doubling the salary of most workers in 1914.  There are all sorts of benefits from efficiency wages, but they can be summarized simply by “those who get paid more work harder.”

I believe the same occurs when you pay for service or anything that is continual and will result in repeat business.   It becomes particular important when you are paying for use of a resource that is constrained.  Consider you are one of the many airlines that run on the same engines.  In an airport, there is a freeze over that breaks the engine of all airplanes on the ground.   All the airlines have a maintenance contract with the same manufacturer.  However, since this is an unexpected event, the manufacturer can not provide service to everyone.  Who do you want to be, the company the pays the lower maintenance fee or the one the pays the highest.  Even if the contract is the same for both, who do you think will be able to fly the planes faster?  Without a doubt it will be the one that pays the most money.  When decisions need to be made on how to allocate resources, resources get allocated to those that produce the most revenue.

Another example is software licenses.  You pay for maintenance upgrades, improvements and support.  Let’s say two companies are asking for different enhancement requests of equal complexity.  They both run the same software and have similar contracts.  However, there is a fixed number of developers that can get the enhancement finished.  Who do you think is going to get their request finished first?  Everything else being equal it will be the client that pays the most.

Paying more has its benefits.  You are able to demand more.  However, this only works when there is a promise of continual business.  Paying more for the same computer from Best Buy if it comes with a service contract will be worth far more than some cheapie off the internet - at least when a virus wipes out your hard drive and you need it repaired/recovered.

As times become worse and if the economy doesn’t improve, consider when you to cut costs what it actually means to pay less.   In theory, when you cut the cost it might not been much, but in situation when you need the service, it might just no be worth it.

Make it, Sell it, Service it

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

If you’re struggling as a manufacturer in the current climate (or if you want to avoid membership in this club), there is an article out there that is well worth your time.

It may well be that you’ve already caught “Britain’s Lonely High-Flyer” in this week’s “The Economist” - or maybe its introductory piece, “What Rolls-Royce Can Teach Britain”. Both articles look at Rolls-Royce, and how “the way in which it has melded technology and service” offers “much to suggest that it will weather an economic downturn better than its rivals”.

 ”The China Effect” has relegated Britain’s share of world merchandise exports to just over 3% - yet the UK ranks second for services. And, whereas Rolls-Royce generated only 20% of turnover through aftermarket in 1981, and 40% in 2001, post-sales now contributes to the majority of the group’s revenue.

 Can everybody be a Rolls-Royce? Can everybody implement strategies based on “adding value through the provision of product-related services”? Well, maybe not everybody can maintain products for decades… I don’t expect to be using the same digital camera in 2029, downturn or no downturn. But the principle is transferable - and we can all learn from the leaders. After all, “the success of Rolls-Royce suggests that the world will not be neatly divided into firms (or countries) that make things and those that sell services. Flying high depends on being able to do both”.

By Shawn Lane, VP, Product Marketing, Servigistics

I recently had the pleasure of chairing a day of the European Strategic Service Management conference in Brussels.  And it was pleasurable, unusually.  I attend lots of tradeshows and events, but this one was genuinely interesting, partially due to the quality of the attendees.

Attendance wasn’t as high as expected, largely due to corporate cuts in travel expenses.  But those that were present tended to be more senior in stature and surprisingly candid in their conversations.  This show ended up being a true collaboration among leaders in their respective fields.

The second reason I enjoyed the show was the topic.  This is the first event that has been specifically labeled “Strategic Service Management,” and it truly was about the business STRATEGY.  Everyone was talking about how the service arms of their businesses were crucial in delivering profits, particularly in today’s economy when new product sales are down or flat.  Service has long been a strategic topic for businesses, but only now is the world beginning to recognize this fact.  Past conferences I have attended have focused on only one area, such as field workforce management, or parts management, or warranty management.  This is the first show that brings all these topics together as a holistic approach to the service business.  Kudos to WBR for arranging a conference that deals specifically with this topic.

People from a wide variety of industries attended this show, including healthcare, industrial equipment, consumer electronics, enterprise computing, oil & gas, construction equipment, and power generation.  Despite the diverse industries, there were several consistent themes not only in the presentations, but also in hallway discussions.   The buzz was in the following areas:

• Centralized vs. Decentralized Service Organizations
• Training & Knowledge Management
• Service versus the Sales team
• Compensation and Incentives for Customer Service
• Decision Support & Workflow Automation
• Customer Satisfaction Surveys
• Telematics & Remote Diagnostics

I don’t have the space or time to address all these topics today, so I’ll start with organizational theme.

Centralized vs. Decentralized Service Organizations

Ah, the classic management dilemma.  Should we centralize our resources and organizational structure to drive efficiency and standardization, or should we decentralize to achieve more customer focus?  And what about the 1980’s style Matrix organization that tries to do a bit of both?  Companies go round-and-round on this topic, generally switching back and forth as management changes occur.  Unfortunately, there is no ‘one-size-fits-all’ answer to this question, and I heard presentations from companies moving towards both.

As for Matrix organizations, it seems like everyone but the management consultants hate the idea.  But I did hear an interesting podcast about managing in a matrix organization on Manager’s Tools.  Their basic premise is that matrix orgs are inherently inefficient, but if you’re stuck there, you should know how to manage through influence and through clear operating principles.   (http://www.managers-tools.com)

Of all the presentations I heard, Ivin Smith, Vice President, Customer Service & Worldwide Technical Support, Pitney Bowes, had a good perspective on this topic that summed up the attendees’ opinions well.

First, identify the objectives of each function.  If these objectives are similar across product lines or geographies, then centralize it.  In his case, Ivin chose to centralize Pitney Bowes’ technical support and training structure.  Rather than treating technical knowledge and product skills as an after-thought to be managed by region, the centers were staffed by training professionals who developed certification processes world-wide.  By the same token, he decentralized areas where objectives may differ and more customer focus could be generated.  Pitney Bowes moved to a decentralized structure for major account focused regions and commercial focused regions.

Secondly, drive the P&L responsibility down as low in the organization as possible.  Ivin assigned P&L responsibility all the way down to the Service Manager level.  This discipline ensures focus on both revenue generation as well as profitable and efficient operations.

Finally, develop effective operating principles that are clearly communicated to the organization.  The catch-phrase is PRIDE, which stands for the components of their operating principles.  Ivin has issued a card to each service engineer that outlines Pitney Bowes’ service operating principles and holds his service department accountable for acting to these principles in their daily work.    OK, issuing a card does seem like a very AMERICAN management practice – but hey, sometimes those Americans get it right.

By Sebastian Urbina, product manager, Servigistics

On a commuter flight one Friday night from NYC to Atlanta, I ended up speaking to the two people sitting next to me.  That should worthy of note in and of itself. I generally limit the comments to my row-mates to “Excuse me” as I head to the restroom if I’m on an inside seat and “You’re Welcome” if I’m the one inconvenienced by their bodily needs.  I’ve had overnights flights in which we haven’t even reached that level of communication due to the  “don’t bug me I’m on the plane and don’t want to know your life story” approach.

This time, my row-mates were two consultants from competing software companies.  I originally thought it was funny and tried making fun of the situation, but they didn’t seem to care.  Both were road warriors with years of experience as the Monday morning to Friday afternoon.  Me, a former cubicle monkey converted into a stay-at-home-laptop-on-lap-coach worker, was eager to hear the war stories.  However, one of the consultants, a married woman, was talking about her husband.  Normally, this would be enough for me to tune out the conversation as old woman’s gossip, but this was interesting.

She was talking about how her husband, a non road-warrior, complained when airplanes were late and plans went awry.  She would just tell him to relax and not worry about it.  Apparently, the discussions went on ad nauseum and the husband simply could not understand how she would not be bothered by incompetence.

It wasn’t until he became a fellow road-warrior himself that he understood her patience and stopped complaining.  She explained that the experience of being on flights so much taught her that “stuff happens” so it no longer caused her grief or stress. Once her husband started travelling he developed the same tolerance.

The actual underlying problem here is not that airlines have poor service.  (As someone once stuck in the airport at the beginning of a month long back-packing trip through Southeast Asia, I can assure you they do.)   The problem here is that expectations are poorly managed.

People buy airline tickets expecting a service, a service that includes on time arrival.  That is why airlines have schedules.  Services based on a schedule are generally controlled tightly, just as anyone trying to get on a German train arriving at a station 2 minutes too late can tell you.  We do understand that things happen; however, we believe these are rare events that generally do not affect us - especially if we only travel sporadically. Now the veteran air commuter had enough experience to know that she had to reset her expectations.  When things went wrong she expected it and, thu,s was not fussed or stressed.  She is a much happier person than her husband was as her expectations were in-line with the service offered.

This got my thinking into the wider range of services.  I started feeling that most angry customers are probably a result of improper expectations.  If you buy a 30 year old car and the radiator falls out are you upset?  You probably are somewhat, but less than if you had just bought a brand new car and the same thing happens.

Lets analyze this situation, in both cases you are buying a car (new to you) and it breaks down shortly afterwards.  The difference in reaction is complex, but it is fully based on your expectations.  You do not expect a new car to break down but you could expect a very old car to have problems.  The person who bought the new car will cause havoc and complain about the quality of product.  This drop in customer service can have serious consequences for a company.

However, it is not enough to simply try and reset expectations.  Lower service expectations come with a drop in revenue.  There is a joint Toyota-GM car factory in northwest United States.  The cars coming from the factory are identical but the GM cars were selling for less money purely based on the brand on the car.  This was a result of the expectation placed on the car based on the manufacturer.

This type of situation created a conundrum: you need high expectations to ensure a price premium, but they can’t be too high or those expectations will result in terrible costumer service, which would undermine the process.

Managing expectations should thus become paramount for any company.  Set them to high and bad costumer service will skyrocket; set them too low and you will end up being priced down.   I guess the obvious solution is to set high expectations and deliver on them.

My row-mate would not have had discussions with her husband about the pathetic state of the industry, if the industry had been able to deliver on the costumer’s expectations by simple changes unrelated to weather, like increasing flight times (giving greater margin of error) and increasing maintenance cycles (reducing unexpected mechanical problems).  Guess we know what the industry values.

By Giacomo Squintani, Marketing Manager, EMEA, Servigistics

At Servigistics, we have been underlining the strategic value of service for manufacturers for several years now. But how has after-sales impacted other industries - industries where “after-sales service” does not always involve service parts, often embracing offerings which customers appreciate just as much? Let’s take a look at some of the vendors whose items you may be hoping to find in your stocking:

LiveNation

Remember record deals? An artist would submit a demo, and, if successful, sign for a record company. CBS, Atlantic, Motown… names that are entrenched in the minds of music lovers. But recording deals aren’t what it’s about anymore in a world where music downloads and cheap CDs have turned recorded music into little more than the opening gambit. Enter players like LiveNation, with deals covering both albums (the product) and tours (the service) for household names like Madonna, reportedly set to earn $120m over 10 years from the venture. CD prices may be falling, but concert tickets show no sign of doing so… How much is an album an artistic statement - and how much is it becoming a means to attract an audience?

Apple

As Harvard Business Review correctly points out in its December 2008 lead article, when the iPod landed in 2003 it was not the first of its kind. The Rio had hit the stores in 1998, and the Cabo 64 in 2000. The products had been there for some time. What was missing was a reliable, legal after-sales infrastructure to enrich the initial offering. Enter the iTunes Store - and enter a market revolution. By providing a means of enriching the initial product, Apple saved digital music from piracy - and, quite possibly, saved itself.

Low Cost Carriers (LCCs)

In a downturn economy, how will LCCs (who have cut just about all the costs there are to cut) fare against rising fuel prices and increasingly low levels of disposable income? What will determine their survival?

To a large extent, it won’t be fares. Of course, they will help - not least in ensuring passenger load factors (the percentage of available seats sold) still outperform those of the traditional, more expensive carriers. But the bottom lines of players like EasyJet, Ryanair and Air Berlin are helped by far more than mere e-ticket sales. A recent poll of 12,000 airline professionals found that 56% of them believed that “the best way at this time for airlines to effectively battle rising costs is to charge fees for amenities that were once included in the price of a ticket”. When announcing Q3 2008 net profits of €35m, Ryanair CEO Michael O’Leary commented that “ancillary revenues [...] grew by 30% to €111m. Ancillary penetration continues to increase, and we are on target to achieve our ancillary sales objective of 20% of revenues over the next 3 years”.

The initial sale truly is “breaking down”… Sure, good ideas have backfired on some airlines - a lot of it is about communication (to customers, staff and press). You can read a lot more about Ancillary Revenue in the Airline Industry here. But what’s happening in your industry? As service offers scope for competitive differentiation, are customers expecting more for their initial buck - or are they getting used to offerings being broken down into individual components?

Happy Holidays!<-->

by Giacomo Squintani, Marketing Manager, EMEA

From the moment you first sent an e-mail, you knew that things were never going to be the same again, at home or at work. With the Holiday Season truly upon us, are you escaping those checkout queues and putting on a Christmas CD as you surf for gifts? If, like me, you are (well, minus the CD), you are a challenge – to the retail marketers for whom seasonal in-store promotions and glitzy shop windows are of no use.

Of course, many of those skills have been successfully transferred to e-mail – and enhanced in the process. But what about our less frivolous investments – those that are set to last a few years (the Web 2.0 age equivalent of what our parents would call a “lifetime”)? What are the implications for us – both as marketers and customers?

Research in Motion experienced one such implication quite clearly in the UK recently. As they launched their BlackBerry Storm model with a marketing campaign worthy of its name, they could not foresee the online backlash. In particular, popular comedian and TV personality Stephen Fry caught the imagination with a Twitter comment – and, while he made a point of stating that “Yes, I blame n’works more than RIM”, his paragraph “Problems are terrible lag: inaccurate t’screen, awful, slow and fiddly text input. I SO wanted to like it” was still sufficient for the BBC to ask: “Can Stephen Fry kill a gadget?”

Yet, for every negative side of a coin, there’s an upside. Web 2.0 allows the smarter players to turn junk mail into viral marketing. We accept comments from people we like and trust far more than corporate communications. The problem for marketers is that this can mean losing control.

The key reason Service is both a threat and an opportunity today is the “2:11 Principle”. This states that customers receiving good service will share their experience with two people, whereas those receiving poor service will tell eleven. Now take a second to consider how everyday Web surfers have taken over the Net from the critics, and how they influence opinion through social networking, blogs and even review sections on e-commerce sites. Your Service team was late resolving a call? The product was delivered late? What before was a private matter between customer and the Customer Services Department is now as public as the Internet itself. And, while commercial buyers may be more reluctant to air grievances online, don’t think you’re immune if you’re operating in B2B.

But easy on the Prozac. Your Service team exceeded expectations? They always deliver on time? Hey, it works both ways. Positive enthusiasm may not match angry venom, but it still has a role to play. When, in 2007, TechRepublic asked “What bothers you when you are a customer?”, it received 132 responses; when it asked “What do you remember about good service you received?”, just 12 comments followed. But that just makes the praise (such as this heaped on Dell for the speedy replacement of a faulty hard drive) all the more valuable.

Will great post-sale service ever help turn a terrible product into a success? Unlikely, but not impossible. Will bad service ever turn a great product into a failure? You bet. So make sure you take care of your customers for the long-term – long after the excitement of opening the box is gone. And leverage the Web to make sure tomorrow’s customers know how happy today’s customers are.

With the real-time applications and connectivity it enables, Web 2.0 has taken away many excuses. And for Service to be a threat to your business is one of them.

by Sebastian Urbina, Product Manager

A month ago I thought I had found a killer deal on a new HD TV: a 37” High Definition TV for $450 at an online retailer.

I had never used the retailer before, but since I’m technophile, I went ahead with full confidence in the website. After all, I trusted the site that referred me, and they do analyze the sites they refer users to. Additionally, I was paying with my trusty American Express with their great consumer protection policies.

I was excited. Not just with the new TV, but also with having found a good deal.

There is something magical about high definition that makes college football so much better; it’s almost like you are there. Of course, nothing is like being at the stadium. Nevertheless, I wanted my High-Def TV, and I wanted to see the individual leaves of grass on the field.

It turned out the price was actually $500 as I had to pay for shipping, but $500 for a new HD TV seemed pretty good.

A few days later, the door bell rang and I received the big box. Like a kid on Christmas morning, I ripped it open and started arranging it in my living room. Within moments, I was watching Judge Judy in High Definition. I would have chosen another show, but really, Tuesday early afternoon the channel selection, is well, limited. Despite my lack of interest in the show, Judge was crystal clear, and I could see every pore in her judicious face.

A month later the unfortunate occurred: My TV wouldn’t turn on.

Now the fine print of a purchase comes into play. The TV is branded “Scott;” turns out it’s basically a rebranded Aiko. Another company I had never heard of. There is a refrub in the fine print. Turns out refurb means refurbished, which means this was broken, but the manufacturer hope it’s fixed. I called the online retailer. They told me I have to contact the manufacturer, but it should be covered since I’m within 90 days of the purchase date.

I contacted them and explained the situation; they tell me to send them a receipt. I forwarded the confirmation email in and was told to wait 5-7 business days before I’d learn if the warranty was approved.

A week later I called to check in and was told that the receipt hadn’t been received. Fortunately, I wrote down the name of the agent that I had talked to the week before and asked for her. She informed me that I can’t just forward the receipt because it’s too easy to modify. They need it faxed in. So I called the retailer, who told me how to get a receipt form their website and how they could fax it in. I went online, created a pdf of the website and emailed it in. Apparently, that was enough to satisfy the receipt requirement. Next, I had to wait for the warranty department to come through.

A week later they contacted me and requested that I ship them the bad TV. That would cost me $100 - A quarter of the price! Good service would have offered me one of three possible solutions:

1. A refund
2. An in-home technician to service it
3. A new TV with return shipment paid for so that I can replace one with the other and ship the bad one back.

Not this company. I called them multiple times, argued with costumer service, asked to speak to the warranty department, supervisors, and different agents - all to no avail.

The retailer is equally unaccommodating until I threatened to dispute the charge through my credit card company.

So now I’m fuming. Do I waste another $100 chasing a TV that may be returned to me bad again or attempt to recover the cost through my credit card? Why do I have to be in this position? It’s a bit frustrating that all it would take to make me a repeat costumer would be good customer service. And instead of ranting about what went wrong, I could be lavishing praise on them for taking care of a frustrated costumer.

In the future, I’d rather pay more for a product – if it includes outstanding and reliable service – than find the best “deal.” After this ordeal, good service is worth the extra money.

By Shannon Rentner, Senior Manager, Servigistics

If there’s a company, or an industry, that receives the MOST complaints about service, it would have to be the cable company.

Have you seen the youtube segment of the cable field service tech who actually FALLS ASLEEP during a service call?

Friend after friend and colleague after colleague have shared stories about missed service calls, faulty equipment, misdiagnosed problems, multiple service calls because the tech couldn’t fix the issue on the first call, and the best story of all – the one where the service tech shows up to repair the AC unit when the call was for a cable service tech. How the wires got crossed on that one I’ll never know.

Nevertheless, it amazes me that cable companies continue to thrive despite such dismal service. But most people don’t have a choice: Either go with the cable service provide in your region or go satellite – with nothing in between.

Until Now.

I am one of those customers who experienced poor service. I took a morning off of work to wait for the cable guy. I waited and waited until noon approached, called the company, and they assured me he was on his way. Five hours later, he finally appeared. He didn’t have the right part to fix my problem. So I had to miss another morning of work to wait for the service tech. Once again, the morning turned into an entire day. And still, he couldn’t fix the problem.

In the meantime, the cable company continued to charge me for cable service, that’s right – the cable service that wasn’t working. So I cancelled it, knowing that I had NO other options at the time, except for some old rabbit ears from the 70’s handed down to me from my parents. Needless to say, I couldn’t watch TV. Which isn’t so bad given the new study that announced watching TV is a sign of depression… The finding, announced on Thursday, November 15, comes from a survey of nearly 30,000 American adults conducted between 1975 and 2006 as part of the General Social Survey.

However, the only thing that depressed me was the cable company. So what’s an average person to do to access her favorite shows and movies?

Watch out cable company, average Jane now has OPTIONS thanks to the internet. And it’s about time. Oh wait, I also had to find an alternative internet provider service, which I obtained through my cell phone provider. A teeny tiny device that provides clear, constant internet service at $69 per month. Not bad and no service calls required!

I signed up for Netflix. Blockbuster or Netflix provides access to not only movies, but also TV episodes from seasons past. And thanks to the Netflix ready device, I can watch unlimited shows/movies on my TV at a much cheaper price. While I may miss the new episodes, it’s only a matter of time before companies like Netflix, itunes, Blockbuster, etc. figure out a way to offer TV online without the cable company.

Once viewers have access options, the true differentiator will be service – I wonder how Netflix service techs work? Haven’t had a problem yet….

You know how when you buy a new car, you start seeing similar cars everywhere but never noticed it before? I think I’m starting to feel that way about service. I’m starting to see examples of the good, bad and the ugly of service everywhere. I can’t believe that I’m starting to talk service with friends outside of work.

For example, I was catching up with a classmate a few days ago. We hadn’t talked in a few weeks, and we were talking about how work was going. Now this friend works for a large hardware, software, and services company; she manages one of the storage divisions. About a month ago, a big software company teamed up with one of her competitors to create a new fit-for-purpose storage device that was better, faster, and cheaper than anything comparable on the market. I asked her if this new offering scared her.

“No, it really doesn’t”, she said quickly and firmly. I was amazed, I rattled off details about throughput, software specs, price, and applications. I expected her to at least show a chink in the armor, some sign that this seemly disruptive technology would be a threat. “You made a lot of good points, some people will jump to try the latest and greatest, but what happens something goes wrong?” The smug smirk on my face fell.

“You mean you’re betting that service is the differentiator for your products?” I asked.

“Listen, when you talk about products in the dollar range we’re talking, feature, functions, and speed are important but the number one reason people make this level of investment is reliability,” she said. “People will pay for the security and integrity of their data.”

To try and counter her, I mentioned a bit about their redundancy and security features. “It’s not about RAID levels and hardware specs, it’s about who is standing behind the products and answers the phone when you have a problem,” she said. “Both of these companies have a record of poor support and service, reputation means a lot in this market.”

Then she added, “Not to mention, this is a new and untested product, and you know the history of first versions in the technology market.”

She’s right. A few years back, I had to buy a high performance storage array and selected the leader, which was almost double the cost, based on their support agreement terms and levels. I went with the leader based on the experience and reputation of service. I didn’t want to trust our data to a new upstart for fear they wouldn’t be there when I needed them.

I hate to lose a debate, but I conceded.

“You’re right, they both are horrible at service and support,” I said.

“Wait until the finger pointing starts between them when an issue arises, that gets out on the Internet, and they will not be able to give them away,” she said.

“I bet they don’t have the technology to effectively manage their service chain between them,” I said, thinking of that possible opportunity.

“By that time, we’ll have our new products out that will complete very well with their offerings” she finished.

“Sometimes all you need is a small head start,” I piped up.

“Drink your beer,” she scolded.

You know you hate it.

You know you also feel sorry for that guy.

That guy.

I could write about the recession, but that guy offers a bit of hope amidst the gloom and doom of today’s headlines.

What guy? That pesky sales guy. Calling during your dinner. Calling on your cell phone [how did he get that number?] Calling when….

Well, it doesn’t matter. It’s just annoying that he calls. And when you say “I’m not interested” and slam down the phone, you know you feel bad. Think of how that guy feels hearing that more than 50 times a day. Who’d want to be that guy?

Truth is, we’re all that guy once in awhile. We don’t need to pick up a phone and cold call, but we all must play salesman for a season. ‘Oh not me, I’m an accountant’ you may be saying, or ‘No way, I’m in IT’.

Those silos are gone. And in this cash-strapped, credit poor, paranoid economy, that’s good news. As more and more doors are slammed in salesmen’s faces, businesses are going to need a contingency plan – or a back door.

According to James Alexander of Alexander Consulting, that back door is a customer’s trusted advisor, or his service technician. Think about it– a field technician can actually visit a client’s home or business and assess not only the current problem, but can sell a system upgrade or even additional services – something to which the front-end salesperson couldn’t access.

It’s similar to automobile repair. You take your car in for a grease, oil and filter, but then you find out your brake pad are about to go. So what’s a customer to do? Spend more money on brake pads. Or the tires need to be replaced. Or the transmission flushed. Or whatever else. That’s a way to make money on service while delivering excellent service.

The Field Technician enters a customer’s business or home to repair a problem, but with a little training, he’ll learn how to assess a situation for a new service or product sale. Think of Best Buy’s service person visiting a customer to repair a desktop computer, and the service person could potentially sell not only a printer/fax machine, but also a plasma screen television and surround sound. Or maybe he could sell a lease on an entire networked computer system.

Apply the same concept to B2B. It may be difficult for your salesperson to access an existing client who has been ordered to freeze all spending, but the field technician will pay a visit and see what the real needs are –and, in fact, he may be able to sell something that could save your client a bundle of money. This happens all the time with complex products and systems where the end user may not be maximizing its performance due to a missing piece or an outdated system/product. It gets complicated, so bring in the trusted advisor.

At least the trusted advisor or field tech will never have to be that guy all the time, but he sure can play his part in adding to the bottom line.

It’s good to hear that we’re not the only company extolling the virtues [and profit margins] of service.

I just returned from ASU’s Center for Services Leadership Symposium on “Competing Through Service” in Phoenix, where an impressive array of industry leaders and academics discussed the growing significance of service as a competitive differentiator. Featured speakers included executives from Cisco, IBM, Sony, Cox Communications, Best Buy and even the online ‘upstart,’ Zappos.

While much of the discussion and presentations centered on service at the point of sale, I did take home some key points on post sale service.

According to Gary Bridge, Ph.D., SVP and Global Lead, Internet Business Solutions Group, Cisco Systems, automobile manufacturers make about 1 percent profit on the initial auto sale and 22 percent profit on the aftermarket services.

1. Sean Skelley, SVP, Services, Best Buy Inc., reported that Best Buy’s Geek Squad performs service on only 40 percent of the computers it sells and the remaining 60 percent comes from competitors purchased elsewhere.
2. A study on service from the hotel industry found that service recovery had a significant impact on customer loyalty – and future sales. Customers who experienced a service issue and received quick and helpful resolution reported that they were more likely to recommend the hotel to a friend or colleague than customers who experienced no service issues.
3. All the speakers agreed that businesses in the future cannot win on product price due to commoditization. Instead, businesses must compete with value – and service is an enormous factor in that.
4. James Alexander of Alexander Consulting shared that the majority of technology services organizations, to off-set shrinking profit margins on products, expect their field service techs to aggressively help sell services and solutions. Think about it– a field technician can actually visit a client’s home or business and assess not only the current problem, but can sell a system upgrade or even additional services – something that the front-end salesperson wouldn’t see.

More interesting facts, figures and anecdotes to come!

Yesterday was Election Day and as a technology guy, I both love and hate to see the technology in our system.  As I was waiting in line, one of the machines that load the ballot into the smart card stopped doing its only function.  Of course, no one in the polling station had a clue how to fix it.  So we went from two registration lines down to one.  I was almost at the front of the line, so it really didn’t affect me.  However, I hate to think about all the poor people behind me, their line just got longer and they didn’t even know it.

Technology is great when it works and we’ve all become more increasing more dependent on it.    I think we all feel better about electronic voting rather than the “hanging chad” alternative, but it also can be a bit scary.  How do I know my vote has been counted?  How do I know the machines work?  Paper trail or no paper trail…  I find it interesting that we all can love technology on one side like cell phones, HDTV, and Roomba but hate it when it comes to something like voting. 

Do we love technology when it comes to service? (You do remember that this is a blog about service right??)    I would say yes.  Let me give two very recent and relevant examples.  I had to have two service techs on my house over the last two months.  One tech was there to fix the oven; the other was to do maintenance on the heating system before it got cold.  The difference between the two was night and day. 

The oven tech showed up late, couldn’t find the address, and documented everything on three part forms.  The heating tech was on time, used GPS for the location, and documented everything on a handheld.  The oven tech needed a check and just wrote PAID on my goldenrod copy of the form.  The heating tech just had me sign the handheld and said my account would be billed. 

Now I could only imagine if the oven tech didn’t fix the problem.  Did the right copy of the form make it back to headquarters?  Did their copy show that I had paid?  Did they know what the tech fixed when he was out at my house?  What about the make and model of my oven? 

The heating place had me covered; they knew the make and models, had payment history, and when the tech started and stop my job, all in the system.  I’ll take the technology-based system any day.  Investment in technology for service makes sense from a customer satisfaction and well as it can be a money saver.  Aberdeen just published a report that said putting mobile devices in the hand of techs increases productivity, boosts first-time fix rates, saves money, and increases margins.  All things people are looking to do in this economy.  Investing a little in technology can return tremendous savings. 

Now if the polling places had better service or we could vote on-line, I guess that’s just wishful thinking.

      “Opportunity is missed by most people because it is dressed in overalls and looks like work.”

-          Thomas Alva Edison

Well, it’s almost official, we’re in a recession.  So now what?  A solid strategy is to make sure you don’t lose the customers you already have.  A major opportunity in this market is a strategy around service.  Good service can win lost customers back and keep the ones you have satisfied.  Here are some tips on what you can do to make service pay in a recession. 

First, you need for your customers to be satisfied after each and every service event.   A current trend is to apply the practices of Total Quality Management (TQM) to service.  So to summarize what this means for service:  understand the customers’ expectations, identify the risks in trying to meet them, put processes in place to mitigate them, incent staff, and create a feedback loop.   Simple, huh? 

The first point, understanding expectations, isn’t as easy as it sounds.  This fact is why company spend hours negotiating Service Level Agreements (SLAs).   Now these are very popular in the IT world but are used more and more in other industries.  The problem is many customers have iron clad SLAs are still unhappy with their service.  Why?  Expectations.  Meeting expectations isn’t enough. 

Think about it, when you were in grammar school, were you happy with an “S”?  All that said was you were “Satisfactory, met expectations.”   In other words you did what was expected, what you were obligated to do.    Big deal, I’m sure there are a dozen of your competitors that are willing to do a satisfactory job as well. 

So how do you exceed expectations?  By focusing on the second step, risk mitigation.   You better have everything in place to execute and execute well.  That means having a high performance service supply chain.  Everything should be monitored and managed: repair, planning, sourcing, pricing, and logistics.  Stock outs, for example, should be a major exception rather than a “fact of life.” 

The final step of a feedback loop is often underutilized.   Notes when closing a case really doesn’t cut it.  Root cause analysis of what caused the problem is key.  Can you prevent this issue for impact other customers?  Can you lessen the impact to other customers?  Unless you are really analyzing data, capturing the field knowledge, completing the feedback loop with all the data, then finally making this information available to the front lines, you are operating in the dark. 

Another missed opportunity is repair.  In a down economy, people hold on to their equipment longer, this means more repairs.   For repairs, the demand patterns are less predictable and more speculative, the sources of supply are varied (new, repaired, and refurbished), the life cycle extends beyond manufacturing lifecycles [in some cases like A&D by decades], repairs can take multiple paths, the levels of part substitution  are huge, and multiple levels of inventory require optimization.   All of this makes repairs a complicated but critical piece of the chain. 

So that’s just a small window into some of the tactics you can use to build into you service strategy.  Many people forget that service can be your most powerful profit lever, especially in hard times.  Any the only way to pull that lever is with quality service and quality service is hard work.

As a tech reporter for the Austin Business Journal, the stories that would make me drool were the ones that seemed like science fiction, not news.

Hi-tech start-up promises to deliver a refrigerator that does the shopping for you – for example, automatically orders milk when you’re almost out or gathers and orders the ingredients for Monday night dinner.

The Matrix pitch: a C-level executive from a leading computer company told me about his work on a brain implant that would enable you to download information directly into the brain.

Almost ten years later, I’ve still not found a “smart” refrigerator and we have yet to download data directly into our brains, but look what we do have: ShopSavvy, a price comparison engine on Google’s G1 phone. It will transform the entire shopping experience.

Yesterday, my friend showed me how it works. Using the phone, he scanned the bar code on his baby daughter’s giraffe and Voila! There was the price of the giraffe listed on multiple sites, both online stores and bricks-and-mortar shops in his area selling that item by using the G1’s built-in GPS.

Imagine a similar tool for service. Simply input the model number, or scan the bar-code, with a brief description of the problem and Voila! There’s a list of the service providers in your area and estimates of price and time to repair the problem. It’s not as far off as those smart refrigerators and brain implant, so service businesses better have the people, parts, prices, knowledge and processes automated optimized and automated to make way for the Brave New World of service.

However, we’re one step closer to that level of automation through service knowledge management. Today, you can actually diagnose the problem on-line even before you pick up the phone to ask for outside assistance. That way, if you just need to plug the machine into the wall or clean a sock from the filter, you can save a ton of money. Conversely, call center reps can do the same before they send the issue to dispatch, and dispatchers can better manage the field techs based on problem-diagnosis. And the best part of all of it: Field techs can use knowledge management to guide them through the repair process if they face an issue they can’t diagnose on the field. Saves the customer money (you don’t have to pay for multiple home visits); saves the company money ( truck rolls only once); and the field tech can access the intellectual capital of more experienced techs who have retired (without lugging around multiple manuals that would require hours of page-turning to find an adequate diagnosis and solution).

Of course, I’m still waiting for the day that my washing machine can predict imminent failure before it even happens. And then walk me through the repair itself. And then give me a backrub….

I think for most people, it’s pretty clear; we’d rather not need service.

We’d rather not need to call about an error on our credit card, take our car to the shop, or invite a repairman into our homes. We’d much rather have things that “just work.” The classic example is the POTS, which is going the way of the dinosaur, but remember how reliable the dial tone was? The phone company created a service that was reliable 99.999% or five nines reliable, which meant the phone was out for about 5 minutes a year. Don’t you wish your cell phone was a tenth as reliable?

We know that’s not the real world; things break and need service. So, in fulfilling that commitment lies an opportunity. I started reading about something this week called “service recovery.” This concept is that excellent service can trigger better customer loyalty than if the customer never needs service to begin with. I think this was illustrated in my laptop example. I am much more loyal to this manufacturer after I needed service than before.

The question with service recovery is if it’s just rare and whether or not it can be fostered within a company as a competitive advantage. I think it can be and while rare, the alternative is much worse for your company. A new survey done by the Harris Interactive shows that 84% of people are willing to share a negative customer experience. So while you customers might not be as willing to sing your praises, they are sure willing to speak ill of you.

Some other interesting data points in that survey as well: 87% of people have stopped doing business with a company due to bad service. So when you looking at reducing your spend in service next year due to economic factors, make sure you account for all the new customers you’ll have to acquire to replace the ones that leave. A typical manufacturer will spend 8-10 times the amount of money acquiring a customer than making the ones they have loyal. Even through for many of these companies, service and parts can generate three times the amount of the original sale, as reported by both McKinsey and AMR. Where do you think the wise investment would be?

A final point out of that Harris study: 58% of people are willing to pay for a better experience. Shannon mentioned that in this post. I am a prime example of that; I will pay to be treated better. I pay for AppleCare, VIP tickets to shows, or commercial-free radio. I think there are many more people out there like me who would be willing to shell out a few extra bucks for the promise of an above average experience. If individuals are willing to pay for better service, shouldn’t your company invest as well?

You know a business is a bit desperate when it hires a plane to write boldly in the sky, “SALE TODAY.”

I remember planes flying banner advertisements over the beaches of sunny Ft. Lauderdale over spring break, but they’d fly those things back and forth, usually announcing some type of event – like a happy hour drink specials, ladies night or a wet t-shirt contest. That’s one way to garner attention among beachgoers lying on their backs looking forward to a night of partying. It’s quite another on a weekday in Atlanta.

But this morning, as I hastily schlepped my coffee and laptop to my car, the “SALE” portion was already fading like the morning mist as the plane completed the “y” on “TODAY.” The worst part: As I drove toward the interstate, I never even got to see who was having the sale. What a waste of advertising.

Was it a clothing sale? Car sale? Home appliance sale?

Perhaps I’m a bit jaundiced, but with consumer spending down, it appears that people simply aren’t purchasing new products. Which is why, when my friend – no, not Joe the Plumber but the female equivalent, a stay at home mom – complained to her husband that she desperately needed a new washing machine, he asked her to see if the current one could simply be serviced.

Since the washing machine was no longer under warranty, she discovered that it would cost over $100 just to have someone come out and look at it, much less repair it. Follow-up trips and parts would add up, so she packed up her three children – all under the age of 10 - and drove to the nearest home appliance store. The one she wanted was priced well over $1000, far beyond her budget, and the lower-priced options weren’t near the same quality as what she already had. What could she do? The clothes had to be washed.

This seems like bad news for business, but there is a silver lining – for business and for “Hockey Mom” - and that’s SERVICE. Since most consumers are cutting spending on durable goods, they have to maintain what they’ve already got. Businesses with sub-optimized service centers may be taxed, but those that have optimized the people, parts, prices of those parts and the knowledge involved in repair/return have a significant opportunity in increase profit margins on service. If you can’t sell more washers/dryers, you can sell service on those already purchased.

Case in point: my friend walked out of the home appliance store not with a new washing machine, but with a new service contract on the appliances she already owns.

WIN/WIN for business and for the consumer!

Our company is headquartered in Atlanta. We had a gas shortage a few weeks ago and gas prices shot up through the roof. The real interesting thing about it, for me, was the change in traffic. It’s no secret that Atlanta has bad traffic; however, during those two weeks of the shortage, it was great. My morning commute, which takes typically 35 minutes, was down to 10 minutes. It seemed that the shortage and the price really affected demand. Everyone is familiar with the relationship between supply, demand, and price; the more demand, the less supply, the higher the price.

Interestingly enough, there is a real relationship between price and demand as well in many products; it’s a more dramatic curve but it exists.

Now the example above shows a perfectly elastic price. There is nothing that really fits that model; at some point everything will become too expensive and demand will drop off. The key to pricing elastic goods is to find that perfect point, where you are maximizing demand and price. It’s a science but its something that can be done.

Regular elasticity curve image

Back to the gas idea: now there seemed to be a point where the cost of gas was too high and demand drops off. However, there are a lot of factors in that. For some, gas is a necessity and it doesn’t matter what the price, they are going to buy it. For others, they might just cut back on some non-essential driving and just use less. The point here is there is a lot of non-price factors that people would consider before filling up, criticality would be one of them.

Same with service: people take into account a number of factors before deciding to buy, including whether or not a price is fair. Criticality is a factor, age of the machine being serviced, warranty, cost of the labor, and so on. So how do you maximize profit on service? Well, first of all, cost plus isn’t the answer and neither is just elasticity.

You need intelligent pricing strategies accounting for all the factors. Competition is another key one: If you are a station charging four bucks a gallon and across the street they are charging a buck less, you probably won’t be selling much gas. Same with different grades: Charging a great price on regular might work, but you will have problems if all the other grades are out of whack from that base price. The grade prices should be aligned within ten to fifteen cents.

These are simple examples, but image it on a scale of hundreds of thousands of service parts across dozens of locations. It is a big problem accounting for all the prices, competition, alignment, and demand. For most companies, it’s too big of a problem and they only focus on pricing high volume or high demand parts. That is leaving big money on the table, which is a crime in this economy.

Specialized software can solve this problem and generate millions of new profit.

One final service example: a Servigistics customer figured out that it lost about 20% of service call business after the tech had arrived to do the work. Why? The cost of parts. If the machine was old or the price of the parts was too close to the replacement value of the machine, the customer told the tech to leave. It cost the company money, about $150 a visit, because of bad pricing. I bet that lost sale cost much more in Atlanta with the shortage.

Do you think they could adapt to higher gas prices in a single region? Not without a real pricing product.

Before I became a professional spinstress, I harbored aspirations of becoming a documentary photographer, in the same vein as a Mary Ellen Mark. Part of my preparation included a summer at the Salt Institute for Documentary Studies in Portland, Maine, where I documented contemporary Registered Women Maine Guides.

What I discovered - apart from learning how to fly fish, tie flies, light a cigarette on a boat in a rainstorm, and make bananas foster on an open fire - was that becoming a guide is no easy feat. While I won’t drill down into all the details at this time, what I will discuss is the role of service as it pertains to guiding.

It’s no longer the end result that differentiates one guide from the next – just like in today’s commoditized and globalized market, it’s not the end product that will attract new business or foster customer loyalty – but the service provided along the journey. Think about it: Most professional guides will help you land the big kahuna – whether it’s a fish or a deer or a caribou – but do you want to squat on a log eating baked beans from a can or do you want a nice meal after a long day of trekking in the woods or fishing in the river?

I documented two women guides in their early thirties who were just starting their own guiding business. In order to cut their teeth and prove to the old school guides that they had what it took, they joined an old-timer on a weekend hunting trip.

At the end of the weekend, the two women agreed that old-timer knew how to hunt, but he sure didn’t know much about customer service. His gear was ratty and moldy. The tents had holes in the floor as well as the roof. For lunch, he tossed them PB&J sandwiches wrapped in tin foil and squished from being stuffed in the bottom of his pack. For dinner, the old-timer stuck the cans of baked beans in the campfire coals, pulled out dirty utensils and then passed each of the women her own warmed can. He used his fingers to dig out the beans that were burned to the bottom of the can.

What these two women offered was excellent service plus the big kahuna. By offering gourmet meals, clean and comfortable tents, state-of-the-art gear and fly-fishing expertise, these two women were creating a service model that would put the old-school guides out of business. And they’d get paid a lot more to do so.

Isn’t that true for most businesses in the 21^st century? Whether it be a telephone system or a computer server, products and price being about the same, I’m selecting the business that offers me the best service package and I’ll even pay more for it.

And if you ever want to fly-fish in Maine, check out Kennebec Tidewater Charters. You’ll improve your fly-casting, catch a fish and enjoy great service along the way.

Fuel shortages. Credit Crunch. Wall Street Crisis. Congress in Chaos. Who can even think of service at such a time?

We just got off the phone with a reporter from the Atlanta Business Chronicle who’s writing an update on several of Atlanta’s 50 Fastest-Growing Private Companies. He wants to how local business is adapting to the current economic climate and whether or not fast-growing companies can continue to grow.

While sales cycles are indeed slowing down due to additional scrutiny of capital expenditures, today’s economic weakness has created an opportunity for Servigistics’ solutions, as manufacturers and other businesses scramble to obtain cash and reduce operating costs. In many parts-intensive businesses, companies often over-stock millions of dollars worth of inventory. With a Service Parts Management solution in place, companies can free up millions of dollars by reducing inventory without sacrificing part availability. For example, Sun Microsystems saved more than $40 million by reducing inventory and eliminating purchases while still achieving high service levels. In addition, reduced amortization spend by $10 million

per quarter.

Furthermore, on the flip side, when end-users slow spending on new purchases, they often shift attention to servicing the ones they have. For example, my best friend was going to purchase a new washer and dryer, but due to cuts in her husband’s bonus structure, she’s going to save that money and repair the ones she has. So, companies may not make the profit on the front end, but now they have an opportunity to profit from service, as long as that service is efficient, low-cost and excellent.

That’s the value proposition of Servigistics. According to a recent AMR Research report, post-sale service represents 50% to 70% or more of company profits.

The reporter said that sounds like a solid opportunity, but in the meantime, most companies have a “wait and see” attitude.

Perhaps if Congress acts expeditiously, business can begin again “as usual” and there will be less waiting and more seeing.