Strategic Service Management

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 Shannon Rentner, Senior Manager, Servigistics

Forrester Research just published two reports in December that demonstrate how critical customer experience is a company’s competitiveness.

While I can’t include the entire report here, if you have Forrester access, you should check them out:

• December 12, 2008. Customer Experience In A Down Economy, by Harley Manning and Moira Dorsey
• December 12, 2008. The Customer Experience Index, 2008 by Bruce D. Temkin

Some key points that we’ve been making have been verified in these reports. For example, in the “Customer Experience in a Down Economy” report, Forrester affirms that there is a direct connection between “a great customer experience and increased revenues.”

In the “Customer Experience Index, 2008,” Forrester reports that a good customer experience fosters customer loyalty. While that may sound banal, customer loyalty translates into additional purchases by the customer. In fact, according to the March 24, 2008, “The Business Impact of Customer Experience” report, “customer experience quality could cause a swing of $242 million for a large bank and $184 million for a large retailer.”

While banking doesn’t require service parts or service techs, a retailer just might. Consider once again, Best Buy, the nation’s largest electronics retailer, with $44 billion in annual revenue. While it, too, is getting pounded by the drop in consumer spending, Fitch Ratings, a leading global rating agency committed to providing the world’s credit markets with independent, timely and prospective credit opinions, says that Best Buy’s reputation for outstanding service that helped it become the number one electronics retailer will help it weather the storm.

[The day after this post, The New York Times reported that Best Buy will have to cut workers due to significant losses. The CEO Bradbury H. Anderson, said in a statement, "We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace."  One new reality, as we've blogged about in the past, is the  "repair vs. replace" attitude for consumers and industrial customers alike, putting a critical emphasis on getting service parts management in order. Companies that can perform well on after-sales service will have a clear advantage in this market, according to Walter Weart, Outsourced Logistics.]

In fact, Best Buy’s technical support business, aka Geek Squad, has been such a huge profit center for the company that other retailers are jumping on board. Target recently hired Zip Express, a company started by a former Best Buy employee, to compete with Best Buy on service.[1] Once again, this demonstrates that it’s not just about the price.

Finally, speaking of electronic gadgets and service, “The Business Impact of Customer Experience” report found that a cable television provider and a cell phone provider were most prone to customers taking their business to a competitor based on customer experience. Therefore, service delivery is extremely important in those asset-and-field-service intensive environments.

Like always, we welcome your feedback. Have any good/bad service experiences to report? We’d love to read about them!

[1] Zinn Fromm, Laura. “In Hard Times, Is Best Buy’s Best Good Enough?” The New York Times, Dec. 7, 2008.

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 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!

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….

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!

Sounds like an episode of HBO’s “True Blood” - the one that features vampires - but it’s not.

In fact, it’s not even related to television or film. It happened at a local deli.

Some Servigistics colleagues and I walked over to a popular deli during our lunch hour to feast on some fresh subs. The line ran long and the number of employees low. The woman in front of me ordered a tuna sub on wheat, as did I, but the customer in front of her had ordered roast beef.

While the employee took the order from my colleague who ordered after me, the woman said aloud to any employee that would listen, “Uhm, excuse me. There’s blood on my sandwich!”

No joke.

Only one employee paid attention to her. With a look of annoyance, he moved over to face her behind the counter where the sub makers placed blocks of cheese and deli meat on the stainless steel slicer in order to prepare the subs.

She pointed to her tuna sub on wheat that was placed next to the meat slicer.

“Some blood from that beef fell on my sandwich,” she said.

“What?” the employee said.

“Blood,” she said. “On my tuna sandwich there,” and she pointed to her tuna sub.

He lifted the bun off the top of it. “I don’t see anything,” he said.

She insisted that she saw blood fall somewhere on her sandwich.

The employee let out an exasperated sigh and lifted the piece of cheese up from the tuna fish.

“I don’t see anything,” he insisted.

The woman tried one more time to explain that blood had spurted on her sandwich. It was obvious that she was NOT going to eat that sub. Instead of offering to make another one, the employee just looked at her, insisting that HE didn’t see any blood. I didn’t either, but she sure did. Real or not, the woman threw up her hands and walked out of the store.

No doubt she’d never return. And I’m sure once her friends and acquaintances heard of blood spattered sandwiches and poor customer service, no doubt they’d never return either.

When my colleagues and I finally sat down with our sandwiches, one of them said he’d never return to that deli after witnessing the spectacle. Blood or not, the employees’ reaction was inexcusable, he said.

How much business did this deli just lose? How spoiled had their brand become?

Certainly the loss will amount to more than the $4.29 tuna mini-sub. Blood or no blood, the employee should’ve offered to make her a fresh sandwich. A satisfied customer, positive word-of-mouth and relieved patrons would have been worth the cost.

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.