The Smarter Services Executive Symposium, 2014 Boston
This unique annual event was a deep dive into the world of services, service providers, and field service engineers. The depth of sharing was impressive, as was the depth of expertise.
I gave one keynote presentation and took fourteen pages of notes. Here are my “top twelve take-aways” from the event. Which one is most relevant for you?
1. “The disconnect between marketing and service delivery must end.”
A sea-change is under way as profitability shifts from first sale of goods to long-term provision of services. Profits from an initial sales pale beside the revenue and profit potential of warranties, maintenance contracts, automatic upgrades, consumables, repairs, and spare parts.
One speaker claimed “an intellectually honest forensic analysis of revenue and profitability” increased the influence of service on the budgets and activities of R&D, engineering, marketing, and sales.
Sales can no longer “bundle in free service” to close a deal when closing a service contract offers higher margins. Marketing can no longer over-promise and expect a service team to cover the gap.
Today, the quality of a customer’s service experience determines the success of future sales. Service is the new marketing.
2. “Good sales people have a great relationship with service people.”
Some sales people try to keep customers away from the service department during the selling process. They fear losing the sale of new equipment to an extended service agreement on a customer’s existing equipment. Or they are trapped in an internal dispute about how revenue will be recognized; as a new sale to an existing customer, or an extension of service to retain a customer.
One company resolves this tension by giving both sides a financial incentive to help the other, but they keep the roles of sales and service personnel very clear. A conference delegate said “Our service staff do not make sales proposals, they make recommendations to customers. By the time these recommendations are passed to sales, the customer is already in agreement.”
It makes sense to include your service people in the selling process and the rewards. After all, service personnel have more ongoing contact with your existing customers and equipment than your sales people ever will.
3. “I don’t compete on price. I compete on the experience my customer receives.”
One panelist said “There are no products anymore. I only buy a product to serve me.” Another replied, “We are no longer service providers, we are all experience providers.”
4. “Self-service may cannibalize your service revenue. But the future is here so you’ve got to do it.”
Enabling customers to self-serve can reduce service revenues. Customers can service themselves with internet connected equipment, embedded machine diagnostics, self-adjusting supplies, user-enabled updates, and easily available remote support. There’s no need to send a technician in a truck when a remote device (a washing machine, photocopier, or surgical pump) can diagnose and regulate itself.
“The Internet of Things” is creating a huge wave of smarter devices and savvy customers. This can lowers costs, but may lower service revenue, too. The good news is that better connected customers enjoy a “stickier” relationship with suppliers. And that’s a win-win for both parties. Find the right balance of your service and self-service to create the ideal customer experience.
5. “Which is better, lower customer effort, or higher customer engagement?”
In some companies reducing customer effort has direct impact on increasing customer satisfaction, retention, and profitability. The easier you can make things for customers, the more likely they are to stay.
But this is not the case in all situations. Some companies prefer customers who are willing to roll up their sleeves. A panelist shared the three scores his company assigned to each customer:
Partnership Score: How much heavy lifting is a customer willing they do? Will they work with us closely through challenges, or do they want us to do it all? A low score may warrant a higher price.
PEBCAK Score: Problem Exists Between Chair and Keyboard. This score measures customer knowledge and understanding. A low score makes it easy for you to explain to the customer what needs to be done. A high score means you’ll need to invest more in customer education.
ID10T score: Pronounced “ID-ten-T”, but means what it looks like. This measures a customer’s ability to apply the knowledge they have – or not. A low score means your customer can handle more self-service. A high score means you’ll be safer doing the work for them.
6. “Your learning base must be in technologies, not in people’s heads.”
The labor force is changing as experienced boomers retire. New generation workers are more loyal to causes than companies, and more connected to friends than family members.
To succeed with this changing workforce, learning transfer must be fast, consistent, and low cost. That means using technology. Yes, there is a cost to build a knowledge base, but the cost of not doing so is even higher.
One executive uses outside contractors to solve certain problems, but wants his internal resources to solve them in the future. So he pays the contractors once to fix the problem, pays them again to document the knowledge, and pays another fee each time his team uses that document to successfully solve the problem.
7. “Start new projects with a pilot.”
I heard many stories of big projects that delivered disappointing results. Whether deploying new technology, leveraging social media, applying innovative metrics, or implementing incentive plans, everyone agreed on the need to Pilot, Pilot, Pilot. Start small and then scale up.
Early wins create buy-in for future efforts. If you can’t make the case for revenue increase or profit improvement, focus on operational costs and efficiency gains.
And consult your colleagues in marketing for help in proving value. They have plenty of experience correlating new investments and ideas with measurable economic gain.
8. “Trying to be great at everything leads to exhausted mediocrity.”
Francis Frei, Harvard Business School professor and author of Uncommon Service, made an impassioned plea “To Be Bad To Be Good”. She said “In order to be great at something we have to be bad at something, and be equally unapologetic about both.”
Southwest Airlines is budget priced and takes off right on time (good), but they will not serve you food on board (bad). MBNA bank offers the worst savings and loan rates in town (bad), but they hire the friendliest people in town (good) and stay open very late (good).
“Stop using red, yellow, and green management reports,” Frei insists, “because they drive everyone to focus on fixing the reds. Some things need to be red!”
9. “Sometimes you need to keep quiet in social media.”
One manufacturer shared what happened when his technical team answered questions in a User’s Forum. As soon as the users saw that the company was participating in the Forum, the user community went silent. He said “Our customers wanted contact with each other, not with us.” Now we have a clear guideline for certain user forums: Observe but do not intervene.
10. “Fortune’s Top 100 Best Placed to Work get 10X resume applications.”
Companies listed in the Fortune Top 100 Best Places to Work, get 10 times the number of job applications as the industry standard below them. Imagine having a pool of ten times as many applicants to choose from.
If you are struggling to attract and keep good talent, can you afford not to build a great place to work – and uplifting service culture?
11. “It’s no longer work-life balance. It’s all life now.”
The idea of doing your work and then having a life is obsolete. People want work to infuse their lives with meaning, not suck the life out of them before the weekend.
Over dinner we heard from a police officer who was shot during the Boston marathon bombing. As he shared the incredible medical efforts to save his life, the man next to me whispered that his wife is a nurse and said “that’s why nurses get paid so little and still do what they do”.
Work-life balance is becoming work-life integration. This doesn’t mean showering with your smart phone, but it does mean things you care about are part of your daily work. If the work itself is not inspiring, then your customer connections and company culture must fill the gap.
12. “Customers are customers only when they buy. All the rest of the time they are people.”
This one sums up the conference, and the future we are entering together. We have lives, interests, cares and concerns. And sometime we buy things to make our lives work better. In those moments of transaction we are customers to each other. All the rest of the time we are sharing the miracles and mysteries of life. We are people, all of us together.
Which of these ideas is most intriguing or relevant for you?