September 2013 - The Service Council

Looking Ahead: Q4 Holds Revenue Promise for Service Organizations – Part 1

By Sumair Dutta | Perspective | No Comments

Q3 (calendar) wraps with a pending government shutdown, the end of Breaking Bad, talk of a 16-0 team in football (way too early, not played anyone yet, most games at home, no injuries), a Manchester United slump, and improving prospects of sanity in US-Iranian relationships. Quite a quarter across all spheres and we’ve posted our comments on the impact of the quarter on service organizations in our previous blog (Looking back: Process Inefficiencies and Market Conditions Hinder Growth in Q3).

We now step into an extremely important final quarter of the calendar year. The time when budgets are set, renewals are made or lost, plans are solidified, bonuses are determined and a whole lot more. For industries like retail, this quarter is make or break given the pending holiday season, while other industries see a slowdown with the coming winter. Service requests and incidences peak or dive given the industry one resides in, but Q4 is seldom the time to take a break.

As we pointed out in our previous blog, 72% of service businesses are currently run as profit centers. In the fourth quarter, we see these organizations continue to drive their focus on profitability. The top areas of focus projected for the final quarter of the calendar year are (percentages reflect percentage of respondents):

  1. Cost containment – 43%
  2. Revenue growth – 40%
  3. Collaboration between service and other business groups – 38%
  4. Customer experience management  – 37%
  5. Global growth or expansion of service business – 37%

No significant surprises in the areas of focus, but once again we see an increased attention being paid to the collaboration element, between service and other business functions. This is primarily tied to the service-sales link, an area where organizations are really struggling in their efforts to improve account management and drive revenues (it will also be a core topic of our research coverage in Q4 2013, Q1 2014).

Customer experience management wasn’t reflected as a key area of focus in Q3 and neither was global expansion. Given the fight for customer commitment and customer loyalty especially at the time of renewals, the increased focus on customer experience management makes sense. Even if it isn’t tied to renewals, we see more and more organizations looking to formalize CEM initiatives within their businesses. In our recent CEM Strategy survey, of the 35% of organizations that did not currently have formalized CEM initiatives, more than one half indicated the start up of CEM initiatives in the coming 12-24 months. Once in place, the extension of these initiatives across multiple geographies is the next stage in order to ensure consistency of brand and excellence in service delivery to customers across the globe.

In Part 2 of this blog, we will chat about some of the key investment areas in Q4.

Looking Back: Process Inefficiencies and Market Conditions Hinder Growth in Q3

By Sumair Dutta | Perspective | One Comment

The results from our first quarterly trends survey are in. Nearly a hundred organizations participated in TSC’s Q3 (July-Sept) Business Trends research survey focused on the growth of service businesses across the globe. Here are a few highlights:

  • Process inefficiencies and financial market volatility were selected as the top business challenges faced by service businesses in the three months leading up to September 2013, as seen by 46% and 42% of respondents respectively. Those organizations with global service coverage were much more likely to have their service businesses hindered by financial market and global geopolitical challenges.
  • Seventy percent (70%) of organizations indicated that their service revenues were either ‘as expected’ or ‘greater than expected’ in Q3 2013 (20% reporting greater than expected), with 28% reporting ‘less than expected’ revenues. Less than expected revenues were primarily attributable to softness in the parts management and service sales components of the business.
  • Eighty-five percent (85%) of organizations indicated that their service costs were either ‘as expected’ or ‘less than expected’ in Q3 2013. Eleven percent (11%) saw an increase in service cost primarily tied to the field service and contact center components of the business.
  • Thirty-four percent (34%) of respondents indicated an increase in customer satisfaction scores over the previous three months compared to 6% reporting a decrease. Those reporting an increase tied it back to:
    a) Performance in meeting promised appointment windows and response times
    b) Field service efficiency and resolution rates
    c) The ability to articulate the value of the service relationship to the customer
  • Performance management and cost containment were the top areas of focus in Q3 and as seen in the third bullet point above, most organizations were fairly successful in keeping service costs under control. Increased collaboration between service and other business functions was tabbed as the third most important area of focus for the previous three months, in an effort to support better customer management and revenue growth initiatives.

These are some of the key data points captured looking back into Q3. More than seventy percent (70%) of organizations indicated that they were running service as a profit center with another 10% revealing that they were in transition to a profit center. Service margins were relatively healthy at 31%, which sits in the overall range seen over the previous 12 months. Smaller organizations struggled with their service margins at 23% compared to mid-size organizations at 39%.

Future blogs will feature a detailed analysis of these trends as well as a look ahead at Q4. Stay tuned.

If You Care about Profitability, It Really is Important to Satisfy Your Customers

By Sumair Dutta | Perspective | No Comments

It seems like an extremely obvious statement (and analysts have never been guilty of stating the obvious). But quite often organizations haven’t been able to attach a financial value to satisfied customers. In the past, the role of service and support has never really received significant attention especially since the function’s impact on profitability was relatively unknown. If known, the impact was underestimated to the tune of ‘satisfied customers don’t spend elsewhere’. But satisfied customers can be a whole lot more. They can be revenue drivers, cost cutters and brand advocates for your business.

The Service Council recently launched a research survey on Customer Experience Management strategy (survey still open – and the early results (150 organizations) have been incredible. I look forward to sharing additional results in upcoming blogs and documents. One of the paths of discovery was around the importance of satisfied customers and here were the rankings (respondents were asked to rank these goals from 1-7)

1-    They increase their spend on products and services

1 (tie) – They continue to spend on products and services

3- They bring in new customers via referrals

4- They promote our organization’s brand

5- They spend less on competitor’s products and services

6- They guide product/services roadmap and strategy

7- They cost less to serve

In survey results, the first two factors were closely bunched and so were reasons three and four after which there was quite a drop off towards reasons five through seven. It looks like organizations are no longer just happy with the fact that they have satisfied customers, but they are making sure that these customers are satisfied to the extent of revealing commitment and loyalty either via their wallets or their referrals.

And customers are coming through. For those organizations with a 90% or more level of customer satisfaction, 81% and 34% saw increases in total revenue and volume of customer referrals respectively over the previous 12 months. On the other hand, for those with a 70% or less level of satisfaction, only 44% and 25% saw increases in total revenue and customer referrals over the previous 12 months.

We have much more data to share as we close the survey in the coming weeks. If interested in participating, please visit –

Microsoft and Nokia: Hope Remains in Field Service

By Sumair Dutta | News | No Comments

On Sept 3, 2013 Microsoft announced that it was acquiring the devices and services business of Nokia valued at approximately $7.2b. Admittedly this move is much more tied to Microsoft’s focus on the consumer smartphone market, but it can have some field service ramifications. (Note: We’re not taking into account that Stephen Elop could also take over the helm at Microsoft in a year’s time and significantly overhaul future strategy).

Here are some data points from our recent mobility research of over 280 field service organizations that highlight a continued interest in Microsoft’s current or future device and operating system offerings:

  • Forty-nine percent (49%) of field service organizations use smart phones or handhelds as their primary field service device. Of those, 13% run their field applications on Windows operating systems (Windows mobile, 6, 6.5 or newer Windows phone platforms) with another 17% supporting multiple operating environments.
  • Not specifically tied to smart phones, but 31% of organizations indicate that a laptop is the primary work device used by field workers and a majority of these laptops are powered by Windows operating systems.
  • Of the 57% of organizations looking to acquire, replace, or upgrade devices, 50% are looking at smart phones. Of these organizations, 18% or so are looking at Windows-powered smart phones with another 18% indicating that they don’t have a preference at this stage.
  • Once again, not tied directly to smart phones, but of the audience looking to bring in acquire, upgrade or replace devices, more than 70% are also looking at tablets for their field service workers. Of those, 32% are looking at tablets running Windows software, more so than any other operating environment. (Yes, even iOS). Another 32% have yet to determine their preference or are looking to support multiple environments.

IT teams at field service organizations still favorably view the Windows operating environment from a consistency, stability and security point of view. Hence, the future interest in the Windows family of devices remains. It’ll be interesting to watch if the Nokia acquisition impacts Microsoft’s intentions to work with other device manufacturers at the enterprise-level or if it chooses to vertically integrate the device, OS and services stack. More importantly, can Microsoft provide an enterprise-ready application roadmap to its field service application and software providers? Most of these partners have been feverishly working on developing HTML5 or native Andorid and iOS versions of their applications to track the movement of the market. In selecting mobile devices for field service most organizations consider the ability of these devices to run desired applications as the top selection factor, therefore making the availability of robust field service applications on future Windows versions a critical determinant of Microsoft’s success in field service.

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