January 2014 - The Service Council

The Service Theme for 2014: Differentiation

By Sumair Dutta | Perspective | No Comments

Most beginning of the year predictions focus on technology and this year the consensus seems to be around the Internet of Things, wearable devices and 3D printing. These solutions will definitely see a greater deal of interest and activity in the consumer space. Their uptick and adoption in the enterprise space, primarily for the service and manufacturing organizations that The Service Council (TSC) works with, will come down to their ability to allow for these organizations to differentiate themselves in an extremely competitive post-sales environment. Given the higher margins on service and the impact of service delivery on customer retention and customer lifecycle value, there is a great deal of competition within service. To a certain extent, competition is fueling innovation and generating new service offerings, but it is also driving down prices and placing extreme pressure on service margins.

Our 2014 Trends research confirms that increasing competition is the top challenge that service and manufacturing organizations will face in 2014 (see Figure).

2014Trends

The idea of competition in service isn’t necessarily a new phenomenon. In fact, looking back into Q4 2013, organizations overwhelmingly stated that increased competition was their biggest challenge. What we’re seeing though is an increased competitive environment from a variety of organizations, the primary of which are:

  • Other OEMs
  • Third-Party Service Organizations
  • Dealers and Network Partners

For the first group, taking over the service oversight of other equipment is a value and convenience play intended to reduce the overall service vendors that a customer has to work with. For third-party organizations, it is mostly a price play wherein these organizations serve to offer labor, parts, and more at a much discounted price vis-à-vis supported OEMs.

As a result, manufacturers and OEMs are facing a strategic decision with regards to their service relationships. The need to differentiate is very real, but there are two primary paths to differentiation:

  1. By delivering improved customer value
  2. By lowering price and focusing on increased internal productivity

While some elements of both can be incorporated in a customer management strategy, the two philosophies are very different. The path chosen, impacts the decisions that these organizations will take with regards to investments in various service functions such as field service, service parts and the contact center.  It will also impact the type of talent that is sought after to support service delivery. One strategy is customer focused and the other is cost focused. While both might support short-term profitability, the customer value strategy is the one that needs to be incorporated to support long-term growth.

In support of such a strategy, here are several themes that will be pertinent in 2014:

  1. Customer segmentation and account management for service customers
  2. Customer value discussions and reporting
  3. Innovation in the development of new service delivery and consumption options
  4. Workforce development
  5. Formalized voice of the customer programs

From a technology point-of-view, a differentiation plan will raise interest in the following tools:

  1. Analytics
  2. Remote services and M2M (See post on early 2014 activity in the market)
  3. Mobile functionality
    – For Field Workers – Focused on Revenue and Improved Resolution
    – For Customers – Focused on Self-Service
  4. Knowledge management

In addition to the topics mentioned above, the fight for talent in service will take center stage on a global scale as organizations look for front-line agents, managers, and business leaders to executive on their customer-centric strategies.

Check in at www.theservicecouncil.com for a complete summary of our 2014 Trends research.

Note: This post is also available on PTC’s Product Lifecycle Series Blog page.

Guest Blog: "Field Technician Career Path" by Cary Chapman

By | Perspective | No Comments

HISTORY:

Several companies that I have been associated with measure and view a successful employee as one who promotes upwards in the organization. This generally resulted in moving into a management or supervisory role. In a fairly significant number of cases, this move resulted in the ultimate failure of the individual because managing was not a skill set they possessed. It was evident, in many cases, that what made them successful technically did not carry over into leading them to success in a management or supervisory role. I believe that it should also be stated that an organization needs a percentage of their employee base that is quite skilled at what they do and are happy coming to work every day applying that skill to the benefit of the customer, the company and themselves.

CAREER PATH:

For those technicians who have aptitude for management and are interested in pursuing it, of course we encourage and support the achievement of that goal. For the others, we should consider it our challenge to provide within our companies a clear and definable career path structure. I would suggest a structure similar to the following that would meet your organizational needs.

  1. Generalist base line technician
  2. Product specialist technician
  3. Multi-product specialist technician
  4. Technical support
  5. Go-to troubleshooter specialist technician
  6. Engineering technical consultant
  7. Technical assist sales advisor
  8. Technical trainer
  9. Fellows Engineering Recognition (for qualified individuals)

TRAINING:

Training is a topic that is treated differently company to company. I don’t believe that I would receive any argument with the statement “training is a key component to building world class service”. I have frequently found companies that are experiencing difficult financial years where training becomes one of the first things they cut. I would suggest training should be one of the last things we cut when trying to meet the financial plan. To that end, in a career path program, training is a key component as well. If we offer the training that supports the technician achieving the next step in his progression, we are demonstrating our involvement and commitment of the career path program. Training is significant evidence to the employee, as a company, that we are invested in their growth and advancement.

EMPLOYEE INTERACTION:

A career path discussion should be included in quarterly objective reviews. On the front end, it should be made abundantly clear that achieving all the objectives in this section does not guarantee them the position; it only makes them eligible to be considered. In this discussion, there should be a review of progress toward assigned goals for the employee that they are required to complete each quarter. We should also validate that the employee is still in favor of achieving the next position discussed. Lastly, there should be agreement on the upcoming quarter’s objectives to complete.

SUMMARY:

Creating a true career path that does not demand going into a management position is a true win/win proposition. There is a common concern within the technical ranks that if they remain technical they are locked into a dead-end position. With a valid program to achieve a career path goal, we create a slightly positive culture change demonstrating to the technician there is upward movement in the technical arena without having to become a manager. It feeds a need for most of us that we are progressing and improving. This also ensures that our customer base is able to enjoy stable and improving technical support along with potentially longer term relationships with the technical team.

Cary Chapman is a customer service professional with forty-one years of service and sales background. As a result of his focus on people development, Cary was hired by Safeline as the National Service Manager to stabilize a multi-year turnover issue. In this role, Cary was instrumental in completely eliminating service employee turnover while assisting in achieving fifteen percent annual growth over the previous three years. Cary has also been instrumental in helping The Service Council establish itself as a community and information platform for global service organizations as a founding Advisory Board member. To contact Cary, please send requests to info@theservicecouncil

Defining Service Transformation

By Sumair Dutta | Perspective | No Comments

The Service Council’s (TSC) recent research of over 150 organizations on Service Transformation yields that 70% have an initiative in place to elevate the role of service and support and that 51% actually have a formal initiative in place to transform their service organization. Transformation can come in the form of the way the service organization is structured all the way to new service delivery processes, new service offerings, variable pricing strategies and much more.

Before getting into the details of service transformation best practices, we asked responding organizations to define the term ‘service transformation’ as it related to their business and the following word cloud represents the top results:

Cloud

Some of the most pertinent quotes were as follows:

“Developing a customer-centric strategy while moving from a transactional to a relationship-oriented model.”

“Having the business see ‘Service’ as a priority with a great deal of focus on Total Lifecycle Costs.”

“Having service involved in every level of the product lifecycle.”

“Creating and sustaining long-term value via best-in-class service delivery processes leveraged by optimal usage of capacity within a given cost structure.”

Note: none of the definitions involved the use of drones to deliver service as revealed in the Amazon Prime Air interview on 60 minutes. Reviewing the definitions and the word cloud, we see four primary levels of transformation.

1 – At the Organization Level: tied to raising the focus on service and treatment of    service as a strategic contributor to the business

2 – At the Service Execution Level: moving from reactive to responsive and predictive in order to better meet customer needs.

3 – At the Business Strategy Level: integrating service information and feedback across various business functions in order to improve output, quality and customer experiences

4 – At the Customer Level: defining service’s role as taking a stake in the customer’s operations and thereby equating value with customer success

Most organizations are still working through the first two levels of transformation and are dealing with significant cultural resistance in driving true organizational change. Surprisingly this resistance continues to come in the form of a ‘lack of focus on service’ across the organization. Given the role that service plays in supporting customer loyalty, increased revenues and improved profitability, the lack of focus on service is unacceptable and a precursor to failure.

Figure: Challenges Preventing Service Transformation

Figure

Source: TSC Data, December 2013

Organizations need to have a ‘everyone is in the business of delivering service’ mentality to truly embark on a successful service transformation initiative. Having the right tools and technology certainly helps, but establishing the service or customer-first mission of the organization is a vital first step. When we asked respondents about the first steps recommended when embarking on a transformation, establishing a service culture was highlighted as a top step along with the following:

  • Establish senior service leadership and get executive buy in
  • Develop clear goals for your transformation
  • Baseline current performance and processes
  • Understand customer needs and current gaps in meeting those needs

These bulleted steps are vital not only in support of a service transformation, but also in aiding the development of a service or customer-centric culture across the organization. With the aid of these steps, organizations can truly take a stake in delivering and enhancing customer success.

Further details on transformation steps and broader results of our research survey will be made available on www.theservicecouncil.com

Note: This blog is also posted on PTC’s blog Product Lifecycle Stories

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