If you follow me on twitter, you should we well aware of my interest in soccer (To the purists, my apologies but I will use the term soccer). In the realm of soccer, and specifically in the Barclays Premier League, a new champion was crowned this past weekend. Manchester City beat out Liverpool by two points to wrestle the title back from Manchester United. City famously won the title two years ago after a long drought of not winning anything while Manchester United consistently won trophies across England and all of Europe. City received an influx of capital from new ownership in 2008 and began to challenge United’s dominance in Manchester which prompted then United manager Sir Alex Ferguson to label City as ‘noisy neighbors’. Well, City is now a dominant force in European soccer and outclassed United this past season (tough to say for a United fan).
Believe me, there is a transition to service in here somewhere. In the service ‘circle of trust’, we get caught up in pontificating about the importance of service and how service is the only way that organizations will be able to compete in the future. We’ve all tasted the Kool-Aid. For the longest time, the rest of the organization did not share this interest in service. Service was perhaps viewed as a noisy or perhaps a necessary neighbor.
Well, it seems like samples of the Kool-Aid have made the rounds outside of the boundaries of the service organization. Our recent research on service transformation highlights that the non-service professionals in our data set (n=25 representing sales, engineering, marketing, operations and more vs. 135 service professionals) agree with the increasing importance of service. It has taken them a while to hop on the bandwagon, but there is recognition of the increasing importance of service (See table below). For the service group, 90% believe that the importance of service has risen from 3 years ago, especially as these folks have been beating the drum for quite a while.
Table: Surging Service
Source: TSC Data, 2014
Non-service professionals believe that the attention being placed on service is due to competitive factors, as they understand the increasing role that service plays in differentiation. In fact, 39% of these folks believe that service is the major driver of competitive differentiation for their organizations, the leading answer followed by R&D at 26%. And the reliance on service for competitive differentiation is only going to increase, as 60% believe that service will be the major driver of competitive advantage in three years.
Figure: Competing with Service
Source: TSC Data, 2014
Service professionals believe that the increasing attention on service is much more due to the pursuit of new revenue opportunities that are enabled directly or indirectly via service. Directly, there is the opportunity for new revenue directly tied to the service business via:
- Not giving service away for free
- The development of new services
- New pricing models for service offerings
- A sales and marketing focus on service
- The introduction of performance-based contracts
- New product purchase and consumption models
Indirectly, the impact of service is felt on:
- Renewals and retention
- Up-sell and Cross-sell
- The introduction of new features or entire product lines
This in turn significantly impacts the revenue of the entire organization. Service and non-service professionals agree that the success of service transformation initiatives needs to be measured via the change in:
- Customer loyalty and commitment metrics
- Profitability of the entire organization
It is great to see that service is getting greater attention especially among non-service professionals. However, for most organizations to truly value the importance of service, it is necessary that all stakeholders realize the impact that service has on improving other business functions. The type of information collected at the point-of-service can significantly impact areas such as product design, engineering, sales, marketing and more. With the aid of service information, all other aspects of the organization can continue to support a differentiation strategy. This is an unappreciated advantage of a truly transformed service organization.
If interested in our service transformation research, please visit our research library. Our new research series on service revenue is in the survey stage, and one can participate here – https://www.research.net/s/TSCSRev