In this new article for Field Service News, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses the service leaders' journey to achieve their desired outcomes.

Here is an interesting conversation from Lewis Carroll’s Alice’s Adventure in Wonderland:

‘Would you tell me, please, which way I ought to go from here?’ [asked Alice.]

‘That depends a good deal on where you want to get to,’ said the [Chesire] Cat.

‘I don’t much care where—’ said Alice.

‘Then it doesn’t matter which way you go,’ said the Cat.

‘—so long as I get somewhere,’ Alice added as an explanation.

‘Oh, you’re sure to do that,’ said the Cat, ‘if you only walk long enough.’

Fortunately, service leaders know exactly where they want to go. They want to achieve the business objectives they signed up for in the strategic plan or in their individual goals and objectives (which are used to calculate their annual bonus.) Unfortunately, many of these leaders are missing a terrific opportunity to win their own version of the Euro Cup because they are not using all the tools available to them.

DRIP

Service businesses are buried in data. They get operational data from their products in the field, the people in the call centers, service managers, logistics people, and their peers in Finance, Marketing, Sales, Customer Success, and anyone else with an opinion. But what they are missing is insight – actually actionable insight. I call this condition DRIP:

Data Rich Insight Poor

Here is an example:

Most Field Service organizations survey their customers and measure one or more metrics they then use as key performance indicators (KPIs). The three most popular KPIs are:

• Net Promoter Score (NPS)
• Customer Satisfaction (CSAT)
• Customer Effort Score (CES)

You collect data about each customer and lump it all together to arrive at a single KPI number. Unfortunately, using any of these KPIs will not guide you to the actions you need to take to achieve your desired business outcomes like growing revenue, increasing employee satisfaction, and improving productivity. To get down to these actions, you must link individual data to actual actions taken by the customer to 1) find out what customers really did and how they responded to your survey and 2) go back and find out specifically what you have to correct to achieve a better outcome for your business.

The solution to the DRIP problem is to take your team on this journey:

There are not enough people doing this detail work, what one of my friends calls working in the weeds. So, let’s look at how NPS is generally used to see what you don’t want to continue doing.

Net Promoter Score

Net Promoter Score (NPS) first saw the light of day in 2001 when it was marketed as “The One Number You Need to Grow.” Today it is used in many businesses of all size and all industries. Also, it is used by many field service organizations. Interestingly, the NPS system has an enormous number of critics who think the whole thing is BS. However, there are real world examples that also support the validity of the system.

Let’s look at an example of where NPS and a high-level analysis yields some data that makes the analyst and their company feel like they are actually accomplishing something important. But they are not increasing desired outcomes.

A Quick Review of NPS

The interested party asks their customers the following question:

“Based on XXX, how likely are you to recommend us to a friend or associate?”

They use an 11-point scale where 11 is definitely likely, 5 is neutral, and 0 is definitely unlikely. The results are then grouped as follows:

The 2 green scores are promoters, the 2 yellow are passives, and the 7 reds are detractors. The NPS score is the percent promoters minus the percent detractors so the score can be anywhere from +100% to -100%.

Some Data

Here is a chart produced by Bain & Company, the originator of the NPS system.

In this example, the surveyors are not worried about the NPS score: they want to understand how customer’s feelings correlate with their buying intentions. In this case, the promoters appear to be about 90-95% likely to consider their current manufacturer, the passives 75-80% likely to consider the incumbent, and the detractors only 40-45% likely to consider their current supplier.

Since the surveyors know the score each individual submitted, they can create unique programs to follow up with their customers in individual segments, or even sub-segments, to identify the reasons behind their feelings and then either correct any issues and/or offer compensation if their issue is beyond their control or unresolvable. Of course, in parallel, they must look at their internal procedures and policies to prevent alienating other customers.

But this is about intent. One of my all-time favorite business books is “Five Frogs on A Log” by Mark L. Feldman and Michael F. Spratt. The book is about mergers and acquisitions and is scary. The title comes from a child’s riddle:

Five frogs are sitting on a log.

Four decide to jump off.  

How many are left?


Answer: Five.


Why?


Because deciding and doing are not the same things.

This is important because we don’t care what people say they will do; we care about what they do! A customer who says she will be back to you tomorrow with a purchase order is worthless until the P.O. is actually received and booked.

With respect to the Bain & Company data, I think it would be much more useful if the question were reworded to “Based on XXX, how likely are you to lease or purchase your next vehicle from our brand (or maybe from our dealership)?” After all, your business objective is to sell or lease vehicles, not get referrals. Then the surveyor could track each respondent and find out the percent at each response level, e.g., 0, 1, 2… who leased or purchased a car from them. It might take one or two years to understand the value of increasing the percent of promoters by one point, but at least they would be able to move ahead with their CX program based on actual data.

Another Example but About Service Parts Usage, not NPS

Data - Your business is the Field Service arm of a hardware product OEM. And, unfortunately, you consume a large amount of parts every month. To find out what is going wrong, you have your parts manager prepare a report of actual total usage by part number and another report breaking out the same data but by type of transaction; i.e., installation. warranty, billable, and service contract. You quickly notice that one expensive part is the most used part during warranty.

Insight - If you are only concerned about minimizing your customer’s downtime, you would increase stock levels. But if your desired outcome is to increase company profit and CSAT levels, you would make sure that each defective part is returned for failure analysis.

Action – The failure analysts would share the FA results and the total cost of each field repair with both Engineering and Manufacturing. Most likely, the results would be either a part redesign or modification plus a change in manufacturing process

Outcome - When this is done, you might find it relatively inexpensive to swap out the old design whenever you have a field engineer on-site with access to the equipment. And obviously you would pull all the old parts from stock and replace them with the new design. Your overall cost savings is your desired outcome.

Conclusion

Without linking your data to your desired outcomes, you are basically looking at a gratification metric. It makes you feel good, but it doesn’t get you any closer to where you have to get.

Note: Net Promoter, Net Promoter Score, and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld, and Satmetrix Systems, Inc.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more articles by Sam Klaidman on Middlesex Consulting Blog @ middlesexconsulting.com/blog
• Connect with Sam Klaidman @ www.linkedin.com/samklaidman

 

In this new article for Field Service News, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, analyzes the advantages of hiring for attitude and training for skills.

Introduction

According to ToolingU-SME “Relentless turnover in the manufacturing industry is threatening companies focused on driving productivity and profitability. Finding talent is one of the biggest challenges in the industry, so losing employees, whether entry level or seasoned, significantly compounds the problem.” And the same dynamics apply to field service and technical support technicians. And according to Forbes, “Companies that create annual budgets will find their 2021 budget busted because of the rapidly increasing rise in the price of talent – both for internal employees and for talent provided by third-party service providers”.

Why do you need a replacement strategy?

In the May 5, 2021 issue of Thomas Insights, I published an article titled The Silver Tsunami: As Older Employees Plan for Retirement, It's Time to Plan for the Future of Your Workforce. The article went into detail about older employees preparing to retire and what you can do to prepare for that inevitable situation. Now we are seeing the effect of what some people call “the great crew change.” This is the voluntary churn of large numbers of employees from all disciplines in their business. Why is this churn happening now? While you may have reduced your workforce because of the pandemic, the voluntary exit will accelerate within the next few months. Here are some of the reasons:

• As the situation at home returns to normal, many older workers will feel comfortable moving into the next phase of their lives
• As jobs open up, many people will convince themselves that “the grass is greener” at another employer
• Companies more desperate than yours will offer large pay increases or sign-up bonuses to fill their vacancies
• Companies that used the last 18 months to improve the tools and processes they provide their employees will attract the younger employees who grew-up with digital technology

Where Will I Have a Problem?

If your technology is old, somewhere between 5 and 10 years, expect trouble with your younger and technical savvy employees. You can also expect turnover in clusters if you have some managers who do not relate well to their employees. And most importantly, expect employee churn in the customer facing sales and service departments.

• Sales because their world has changed from face-to-face to virtual meetings and customers who now reach out to potential suppliers when they are about 75% of the way through their buying journey. Also, in many industries trade shows are now obsolete!
• Service because the technicians are reading about remote support and if you implemented it, some will miss the travel and in-person customer interactions and will look for a company that has not yet caught up with competitors. And if you did not implement it yet, the rest will look to work at a more advanced company.

To make matters worse, Sales and Service people are extra important to your business because they interact with all your customers. And the Service people interact during the whole time the customer owns your equipment while the Salespeople only interact with customers when there is a new selling opportunity. This means that replacing, or preparing to replace, your service team is the most impactful area for you to focus on.

What is the single most crucial decision I can make when I prepare my Service technical employee replacement strategy?

Good service people have a lot more skills and attributes than just knowing how to fix inoperative equipment. These are the areas where customer facing field and help-desk engineers (in person and virtually) must excel:

1. Technical skills

2. Understand business; basic finance, logistics, P&L, Sales, and Marketing

3. Understand business processes and systems

4. Customer relationships. They should be their customer’s trusted advisers.

5. Negotiating

6. Communications

7. Creativity and problem solving

8. Soft skills including listening, empathy, and how to avoid confrontation

9. Self confidence

10. Accountability

11. Adaptability

12. Loves learning

13. A sense of urgency.

Considering the breath of skills, abilities, and personality traits in the list, I recommend that you make a firm commitment to hire for attitude and train for skill. In the opening paragraphs of the 2011 Harvard Business Review article Hire for Attitude, Train for Skill, the author describes the reinvention of a primary-care clinic that was producing great results. They did it by redefining the jobs and throwing away the old playbooks. When asked how he found the right people for these unique positions, the practice’s leader, Dr. Rushika Fernandopulle, said “We recruit for attitude and train for skill,” … “We don’t recruit from health care. This kind of care requires a vastly different mind-set from usual care.”

And the July 1, 2021 issue of Industry Week included an article titled One Job, Two Good Candidates - Would You Hire for Attitude or Aptitude? The key conclusion was:

“And what are they finding? That “hard” skills are increasingly transient, and "soft” skills — or “personal habits and traits that shape how you work on your own and with others” — are what’s worth investing in when it comes to human capital.“

What is the single most crucial decision I can make when I prepare my Service technical employee replacement strategy?

There are only two things you have to worry about:

1. Before you start the hiring process, you must get HR on board

2. After you hire someone, you must have a detail training plan to on-board the new hire

As you start trying to hire candidates based on their attitudes, soft skills, and personality, you will need lots of help from HR. Here are some of the areas where HR will be critical:

• Training the interview team on how to evaluate these soft attributes.
• Figuring out how to compare post-interview notes and fairly evaluate all candidates.
• Identifying sources of candidates. When I was hiring field service engineers, I loved hiring people who were leaving the military. My first preference was the nuclear navy followed by air force line mechanics. People from both groups had a terrific ability to quickly learn complex technical topics with minimal instruction and they excelled at many of the soft skills and attributes you will need.
• Communicating with these non-technical people and learning to not dismiss a candidate because she doesn’t physically meet your image of a great field service technician.

By the time you are ready to make an employment offer, you will need a detail training outline, schedule, and list of resources. In fact, an outstanding candidate should ask you how she will receive her technical training before accepting an offer. No really suitable candidate will accept an offer unless she is convinced that you will build on her skills and help her succeed in this new role. Once your new hire shows up for work, you must make sure that she has a productive on-boarding experience that reinforces the idea that she made the right decision to join your business. There is nothing worse for an organization than to have a new employee quit in the first days after joining the business.

Conclusion

It may take a while for your business to learn the advantages of hiring for attitude and training for skills but keep working at it because this is the future!

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more articles by Sam Klaidman on Middlesex Consulting Blog @ middlesexconsulting.com/blog
• Connect with Sam Klaidman @ www.linkedin.com/samklaidman

 

In this new article for Field Service News, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses how an OEM should organize technical support in order to provide the best experience to the customer...

Both Kris Oldland and other FSN authors have been telling us that for many businesses, the new normal will be touchless service. The customer will interface with the equipment and the OEM’s technical support team will use AR/MR/VR to help the customer troubleshoot and repair the equipment. Now the question is “Over time, how will customers feel about touchless service?”

Getting the experience “right” is critical for the business because in the B2C world, and more and more in the B2B environment, the most frequent customer interaction with the business is with technical support. And the quality of each experience is important because the individual’s cumulative perception of the experience they have with a business is the brand. To make matters worse, Daniel Kahneman, the Nobel Prize winner and noted Psychologist, has written about what he calls the Peak-End Rule. This rule states that for reasonably short duration, we ignore most of the details except for 1) how we felt when we had the maximum “good” or “bad” feeling and 2) how we felt while the experience came to an end.

We may not know when our customer has reached the “peak” point, but we certainly know when the journey comes to an end. So, getting each transaction to leave a positive memory in the mind of the customer is especially important.

One way to ensure good outcomes is to organize and staff technical support organizations around customer’s technical skills. The challenge of this strategy is that we have to direct calls, emails, and chat sessions to the support person who is at the same level as the customer.

First, we must understand the technical level of the people who contact technical support. In a B2C situation the technical support engineer usually communicates with either a Level 1 operator, a Level 2 person with more experience, or a trained Level 3 FSE. Here are some examples of each:

 

In a B2B company there are also three levels of knowledge that technical support works with:

 

Notice that in the B2B environment, the personnel at all three levels are well trained for their job and also know the limits of their knowledge. In the B2C situation, the Level 1 and 2 people may think they know more about taking care of their equipment than they actually do and so the technical support people have to take extra care to ensure that these people do not create a bigger problem than what they started with.

Given all of the above, the best we can do is organize our technical support organizations into levels that match the levels of the customers. Unfortunately, that is easier said than done since the company has little control who calls in to get aid to fix a problem.

The easiest solution for the OEM is to have a great reference library organized into FAQ’s that cover the issues that the Level 1 and most Level 2 callers can safely attack. And then encourage the callers to look there first before trying to talk to a live agent. But we know this solution would frustrate many customers and lead to many negative comments on social media, your NPS score would drop into negative territory, and your Sales partners would make your life miserable because you were now part of the “Sales Prevention Team.”

Another solution is to implement Chat and use that as a Level 1 triage and, when that does not work, the agent can escalate to either the Level 2 or 3 Tech Support as appropriate. If you elect to try this route, consider having the Chat agent arrange for a callback by a tech support agent. As long as the call is complete in about 3 minutes or less, the customer waiting for the call will generally not be upset.

In conjunction with the chat/live call back solution, you can make sure that your company certifies the internal people who will be calling for Level 3 support. This way they can have a dedicated telephone number and you have a reasonably good chance that the people calling in are trained enough that your experienced tech support agents can be spending their valuable time dealing most efficiently with customers.

Whatever strategy you decide to implement, make sure that your callers always feel that their time is being respected and that you take their problem seriously. Empathy and understanding can go a long way to making touchless service into a positive experience.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more articles by Sam Klaidman on Middlesex Consulting Blog @ middlesexconsulting.com/blog
• Connect with Sam Klaidman @ www.linkedin.com/samklaidman

 

Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, analyzes the role of the Field Service Engineer as the customer's trusted adviser in his new article for Field Service News...

In a recent whitepaper Beyond Remote Service: Is now the time to redefine service delivery? Author Kris Oldland, Editor-in-Chief, Field Service News presents a number of compelling arguments that support the notion that Augmented Reality will not only change Field Service delivery, but the long-term outcome will be good for customers and service organizations.

However, neither Kris nor other current authors discuss what will happen to the Field Service Engineer’s role as the customer’s trusted adviser.

What Is a trusted adviser?

There is a significant difference between customer experience and a trusted adviser. Customer experience deals with all the aspects of how the customer interacts with the company, their products, advertising, people, and processes. A trusted adviser is someone in the company who customers reach out to when they want honest, unbiased opinions about aspects of the company’s products, processes, or people.

In most B2B companies, people generally accept as fact that field service engineers are customer’s trusted advisers. I believe that every FSE with more than a few years’ experience in their company has been asked at least once:

• “Is the new XXX worth buying to replace my old one?”
• “Should I install the latest version of the XXX software?"

And the customer expects, and usually receives, an honest answer with supporting reasons. Also, the first thing that a person who becomes a service customer learns is “don’t give your FSE a tough time or complain to their boss unless it is a significant issue!” They want to make sure the FSE trusts the customer and they expect to be able to trust the FSE’s recommendations.

How will remote support change the FSE's role?

Remote support is the enabler of self-service. The customer who has the proper skills and tools can work with the remote technical support person and perform many of the FSE’s tasks as long as spare parts are available. This new process cuts down on the need for the FSE to actually visit the customer’s site to fix problems. The FSE role changes to concentrating on big projects like installation, major upgrades, infrequent troubleshooting of difficult problems, or uninstalling equipment.

Therefore, the key questions are:

• “If self-service becomes the accepted business model, will using merged reality (MR), augmented reality (AR) or virtual reality (VR) systems remove the FSE as a trusted adviser?”
• “Will our B2B technical support professionals fill the trusted adviser role?”

Why is the FSE a trusted adviser and not the technical support engineer?

The pre-COVID interaction between FSE and customer is quite different from the interaction between technical support and the customer. To help understand these differences, it is useful to look at the following table that compares how customers view our FSE’s and technical support engineers with and without using MR/AR/VR.

 

 

 

However, if the FSE role changes to a few face-to-face infrequent interactions spread over a number of years, then the earned trust will not continue.

 

Who will replace the FSE as the customer's trusted adviser?

From the perspective of the service organization, the preferred choice is the technical support professional. But will technical support replace the FSE? Probably not. There are two reasons for this conclusion:

1. There is no continuity between technical support and customer. Tech support customers require a rapid response and as a result, calls are usually handled on a first-come-first-served basis by the first available operator.
2. There is no chance to create a lasting relationship because of (1.) above and because trust is usually earned from multiple face-to-face interactions.

And if not technical support, then who will take on this role? Possibly either sales or customer success.

Sales has a big obstacle to overcome. Historically salespeople were seen as being “coin operated.” The perception was that their recommendations were designed to increase their income. While today many salespeople place the customer’s best interest above their own, it will take a long time for the earlier image to be removed from people’s minds. And with customer success teams replacing sale for aftermarket upselling and cross selling, the salespeople may never get the opportunity to reset expectations.

Customer Success has a real opportunity for a few reasons:

1. They are relatively new so the do not carry any baggage
2. They are trained to work as consultants
3. They collect and use customer data to help increase the value derived from using the product and also for demonstrating the advantages of using what CS recommends
4. They are assigned to accounts and charged with building lasting relationships
5. Some under-utilized FSEs are likely to transition into customer success roles. They will bring their consultative skills and existing relationships along with them.

Therefore, in my opinion, the new customer trusted adviser will be someone from the Customer Success organization.

Key takeways

1. With self-service, field service will no longer remain as the customer’s trusted advisor
2. For B2B technical support, the people who call them are trained and know the limits of their competency
3. Sales will be unlikely to replace field service as the customer’s trusted adviser
4. Customer Success will probably succeed field service as trusted adviser
5. The career path for many FSE’s will be into Customer Success

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more articles by Sam Klaidman on Middlesex Consulting Blog @ middlesexconsulting.com/blog
• Connect with Sam Klaidman @ www.linkedin.com/samklaidman

 

In this new article for Field Service News, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses many aspects that field service organisations should consider and evaluate as we start existing the pandemic...

The pandemic still has the world in its grip, but it is becoming looser as vaccinations become more widespread. In some developed countries, we see signs of increased hiring and manufacturing output. And increasing manufacturing output means more demand for field service for installation, training, and warranty work as well as remedial repairs on equipment supporting the manufacturing ramp-up.

The big unknown is how B2B customers will react to field service continuing its emphasis on touchless service while they are thinking about the old normal. The answer to that question may impact how these customers think about our brand: which can have a major impact on our future business.

HOW B2B BUYERS SELECT A PRODUCT TO PURCHASE

As a service leader, you know about customers and their buying habits. You know that most products are becoming commodities and while there may be differences between products from different managers, those differences will disappear over time and new differences will emerge from other competitors. You also know that there is usually a minor difference in price and anyway, B2B businesses do not buy based on price.

So how do people choose who to purchase their new equipment from if not by price or features and functions? If we are totally honest, we would say the primary differentiator is service. Of course, our sales and marketing peers would disagree with you, but we know they are biased. They would probably agree with you if you said, “people buy based on the brand.”

WHAT IS A BRAND?

If you ever want to get into a good argument with sales and marketing people, just ask each person to write down their definition of brand. Do not be surprised if there is no agreement. During my research, I discovered a wonderful article “Defining What a Brand Is: Why Is It So Hard?" In the article the author, Tracy Lloyd, shared a few definitions:

1. David Ogilvy, the “Father of Advertising,” defined brand as “the inangible sum of a product’s attributes.”
2. The Dictionary of Brand defines brand as “a person’s perception of a product, service, experience, or organization.”
3.  Marty Neumeier, author and speaker on all things brand, defines brand by first laying out what a brand is not: “A brand is not a logo. A brand is not an identity. A brand is not a product.” Neumeier goes on to say that “a brand is a person’s gut feeling about a product, service, or organization.”

Definitions 2 and 3 are remarkably similar yet hard to do anything with.

In late 2012, my friend Harry Klein, a professional Marketeer, and I decided to collaborate on a White Paper that we called “Because I’m The Customer!” A Guide to Managing Your Brand & Customer Experience in the Age of the Customer. Here is a paragraph from the White Paper:

As Brian Millar wrote in his FastCompany article Branding Talk Isn’t Helping Your Company. Here’s What Should Replace It:

“If you promise something clearly, deliver on that promise, and repeat the process, you build strong emotional links to your company with certain consumers. But that’s where the value resides: in my head and your head, and your mother’s head. And the stuff inside my head is my property. If brands exist at all, they exist in the minds of consumers. I can switch my brand of search engine at a moment’s notice. Bank accounts and makes of automobile are a bit more hassle to discard, but I can still change my mind about them.”

So, a brand is unique to each of us. It is the sum of all promises and experiences we had with a product, service, or company. This perception changes as we forget old or irrelevant promises or experiences and add newer ones to our memory. And to make matters worse, we might have different perceptions of different situations with the same product or service.

Here is an example: Think about your current car. If we are talking about design and ease of use, you might say “It took me only 30 minutes to figure out how to set up the infotainment system.” But if I ask you about the dealers training on all the new features, you might say “he was confused and so was I.” And if ask about fuel economy, you might say “It is great on the open road, crap in city driving, and does not come close to what was on the sticker.” But if I just ask, “how do you like your new car,” you might respond “I love it and feel like I rule the road when I drive it.”

ARE BRANDS REAL?

Even though brands only exist in our minds, they are real because we make our purchasing decisions based on our current perceptions of the promises the manufacturer makes and our experiences about how well these promises are met. In other words, brands drive how money is spent! That is as real as it gets.

In January 2021 McKinsey & Company released an interesting article “The Rising Value of Industrial Brands.”  One of the six main insights in the article is;

Visibility drives performance—but only for a few players. The top three brands in each segment average a total 60 percent of visibility, and the top brand typically has four times more visibility than the third-place competitor. Overall, 5 percent of companies capture 95 percent of total visibility. And top-quartile companies enjoy about 30 percent higher ROIC than those in the bottom quartile.

McKinsey & Company uses visibility (share of voice) as the measure of brand favoritism. They define visibility as “… brand name mentions in the media, including industry publications that customers read to learn about new products, systems, and technologies. Because B2B sales are increasingly held to the same standards as B2C sales channels, including the option to purchase online, we also tracked the growth of searches for the brands on major online search engines.”

Next, they show how share of voice impacts the company’s ROIC (Return on invested capital):

CLOSING THE CIRCLE

Since a brand is the sum of all promises (expectations) and experiences we had with a product, service, or company and brand visibility drives ROIC (and other financial metrics), then your promises and delivered experiences are driving your financial results. That raises two questions:

Question 1. Where do expectations come from?

There are six sources of customer expectations

1. Organizational promises
2. Competitor’s promises and/or performance
   
3. Personnel promises
4. B2C experiences
5. Previous experiences with your business
6. Comments from friends and associates

Unfortunately, you and your business can only influence #1 and #3. The other four are outside your control but you must be sensitive to them and if you or your team discovers that customers have expectations that differ from what you can routinely deliver, you must reset their expectations. Doing that professionally will prevent disappointment when the experiences are as you promised, not what they wanted.

Question 2. Where do experiences come from?

Every interaction your company has with a customer or prospect creates a new memory of an experience. The two most important steps you can take to make sure you are providing great experiences are

1. Train everyone on how what they do and say impacts how customers feel about doing business with your company
2. Follow up either all interactions or a randomly chosen subset of all interactions and talk about how the customers feel about their experience. Discussions are better than surveys because people are sicker of surveys than they are of being locked down at home. Do this every day with the same people making the calls and analyze the data using as many views as you can imagine. Then share the results with everyone in the company.

WHY IS MONITORING BRAND PERFORMANCE ESPECIALLY IMPORTANT AS WE EXIT COVID-19?

During the past year, we have all been busy implementing touchless service, a blended workforce, and trying to avoid sending our Field Engineers on calls for both health and safety and economic reasons. Many of us believe that these initiatives will continue into the future and become our permanent business model.

This was expected during the height of the pandemic and customers subconsciously adjusted their expectation to accept what you were providing. But what if customer’s expectations revert back to the 2019 business model and you continue to deliver on the 2020 model? A major gap will open up and customers will feel disappointed.

The solution is marketing communications. You and your team must proactively reset your customer’s expectations to be in line with your intended future deliveries. There might be some intense customer discussions and you may have to modify your plans if the pushback is too great. You must ensure that the experiences your business delivers either meets or exceeds your customer’s expectations.

Finally, when the folks in the C-suite start looking for more revenue and profits, don’t automatically jump on the cost-reduction train. Make sure your promises are being met and exceeded by your performance. It takes work but it is worth the efforts.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Read more about the impact of COVID-19 on the field service industry @ www.fieldservicenews.com/covid-19
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

In this new article for Field Service News, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses the importance of setting realistic and achievable expectations when rolling out new services.

In 1988 Michael R. Mantell wrote a book “Don’t Sweat the Small Stuff…and it’s all Small Stuff.” Now we know that Mantell was wrong when it comes to Field Service.

Here is the real story! In the coming months and years, it is likely that your organization will be implementing a steady stream of changes to the way you do business. Some of these changes that are on most service leader’s minds are:

• Touchless service
• Blended workforce
• New business models – XaaS, IoT
• Circular economy
• Digital transformation
• Servitization
• Predictive maintenance
• Artificial intelligence

SOME USEFUL DEFINITIONS AND OTHER BACKGROUND INFORMATION

Before we jump into the details, it is necessary to understand an idea and three definitions.

The ideas expressed in this article originated in “How small service failures drive customer defection: Introducing the concept of microfailures” by Sean Sands, Colin Campbell, Lois Shedd, Carla Ferraro, and Alexis Mavrommati.

Service failure – any service that fails to meet a customer’s expectation. They come in two varieties – macrofailure and microfailure. Because services quality is influenced by individual’s emotions, the following definitions are imprecise and may leave you a little uncomfortable. Don’t worry!

Macrofailure – Sands et al define a macrofailure as a “negative service encounters in which customer expectations go unmet by a wide margin.”

Since each of us will react differently to any specific outcome, the best guidance we can provide is to quote from U.S. Supreme Court Justice Potter Steward in a 1964 decision about whether a movie was pornographic:

“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"], and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.”

Until you get customer feedback that a particular transaction did not meet their expectation, you or someone who works with you must be the internal judge as you design services and set the expectations you will share with your customers.

FIRST AN EXAMPLE OF A MICROFAILURE AND A MACROFAILURE

An example of a service technician going to a customer whose product equipment has failed and the production line had to be totally shut down.

A macrofailure - When technical support decided that a service technician had to be dispatched, the support person said “Joe Brown has just finished up his job and will be at your facility within 30 minutes.” Unfortunately, the dispatcher did not tell Joe that the whole factory was shut down, so Joe stopped for lunch. He arrived 45 minutes late. The plant manager was really mad and after Joe departed, she called the SVP Field Service and totally blasted him.

A microfailure – Another day, the field technician showed up within the promised window and immediately got to work. One of his repair steps was to reboot a controller. This step usually takes 8 to 10 minutes. During that time, he called the office to update his status, but the customer only saw Joe standing about 20 feet from the equipment talking on his mobile phone. She didn’t say anything to Joe, so he never had the opportunity to explain that the repair was still going on while he was on the phone and that he was watching the controller and ended the call as soon as the reboot was complete.

WHY ARE MICROFAILURES IMPORTANT?

When a customer experiences a macrofailure, their usual reaction is to complain to the company. And service departments are exceptionally good at quickly and efficiently solving big problems and communicating their results back to the customer. If done well, most customer’s either stay as loyal as they were before the incident or actually increase their loyalty! After all, the customer now knows how their service provider will act in a messy situation and the customer comes away with increased peace-of-mind.

But when a microfailure occurs, the customers usually suffer in silence. Usually because they are embarrassed to make a big deal over a minor problem and they don’t want to create a reputation of being a complainer. But there is another set of factors that come into play:

1. We remember negative situations and forget positive ones

2. The negative situations grow in our minds and the ill-will accumulates

When it comes time to renew their contract, the customer who has experiences a small number of microfailures blows them up in their mind and finally unloads on the service seller. Typical outcomes are:

• The salesperson is depressed or demotivated
• The customer declines to renew their contract
• The customer demands a discount before renewing
• The customer shares their frustration with other customers or prospects
• The service organization does not have an opportunity to make things right before the become highly visible at an inopportune time

HOW TO PREVENT MICROFAILURES FROM GROWING INTO A MAJOR ISSUE:

Strategy	Tactics
Detect microfailures	·      Encourage customer complaints ·      Reassure customers that you hear them and the concerns        are valid ·      Train staff on how to deal with complaints ·      Track complaints
Repair microfailures	·      Offer a small gesture & nonmonetary compensation ·      Train staff about how all failures are important ·      Empower the team to solve the problems in real-time ·      Make sure there are no repercussions for the customer
Prevent microfailures	·      Try and predict when a microfailure is likely to occur ·      Enhance your continuous improvement efforts ·      Consider under promising so you can over deliver ·      Cocreate services experience with your customers

 

A final comment

In the July-August 1990 issue of the Harvard Business Review, Christopher W.L. Hart, James Heskett, and W. Earl Stasser, Jr. published the classic article “The Profitable Art of Service Recovery.”

The second paragraph of the article states:

“While companies may not be able to prevent all problems, they can learn to recover from them. A good recovery can turn angry, frustrated customers into loyal ones. It can, in fact, create more goodwill than if things had gone smoothly in the first place.”

This is true for both macrofailures and microfailures. If you treat both of them the same way then you can’t go wrong.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

In this new article, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses how service leaders should make decisions based on data and research, rather than opinions...

According to Clayton Christenson, the late Harvard University Professor and strategy expert, “To find the biggest opportunities in the world, seek out the world’s biggest problems.” This is wonderful advice if your goal is to win a Nobel Peace Prize, but what if you are a senior executive in a business trying to survive? What to do? Substitute “Your Market” for “World.”

“To find the biggest opportunities in your market, seek out your market’s biggest problems.”

This is true if you are responsible for growing your company or your service business. The problems are the same but the resources available to help solve the problem at the business level are much greater than the resources at your disposal in the service business. This resource limitation frequently causes service leaders to make their plans based on opinions, not actual research. The outcomes are usually disappointing. The formal name of the solution process is Evidence Based Problem Solving.

THE BUDGET

Annually, most service leaders are asked to prepare a budget including a revenue and profit projection. These two commitments are then rolled into the next higher level’s budget. At that time, either the budget is accepted or more likely, the higher-level executives will come back with a comment like “We need an additional 10% on both revenue and profit” or “How much more can you deliver next year?” The only way to answer these questions is by having actual evidence to back up your projections. And when you finally settle on the new budget, you will first have to convince your team that you knew what you were doing when you submitted the budget and second, that you have an actual plan on how to deliver on your projection.

The implementation of your decision will require some service marketing. For example:

• Evaluate the profitability of all your services
• Create and price new services
• Update and reprice existing services
• Grow the number of people purchasing your services
• Align your branding with the corporate image
• Other things that effect your customers

EVIDENCE BASED PROBLEM SOLVING

This simple drawing shows the four steps that IMPORTANT customer impacting service decisions should follow to minimize the likelihood of having the outcome fail to meet expectations:

When trying to solve your important problems, following these four steps will not guarantee success, but not following these steps make it highly likely that you will miss the real opportunity.

Step 1: Brainstorm to define growth objectives

Defining your growth objectives seems easy – just accept your boss’ target. But doing this will be a big mistake because:

• The target may be unreachable within the time or operating budget set.
• The target may be to low and achieving it would leave money on the table.
• Your original proposal may have been spot on, but you were not able to defend it because it had been a guess and not backed by facts.
• Over time, every business tends to become less effective. You should use this opportunity to evaluate all your assumptions and make appropriate changes.
• Your operating environment may have changed. You need to update your plans to account for current situations.
• It is likely that your business experienced significant staff changes because of COVID-19. Some people retired, some may have been made redundant, others joined but were not fully on-boarded into the organization. They may not be the right people for the long-term or they may have undiscovered skills which will influence your plans.

The first thing you must do is identify any and all useful data. Some of it will come from your financial, CRM, and service management systems. Other data will come from external sources like industry projections, management articles and books, webinars, and discussions with thought leaders in your network.

Data collection should be an ongoing activity. Data from internal systems are usually reviewed daily, weekly, or monthly and reviewed to identify areas that are doing well or need help. The external data is a different story. The members of the service management team at all levels should be assigned one or more sources to follow and create and circulate summaries of useful content. Some of these summaries may result in group discussions and actions leading to operational or strategic changes. Be sure to give full credit to the people participating in these activities and take their actions into consideration when evaluating promotion candidates.

In the “crazy busy” world of field services, the organization can benefit from a periodic ½ day to multiple day meeting to just go off the grid and focus on continuous improvement. This is a fantastic way to prepare up-and-comers for future positions while getting their unique insights on your business.

There are two desired outcomes from this brainstorming - actions:

1. A set of growth targets for the coming year or two that everyone believes is attainable with a little stretch.
2. A list of potential ways to achieve these targets.

At the end of step 1, you will have gone from data to insight to action!

Step 2: Internal audit to find growth capabilities

Remember that step 1 was all about brainstorming to identify your 1 to 3-year targets and to create a list of potential ways to achieve these targets. In step 2, we begin to expand our list of potential services we created in step 1, understand the resources we have available to grow the business, and identify some of the underutilized resources in the organization.

There are two desired outcomes from this stage:

1. A prioritized list of all the possible ways the organization can grow revenue and profit. This list must include:
   1. A brief description of the offer
   2. Your best quantified guess (a range) of the contribution to achieving your target
   3. The advantages and disadvantages of each from both the customer’s and business perspective
   4. The key resources which will significantly increase over current conditions
   5. The resources that will be needed and are not currently available at all
   6. The resources which currently are used and will no longer be needed at all
2. A list of the underutilized resources in the organization including people, parts, equipment, space, etc. These will be candidates for redeployment or removal as the organization changes.

At this point, no decisions have been made about the way forward. You only have a list of potential offers and constraints. You still must interact with customers and find out how likely they are to purchase them if made available.

Step 2 can be done using internal resources only although a facilitator (either internal or external to your company) may be helpful if your team hasn’t done many of these activities.

Step 3 - Market research to discover growth opportunities

Step 3 will have the most impact on your evaluation since this is when your customers get to tell you what they want and don’t want and how much they are willing to pay for any novel offers you are thinking about. They will tell you their biggest problems, how much they are willing to pay you to solve them, and if they have enough confidence in your business to trust you and buy your new services.

This step is best done by an outside resource who understands the service business and will not bias or spin any findings or opinions. You need honest insights if your decisions are to turn into positive outcomes.

These are the steps most likely to be used to arrive at an understanding of what your customers want and need and are willing to pay for:

• Segment products and services in your normal way and then decide on which segment(s) to concentrate on initially. This could be product, geography, application, type of user, etc.
• Prepare to interview at least 15 customers in each segment.
• Develop questionnaire including the importance of every proposed offering or modification and other relevant information about how the customer feels about their relationship with your service business.
• Randomly select enough contacts to ensure being able to complete the agreed number of interviews.
• Telephonically interview the agree number of customers in each segment.
• Prepare recommendations and findings:
  • Importance of each proposed offering or modification
  • Contract elements for one or more levels or types of contract
  • Value proposition(s)
  • Acceptable price range
  • Recommendations for initial and long-term metric deployment
  • Ideas for a sales strategy
  • Other information learned from discussions

A project like this for one product and one segment in one geographical area can easily yield 2500 unique data points plus numerous comments. Compare this to the opinions of one or a few internal people and you see why this article is titled “Make Decisions Based on Data, Not Opinions.” And why your plans and commitments will carry enough weight that it will be difficult for anyone to challenge your decisions.

Step 4 - Service marketing to commercialize best opportunities

Recently I was thinking about the differences between a product and a service. One of the differences that nobody mentions is “There is no Kickstarter for services." I know that Kickstarter is for startup companies and rarely B2B, but the point is that companies can Beta test hardware products (including software), but how do we try out our services on our captive audience? The only way is through Step 3.

After we review the recommendations from the interviews, we are ready to choose one or more new offerings. Now we have to GTM (Go To Market). Here are the steps in their approximate order:

• Get buy-in from the C-suite. Sales, Marketing, and Finance are probably the most important support you will need although HR and Manufacturing may have a strong say depending on what you propose.
• Training will be critical to the success of your plans. People you must train include:
  • Your team.
  • Marketing to modify the standard quote forms and update the website to include your new stuff. You may need some dedicated advertising and an appearance at your industries upcoming real or virtual trade shows. This is your opportunity to boost your sales so do not look at this as a chore.
  • Sales needs training on how to sell what you will offer and probably would like a slide deck to use when presenting the service package to a new prospect.
  • In Finance, the Accounts Receivables team should receive an introduction to your new services so they can talk knowledgeably while collecting overdue payments.
  • If some of your service is delivered by the channel, then they the same training as the Sales team.
  • Customer experience, wherever they report, should be asked to do follow-up surveys or interviews on some of the early users of your new services.
• You can now start selling your new products. And make sure the CX group is surveying all early customers. Any negative feedback must be promptly followed-up by a senior service executive. And lessons learned should be quickly incorporated in your offerings and messaging.
• Repeat.

CONCLUSION

This whole effort deserves the same attention as the launch of a new physical product. If you have done everything well, the impact will certainly be the same in both cases. After all, new services are new products. Give then the same chance of succeeding as the product side of the business does.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, analyses the five global trends that will drive the future of field service...

In the science of dynamics speed is defined as the rate of displacement of a moving object over time (d/t). Acceleration is defined as the rate of change of speed over time (d/t2). And then comes jerk – the rate of change of acceleration over time (d/t3).

Why, you ask, do we care? Because until March 2020, we have been experiencing a period in which the rate of change of our “world” has been steadily accelerating. And then COVID-19 came along and changes that were projected to take years to accomplish were somehow accomplished in weeks or months. Mentally we felt as though the car we were riding in suddenly crashed into a bridge support and we were thrown into an airbag. We experienced jerk!

When we operate in a period of acceleration, we have time to prepare our self and our team to adapt to new operating conditions. It is still hard for many people to adapt as quickly as the change occurs, but they still have warning and can frequently participate in designing the new “world.” Unfortunately, the side effect of jerk is that changes suddenly appear and people must adapt without having the time to figure out how they will be affected. They don’t get a clear answer to the age-old question WIIFM (what’s in it for me?).

Since the world of Field Service depends on people, our own, our partners, and our customers, we must be sensitive to how our new operating procedures will impact them and effect their personnel and professional lives. We must consider all these people as we specify, design, implement, test, and go-live with sub-projects that will come together to create the new world that is rushing towards us.

THE five trends driving the future of field service

First a word of warning! On the morning of January 2, 2021, I read this in a Bloomberg News daily mailing:

Last year taught us that sweeping forecasts are pretty much a waste of time. Amid a raging virus, a global recession and a rapid markets turnaround, no one could have guessed that a record $120 trillion of stock would change hands on U.S. exchanges in 2020, that Tesla short-sellers would get burned so badly, or that Bitcoin would be such a huge hit with Wall Street. It’s hard to say which trends will continue into 2021. The forecasts to watch are those that only look one or two months ahead, or 10 to 20 years ahead, Jared Dillian writes in Bloomberg Opinion. As for all the prognostications in between—better to ignore them.

These five trends will drive the future of field service:

In the long-term, climate change will have the greatest influence on field service - how it is performed, who does the actual service work, how are parts managed, and how value is created. And because mitigating climate change is so critical, so complex, and so expensive, we will see unique changes being implemented in each industry and in each geographic entity and finally in each business.

In the medium term, there are two major changes which have already started to impact us:

• New business models like XaaS, IoT, and use of machine language and AI

• The circular economy and refurbishing and/or remanufacturing major assemblies or even complete products

In the short term, we are already seeing major changes due to the desire of customers for touchless service and the continuing trend of the aging workforce. What is not known is how must each of these trends will impact any specific industry or company. Knowing requires a familiarity of the specific details about what is happening behind the closed door of all the major players plus any potential entries. So, this article will discuss each trend and you, the knowledgeable reader, can pass each idea through your specific knowledge filters. You can then decide how much time, effort, and money to invest in getting your business ready to take advantage of any opportunities that develop. Now let’s look individually at each trend starting at the top of the pyramid. We start here because you should always keep this trend in mind as you address each lower level trend to make sure you do not have to redo some lower level change as you address the longer-term drivers.

CLIMATE CHANGE

We are all familiar with the need to make a major reduction in global greenhouse gases. It now appears that in the US, the Biden administration will kick our country’s response to the problem into high gear. In most other developed countries, the effort is already underway. As manufacturers and service providers of energy-driven machines, we will find ourselves on the front lines of the action. The greatest fear for OEMs business is that the environment will cause disruption in manufacturing operations. Think about the forest fires we have seen in the American west and Australia, the need for barriers to hold back tides and storm surges in London and Venice, and the drought in the American south-west during the 1930’s.

In October 2020, Boston Consulting Group published an article Climate Disruption And The Path To Profits For Machinery Makers. Here are five of the identified reasons why machinery OEMs, and their service organizations, will be impacted.

1. End users are disrupted – Reduced use of coal will reduce railroad shipments. Oilfield service will be reduced by decreased production of oil and gas. Power generated by solar and wind equipment will increase.<
2. Product design priorities shift – As manufacturers shift to the circular economy, the service groups may assume responsibility for refurbishment and rebuilding instead of on-site service. And new products will likely be more reliable than the models replaced and use fewer parts.
3. Business models change – Value will shift as manufacturers offer Product as a Service and IoT. Newer design will include fewer wear parts and the need for spares will decline. Increased use of digital twins will reduce on-site troubleshooting of failures. On the upside, newer items will include more software, which presents new service and support opportunities.
4. Value chains become circular – Field engineers will have to become experts in both recycling their equipment and consulting on a facility’s total operation to reduce their carbon footprint.
5. Weather, sea-level, and operational risks increase – Service contracts and warranties will have to change to minimize liability risks due to temperature and water-level changes

NEW BUSINESS MODELS LIKE XAAS

Businesses have been evaluating XaaS since it took off with SaaS. Now they are trying to tie XaaS and IoT into a new service based long-term contract where they are selling customer outcomes instead of hardware and service. The main advantage of the XaaS/pay for performance model is that customers and OEMs goals and objectives are totally aligned by focusing on meeting the customer’s needs. It makes their relationship a win-win partnership, not a win-lose contest. Unfortunately, according to Cooperberg in 2019, currently less than 3% of asset operators buy outcomes instead of assets. This trend is in the medium term because there is a long way to go. A secondary advantage of the hardware as a service model is that the OEM always retains ownership of the product. At the end of life, it can be brought back to the factory (possible a part of the service business) and either totally broken down into recyclable pieces or reusable spare parts or disposed of in an environmentally sound method. The challenge is that the OEM loses the initial sale and revenue when your product ships but gain the recurring revenue which can last over the total lifetime of the products and then extend as upgrades or replacements are installed. When it comes to servitization, where services are merged with products so the buyer can buy outcomes, there are a few obstacles that have to be cleared first. For example, again according to Cooperberg:

• Only 36% of asset operators have data and use it effectively
• 35% of asset operators still use in-house spreadsheets/excel to track current maintenance operations
• Only 35% of OEM’s connect all their new products
  

And a report prepared by The MPI Group in April 2020, The Power of Industry 4.0 in New Product Development stated:

• 40% (average) of revenues are from products with embedded smart devices/intelligence.
• The profit margin on these products is 34% (average), significantly higher than margins for other products (29% average).
• Significant improvements were likely to occur with access to data from products or services in the field.

In other words, most asset operators and OEM’s still are in the install-fix-decommission world. The transition to servitization will take more than 5-years unless something happens to accelerate the transition. And the improved margin may be that driver.

TOUCHLESS SERVICE

Right after COVID-19 hit, asset operators shifted from wanting on-site service to demanding touchless service. They wanted to keep as many outsiders out of their facility because any one of them could be primed to infect their whole workforce. And fortunately, merged/augmented reality product were on the brink of exploding for other reasons. OEM’s liked them because a highly skilled field service technician could stay in one place and support multiple relatively inexpensive and more junior field tech at the same time as one on-site call would take.

As the internal application worked so well, some OEM’s decided to try using the same systems with both B2C customers (even unskilled homeowners) and B2B operators or internal maintenance techs. And it worked! Less response time to get in from of the equipment and a quicker than expected restoral time.

The major challenge, and hence the major opportunity, is spare parts availability. OEM’s do not dispatch service technicians unless 1) they believe the fix will not require parts or 2) the technician a local service engineers carries spare parts as trunk stock, or the OEM coordinates the arrival of the field technician with the arrival of the needed parts.

When the internal facilities’ technician does the work, they don’t usually stock replacement parts. So, the tradeoff is technician travel time or parts delivery time. Or the OEM can stock spare parts in their customer’s facility either as an outright sale or as consigned inventory. This is an opportunity and can come in several ways including:

• Consigning or selling spare parts to the asset operator.
• Creating a local stocking location which is available to all customers in a selected area and located in one of them.
• Stocking parts in a controlled location available to a select group of customers.
• In all these examples, any parts used must be returned to the OEM. The OEM will then ship a replacement part to the stocking location.

Logistics and spare parts availability will be an area that OEM’s focus on as they try and roll-out more touchless service contracts.

AGING WORKFORCE

In September 2020, I published a Thomas Insights post “The Silver Tsunami: As Older Employees Plan for Retirement, It's Time to Plan for the Future of Your Workforce.” The article provides guidance about how to move forward and get ready for a different type of workforce. However, it assumes that your business will be the same in the future as it is today.

But we can see that what you do depends on these five trends. They will impact the number and backgrounds of your internal workforce going forward. And this mix will change depending on how quickly both you and your customers adapt to the solutions you both work together to create. In other words, you can make a one to five-year plan for dealing with each trend, but your labor plan has to be no more than one year because you are dealing with people’s livelihood and you don’t want to be known as a company that hires and fires often.

CONCLUSION

The future has at least five significant initiatives that all manufacturing companies will have to manage. The good news is that you now have the time to plan and test potential decisions.

Remember – “What got you here won’t get you there.”

 

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

Sam Klaidman, Principal Advisor with Middlesex Consulting, reflects on the drivers behind why your customers buy the service service contracts you offer, and outlines if and how that has changed since the pandemic...

For over 20 years, I was the Vice President of Service for two companies. In one company I had global responsibility and in the other I was responsible for the Americas. To keep up to date with industry trends, I attended local, and some Global, AFSMI meetings and I read as many service-related articles as I could find.

I was always jealous of people who published articles and got their name “out there.”   Then I retired and started my own consulting business. I felt like the time was right for me to share my ideas and collected information with my peers.

Thanks to an introduction from a friend, I was able to get an article published in the September 2008 issue of American Laboratory. The topic I chose was “Why Companies Sell Service Contracts and Why People Buy Them.” Since then, I have written 16 articles and whitepapers and posted approximately 220 blog posts. Most of these were about some aspect of the business of Field Service. Yet when I searched through the 220 post titles, I realized that I had never updated my original article even though our industry has gone through major changes since the original piece was published.

 

Buying a service contract pre-COVID

Before COVID, the people who purchased service contracts were Manager level. They had day to day responsibility for whatever their equipment was being used for. In that first article, I listed the four reasons why people purchased contracts:

• Maximize Uptime
• Predictable costs
• Peace of Mind
• No hassle

When I have an assignment to grow service revenue, I survey customers and ask them to rate these same four characteristics where one is most important. Here are the results of three of my pre-COVID engagements:

The first and last columns are part of the same survey for the same client. The last column is for a small number of customers with many instruments that provide the company with excess testing capacity. Yet the managers were interested in a service contract for all their instruments! Not because they were worried about maximizing equipment uptime, but because they were interested in minimizing their daily hassles. They were willing to spend company money to reduce their job-related stress.

 

 

Changes in customer’s wants and needs now

Today, the reasons people want service contracts are more varied than ever before. When it comes to buying hardware service contracts, we are seeing two significant changes:

1. The purchasing decision is being made by a more senior individual than the department manager.
2. The reasons to buy a contract are frequently based on more and different strategic factors than in the past. They are as varied as the reasons they purchased your product as well as the high-level strategic goals of the company.

Here are some of the challenges that most business executives (including your customers) are dealing with today and which will continue for the foreseeable future:

• Grow revenue and reduce costs
• Minimize CapEx
• Digitize their business
• Introduce a servitization business model
• Mitigate known and unknown business risks
• Provide a safe and secure environment for their employees
• Figure out how to retrain key employees
• Deal with an aging workforce

Your customer’s challenges will result in changes to how you create, price, and deliver your services in 2021 and beyond. Here are a few well know changes:

• Enable customer self service
• Move to a blended workforce of direct and contract field engineers
• Migrate from a transactional to an outcome driven service organization
• Innovate to embrace the notion of touchless service
• Personalized and multichannel services

 

Changes in the Sales environment

These three snippets from a recent report, 2021 Predictions for Sales Leaders: THE YEAR OF VALUE, highlight some of the changes that sellers must be prepared to manage. These conclusions are generic and impact both product and service selling:

1. In 2020, CFOs got more involved with every purchase being made and every dollar of spend was scrutinized. Those who were able to quantify the outcomes associated with their spend were able to get their projects completed. Those that were not able to articulate value saw their projects overlooked by those who had a higher level of perceived value to the business.
2. To succeed in virtual B2B sales cycles in the coming year and beyond, it’s critical that CROs (Chief Revenue Officers) work with their sales leadership to ensure that their teams are intentional in discussing and quantifying value early in buying conversations and that every opportunity is substantiated with the strongest business case possible based on true economic impact and outcomes. To thread the value conversion through the full customer journey and ensure retention and expansion remain positive, sales leaders will also need to work with the customer success leaders to ensure that the company is proactive in communicating the outcomes of their solutions in order to maintain renewals NRR (Net Recurring Revenue) remains high.
3. Unlike in the beginning of 2020, sellers can no longer take clients to hockey games or dinner to build rapport. Instead, all information sharing happens digitally, via email or a web conference. You have minutes, not hours, to make an impact. According to McKinsey, “digital self-service and remote rep interactions are likely to be the dominant elements of the B2B go-to-market going forward, when selling to both SMBs and large enterprises.” And 89% of companies expect these changes to stick, anticipating they will need to sustain these virtual go-to-market models for 12+ months, per McKinsey.

 

Selling services now and post-COVID

The best time to sell a service contract is at the time of equipment sale. This is because your product sales teams are dealing with customers with the same issues your service sellers are experiencing. But the product people have successfully addressed their prospects challenges when presenting and closing your product sales. Therefore, the sales team can integrate your services into the overall justification (use case) and close the product and service sale at the same time if they are professionally trained and properly compensated. Also, adding services into the use case will likely differentiate your company and help close the deal.

Obviously, we all have a sizeable number of service contracts which are already in place and renew every year or so. If you are experiencing difficulties in securing renewals on a timely basis, then I suggest you spend some quality time with your sales management peer and get some help on how to dig out customer’s most pressing challenges. You can then present your solutions in a way that shows the customer how you can help them achieve their objectives while feeling that they are minimizing their personal risk.

If you find that there is a large gap between what you are offering and what you believe the customers want, then you have to put on your service marketing hat and find out their needs and the price they are willing to pay. Then you must update your offerings and create new value propositions for each customer segment and the services and contracts you want them to buy. Sometimes you can do it all by yourself and sometimes you will need a more experienced consultant to interview a representative number of customers and find out what your customers are willing to pay for. The consulting investment is generally minor compared to the contract sales you achieve.

Whatever you do, you must make sure that your contracts and other services create enough value for your customers so they will find it exceedingly difficult to move to a time and materials model or worse, move to a third party vendor.

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Further Reading:

• Read more about the impact of COVID19 on the field service sector @ https://www.fieldservicenews.com/hs-search-results?term=covid
• Read more about Service Innovation and Design @ https://www.fieldservicenews.com/blog/tag/service-innovation-and-design
• Read our exclusive series of articles exploring the findings of our research study on the pandemic @ https://research.fieldservicenews.com/
• Read more exclusive FSN articles by Sam Klaidman @ https://www.fieldservicenews.com/blog/author/sam-klaidman
• Connect with Sam Klaidman on LinkedIN @ https://www.linkedin.com/in/samklaidman/
• Find out more about Sam Klaidman's work with Middlesex Consulting @ https://middlesexconsulting.com/