Missed out on the first part of this research report? Check it out here

Adapting KPIs to the mega-trends

Perhaps one of the biggest mega-trends that we have seen within the field service sector is the shift towards more customer-centric strategies. Much has been discussed about this topic on the whole, but is the reality meeting the hyperbole? The proof of whether customer-centricity is a genuine factor in an organisations strategy would, of course, be evidenced in whether such measures as Net Promoter Score or other Customer Satisfaction metrics are beginning to take prominence within the KPIs service companies are currently measuring.

To get a feel for whether this was the case or note we put the question to our respondents: “Do you place more importance on KPIs that measure customer satisfaction or KPIs that measure operational efficiency?” 

Given that the previous mega-trend that dominated industry discussions not too long ago was the move from a cost centre to profit centre it is little wonder that in the past when we have run similar benchmarking surveys on this topic, we have seen the dominance of KPIs centred around operational efficiencies such as First-Time-Fix and Technician Utilisation rates.

However, is that still the case?

In no small degree, it would seem that operational efficiency is still the most crucial aspect of a field service performance for many companies. Well over a third of companies (38%) within the respondent set stated that operational efficiency is the more critical area of concern that they monitor. This is compared to just over a tenth of companies (13%) who stated that customer satisfaction was more important to their organisation.

However, this doesn’t tell the whole tale of the data.

For while customer satisfaction based KPIs do not, in general, outweigh operational efficiency based equivalents for many companies, for nearly half (49%) of the companies whom we spoke to stated that they do hold equal importance. Ultimately this, of course, makes sense as operational efficiency and customer satisfaction it can easily be argued, are two sides of the same coin.

Simply put, customer satisfaction centred KPIs should be supplemental to, not in replacement of, the traditional operational efficiency based KPIs.

This supposition is further reinforced when we see that over three quarters (77%) of the companies surveyed identified that they were operating as a profit centre. In such an environment, when the bottom line is brought into the equation, then it is, of course, something of a necessity to ensure that the field service operation is run with optimal efficiency and minimum wastage.

However, while the majority of companies now operate as a profit centre, the next logical step in that direction, i.e. towards a servitized revenue strategy is as it stands a less common development.

We asked our respondent companies if they offered any advanced services, a servitized business line or any outcome-based solutions.

Considering that the discussions around servitization are still complex and in many cases, companies are relatively embryonic, it is perhaps somewhat of a surprise to see just over a third (34%) of companies have already rolled out such offerings. However, given the vast potential of higher profits and increased customer loyalty that such solutions promise it is perhaps little wonder that a further 38 of companies stated that embracing such offerings was currently on their roadmap.

Meanwhile, just over a quarter (28%) of companies that we surveyed stated that they were not currently exploring servitized business concepts. 

However, what of those companies already down the path to servitization?

What does adopting such an approach mean to them in terms of the way they measured their service operations? Speaking only to those organisations who stated they had implemented some form of advanced services we asked Have you/Do you plan to adapt the KPIs you measure as a result of offering advanced/servitized/outcome-based solutions?

The results here were reasonably comprehensive and indicated that such new approaches in service design thinking do require revised thinking when it comes to measuring performance also. Four-Fifths (80%) of the respondents within this subset stated that they had changed their KPIs as a result of rolling out advanced services compared to just a fifth (20%) who had not.

The most crucial KPIs to measure

Of course, perhaps the most critical question within the survey was to establish which KPIs were most frequently measured by service companies in general.

Returning to the full set of respondents we asked: “Which of the following KPIs do you currently measure?” Offering respondents a comprehensive list of KPIs to choose from and asking them to select all appropriate options.

The most commonly cited KPI amongst our respondent companies was Technician/Engineer Utilisation, which just under four-fifths (78%) of companies measured. This was followed by First-Time-Fix, which was tracked by three quarters (75%) of the companies in our respondent group.

Customer satisfaction was measured by over half (53%) of companies although it is interesting to note that the oft-cited Net Promoter Score (NPS) was tracked by just under two fifths (39%) of companies.

Other popular KPIs that were tracked by more than half of the companies we spoke with were Mean Time to Repair (56%), Time per Job (51%) and Jobs per day (50%)

What is interesting to note here is that this more granular data would also appear to re-enforce the finding of the earlier question around the balance between customer-centricity and operational efficiency. With over half of companies tracking customer satisfaction, this is certainly in line with the previous finding.

However, the research would also suggest that the understanding of how to measure operational efficiency is a more refined notion for many organisations than the newer focus of customer satisfaction.

It could be that this in and of itself is representative of the pace at which our industry is racing to embrace customer satisfaction. Whereby the demand to do so, is potentially outstripping the understanding of how to do so. It will be interesting to return to this topic in our 2020 benchmarking survey to see if the move to measuring performance in a customer-centric economy has developed and matured at all.

However, when we look at the final question in this years survey the data would suggest that while there is an increasing focus on measuring customer service standards, there remains a significantly higher emphasis on operational efficiency when it comes down to the crunch.

In response to the question, what is the single most important KPIs for your business we saw that over half of the respondents 51% cited an operationally focused metric as the most critical to their business while only 32% of organisations cited one based in customer satisfaction. Meanwhile, 17% of companies referenced profit-based KPIs - which is perhaps further testament to just how far away field service operations has moved from its traditional base as a cost-centre.

This final question was left as an open text entry for the respondents to complete which gave us the freedom to really see how varied the core KPIs being used were. In this sense, the results were quite illuminating.

Overwhelmingly we saw the same core metrics being cited as the most important to be measured.

These were:

• Customer Satisfaction/NPS
• Technician Utilisation
• First-time-fix rate
• Meantime to repair
• Meantime to failure
• SLA Compliance
• Profit/revenue generation

Given the earlier finding that tracking between the 4 and 7 KPIs was the most common preferred number field service organisations measure the seven KPIs above could certainly be utilised as a something of a blueprint for measuring core performance.

Conclusion:

So let’s recap on the core findings of this research.

Firstly the data reveals that the most common practice amongst field service companies is to measure between 4 and 7 KPIs. However, the data does also show that we are beginning to see a trend in this number increasing.

One reason that we are maybe seeing this trend of tracking more KPIs emerge is the impact of new service revenue strategies such as servitization which are adding an increasing demand on service delivery and a different dynamic within the workflows of service operations.

However, with four-fifths of companies who have adopted some form of advanced services program stating they have adapted the KPIs they measure as a direct result of doing so the evidence towards the impact servitization is having on the metrics field service organisations are monitoring is undeniable.

Even for those companies yet to move towards such advanced service strategies, the overwhelming majority of field service companies now operate as a profit centre, and this too is having an impact on the metrics field service companies are actively measuring. The fact that just under a fifth of companies now identify a KPI based around profit as the most critical KPI they measure for their business is another signifier of this.

One final observation is that the shift towards a customer-centric approach to service is undoubtedly beginning to take hold.

The number of organisations that identified customer satisfaction as either equal to or higher than operational efficiency is certainly a testament to this. However, it is good to see that there is a full pendulum swing here away from the metrics that track an organisations ability to deliver service efficiently.

When it comes to the most critical single KPI organisations tracked the majority of respondent companies still put operational efficiency-focused metrics as their number one priority. This, of course, makes sense as operational efficiency and customer satisfaction should essentially be two sides of the same coin - both of which then drive the third cog in the wheel - profitability.

Perhaps the most valuable insight that the research reveals is that field service companies are at large beginning to see the importance of maintaining the balance across each of the areas - which will only drive their business ever forwards if it can be achieved.