The water sector is coming under immense pressure to improve the quality of its service after Ofwat announced it will intervene in water companies whose business plans for PR19 don’t match the “high bar” it expects for customer service...

With an increased demand for water, an ageing infrastructure and rising costs, some large water providers are exploring the use of cloud-based technologies, as a way to make considerable cost savings and manage the network more effectively.

Yorkshire Water is one such water company that has been investing heavily in advanced technology to improve the services it provides.

Since adopting the WorkMobiles’ mobile data capture app, the company has used it to become more agile and efficient compared to its previous method of data capture.

Previously, field engineers were relying on paper-based forms and handheld cameras to capture information on jobs and projects and were then having to drive at least five miles back to head office to load their job data into the company portal. Yorkshire Water recognised that it needed a digital solution that would help to collect and manage essential project information more effectively and also reduce administration costs based on the price of fuel and non-productive wage costs.

After trialling the cloud-based application with a team of 400 workers, the water provider has deployed the WorkMobile solution to over 1,800 of its employees.After trialling the cloud-based application with a team of 400 workers, the water provider has deployed the WorkMobile solution to over 1,800 of its employees. They are also continuously looking for new ways to further increase usage of the app.

WorkMobiles’ flexible form designer allows users to create mobile forms relevant to the specific job in hand, including site inspections, health and safety forms and timesheets for all workers on site. Using a digital form to capture the information for these important documents reduces the risk of data being lost or incorrectly collected.

Job details can now be sent to employees in the field and project data can also be captured in real-time, with all information integrated into internal project management systems. Work can now be completed quickly and recorded more accurately, making for a more efficient network management process.

A Yorkshire Water spokesperson said: “There is an increasing pressure to become more efficient and innovative in order to remain competitive and deliver an even better customer service. However, with new, emerging technologies, water companies are now gaining the ability to streamline their working practices and meet the needs of their customers more effectively.

“Our main challenge was that our previous data capture process was simply not cost-effective and meant that our teams were spending extra hours travelling back to base to record their job details. We needed a solution that could provide greater efficiency and connectivity, so staff working out in the field could record and share information in a timely manner.

“With our aim to roll out the WorkMobile application across various departments in the business, we have calculated that this will result in huge cost savings for us and our customers. The money we save as a result of this switch will help to relieve some of the pressure on our resources and will also help us to provide a better quality of service to our customers.”

With pressure mounting from Ofwat to provide a better quality service through the use of innovation, water companies are looking for ways to become more agile and efficient so they can work more effectivelyColin Yates, Chief Support Officer at WorkMobile, said: “With pressure mounting from Ofwat to provide a better quality service through the use of innovation, water companies are looking for ways to become more agile and efficient so they can work more effectively. The sector is facing a number of challenges, particularly due to ageing networks that can’t cope with the rising demand for water and the inherent leakage synonymous with older pipes. In order to keep these networks operational, now is the perfect time for water companies to get smarter and embrace new technologies so they can deal with issues quickly and successfully.

“It’s great to see that solutions such as ours are helping the water industry to combat its current issues. Yorkshire Water, for example, now has a tool that can help meet the needs of its workforce, so that work can be quickly recorded by employees and information then sent back to the office. The business has now seen greater efficiency amongst its workforce, along with huge cost savings. Every water company across the sector should be looking to embrace technology to achieve similar results in order to create a more sustainable future.”

For more information, please visit: www.workmobileforms.com/

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Commerce has successfully transitioned from being based around commodities, then products and finally services. But that is not the end of the evolution as Mark Brewer, Global Industry Director, Service Management, IFS introduces the concept of the experience economy...

Commerce began with commodities.

Hundreds of years ago, we simply exchanged items for money in a single transaction. Take coffee, for example. You could buy a sack of beans, but you’d still have to put in a lot of work in to make a drink.

So, these transactions gradually became more constructive and based around specific buyer needs. Commodities became products. Coffee beans became coffee jars – ready-ground. All you had to do was add water. It was a better, faster and a more cost-effective solution.

As competition intensified, our service economy was born. Rather than getting your coffee from a jar, you went to a coffee shop where someone would not only make it for you but also ensure it tasted just right. Success was now about ensuring customer satisfaction.

But what’s next?

Welcome to the ‘Experience Economy’

Technology has transformed the way people interact. In the digital age, we expect to track orders, resolve issues and update information immediately. It’s a world of ‘connected customers’, and businesses must respond with exceptional, personalised service experiences. Customer engagement is king and servitization enables it.

Staying with the coffee analogy, consider Starbucks. Now, you’re not just buying a product or service, but an entire lifestyle. However brief your visit, you’re immersed in the Starbucks brand - from communications and messaging to products and services, and so on. It’s a rich, multi-sensorial, emotive world... and whether good or bad, you leave with a feeling. It is memorable.

And that’s the difference between the service and experience economies. Done well, this experience creates positive brand associations and is the ultimate driver of customer loyalty.

Mass customize a service and it becomes an experience – making you feel like “one in a million” (Starbucks puts your name on the cup!). It’s the next evolution for businesses, although some are already well on their way - like the medical devices industry.

MRI scanner manufacturers are under pressure to deliver high-quality, accurate scans every day.

With the stakes so high, these companies don’t just sell the machines, they also guarantee their ongoing service performance and overall user experience. It’s about the entire patient and hospital interaction, from start to finish.

It’s like staying in a hotel. These days, you probably wouldn’t only judge your stay based on your room, or how comfortable your bed is. More likely, you’d consider your entire accommodation experience - from the moment you make your reservation online to your final steps out of the door after checkout. Each influence and interaction along the way contributes either positively or negatively to your overall opinion.

Every touchpoint counts

This analogy may seem obvious - but it’s essential to doing business today. Most organisations have traditionally measured customer satisfaction to predict loyalty and future behaviour. However, consumers consider every individual touchpoint, rather than simply linear values like ‘Did I like the product?’ or ‘Did I get value for money?’ So, this metric may be less valid these days.

Sure, the product may be excellent and do exactly what they always wanted, but that is table stakes today.

What if the delivery lead time was too long, the support helpline is not promptly answered, or the returns process inefficient, then they may shop elsewhere next time.

Elevator manufacturers demonstrate this opportunity in action. Most products are similar in functionality and have become commoditised.

They use similar technology and parts so it’s difficult to differentiate between them on appearance or performance alone. To gain an advantage, they focus on overall experience. It’s no longer about being the fastest elevator or the most hi-tech: it’s about giving every user the best end-to-end experience, that fulfils their particular needs. Their focus today is not their customer (i.e. the hotel), but their customers’ customer – you and I.

If we look at this from the perspective of the IT industry, for service providers the mindset shift is from selling contracts to selling outcomes, such as user experiences and comprehensive service level agreements. In such a competitive environment with so many similar products and services on offer, this gives vendors a real opportunity to create difference and build success within their customer base.

So, how do you get to this position?

Many companies don’t yet have the right processes or infrastructure in place. Systems are not optimised and often disjointed which means ERP is either over-stretched or misused. IFS can help. Our end to end service lifecycle management solution is purpose-built and holistic, delivering customer engagement seamlessly, throughout the journey.

The experience economy is here to stay - and customer engagement aimed at delivering outcomes is its currency. To find out more about how to make the experience economy work for your business, visit IFSworld.com.

 

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Paul Whitelam, VP Product Marketing, ClickSoftware, puts across the case that in the race towards AI adoption we shouldn’t forget to see the value and importance of human input in the service cycle...

Like many industries, field service has seen an increase in the adoption of artificial intelligence-driven automation.

The benefits are many: improved efficiency, schedule accuracy, workforce productivity, responsiveness, cost savings and higher profit margins, and, importantly, happier customers.

Naturally, the onset of automation causes some anxiety in workers whose tasks are being handed over to AI. As with previous industrial revolutions, we’re not likely to find ourselves in a low employment high-leisure utopia. While the nature of work might change, plenty will remain to be done. Getting the full benefits of AI and machine learning still requires some human participation and a good understanding of who (or what) is best for each job.

People provide context

Service management solutions powered by artificial intelligence and machine learning can rapidly process high volumes of data to use as a basis for automated decisions. But when it comes to learning, machines can be a lot like humans— garbage in, garbage out.

When Microsoft launched its Tay chatbot on Twitter in 2016, few would have guessed that in just a day it would become a bigoted bully. The problem, of course, was that Tay was learning to converse by interacting with Twitter users, some of whom seized the opportunity to educate it on humanity’s worst impulses. Even with less shocking or inflammatory outcomes, AI learns from what it is shown and told. It’s likely to replicate bad behaviour if that’s all it’s shown.

AI-based tools can also provide simulations and modelling for multiple scenarios and highlight the interaction of various policy and process changes. For example, if the objective is the fastest response time available for every job, more technicians might have to be available for dispatching, increasing labour costs and decreasing utilization.

People must still define the process and priorities for automation to ensure your system optimizes for the right business goals. While intelligent computing power can grease the wheels of daily service operations, the real value comes from informing businesses to foster improved decision making.

Managing the unique and unusual

While humans can grow bored with the rote and routine, machines have yet to complain. Tasks that are repetitive and predictable are best handled with automation.

AI can manage most routine and ordinary tasks – chatbots, scheduling, appointment confirmation, routing, showing a mobile worker’s location and travel path to a job, it can even reassign and redistribute jobs around disruptions, addressing unplanned work with urgency. One UK gas utility can dispatch engineers to address a leak emergency in 13 seconds from the initial customer call—without human intervention.

AI can use a variety of inputs to increase schedule and travel time accuracy and optimize in real time, but what happens when you just don’t have the data?

One of the challenges faced by self-driving car producers is how to navigate remote areas, especially with routes that lack landmarks or distinguishing features.

Too few inputs can stump the machine. There is also additional context in some situations that will not be gleaned from data analysis, and impact from factors that perhaps are not being measured.

Hands off, humans

Applying new technology to solving problems in old ways yields minimal benefits, if any. Field service organizations see the greatest benefits from automation after reviewing their processes, KPIs, and business goals to leverage exactly the kind of data processing and analysis they didn’t have before.

They guide machine learning by providing good and plentiful data, filtering out the unimportant, and prioritizing the right goals. Specificity is key.

AI will do exactly what you tell it to—including replicating inefficient processes or making dubious decisions to optimize for a single outcome.

For example, prioritizing the shortest possible wait times for a technician to arrive could result in overstaffing and idle time—costing a lot of money.

Use projections and simulations to see how various goals interact to find the optimal balance, and remember that instructing your system includes telling it what not to do.

The vision of zero-touch service scheduling and dispatching enabled by AI and the Internet of Things is increasingly becoming a reality for service providers. Resist the temptation to interfere when unnecessary so you can give the machine a chance to learn, and reap the full benefits of increased productivity and efficiency.

What can your employees do with the extra time in their day? Focus on the people stuff, of course: training and coaching, brand ambassadorship, cross- and upselling, remote support—you name it.

There is still plenty for humans to do in the increasingly automated field service world, and it’s the work that relies on person-to-person connections and trust. While your people are improving service quality and strengthening relationships with colleagues and customers, trust that automation can handle the rest.

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Kevin McNally, Sales Director, Asolvi takes a look at how technologies such as Cloud and IoT are levelling the playing field and giving small and medium-sized businesses the opportunity to deliver service standards that meet and exceed those of the traditionally dominant enterprise-sized organisations...

Want to know more? The bad news is the full white paper is only available exclusively for fieldservicenews.com subscribers.

The good news is that if you are a field service practitioner then you may well qualify for a complimentary industry practitioner.

The even better news is we will send you a copy of this white paper when you apply as a welcome!

Click here to apply for your complimentary industry subscription to fieldservicenews.com and access the white paper now!

Note: Please do take the time to our T&Cs (available in plain English at fieldservicenews.com/subscribe) and note that this content is sponsored by Asolvi

One thing is certain in today’s field service sector, that never before has service delivery been so empowered by the technology that now underpins field service management.

Cloud is, of course, one such technology and the introduction of the Software as a Service (SaaS) model that it gave life to has undoubtedly changed the way that smaller field service organisations can operate.

Cloud has given them access to SaaS-based Field Service Management (FSM) solutions that in the previous CAPEX world of the late twentieth and an early twenty-first century would have been simply too cost-prohibitive for them to access.

IoT, has the potential to go even further and not just enhance the way field service operations are undertaken, as Cloud and Mobile have done, but entirely revolutionise the fundamental ways in which we approach field service delivery.This is one very clear example of how technology has very much levelled the playing field for smaller field service companies.

Another key technology, IoT, has the potential to go even further and not just enhance the way field service operations are undertaken, as Cloud and Mobile have done, but entirely revolutionise the fundamental ways in which we approach field service delivery.

The long-standing break-fix methodology, which has been at the core of field service operations by necessity since the inception of field service itself, can be circumvented and replaced by proactive preventative maintenance.

In a world of IoT, the service provider is no longer dependent upon the customer to report a fault, the asset itself can identify that it needs maintenance and the service call can be arranged in advance of the failure.

IoT absolutely offers the keys to a far better future for field service - for both service provider and customer alike, but for smaller to medium-sized companies are we entering once again into an era of cost-prohibitive technology?

Has the playing field so neatly levelled off by the introduction of the Cloud, once again become skewed in favour of the enterprise-sized organisations?

The importance of Cloud:

As I alluded to in the introduction there is no denying that the emergence of Cloud computing has been a core driver in the ability for smaller field service companies to be able to compete with their larger competitors.

This development is mostly the result of the introduction of SaaS-based subscription-style licensing which makes access to such systems possible.

It seems like a long, long time ago that Tesseract, an Asolvi product became the first company in the world to offer their full FSM solution in the Cloud and on a SaaS model. Indeed, today almost all FSM providers now offer their solution in such a manner.

Many aspects of introducing an FSM solution can become more challenging the larger an organisation isThis means that the smaller companies can have access to tools like scheduling, stock and parts management and mobile work management applications for their field-based staff to access via a mobile device.

Yet, they also have the advantage of being more agile, more streamlined and less weighed down by legacy systems and processes that their larger peers undoubtedly face.

In fact, many aspects of introducing an FSM solution can become more challenging the larger an organisation is. For example, optimised scheduling engines need to be ‘taught’ the rules under which they are to operate – the larger the workforce and the more diverse the skill-sets within that workforce, the more ‘lessons’ that need to be fed into the scheduling system for it to operate as intended.

In terms of FSM solutions, the shift to the Cloud has absolutely changed the competitive dynamics within various industries in favour of those smaller companies who are savvy enough to embrace cloud-based FSM and unencumbered by challenges such as the above which larger companies may face.

Can IoT work for SMBs?

Earlier, I outlined the potential seismic disruption that IoT is set to have on field service delivery as a whole.

Yet, when we hear about those companies that are harnessing the power of IoT, invariably we often tend to look at examples of companies who all tend to sit within the largest bracket of organisations.

Rolls Royce, GE, Sony et al have often dominated the headlines in terms of the successful application of IoT platforms that have radically changed their approach to field service. So one could be forgiven for thinking that IoT is perhaps something only the largest organisations are capable of implementing – but is this necessarily the case?

The reality is that there are a growing number of SMB-sized field service organisation who have embraced IoT to become a truly disruptive force within their respective sectors.The reality is that there are a growing number of SMB-sized field service organisation who have embraced IoT to become a truly disruptive force within their respective sectors.

Take for example regional German IT and document management services provider IBS Bürosysteme (IBS).

By utilising a machine-to-machine solution called Evatic Consumable and Meter Management (ECMM) they have been able to boost productivity, dramatically eliminate washed toner and streamline their processing. They have done this by integrating ECMM with their fleet management solution and directly processing data from all of the printers within their fleet, generating consumable replacements and subsequent invoices automatically.

This provides a clear win-win scenario in that their customers’ are receiving an improved service and massively reduced downtime, whilst IBS are able to improve their own efficiencies both within the field service and consumables areas of their business.

However, for those companies that embrace IoT, the rewards can be even greater than mere efficiency and cost savings.

As an example of a smaller company truly utilising the power of IoT let’s take the example of Espresso Service – a third party service provider operating within the coffee sector.

They have taken an active approach to utilising IoT data from across the fleet of coffee machines that they service and in doing so have not only been able to improve their own service delivery but have subsequently been able to develop additional advanced services based on their ability to translate the data from the assets they serve into truly meaningful insights that help their customers better understand how the assets are being utilised.

This allows them to tailor their own marketing and business strategies to be closer in line to how their own customers wish to be served.

It is in examples such as this where we see the true impact that IoT can and will have on industries of all sorts.

IoT naturally paves the path towards preventative maintenance, thereby simultaneously reducing the cost of each truck roll whilst improving customer satisfactionFor whilst as we’ve discussed IoT naturally paves the path towards preventative maintenance, thereby simultaneously reducing the cost of each truck roll whilst improving customer satisfaction, it is within the data generated by connected assets that we will find the most valuable new revenue streams.

As seen with Espresso Service, being able to offer customers advanced services that are based around the insight from data collected within their assets, can open up potential new revenue streams while firmly embedding an organisation within their customer’s business ecosystem.

Yet, while the data is the tool that underpins such advanced services, it is an organisation’s ability to think beyond the bounds of the currently accepted status quo of what good service within their sector is, and to seek what the new normal should be and bring that forward to their client base, that is the critical genetic component of almost all disruptive companies.

This is certainly not a trait that belongs exclusively to enterprise companies.

Indeed, a strong argument could be made that it is the entrepreneurial environment that exists within many smaller organisations that can allow such ideas and concepts to be nurtured and ultimately flourish.

Another factor for consideration here is also that examples such as that of Espresso Service are largely reflective of an organisations ability to truly understand the market they serve and their customers needs within that market.

In today’s world where service has become a core differentiator, this can allow the SMBs to flourish should they embrace the current technology available to them.Again, here we see an advantage that many smaller companies may have over their larger peers in that the relationships they often have with their client base are that much more intimate – giving them perhaps better opportunity to really get under the skin of what their customers’ most challenging issues are and making them better placed to develop strategies and solutions that can solve the issues at hand.

The rapid development of technology we are seeing today means that smaller organisations are now able to access technology that can push their service standards on par and above those of the larger, traditionally dominant companies within their competitive sphere.

In today’s world where service has become a core differentiator, this can allow the SMBs to flourish should they embrace the current technology available to them.

Want to know more? The bad news is the full white paper is only available exclusively for fieldservicenews.com subscribers.

The good news is that if you are a field service practitioner then you may well qualify for a complimentary industry practitioner.

The even better news is we will send you a copy of this white paper when you apply as a welcome!

Click here to apply for your complimentary industry subscription to fieldservicenews.com and access the white paper now!

Note: Please do take the time to our T&Cs (available in plain English at fieldservicenews.com/subscribe) and note that this content is sponsored by Asolvi

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The company that made UK showers smart is about to do the same to its scheduling operation, by overhauling it with powerful new software from Fast Lean Smart (FLS).

Aqualisa was the brainchild of founder Derek Goldsmith, an engineer who bound together two dissimilar metals to create the Bi-Metallic Coil in 1976, making cold showers a thing of the past. In the 00s, Aqualisa introduced the digital shower, which provides consistent, no-fluctuation water temperature at the touch of a button. Over the years, Aqualisa’s smart showers have become ever more sophisticated, particularly with the recent introduction of the QTM, which has personalised functions promising the perfect shower.

Aqualisa employs a network of field engineers to service and maintain its showers, which are supplied under warranties of up to five years. To book maintenance appointments, Aqualisa used scheduling software that did the job but was limited in scope and had received very few updates since it was implemented. Kieran McNally, field service manager for Aqualisa, explains, “We knew there were better products on the market. So as our contract with the previous provider came up for renewal, we shopped around, attended exhibitions, and invited potential vendors to present their product. FLS was one of them.”

The way the data is presented makes it easy to read, understand and manipulate, so we can see what’s happening across the whole service chain.FLS demoed its real-time scheduler and route optimiser, FLS VISITOUR, and offered an initial test: taking jobs already scheduled by the old system and seeing if FLS VISITOUR could do it better. Without changing appointments, FLS VISITOUR brought back a 9% fuel saving and showed the potential for much more if it had been used to schedule the appointments in the first place.

“The fuel saving was significant, and was one of the reasons why we chose the system” says Kieran. “There were other factors too. FLS VISITOUR has a number of cost- and time-saving functions the old system didn’t. For example, if an engineer phones in sick, the system will automatically reassign their jobs or propose the most economical engineer if overtime is required. The on-screen graphics are well laid out too. The way the data is presented makes it easy to read, understand and manipulate, so we can see what’s happening across the whole service chain.”

Aqualisa proceeded with a ‘try before you buy’ trial, which FLS offers all new customers. This involved a light integration with Aqualisa’s service management system, Tesseract, and live operation for eight engineers. “The results of the trial were really positive,” says Kieran. “Mileage costs were reduced and we saw an increase in the average number of jobs per day. We quickly learnt how to use the system and received a very good, very accommodating service from FLS.”

With the business case for using the software proven, FLS VISITOUR will be deployed company-wide this month. For Kieran the outlook is positive. “It’s a huge improvement on the system we had before and makes us far more efficient than we were. What’s more, FLS is constantly refining it, making it better for customers, so that we can provide a better service to ours.”

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AD Bly has achieved savings of £100,000 after an investment in technology helped to reduce maintenance bills, improve driver behaviour and slash mileage

The Knebworth-based construction firm has implemented a joint solution combining TomTom Telematics WEBFLEET and FleetCheck to help boost efficiency across its fleet, with consultancy support from TomTom reseller Auto Electrical Services.

The integration of WEBFLEET and FleetCheck means service schedules can be managed based on up-to-date information drawn from the vehicle, including odometer readings. This helps AD Bly to conduct proactive maintenance work, calling vehicles in immediately when work is required to prevent problems from developing.

Meanwhile, improved mileage reporting has also allowed the company to cut down on out-of-hours use of vehicles, helping to reduce the number of miles travelled by around 5,000 over the course of a year. Reports on driving time and mileage per day also help AD Bly take greater control over the safety of staff.

Bringing different data streams together in one place has helped to change the way we work and allow us to gain greater insights into the operation of our fleetAdam Gamlin, Fleet Manager at AD Bly said: “Bringing different data streams together in one place has helped to change the way we work and allow us to gain greater insights into the operation of our fleet. As a result, the transport department is better able to support the growth aims of the wider business.”

AD Bly also targeted driver behaviour as an area of focus across its fleet of two HGVs and 169 LCVs. OptiDrive 360 – a key component of WEBFLEET – provides managers with weekly reports detailing incidences of speeding, harsh steering and harsh braking. This allows them to conduct detailed driver debriefs allowing them to target any performance issues that may have a negative impact on fuel efficiency and safety.

Meanwhile, the drivers themselves receive in-trip feedback and predictive advice, empowering them with the information needed to make positive changes.

Gamlin added: “By unlocking a wealth of data on driving performance, we are now in an even better position to work with our drivers to improve their safety and help the business operate more efficiently. Our employees reacted well to the introduction of the technology and improvements to performance happened very quickly.

“Now, we are quickly able to identify the root causes of any performance issues and address these with individual drivers, providing the support, advice and training needed to help them improve.”

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Leading Author and founder of Alexander Consulting, James ‘Alex’ Alexander puts forward a series of strong arguments for the reasons why product-focused companies can and must sell services. This is essential reading for the service director struggling to get their voice heard in a product-centric organisation...

Leading field services in a product company is not for the weak of heart. You must deal with executives who feel that products are the only ingredient in the recipe to organization success and that services are a bothersome, necessary seasoning like garlic in a casserole.

Like trying to convince a toddler that vegetables are good for them, you must constantly demonstrate your value internally, while confronting a product-thinking, product-is-everything culture.

Where to begin? I suggest that the best defence is a good offence. Research and review, prepare and practice, and then request individual or group sit-downs with your executive peers to address the question, why sell services anyway? Your future may depend upon your persuasion.

Why sell services anyway? Following are the benefits to articulate and motivate.

1. Sell More Initial Deals

Here is a bit of blasphemy to a product executive: Most customers view products as commodities! Regardless of how truly unique or elegant or innovative, your products are from your perspective, in most all buying situations, customers see no meaningful difference in the top two or three products in any category, across all industries, across all geographies.

Yes, I understand this may not be 100% factual, but from the perception of the customer, it is true. Hence, the old adage comes into play: Perception is reality. Kind of a sobering thought. 

Once customers have determined their shortlist of the two or three potential products or bundles of products that they will seriously consider buying, they almost always cast their product ballot based on what they believe are the best services that surround the productOnce customers have determined their shortlist of the two or three potential products or bundles of products that they will seriously consider buying, they almost always cast their product ballot based on what they believe are the best services that surround the product—services that will best ensure the product works as promised, keeps working, and does so with a minimum of hassle and added expense.

It is important to note that, in many cases, they will pay a premium for your offering if they understand the higher value your services bring to them. In essence, they vote with their pocketbook.

Furthermore, if your salespeople were strategic and sold an assessment early in the buying process—before needs were clear and products were specified—the probability of you getting the product business, later on, is greatly improved, giving you the chance to shape the final recommendations early while building relationships with people key to the final purchase.

GIST: Selling services effectively from the get-go will land you more initial deals.

2. Handle Fewer Train Wrecks

Sadly, sometimes products are positioned to the customer with these words coming out of the salesperson’s mouth: “Our products don’t break.

You don’t need any additional services,” or “It is so easy to implement our software. Just read the manual and you can do it, no worries.” This is all a bunch of baloney, especially if you are dealing with a fairly complex situation, an important customer process, and/or the customer has little if any familiarity with the implementation.

Rare is the product that will not need some type of service in its life cycle, whether a tailored implementation, ongoing maintenance, software updates, refurbishing, and on and on. Not positioning this reality of life with the customer upfront is negligent selling.

Services appropriately sold up front greatly improves the probability that:

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• The product will work the way it is supposed to work the first time.
• Greater functionality of the product will be utilized.
• Irritated customers ringing the bell of the fire engine, escalating their concerns up your organization ladder, will be greatly minimized.

[/unordered_list]  

GIST: Selling services upfront saves your organization time, hassle, and money over the long term.

3. Sell More Products and Services Later

Experience also shows that when deals are sold with services up front, more products and services are sold later on.¹ Services greatly improve the chance that installation and implementation will be done correctly the first time, and services and support improve uptime and productivity.

Delivering services means dealing personally with customer personnel and, done properly, starts to build trust-based relationships. These customers are very likely to buy more of your products (and more services, of course) and are well on the way to being loyal, highly profitable customers for life. 

Figure 1 shows a real-world example of this revenue opportunity beyond the initial product sale. By selling services correctly early on along with the product, this company had a very realistic opportunity to add 2.7 times the original product revenue through incremental services. In this example, the product sold for approximately $100,000, so the potential for more services revenue was approximately $270,000. Plus, the customer was much more likely to buy this company’s product at the end of the equipment’s life.

GIST: Want to be a true total solutions provider? Services are the key.

4. Enjoy Predictable Revenue Streams

Want to see a CFO’s eyes light up?

Watch their face the first time they grasp an understanding of the predictable, repeatable sales that come from a services business built upon service and support contracts coupled with a finely tuned professional services capability.

This is pure joy to a bean counter. The services annuity stream makes life a whole lot easier for all of management, as it helps take the guesswork out of business financials and becomes an early warning, leading indicator of organization success or failure.

GIST: Strong services help you manage your business more effectively

5. Differentiate Yourself

Depending on the maturity of your industry, your competitor’s strategy, and your competitor’s dealings with distribution, services can differentiate you in a really big way. The more complex your products, the more they cost the customer; and the more mission critical they are to your customer’s business, the more the value-packing promise of services. Leading services researchers note from their studies that more and more companies in tough competitive markets are looking at services to yield competitive advantage.²

If your competitors don’t have full portfolios of strong service offerings, or if they don’t know how to sell them, this is a huge opportunity for you if you embrace the challenge. Give your customers what they need, want, and will pay for while locking out everyone else.

GIST: Services are the drivers of market dominance.

6. Create New Markets

Business consultants like to talk about adjacency strategy,³ the strategy of building upon an organization’s core competencies in one market to transport those capabilities to an adjacent, but different market space.

For example, a company with specialized battery technology designed for the automotive industry could potentially attempt to build upon that battery expertise to develop and sell to the marine market. The same possibilities hold true with services. For example, an energy utilization assessment developed for the automotive industry could be adapted for the marine market.

Taking advantage of your past experience and expertise can crack new markets and expand profitable revenue.

GIST: Services adjacency strategy can be a powerful component of any growth blueprint.

To summarize, services have proven themselves to be able to contribute significant value to many, many product companies through profitable growth of both products and services. Properly executed, strong services capabilities can increase customer satisfaction and generate customer loyalty. In addition, for some companies, having the right portfolio of services helps smooth the entry into new markets. Finally, in some cases, having an arsenal of new or better services can create competitive differentiation.

Question: But aren’t services less profitable?

Answer: Normally not.

Here are the core elements of a conversation I had with the CEO of a software company that I was interviewing as part of a services assessment for his company.

• Alexander: Tell me what role you’d like services to play in helping your company be successful.
• CEO: Frankly, I wish services was a much smaller part of the business. They negatively impact our overall profitability. Every time I talk to financial analysts, they beat me up on this issue. If you can tell me how to eliminate services altogether, I’d be extremely happy.

This perception is fairly common among executives at companies with high product profit margins. However, in most cases it is not entirely correct. 

On average, my research shows that there is no difference between the profit margins of products and those of services.⁴ In general, product profit margins have decreased as industries have matured, and services profit margins have increased as services management has learned how to optimize their organizations. For example, professional services organizations within product companies have improved their profitability by seven points over the last decade. In fact, top-performing services organizations have profit margins double that of their products. 

Adding a portfolio of services, even at lower margins than products, will increase the overall value to the customer.There are exceptions, of course. New products in new industries could have higher profit margins initially. However, experience shows that product margins will consistently drop. A few products, due to their innovation or patents or special circumstances, may be able to maintain very high product margins over time.

Yet, recalling the high value that customers place on services, adding a portfolio of services, even at lower margins than products, will increase the overall value to the customer. Hence, looking at blended margins is probably a much more realistic way to view and understand overall profitability. 

Finally, examining the financials of many services businesses inside product companies raises a few eyebrows, if not a few questions, about how profitability is calculated and the fairness of the calculations. Here are some issues to consider:

• Place your list items here

• If services consultants are spending 30% of their time in a pre-sales role, why isn’t that expense charged to sales?
• If you are a VAR (value-adding reseller) and your partner agreements require you to have a number of certified experts on staff, shouldn’t some of the costs of having these low-billable people on board be charged elsewhere?
• If a big customer has a blow-up, and company execs require a busload of top technical talent from the services business to do whatever it takes to fix the problem at no charge to the customer, should that cost be eaten by the services business?

My own biased experience says that if you sell the right services to the right customers in the right way, they will be very profitable and make the rest of your products look much better as well.

 

GIST: Re-look and re-think cost allocation, pricing strategies, and margin expectations versus customer value. There is a good chance that you don’t readily have this information, and it will take time to get the quality data you need.

 

So, there you have it—proactively communicate the value that your services deliver, help build a more profitable organization, and gain the respect you and your people deserve.

Endnotes

This article was adapted from Seriously Selling Services: How to Build a Profitable Services Business in Any Industry, by James “Alex” Alexander, and can be purchased from Amazon.com or the Alexander Consulting website.

References

1. Hahn, Al. 2007. The True Strategic Value of Services. Sandy, OR: Hahn Consulting.
2. Brown, Stephen W., Anders Gustafsson and Lars Witell. 2009. “Beyond Products.” New York, NY.: The Wall Street Journal.
3. Zook, Christopher. 2004. Beyond the Core: Expand Your Market without Abandoning Your Roots. Boston, MA: Harvard Business School Press.
4. Note that services margins are declining on average in some industries as more and more services appear alike to customers, are hence seen as commodities, and thus seem to have less value.

 

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CSG the trusted partner to simplify the complexity of business transformation in the digital age now offers even more ways for Pay-TV and other service providers to proactively communicate in real-time with consumers about their service appointments.

CSG's Where's My Tech solution offers a real-time view of a service technician's arrival schedule.

As part of CSG’s overall philosophy to enable an exceptional, interactive experience between service providers and their customers anytime, anywhere, on any channel, CSG now offers a real-time option for consumers to follow the arrival progress of a service technician.

Today’s digitally-savvy consumers are conditioned to receive updates from the companies they do business with at every step of the customer experienceThe new solution, named Where’s My Tech, is part of CSG’s field service management solution, Workforce Express (WFX), which offers the ability to get the right technician, to the right job, at the right time and now, can show consumers exactly where their service technician is and when they will arrive at the job site.

Where’s My Tech offers consumers real-time information about the status of a service technician appointment, enables consumers to digitally follow the technician while they are on their way to the service location, and receive email or SMS messages with the estimated arrival time of their technician’s arrival.

“Today’s digitally-savvy consumers are conditioned to receive updates from the companies they do business with at every step of the customer experience,” said Tim McElligott, senior consulting analyst at Stratecast | Frost & Sullivan. “When those real-time updates don’t happen, the customer experience is tarnished which can potentially have a negative impact on customer satisfaction, and even a Net Promoter Score.”

The Where’s My Tech solution is the latest enhancement to WFX, in addition to real-time traffic, capabilities announced earlier this year.

“CSG’s communications management solutions offer an integrated approach for service providers to manage and more actively engage with their customer interactions throughout the customer lifecycle,” said Chad Dunavant, head of product management, CSG. “This solution is the latest step we have taken to help our clients deliver easy-to-use, connected experiences that instantly raise the consumer experience to a new level.”

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Kris Oldland, Editor-in-Chief, Field Service News talks to Deputy CEO and COO of Polygon a company with over 3,500 field service engineers, about how his organisation has evolved over the last decade, the shift towards advanced services that has come from that evolution and how a close working relationship with Enterprise Service Management solution provider IFS has empowered their ability to develop and advanced services approach to field service delivery.

 

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