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Value based pricing is a hot topic in industry today, but what exactly is it and why is everyone talking about it?

Is value based pricing simply about getting as much price from your customers as possible? Or is it about valuing your longer-term relationship with your customers, or perhaps improving your service? In fact it is each of these and potentially more. What is clear however, is that cost-plus pricing for services does not always offer the customer or the supplier the best value - yet there may now be options to combat this with value based pricing.

The following report co-authored by Dr Shaun West, Lucerne University and Dominik Kujawski, Arvik Bolting Solutions brings together good industry practices in a solid academic framework. The report provides business leaders with a guide on how to create a value based strategy to price B2B services - as such it is essential reading for all business leaders...

Why value based pricing?

During a conference we recently attended, a phrase that kept coming up in conversation was “We should all switch to value based pricing”. An increasingly topical statement in industry today, however, the approach of value based pricing is also one which is not being discussed any further. No one seems to be speaking about HOW to actually achieve this goal.

Pricing is not new- even Oscar Wilde said: “Nowadays people know the price of everything and the value of nothing”

Companies need to focus on customer value in developing pricing strategies as pricing pressure in the industrial B2B market has been increasing as a result of changing customer buying behaviors. In this article we’ll delve deeper into why value based pricing can be challenging and why it has a huge impact on companies’ business.

Is pricing really a strategic capability?

Pricing is an important management tool to help achieve the firm’s objectives and has a huge impact on the financial results. It is a multi-departmental activity influenced by several functions within the firm that may attach different importance to pricing and the value drivers of the business.

Every business manager needs to be aware that pricing has an impact on customer satisfaction and that pricing is not only dependent on price itself.

Pricing of services is dependent on situations in which a customer finds themselves in and the jobs in which they need to do at that time.

This relation of pricing to customer engagement in this process includes three strategies:

• Cost plus strategy;
• Competition/market base strategy;
• Value based strategy.

Cost plus pricing

The process of cost plus pricing starts with the firm determining the scope of their service. Here, a unit cost is simply calculated and a pre-determined margin is applied to set the price. This margin reflects the desired profitability of the firm. The customers are then told what will be ultimately delivered in exchange for the set price

Competition/market based pricing

This process begins with pricing based both on the scope and the costs, then additionally on what the competition charges for a similar service. Setting the price here has an influence on the market situation. Large competitors tend to have a scale advantage over the smaller ones since their fixed costs are mostly lower due to a larger customer base. The last step of this process is presenting the customer with the value that is being offered through the service.

Remember that data is in your CRM system and in the market – keep track of it.

Value based pricing

The value based pricing approach is based on analyzing each customer’s needs, pains and gains, and their willingness to pay. It depends on the customer interest and acceptance of price for a provided value. Here, the price is set for the offered value, and later the scope of the service itself is determined.

Calculating the costs in this strategy is also necessary as they used to make a reality check and afterwards calculate the margin achieved.

Listen to your customers

The process of pricing in cost and competition based strategies suggests to ask the question “why is the customer situated at the end of the process if all of the companies always state that customers are the most important?”. A juxtaposition to the truth, you will always hear stated that companies involve their customers in the co-creation of service value from the very beginning, but how can this be actually possible with a cost plus and competition based pricing strategy?

Now, how do we turn this approach around and place focus back on the customer? Straight away, let’s forget about pure cost plus strategy.

This ‘simpler’ pricing strategy shows that the supplier can have a lack of understanding of the customer value and as a result the customer offering can be weak.

In addition to this, the competition/market base strategy, which is endorsed by many companies, indicates that pricing is controlled by the market. As such, this removes focus from the customer and indicates that the supplier does not entirely understand customer value, showing that the resultant value outlined by the firms offering can also be low.

So, how should service companies price in order to bring the customer into the focal point? The answer is quite straightforward; by aligning pricing objectives, strategies and tools according to the holistic strategy of the company.

Note: pricing needs to be strategic… it must not be left solely to Sales,

Production or Marketing departments. It needs to be driven by management and agreed by all the departments influenced by pricing Companies should create more customer focused objectives to choose pricing strategies that consider customer value.

This means that when pricing services, you as a firm need to firstly understand how your customer creates value and secondly, where you and your equipment fit into this process. You need to know that pricing tools used also need to support the objectives of pricing and the pricing strategies. For example, a pricing tool supporting customer oriented objectives can be bundling as it is a way for firms to present the scope/price negations, thereby providing a different approach to customer value discovery and leading to improved customer experiences.

Source of pricing power

Here, a B2B example is given, showing that the source or pricing power comes from customer need states. Let me take you through the example of a simple bolt used in industrial equipment. Bolts are widely present in everyday life and more specifically, they are present in almost every technologically advanced machine or construction, from compressor valves and turbines, to the foundations of wind mills.

So, what is the price of tightening a single bolt? The price of a single bolt varies from market-to-market, from machine-to-machine and from company to company.

The most significant result of bolting, however, is the residual load that a customer requires from the bolting supplier. Now, to show where the pricing power of services come from, let’s imagine a situation where you exchange a single bolt worth a couple of dollars, in a compressor valve which is worth hundreds of thousands or install one in an offshore wind turbine, worth even

more. How much should the tightening of one bolt be worth to keep the compressor running or the turbine safe on its foundation?

In this case, bolting provides safety and savings on a huge scale however, the value of the service to each customer varies depending on the scope of the project. Here, not all customers are the same, so they should also not be treated with the same approach.

Customer value connection based on colors

Customer value connection shows that companies need to do what their particular customer values. If the value proposition you offer creates no customer value, it is then only a purely basic cost to your customer.

It is time to use the “knowledge” about your customers to move to customer value propositions and find ways to deliver what is really valued. Hence, what they are really ready to pay for?

Firms need to consider what is core and what is standardized.

It is important to be aware that pricing can be different for different modules. This means that the customer can pay a different price based on the “menu” or “á la carte”, and shows that there are multiple pricing points for services but what is really interesting, is that its components don’t change. So what is changing?

It is the location and more importantly the type of service provision together with the customer need state. In the first mentioned case, the compressor valve is available in a workshop where the bolt can be tightened with use of onshore equipment, in a quite friendly environment.

However, the tightening of wind turbine requires going offshore to harsh conditions with special trainings and guaranteeing the customer that a bolt tightened worth a percentile of the whole wind mill will provide safety from failing the whole project.

This clearly shows that the customer gets usage, location and utility from the supplier. And if a firm is able to segment customer needs states and purposes for buying. It is also able to find the right pricing points for it.

This helps to identify margin and revenue opportunities available to a company.

This shows that that customer value identification process work for product based firms too.

Pricing waterfall for value based pricing

A prototype of pricing waterfall diagram provides guidance towards value based service pricing. It considers the most important aspects of pricing, starting from benchmarking competitors to considering the customers’ willingness to pay. As such, it helps you to triangulate on the value based price that your customer is willing to pay.

The pricing waterfall presents that single, inflexible offerings can limit companies to sharing limited value. Whereas, flexible offerings respond to customers’ changing needs.

Also, flexible pricing based on all important factors helps to increase customer value. Offering flexible service dimensions that support customer choices, together with flexible pricing strategies can provide the supplier with additional pricing dimensions that can have a positive margin increase impact. The pricing waterfall also highlights the importance of triangulation of pricing based on market analysis, internal value creation and customer value.

Final comments

This article presents that pricing is a strategic capability and needs to be kept in line with the company’s overall strategy. There is a great need to focus on customer value creation during service pricing, and aligning strategies and tools to support the objectives set by the company. Understanding customer value rather than simply relying on cost-plus or market-based approach, is a key to pricing industrial services. Another very important step in the process of pricing, is margin calculation based on the identified costs and value price offered. It is essential to calculate the margins in order to assess the correctness and validity of the price.

To summarise, consistency in pricing is of great importance and needs to be maintained across all pricing objectives, strategies and tools used to determine the final price of a service offering. So after reading this article, ask yourself again, “Should I switch to value based pricing?”. The answer is not always, but one can learn to determine situations, locations, needs and pains to price according to value.

 

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Michael Blumberg, President of Blumberg Advisory Group discusses the emerging hiring trends of the variable workforce and freelance management systems and looks at how these can be applied to help field service organisations balance staffing levels with workloads...

If you follow the business news, you have heard about hiring trends which are moving away from the traditional full time employee model. Having full time employees means a guarantee of wages, benefits, vacation time, sick time and paying additional federal wage taxes.

With the new labour laws coming into play regarding overtime, this can mean additional expenses as well. It also means paying the employee even when there is a lull in the business. For a service company there may be peaks and valleys in workflow and the need for field service personnel. And while so much can be done on a remote basis, there remain many times when someone just has to be onsite to fix the problem. Clients are no longer localised geographically so having technicians who can get there quickly becomes an additional challenge.

For all of these reasons, companies have increasingly turned to freelance workers, AKA a Variable Workforce. Freelancers have existed for decades in the form of writers, artists, administrative assistants and others who were not full time or part time employees, rather they worked and were paid as contactors. The idea of outsourcing work is not a new concept either. The difference is the increase in the number of and types of workers for hire on a part-time or project basis. In relationship to the Field Service Industry, there are now highly skilled, well trained, specialised Field Service Engineers who are available on an as needed or project basis. These individuals are normally highly motivated as they essentially run their own small business and generally have a strong work ethic.

 

For most people in the Variable Workforce, they work this way by choice, enjoying the flexibility that being your own boss can offer. This workforce can be found worldwide and can get to those emergency on-site calls fast. That speed satisfies the customer and saves the service company money.

Given changes in the way companies staff their businesses, a new system of managing this process is a natural extension. With the increased pool of a project based, part time workers has come the growth of Freelance Management Systems (FMS). These online cloud based systems allow those companies looking for qualified workers, including Field Service Engineers, to find them quickly and easily.

The FMS platform handles the billing and payment, scheduling, provides a searchable database with skill sets and geographical locations of the personnel all at the fingertips of the companies who seek workers and the workers themselves. The workforce can market themselves to hundreds of companies at once and manage their incoming payments all at the click of a button.

FMS provides companies with the opportunity to achieve significant cost savings over time and the ability to accelerate strategic or organic expansion resulting in new clients, new service offerings, and/or new sales territories.

So what is the actual experience of companies using a Variable Workforce and FMS platforms? Have they been able to achieve these benefits or is it just hype?

 

When faced with questions like this, what would a great management consultant do? A survey of course! So that is what we did. We created an online survey for the Field Service Industry to look at these staffing trends and how it is being manifested.

We wanted to reach a broad range of companies, reaching out to professionals who engage field service staff or make decisions about field service staffing requirements for companies with field service functions for technology equipment they sell and/or service.

We wanted to examine the benefits of Variable Workforce models, particularly FMS. In addition, we wanted to understand key objections or concerns about the Variable Workforce and FMS models. And in doing so, we could assess the key motivators for using FMS and evaluate the impact of FMS on critical Key Performance Indices.

Finally we could use this information to identify the best candidates for using FMS. This article addresses Variable Workforce and Field Management Systems in the Field Service Industry.

The survey which we conducted yielded 203 respondents. The types of companies included those participants represent include all areas of Field Service: Third Party Maintainers/Independent Service Organisations, Original Equipment Manufacturers, Value Added Resellers, Systems Integrators, and Self-Maintainers.

The companies range in size from over $500 million in annual revenue to less than $50 million. These companies also varied in size as there were those who manage less than 100 field service events per month up to more than 1000 field service events. These field service events included emergencies, installations, inspections, and preventative maintenance or calibration. And the types of technology supported included Information Technology, Network Connectivity, Printers, Point of Sale, Telecommunications, The Internet of Things, Security Equipment, ATM and Banking, and Retail Marketing Equipment. The companies also ran the range of how a Field Service Business is run – as a cost centre, as a profit centre, as a strategic line of business, or as a revenue contribution centre.

What we found was that of the respondents, over three-quarters (77%) were currently using some type of Variable Workforce Model. Also, the respondents were two-thirds Third Party Maintainers (TPM)/ Independent Service Organisations (ISOs) or Original Equipment Manufacturers (OEMs).

 

One of the most important data points we found was that on average, the Variable Workforce users support more types of technology than companies who do not use solely a Traditional Workforce.

That is, those companies who use Variable Workforce are able to support 4 types of technology versus only 1.8 types of technology for companies who do not utilise Variable Workforce.

This piece of information reinforces the idea that those companies using a Variable Workforce can expand their service offerings not only geographically, but also to include more types of service by utilising the highly skilled specially trained technicians they can reach utilising this model.

The top three reasons that companies made the move to a Variable Workforce were:

• The ability to be agile and scale their workforce based on customer demands.
• Over half agreed that “We didn’t have enough work in selected geographies to justify hiring a full time Field Service Engineer.”
• Almost all said that controlling labor costs was a significant motivator.

Once making the decision to utilise the Variable Workforce, companies needed to find tools to help build and manage the staffing. Nearly two-thirds of those companies use a Freelance Management System. Others used and in-house team or 3rd party provider or staffing company.

Of the Freelance Management System users, almost all have been using it for at least one year and 60% for three years or more. Approximately two thirds of these companies are Third Party Maintainers/ Independent Service Organisations or Value Added Resellers.

What type of labor do they contract labour? The number one answer is project based work - an overwhelming 81% of the respondents. Not only do companies who use a Variable Workforce support more technologies than non-users, but also FMS users tend to support more types of technology. On average the companies who use FMS support 4.3 types of technology versus only 2.8 types of technology for non-users. This is most likely due to the ability to have more types of specialised engineers available to the FMS users.

As is the case with most changes, companies considering using the Variable Workforce and FMS to support that staffing model had concerns about moving the impact it would have on their business.

 

These concerns included a fear of a negative impact on customers, how would this change impact the customer and their relationship?

What did they know about the reliability and technical capabilities of the workforce they were hiring and how could they really know who these people were? And would the savings they thought they would get in the long run really be enough to justify the cost of making this change?

The companies we surveyed told us that ultimately the most compelling reason to make the switch was that the FMS platform is agile, giving companies the ability to scale up quickly to meet seasonal, cyclical and short term demands. In fact, 71% of users found this to be the case.

The benefits of FMS and the Variable Workforce these companies have realised include the ability to cover a greater geographic region, increased service coverage, increased flexibility, and lower overhead.

FMS adopters have been able to gain more business and have been able to increase their field service work.

They have experienced such success that 76% of them reported an increased demand for FMS just in this past year. In fact, most of those have increased their use by at least 15%.

 

The increased usage stems from the positive results of New Service Lines, New Customers, and Increased Geographic Coverage. The results show that the very reasons they considered making the move to FMS is now leading them to utilise this model to an even greater extent.

Taking all of the survey results into account, we feel confident that the need for and usage of Freelance Management Systems for the Variable Workforce in Field Service will continue to increase over the next year as well.

Companies of all sizes adopted this model have found the results to be overwhelmingly positive. A decrease in overhead combined with an increase in the ability to serve customers equals increased success. As one survey participant summed it up, “Increased revenue and additional customers [are] driving volumes!”

 

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For many field service directors the opportunity to develop a brand new service organisation would sound like a fantastic opportunity to be relished. Ian Cockett of Cygnet Texkimp, who is in the process of doing just that, tells us what the process is like in reality...

Ian Cockett, Product Director, Spares, Service and Maintenance holds up a blank piece of paper. This is the opportunity I was presented with he says.

An opportunity to build a service operation completely from scratch. How could I resist?

Cockett is talking to a room full of around 50 field service managers and directors at a service community gathering and looking around the room at the nodding heads and wry smiles as he begins his presentation, it is clear that a number of those in the audience not only undersood the challenge Cockett was facing but also the lure of such a proposition.

Having spent some thirty years working in service, primarily within the domestic heating market, Cockett certainly has the pedigree for such an undertaking. He spent many years working for Bosch, one of the most respected organisations in the sector, having direct responsibility for the aftermarket team in the UK with responsibility for around 300 field service engineers, a contact centre of 80 people working 7 days a week and a technical support team of around 40 people.

 

More recently Cockett was Service Director for Domino Printing Sciences a company providing equipment used in print processes within the production environment. Here service was in constant high demand as if a printer goes down then production facilities are not working - so their clients would be directly losing a lot of money and therefore needed a highly efficient service operation to keep them onside.

However, just over two years ago Cockett moved to his current role with Cygnet Texkimp - a business involved in technical fibre processing.

A family owned company that has been in operation since 1974, Cygnet Texkimp operate in the fibre processing industry and design, manufacture, install and now maintain equipment that goes into technical fibre processing servicing sectors as diverse as carpet manufacturing through to aerospace and the automotive sector.

Having experienced significant growth within the last ten years the company now comprises of six main areas with a view to offering a complete turnkey solution for their sector - including the aftersales division which Cockett has been tasked with developing.

However, it hasn’t all been plain sailing as Cockett has looked to introduce the concept and culture of a service oriented organisation into an organisation focused on delivering high quality engineering solutions but without the service support structure or established KPI’s and processes that an established service organisation may take for granted.

“It has had more challenges than I thought we would have. When starting a service organisation from scratch in an established organisation, the challenges are broader than just generating a service business.” Cockett explains.

 

“I am used to organisations where you’ve got a service team that’s an inherent service team, with KPIs in place, with scheduling systems in place, and with engineers all across the UK - so I was there to manage that team and then to drive continuous improvement.”

“This is a completely different beast I’ve found and it’s definitely given me some personal challenges, but nevertheless it’s an exciting opportunity we can work with and hopefully help the business to grow through delivery of excellent service.”

The challenges that Cockett faces are split into two main areas. The first is actual business development and the second is around developing a culture within the organisation that compliments an aftersales division.

The key challenge is that, as with many similar sized companies, whilst the business is growing it is all too easy to focus solely on the here and now, on delivering custom solutions for clients that meet expectations but without a forward vision of how these solutions can be maintained efficiently via a service division that is yet to even exist.

 

As Cockett explains “We are moving to standardise on our products more and more where this is possible and implement process improvement across the organisation as the business continually develops.”

Another additional challenge Cockett faces is that Cygnet Texkimp operates as a matrix structured business.

“In one sense it’s s great “ Cockett comments “it’s good for the business in terms of flexing through peaks and troughs and that is great in terms of the business and providing a stable platform.”

“The challenge I’m faced with on a service basis however, is that I have to go begging, pleading and robbing to get people to provide service support.

I’ve gone form 300 service engineers at Bosch to 1 here. We do have other organisations that we own which we can utilise – for example mechanical and electrical installation and service companies that we are part of so we can draw on that resource but because it’s not my resource the challenge I have is getting the right person at the right time to go attend a service call.”

In addition to this the other significant challenge Cockett faces is that most of their business is outside of the UK where they are based.

With no service team as such just where does Cockett start in order to begin building a service operation that can become a profitable element of the company?

“We have recently recruited a COO, which is now bringing in some of the structure, process and procedure that we need and also some standardisation to allow us to continue to drive through business and continue the growth pattern we are going on.”

“For example, one of our challenges associated with our progress with product standardisation is that of spare part naming and numbering conventions, which historically have been project led.”

“The challenge I face, is we have all these different bits of kit and same widget may appear with a different name or part number when used in lots of different pieces of equipment. So trying to manage that from an aftersales perspective will give you some real challenges, as anyone involved with service businesses will agree.”

 

In order to overcome this hurdle Cockett is now working with design teams going right back to the design process to organise things in a structured way.

“Now our electrical and mechanical design team both use the same language, we all structure the parts in the same way and if we have a part we have used before we give it the same name and part number as before.”

Although it may seem an obvious step it is a crucial one and Cygnet Texkimp won’t be alone in having overlooked such steps as they evolved at rapid pace.

However, as Cockett begins working with his colleagues across the wider business putting these foundations in place, he is able to see the service operation and the company as a whole moving forward.

This in turn has allowed him the opportunity to begin addressing his other key challenge - of developing service business.

“The opportunity is of course the legacy stuff - the equipment that’s already fitted and out there across the world - that’s my opportunity to go and sell spares and service.” he explains.

 

“It’s about getting the right service, to the right customers and we need to have people in the right places to do that,” he concludes.

However, the one thing that comes across clearly having listened to Cockett’s presentation is that he is a man that not only has the experience to know what service excellence looks like, he also is able to take the wider business view to ensure that service doesn’t just get added as a business unit in isolation, but is a central driver for the way the company evolves moving forward.

And whilst the challenges Cockett and the management team at Cygnet Texkimp remain numerous, there remains a genuine feeling that nothing is insurmountable.

The development of a service department is the natural evolution for Cygnet Texkimp and Cockett strikes me as a man that will ultimately deliver.

 

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A shift in attitude & embracing new tools can help break telco’s poor customer service cycle writes Mussy Kurt-Elli, CEO of QubeGB and a keynote presenter at Maximize Europe Conference which took place in Amsterdam earlier this month.

While it’s no secret that telcos perennially end up at the bottom of customer satisfaction reports, a survey this summer by the Institute of Customer Service report actually shows signs of significant improvement in the space.

Not exactly time to break out the Dom Perignon, but any improvement is worth holding onto - although it has to be put into perspective.

So-called challenger brands, such as Tesco Mobile and giffgaff have apparently skewed the scores, so clearly there is still room for improvement.

And according to a more recent report, from market researchers Vanson Bourne, it’s not a wish that is exclusive to the telco sector. The report shows that nearly half of IT and field service decision makers surveyed across all types of organizations peg improving customer service as a priority area for investment. For IT decision makers, ¬field services fall below the popular categories of security, big data and analytics but it’s still significant.

 

To a certain extent it is unfair to compare telco with other sectors. Customer quantities and types of product vary but certainly telco has to keep working on improving service quality. The Institute of Customer Service notes “telecoms continues to generate the highest number of complaints, with one fifth (20%) of customers having experienced a problem.”

I shouldn’t complain. After all, the fact that most operators are struggling to execute high customer service themselves gives us an “in” to winning new business (we provide field engineering and managed services to all of the UK’s major tier one carriers, such as BT, Talk Talk, Sky, EE, and Virgin Media, as well as smaller aggregators, such as the Post Office, housing associations, and electrical retailers).

In my experience, the industry doesn’t suffer from lack of experience, but more often a lack of critical fundamentals, such as modern service tools, processes, training and front line service engineers to uphold customer service standards.

Without investing properly in these areas, the industry as a whole will continue to struggle with high levels of complaints.

In our own business, we deployed the ServiceMax field service management platform to formally manage our service teams in the field, and get insight into products, history, scheduled maintenance, and Cases and Work Orders to streamline customer interaction. Having the  right tools and process in place can lead to transformational change.

So what does this mean for telco customer service? Certainly change is necessary and this change is as much about perception of customer service as it is the processes and methodologies in making customer service and support more efficient. Empowering field service engineers and support staff to improve communication, response times and repair times (as well as increase transparency and efficiencies) is important for modern support teams.

 

The key is for telcos to recognise the true value of field service, not just as something which can impact customer satisfaction but that can also provide data and intelligence on customer trends, product deficiencies, new product ideas and the potential for upselling. Unfortunately, according to the Vanson Bourne study, in the majority of cases, organisations and board members are missing the link between ¬field services and customer satisfaction, let alone everything else. This means that boards are reluctant to support increase field service projects and improvements in customer satisfaction are slow.

In fact the telco sector has an opportunity here to make a leap forward. As a third party support supplier for the industry, we have seen huge improvements in the technology that can help us improve service provision for customers.

Improved reporting with more granularity, a clear feedback path for recurring product faults and transparent workflows are just some of the benefits we can now pass on. What does this mean to telco businesses? Ultimately a time reduction on each job which increases service capacity and therefore financial savings. We estimate that a ten-minute reduction on each job would increase service capacity by 50,000 jobs a month and earn a potential £6m in additional revenue a year.

 

It’s a strategic step that puts an end to the firefighting approach (chances are your service department has yet to modernise in terms of technology, dedicated service platforms, training or tools). Addressing the gap in field service delivery teams will not only increase customer satisfaction but also improve employee satisfaction and lead to greater job retention.

Telcos need to accelerate change and embrace the field service renaissance. Customer service after all is the new growth strategy for all businesses.

 

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Jim Baston continues Charlie’s journey as the serialisation of his service oriented book beyond Great Service continues...

 

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If you missed the earlier parts of this series you can catch up by clicking here

 

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The last time we left Charlie, he was trying to make sense of a comment a past customer made to him.

The comment has helped him to realise that his company is missing a tremendous opportunity to add significant value to its customer relationships. He recognises that asking questions during the contract that gives them more insight into the goals and needs of the customer, will allow them to go beyond simply maintaining the equipment by making recommendations of products and services that could help them address their challenges and achieve those goals. In other words, they could proactively take steps to help the customer to be measurably better off by the end of the contract than they were at the beginning.

This is an important revelation for Charlie as he comes to see the service business as more than a maintenance and repair activity. He recognises that the real value that his company can provide is to use their collective experience and expertise to be a “technical” partner for their customers. Using their unique knowledge and understanding the needs of the customer, would allow them to make recommendations that will help their customers achieve their business goals.

He immediately recognises the important role of the technician in making this a reality. They are in the best position to recognise and make recommendations. They know the technology and the capabilities of their company. They have an established relationship with the customer with typically high levels of trust. They know the customer’s equipment and the challenges they are facing. And perhaps most importantly, they have an understanding of the needs and goals of the customer. These are the critical pieces of the puzzle needed in order to make intelligent recommendations.

 

The challenge for Charlie is that he sees the task for the service people as selling and this doesn’t go over very well with the service team. He introduces the subject at a service meeting.

[Charlie] … brings up the issue of selling by simply asking, “So what do we have to do to encourage you to sell more of our services to our accounts? I am convinced that we could grow our revenue significantly, if you guys would just spend a little time talking to the customers about the other things we can do.”

The group sits in silence for a few minutes. There is a lot of shuffling of feet and a few uncomfortable grins as people look at Charlie, and then around the room at their peers. Finally, Angus speaks up, and Charlie is surprised by his response. “With all due respect, Charlie, it’s not our job to sell. We have a sales person that does that. You need to find a way to get him to sell more. Anyway, I can’t speak for the rest of the guys, but whenever I’ve brought opportunities forward, I’ve been disappointed with the way they were handled—if they’ve been handled at all.'

"Just last week, the building manager at Marsh Estates wanted to know when I was going to get my sales guy to show up to discuss our energy audit program. I brought that to John over a month ago. Frankly, I was embarrassed, and I’m gonna think twice before I make a recommendation like that again!”

John is Novus’ service salesperson for maintenance contracts and small project work. He reports to Lauren Baker, Director of Sales and Marketing. Although John does not report to Charlie per se, he has an informal dotted line of accountability.

Charlie was taken aback. From his perspective, Angus was very good at generating new work. He had the least number of contract hours of anyone in the place, and yet was never one who was short of hours. “How can you say that selling is not your job Angus, you’re one of the best ‘salespeople’ in the place?” inquires Charlie.

Charlie was surprised by Angus for the second time this morning. He did not expect the reaction that he got.

 

Angus smiled and said, “That’s where you’re wrong boss. I’ve never sold a thing in my life. I leave the selling to the guys with the expense accounts and the company cars. I simply keep my customers informed, and keep my eyes open for things that they should be doing to improve the operation of their facilities. I could never be a salesperson.”

… Charlie looks around the room. “What do the rest of you guys think? Don’t you see the value of selling our services to the customer?” … Pete sits forward in his chair and says, “Angus is right—we’re not salespeople. We have no business trying to sell the customer anything. We’d lose our credibility with them.” At this point, the room becomes animated and various techs chip in with their comments. Generally speaking, they are all in agreement.

Now Charlie is in a quandary. He recognises that he can really help his customers by making recommendations aimed at helping them achieve their business goals, but he can’t do that without the direct involvement of the service team. And, based on the reaction from the service techs to his suggestion, he won’t be very successful in getting them to participate.

Thinking about your business:

• Do you have a formal or informal expectation of your field service team to generate opportunities in the field?
• How enthusiastically does your field service team participate in this activity?

Next time we will look at this role of making recommendations as an integral part of the service provided.

 

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Marina Stedman, Director of Global Field Marketing for ClickSoftware takes a look at the recent new EU legislation and what it means for field service organisations operating within the region...

After an employee court case in September 2015, the European Court of Justice (CJEU) ruled[i] that time spent travelling to and from first and last appointments by workers without a fixed office should be regarded as working time.

This is because the workers are at the employer’s disposal for the time of the journeys, are acting under their employer’s instructions and cannot use that time freely to pursue their own interests. This obviously has huge implications from a field service perspective, especially related to the number of hours that can be worked and on rest time which are both part of the Working Time Directive (WTD). While some vagueness remains around the changes, they are expected to be implemented by 2019.

To help our customers navigate the new legislation, we knew needed to get under the skin of the incoming changes, so we decided to survey over 300 senior business leaders across Europe to see what they thought.

WTD and what it means for business 

Our ‘EU Travel to Work’ Research conducted with Bilendi (one of the top digital service providers for the market research industry in Europe) found that over a third (36%) of UK businesses will not be ready when the latest WTD regulation comes into force. France followed closely, with 48% of respondents claiming they will not be completely ready.

Additionally, more than one in 10 companies are not actually aware of the ruling. Just Germany (69%) and Italy (72%) are confident they will be completely ready.

Unsurprisingly, the report found that businesses expect the new ruling to have a significant impact; 60% plan to change the way they operate. So what does this mean from a field service perspective?

We found that nearly seven in ten (68%) businesses will or may have to change the way they schedule resources in the field.

In real terms this means:

[unordered_list style="bullet"]

• Thirty percent will need to cut the number of jobs that any field service engineer can complete in one day and expect to pay staff more for overtime
• Nearly one in five companies (19%) will need to hire more employees to complete field based work – this is highest in Italy (39%) and Germany (41%)
• Nearly half of respondents (47%) will need to implement new systems and tools to manage the new rules[/unordered_list]

Understandably, cost is highlighted as the biggest concern around the new law, according to 29% of respondents. Awareness and understanding will also impact compliance with one in five businesses (19%) concerned about unknowingly breaking the rules.

Transforming lives in the field

What will these changes mean for field service workers?

The new WTD ruling is expected to positively impact the lives of workers in the field. Three in 10 businesses (30%) anticipate having to reduce the number of jobs a field service employee can do in a day. At the same time, the same level of employers are bracing themselves to have to pay more overtime to these employees to factor in the cost of travel. How will businesses cope with this change? Just under one in five (19%) businesses expect to take on more staff to be able to cope with the demand for field based work at its current level.

The challenge for organisations who have field workers will be introducing systems and processes that balance their commitment to employee well-being in terms of mandatory breaks and rest periods during a now extended working day and week, with cost and productivity within the rules that have been set.

 

Containing the cost of service delivery without sacrificing quality will be critical for service-centric businesses. By their very nature, most field service workers are mobile, with many starting and finishing their working day from home, rather than a fixed office, with travel time taking up a large part of their working day.

At ClickSoftware we’ll be working with customers to help them adapt existing practices to ensure they continue to operate in multiple countries across Europe, competitively and sustainably.

An opportunity for innovation?

The majority of European business leaders (75%) think that the new law is set to benefit field service staff.

Already, we’ve seen how digital connectedness and smart mobile devices have transformed the industry. WTD could in fact accelerate adoption of these new enabling technologies as field service companies across Europe look at new ways of improving employee productivity and efficiency out in the field, while remaining compliant. Indeed, our report shows nearly half of our respondents (47%) will need to implement new systems and tools when the latest WTD regulation comes into effect.

 

In terms of top concerns from an industry perspective, 25% of companies in the manufacturing industry, 20% in utilities and 15% in telecommunications said that their current systems and processes would not be able to manage. In addition, half of manufacturers, 31% of utility suppliers and 33% of telecommunications providers put this in their top two concerns.

It is clear from the research that the majority of European companies that employ field service staff who work from home are going to have to make changes to their business processes and their systems regardless of which country of industry sector they are in.

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Jan Van Veen outlines how your field service organisation can succeed on a journey of continuous improvement through ongoing innovation...

Overview

We need to drive Momentum to continuously adapt to changing requirements and new opportunities and drive performance of today, tomorrow and the future. Common management practices and perspectives do not work anymore in today’s rapidly changing and complex world.

They create resistance against adaptation and change.

In this article I will provide an overview of the need and elements of the Momentum-Framework, which enables business leaders and organisations to increase Momentum. In following articles, I will elaborate on the todays management challenges and the elements of the Momentum-Framework.

The problem

Most companies focus on maximising performance of the existing operation and follow tight planning & control types of management practices. These create resistance against change.

This results in one or more of the following:

• Ongoing performance issues, without adequate, timely and sustainable interventions
• Execution of strategies and change programmes slow down, fail and cost huge amounts of resources
• No significant innovation beyond incremental improvements of current products and practices
• No preparations for (potentially) disruptive change

However, the winners of today and tomorrow already have adjusted their management practices and increased Momentum. They see their people think and act collectively and drive continuous adaptation and change.

This is why they outperform their industry and safeguard their future existence.

What is Momentum?

In the most adaptable and agile organisation people are passionate and eager to perform, develop and grow. They collectively take action in a coherent way, across the entire organisation.

Performance and progress are reviewed transparently without fear or hiding information.

They have a proactive strategic dialogue to adjust actions and approaches, align priorities and jointly make things happen. Everyone is curious about what is happening in the world, what impact that potentially could have and how to respond to it.

The Momentum Framework

The Momentum Framework consists of perspectives and practices which most successful and adaptive organisations apply. This drives their Momentum to continuously adapt to changing requirements and new opportunities.

The elements of the Momentum Framework are:

Momentum Perspectives:

The following perspectives will help drive Momentum when they are well incorporated in the company’s values. They will serve as a guiding principle in all decisions, actions and messages.

• People drive change: By nature, people can and want to drive change, if there are good reasons and no serious obstacles. Resistance does not come from people themselves, but from the obstacles organisations create.
• Capabilities drive performance: People and organisations can only deliver sustainable high performance through adequate(organisational) capabilities. Pushing performance by merely working harder and faster is considered not to be sustainable
• Future success lies beyond business as usual: In a rapidly changing world, there is no sustainable success without adaptation and adjusting the core-business, business models and organisation.

Momentum Practices
The best-in-class organisations apply modern “sense & respond” types of management practices at all levels and entities:

• Compelling direction: The organisation has a shared, explicit and compelling view of its mission and future state, which resonates in people’s minds and hearts. Everyone has a clear picture of the upcoming change.
• Strategic dialogue: The organisation has a strong practice of ongoing dialogues at and across all levels and functions for defining, aligning, adjusting and executing strategies and driving performance in a way.
• Continuous learning: The organisation regularly explores (potential) changes and trends, new threats and opportunities. It prepares adequate measures and strategies to respond to these (potential) changes and trends. Everyone openly shares experiences, results and progress, including setbacks.

Setbacks are important learning points, not input for performance review.

Momentum Road Map

Organisations which are most successful in step-by-step increasing Momentum, followed a roadmap for mobilising, increasing and sustaining Momentum.

Mobilise Momentum

In case an organisation has a fairly low level of Momentum, the first step from a few business leaders is to focus on increasing awareness and a shared concern about Momentum and sustainable success.

With their personal leadership approach and actions, they create increased interest, dynamics and action.

Increase Momentum

Once an organisation has some level of motion and energy in some parts of the organisation - often heavily driven by a few business leaders - Momentum will be further increased by mobilising a critical mass and implementing more and more of the Momentum Perspectives & Practices through the entire organisation.

Momentum gradually becomes an integral part of daily practices. However, business leaders still need to drive the new practices and prevent the people from falling back into old habits.

Sustain Momentum

Once an organisation has a high level of Momentum and applies most of the Momentum Perspectives & Practices, the next step is to embed these into the mind-set of everyone. It becomes part of everyone’s DNA.

Momentum will then become less dependent upon the individual business leaders and will survive changes of leadership teams.

 

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Assess your Momentum with our research: Momentum for Sustainable Success

Our research further defines and validates a pragmatic and complete Momentum-Framework consisting
of management practices, perspectives and practical tools. These will help you to increase and maintain
Momentum for sustainable success, to strengthen your competitive position and leave others wondering
how you did it.

You are invited to join by conducting a web-based survey. It takes approximately 15 minutes. Your input will remain confidential and will be reported in an aggregated form only.

In return you will receive in early 2017:

• Insights in how other companies manage their Momentum for sustainable success.
• Insights in how your organisation compares to others in managing Momentum.
• Insights into the new Momentum Framework for sustainable success.

Start the survey @ http://van-veen.limequery.com/792518?lang=en

Read about the research @ http://www.van-veen.nl/research.html.

 

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Nick Frank, Managing Partner with Si2 Partners, gives us a back of the envelope exercise that could yield dramatic improvements to our customer understanding...

For the vast majority of service managers and leaders, customer experience is something intuitive, as most effective professionals already have a good feel for what is important to their customers.

However, as the pace of technology commoditisation increases, so customer experience is becoming an important differentiator to creating loyalty and revenue growth. Perhaps its time to add framework to intuition, so that service leaders can communicate their experiences to their teams more effectively!

One very easy and often overlooked tool for gaining insight into how clients feel about our service is the Customer Journey Map.

It’s a very simple idea: a diagram that illustrates the steps your customers go through in engaging with your company, whether it be a product, an online experience, retail, or a service, or any combination.

It can be a back of an envelop exercise lasting 30 minutes, or a full working day working with a cross functional teams. Whichever approach you choose, it will undoubtedly provide you with insight into your customers feelings about the service they receive from you, and where opportunities may arise to drive customer loyalty or new sales.

In its simplest form the journey usually has a timeline. For example this might be lifecycle of a field service call: Request, Schedule & Dispatch, Service, Invoice.

For each part of the lifecycle examine these four key elements from the customers perspective:

1. Activities and actions of the customer in that step. This includes all the touch-point interactions between the customer and organisation
2. The motivations for the customer going to the next step in the process, what they are feeling and why do they care? These emotions are key to improving the journey.
3. The Questions the customer is asking themselves: This might be details about the work to be done, the jargon you are using or looking for recommendations on how to avoid further failure.
4. What are the Barriers that stop them from moving to the next stage of their journey.

At the end of this this thinking process, you can then validate your thoughts with clients within a structure that is easy to communicate and talk about.In general there are three reasons why managers and service designers use the journey mapping tool:

1. To improve Customer Experience across an end-to end set of interactions. The Field Service Call example would be typical of this type of use.
2. Understand the Sales journey, the critical point of interaction which influence how the customer feels about us, and what sales opportunities might arise.
3. Design the User Experience for a particular part of the journey. This has become particularly relevant as more business ‘shift to the left’ and incorporate more self service into their processes. A detailed analysis through each touch point of the software such as a FAQ page then becomes critical to ensuring that customers have a good experience.

Journey maps originated in the Service Design community, which has brought a much more user centric approach than traditionally existed in the industrial world. In addition to these basic mapping concepts, they have created tools to enable better empathy with customers and their emotions.

One such tool you might consider are personas. This is a fictitious character that illustrates the needs, goals, thoughts, feelings, opinions, expectations and pain points of the user.

By defining a typical character, we can explore the journey through the eyes of the persona and how they might interact with the different channels they come across such as websites, apps, call centres or field service organisations.

More sophisticated journey maps will also examine ‘moments of truth’.

These are the critical interactions that leave a lasting impression and often occur at touch-points known to generate anxiety or frustration.

How do you go about developing a Journey Map? Here are six simple steps you can follow for developing your own Customer Journey maps:

1. Define your goals for the journey map(s)
2. Gather research and customer insight
3. Analysis and discussion with a cross functional team
4. Sketch the journey
5. Refine and digitise, especially if you want to use the map to communicate with your people
6. Share and use: make the journey map live in your organisation

If you would like to read more about customer journey mapping, you can find more practical advice at the Service in Industry Briefing blog

 

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Field Service consultant and author Jim Baston continues his new series based upon his excellent industry focussed book  Beyond Great Service 

If you missed the introduction to this series you can find part one here

The book, Beyond GREAT SERVICE opens on a conversation that Charlie is having with a long-time customer. His company has lost the renewal of a large maintenance contract and the customer has kindly agreed to meet with Charlie to explain why they made the decision that they did. Perhaps you have had a similar conversation with one of your customers.

“I just can’t see any difference,” explains Joe. “I think you guys do good work and our building managers really seem to like you. However, I can’t justify the premium for the maintenance contract that you are asking for over your competitors. Can you?”

“Good question,” thinks Charlie. He expected this and has been practicing his response all morning, but it just doesn’t ring true to him.

“Joe, we do great work, pure and simple. We hire only the best mechanics. Our mobile fleet is in constant contact with our dispatch so we can respond quickly to any emergency, 24 hours a day, seven days a week. Our field service team is polite and courteous and our quality is excellent—we have very few call-backs.” Charlie leans back in his chair, relieved that he was able to get it all out. Before he can decide if he has done a good job or not, Joe is shaking his head.

“Charlie, I know you guys do good work and that your team is friendly. Most of our building managers really like you—even Gus at 2270 Main Street, and that’s saying something. But Barnett Mechanical and 99% of the rest of your competitors can say just what you said. They hire good people too. Barnett for example, has won the Customer’s Select award three years in a row and can show you a ream of customer satisfaction surveys that substantiate their claims. I know ‘cause I’ve seen them. Peter, our newest property manager is very familiar with them from the time he spent at Acme Developments, and he can’t speak highly enough about them.

“Charlie, I guess what I am saying is that I am going to switch my business to your competitor because I think they will do a comparable job for less money. It’s nothing against you or your company. It’s simply a business decision. What would you do if you were in my shoes?”

Regardless of the industry or the service provided, conversations like these happen all the time. The customer cannot see any significant differences between service providers and so elects to patronise the one that provides the most value. Since the competitors are more or less the same in the customer’s eyes, the most value often comes down to the lowest price. This is becoming ever more true as the service business becomes increasingly competitive.

 

For most service firms, any competitive advantage they have is quickly matched or even exceeded by competitors. Customer service levels and corresponding customer expectations continue to rise. Unless reminded, any added value provided is quickly taken for granted by the customer and they assume that all service providers provide similar value.

The question facing most service providers then is, how can they stand out in this increasingly competitive environment? How can they provide a demonstrable difference from their competitors – a difference worth paying for? For the answer to this, we are given a clue by the closing paragraphs of Chapter 1.

Although Charlie thinks that he would probably make the same decision, he just mumbles something about appreciating Joe’s time and thanks him for his past business. As Joe walks Charlie down to the elevator, Charlie strains to make conversation. He asks clumsily, “Rising energy costs and stiffer competition must be impacting your customers significantly. What are you doing to help them?”

Joe looks Charlie in the eye, shakes his hand and says, “You sure picked a funny time to ask that question.” The elevator pings to announce its arrival and Joe turns and walks away.

Joe’s response to Charlie’s question puzzles Charlie greatly.

He discusses the conversation with his service supervisor Ken. They focus on Joe’s response to Charlie’s question and Ken helps him come to the realisation that Joe’s response might be linked to the fact that he felt that it should have been asked earlier in their relationship. During the contract, questions like that would have given the service provider more insight into the challenges faced by the customer in achieving their goals.

With that insight, Charlie could have added great value to their relationship. By understanding their challenges, they could proactively identify and recommend actions that could be taken by Joe’s firm to overcome those challenges and achieve their goals. This would provide a level of service beyond simply keeping the equipment running well.

Thinking about your business:

• What makes you different from your competitors?
• If you asked your competitors this question, how would your answer be different?
• What do your customers value most?
•  How do you know this?
• What is it about “what makes you different” that allows you to deliver on that value?

Next time we will examine more closely the technician’s role in bringing ideas to the customer and why their proactive actions are an important part of the service and not an “add-on” selling activity.

 

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