Many service innovations fail because they do not have a substantial and desired impact for clients. Often, customer insights and value propositions are limited to a description of features and benefits, without considering the outcomes clients desire. The best practice is to have a compelling customer story and vision as a starting point. Jan van Veen, explains how you can achieve this and (and launch irresistible advanced services)...

This customer story illustrates the challenges, common mistakes and best ways clients should solve these mistakes. Based on this insight, you can develop irresistible new advances services and compelling marketing and sales messages, even if you have limited resources.

 

The Importance of Building Your Customer Story:

Do you still see that many ideas and new advanced services do not hit the nail on the head?

• The pain points your teams discuss with their clients do not hit their nerves
• Your clients are not eager to use the new services
• Let alone that they are willing to pay extra for these services

Even though you already did:

• Voice of the customer projects
• Customer journey mapping
• Customer feedback like NPS

Develop a set of features and benefits, for example by using the value proposition canvas

The good news is

• You are not alone. 
• And it does not have to be like this.

In this article, I describe seven practical steps to build a compelling customer story. These are the best practices applied by leading manufacturers to successfully develop and commercialise irresistible advanced services.

Here is the Problem

Your clients do not recognise which of their essential problems you are solving or how your services are offering a better solution. They do not see the positive impact they get from your offerings. And often, this problem is a bigger game than just higher uptime of equipment.

The Solution

You and your colleagues already have most information at hand. It is a matter of turning this information and knowledge into a compelling customer story, for irresistible advanced services.

 

The Elements of a Customer Story

 

• For every customer segment, you should be able to describe the bigger picture;
• The relevant trends which have an impact on the business and lives of your clients. 
• The ultimate fear for your clients, caused by 3-4 dominant problems.
• 3-7 common mistakes your clients make, which cause the 3-4 dominant problems
• Related to each common mistake, your vision or the best practices to solve this common mistake
• The ultimate prize your clients will get, with 3-4 benefits

You can use this customer story in many ways;

• A pitch to your CEO or your client of 1 minute
• A presentation of 5-10 minutes
• 7-12 articles of 700 words each
• Source of insights to develop new advanced services
• Source for the marketing team to develop marketing and sales messages and marketing collateral

 

Be Aware of the Common Pitfalls

This customer story is all about your clients, not your company, products and services. I have done quite a few workshops and masterclasses to develop a customer story. In the beginning of these workshops, pretty much every team struggles to focus on the customer. The pitfall is to be stuck in;

• Use of your equipment
• Maintenance of your equipment
• Performance of your equipment
• Performance of your services

Although these insights are useful for many improvement processes and initiatives, they do not contribute to developing and commercialising irresistible advanced services. On the contrary, these insights increase biases and keep your innovations being stuck in business-as-usual.

 

Getting Started

The following 7 steps take you through each element of the customer story. Ideally, you form a small team to work on the 7 steps.

Step 1: Define the Niche/Segment

A customer insight or story should always be specific for a group of clients with the same characteristics that are relevant to the same challenges and needs they have. This could be a particular customer segment or your ideal client.

At first, it can be challenging to define the specific customer segment. This is not a problem. In that case, just move on to the next steps. In step 3 and 4, you will notice that a lot of the customer problems are not relevant to all clients and how you could segment your clients into a few groups. By then, you can jump back to step 1 and iterate.

Step 2: List 100 Customer Problems

Having this customer segment in mind, start listing all the business problems you know or think they encounter or will encounter. If you do not have a clear definition and choice of a customer segment yet, just start with 1 or 2 relevant clients in mind.

The objective is to build a long list of problems, at least 100. Use the following tactics to keep the flow of new problems going and to ensure you have a broad and open perspective;

• Do not evaluate yet. Just write the ideas. Consider it a brainstorming practice.
• Build on problems you have already listed and think of 4 directions to reframe (see the picture below) 

• Description automatically generated
• Consider different stakeholders in the business, including the CEO and the field engineer
• Address challenges and problems your clients will or may encounter in the next 3-7 years too
• Also consider external stakeholders of your clients, like their clients, other vendors, partners and distributors
• And again, avoid topics which are related to your products, services and organisation. 

 

Step 3: Cluster to 7-10 Main Problems

Now start grouping all similar or related problems. You can do this in a spreadsheet. If you are doing this in a workshop with several people, you may want to work with post-it notes.

You will probably see that there are different ways of clustering. That is perfectly fine. See what makes the most sense.

Now, it is also an excellent time to evaluate if the customer segment you chose, still makes sense. Or, in case you did not select a particular segment, see if you can recognise some sort of segmentation. If so, you can iterate the process so far and start with step 1 again.

Step 4: Further Group to 3-4 Dominant Problems

7 to 10 problems is a lot to memorise and to help to build and communicate a clear message. The magical number is 3. 4 is okay too. If you have more than 4, you will notice that colleagues and clients will not memorise all of them after a conversation.

So, the next step is to further reduce the main problems into 3 or 4 dominant problems.

Summarise these 3-4 dominant problems into one single ultimate fear, like “adapt or die” or “hard work for less financial results, with no perspective for better times."

Step 5: Define the 3-7 Common Mistakes

Next step is to identify the 3-7 common mistakes you see your clients make that prevent them from solving the 3-4 dominant problems. These common mistakes are “wrong” thinking, actions and practices of your clients. 

For example, if one of the dominant problems is “too high operational cost”, one of the common mistakes related to this dominant problem could be that your clients have a “lack of understanding of their cost drivers and cost structure”. 

You may find some inspiration in the list of 100+ customer problems you identified in step 1.

Step 6: Define the 3-7 Solutions for Your Clients

Now define your vision of how your clients should solve each of the 3-7 common mistakes. This is not about your solution or offering yet; you will cover that in one of the next steps.

This is a relatively easy step. In essence, each solution is the opposite of a mistake. Further building on the example in the previous step, your view on the clients’ solution could be that they should “establish cost management practices”. They should gather and analyse data and step by step build a structure of their costs and cost drivers so they can monitor and manage their costs. 

Step 7: Define the Benefits and Outcome for Your Clients

Finally, describe the 3-4 key benefits and the ultimate outcome for your clients if they address the 3-7 common mistakes and apply the 3-7 customer solutions you have specified. The 3-4 benefits are the opposite of the 3-4 dominant problems, maybe structured slightly different. And the ultimate outcome is the opposite of the ultimate fear. 

Next Steps After This:

At this point, you already have a tremendously valuable insight, just using the information and knowledge you already have. Next steps to make this insight and your customer story rock-solid, are to get feedback and additional ideas from:

• Colleagues in various functions (sales, marketing, R&D, other countries)
• Partners, vendors
• Distributor or dealers

and then;

• Process the new information and update your customer story
• Build variations of the customer story for the most important customer segments
• Get feedback from your clients through open and in-depth conversations
• At some point, you may want to initiate a customer research based on the insights in your customer story to validate and expand the insights
• Adjust the wording and messaging to make your customer story more compelling and attractive for external and internal use.

 

The Benefit:

Now you have a robust and in-depth insight into your clients’ needs for today and the future which offers you an “unfair” competitive advantage. You can now;

• Improve existing service offerings
• Boost the innovation of advanced service offerings
• Improve your marketing and sales messages and marketing collateral
• Advance the conversations all customer-facing colleagues have with their clients
• Improve your Customer Success practices

Conclusion:

You are sitting on gold. You and your colleagues already have a massive amount of information and knowledge about your clients. You can turn that into actionable and compelling customer insights and a customer story to boost;

• Development of your services 
• Engagement with your clients
• Commercial success of your service business

 

You can build a substantial competitive advantage, even if you do not have the budget and resources for intensive customer and market research.

All this requires is to;

• Follow the 7 steps I described in this article, ideally with a small group. You can do this in 1-2 days. You can use our job-aid with slides and assignments for this workshop (https://moremomentum.eu/worksheet-customer-story)
• Keep each other focussed on the clients, not your own business or offerings
• Be open to new perspectives

It is not about convincing your clients of the value of your services, but about letting them convince you what they need.

 

Final Question for Reflection

Which 3 common mistakes do you make when developing and using customer insights for service innovation?

 

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Further Reading:

• Read more of Jan's exclusive writings for fieldservicenews.com @ https://www.fieldservicenews.com/blog/author/jan-van-veen
• Follow Jan's own work with his consultancy moreMomentum @ https://moremomentum.eu/
• Schedule a discovery session with Jan directly @ https://moremomentum.eu/discovery-session

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With experiments you can test all critical assumptions and success factors of your service innovations, get better data and take better decisions before scaling up investment and implementation. As a result, you will only pursue the viable and valuable ideas, will not waist resources on unsuccessful ideas nor jeopardies today’s business, brand and confidence of any stakeholders or colleagues. Jan Van Veen discusses...

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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Two decades ago high tech companies blazed a new trail that saw them move away from the traditional transactional relationships they had with their customers as they embraced service as a route to sustainable and predictable revenue.

Other industries including the copier, medical and discrete manufacturing sectors have since followed suit and the evolutionary path to becoming a service led business is now clear explains Hilbrand Rustema, Managing Director, Noventum Service Management...

Twenty years ago, high tech companies such as IBM and HP were product driven organisations that sold hardware with a product warranty service.

Their products such as PC’s and servers were often mission-critical and too complex for customers to repair themselves. Once the warranty expired, customers had to pay for spare parts and on-site field service, also known as “Time and Materials”. These high-tech companies discovered that the service business was an interesting high margins and high growth business.

They adopted a new strategy to start focusing more on the Service Business. They created a new core service business with its own profit & loss statements, with dedicated senior managers at board level.They adopted a new strategy to start focusing more on the Service Business. They created a new core service business with its own profit & loss statements, with dedicated senior managers at board level.

Their customers then discovered that rather than buying services when you have a problem, it was cheaper and less disruptive to purchase preventive maintenance services.

Eventually the high-tech companies found out that to have predictable and profitable revenue it was necessary to create services that would guarantee a certain availability of the product This was the start of a category of services called “Availability Services” and the start of “Service Level Agreements” as a business model that closely resembles that of the insurance industry when it defines a price for the service based on the risks and value as perceived by customers.

Following the high-tech industry, other industries followed a similar evolution, for example:

 

• The copier industry with companies such as Xerox and Canon, now evolved into document management solutions;
• The Medical equipment companies such as Philips Healthcare,  Siemens Healthcare and GE Healthcare that can now offer entire “Managed Hospital Services”
• Discrete manufacturing where machine manufacturers are now moving from reactive to preventive and predictive services using the Internet of Things technologies to accelerate the transformation towards more advanced services.

Since then these high-tech companies have converted themselves into full-service businesses that no longer sell only products and “Product Related Services”.

They have moved up higher in the value chain by offering “Customer Business Related Services” which we can bundle under the name Pro-Active Services.

The model below illustrates the typical evolution of a service business:

We see roughly three types of Customer Business Related Services:

 

1. Process Optimisation Services are the first typical types of services whereby process expertise is used, for example, in process advisory, process compliance services or benchmarking services. Most often, the service provider agrees upon a certain business outcome or deliverables such as an advisory report, a process compliance report or a business improvement result such as an agreed productivity improvement.
2. Business Optimisation Services address improvements in the business model of customers such as “Pay per Use” models where the technology provider also provides the financing of the technology, thereby offering the financial commitment to become an OPEX (Operational Expense) rather than a CAPEX (Capital Expenses) leaving the financing burden to the supplier who is often better able to manage the risks.
3. Business Transformation Services help customers to implement strategic changes. The expertise of the service provider includes the ability to manage change together with their customer. The ability of organisations to adapt fast enough to changing market conditions has become one of the most important drivers of success. Service providers may take over entire processes or functions and manage this with (Managed Service) or for (Business Process Outsourcing) their customer.

 

We see roughly four types of Product Related Services:

 

1. Warranty and Time & Materials Services: Service organisations typically start off offering warranty services to their products. After the warranty period, customers start to request additional services. When a service organisation responds to this request, they most likely offer time & material services.
2. Preventive maintenance: Preventive maintenance services aim to reduce the cost of time & material services. They can do so by planning ahead based on the product lifecycle and reducing the cost of delivery of services as they can be provided without urgencies.
3. Availability Services: The next step is when customers only look at when a product is available for use and consider the cost of unplanned downtime. The service provider guarantees a certain level of equipment uptime or response time. The customer will balance the perceived risk of downtime with the price they are willing to pay. The service contract or service level agreement (SLA) usually renews automatically every year and therefore generates predictable revenues for the service provider, and represents a predictable cost for the customer.

 

Once organisations start to look beyond the level of the product, they find out that they have a lot of knowledge to help their customers improve their processes and even their complete business.

 

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Jan Van Veen of moremomentum concludes his series of articles on the 4 Winning Habits of successful service organisations focusing on the fourth and final winning habit: Discovery...

Following our introductory article about the 4 Winning Habits in the previous publication of ‘Field Service News’, I will now elaborate on the fourth winning habit: Discovery.

Common mistake: Being blind-folded

Humankind by nature tends to be fairly blind-folded, by its strong focus on opportunities and threats in the short term and directly related to its current situation. Companies often enforce this behaviour by:

• Low adoption of the first three winning habits (Direction, Dialogue, Decision-making).
• Not allowing time and resources in discovery and innovation, focusing on the exploitation of the current business model.
• Detailed and top-down control of exact discovery topics and assignments.
• Leaving all discovery activities for dedicated and specialized teams close to the board.

The consequences are critical for the sustainable performance and business innovations we need to thrive in a disruptive world. We tend to:

• Overlook longer-term opportunities and issues and misinterpret the potential impact of these.
• Overlook the real issue behind symptoms and fight the symptoms instead.
• Limit our options for solving problems or pursuing new opportunities and get stuck.
• Encounter resistance when developing and implementing new solutions.

In the past we have seen many businesses missing the boat - and we still do.

Just imagine what would happen if:

• Nokia and Blackberry did recognise that maybe, business-users at some point could expect touch screens, apps, multi-media and full connectivity.
• Polaroid did consider that digital cameras would become affordable for consumers.
• Airliners did understand that low-cost airlines could become attractive to business travellers as well.

The solution: All employees discover the future with an open mind

Leading companies drive their ongoing success with a strong habit of continuously discovering new opportunities and challenges.

Their discovery habits outperform the lagging companies, by:

1. Bringing the outside in
2. Using many sources
3. Involving involve all employees and many external stakeholders.

1. Bringing the outside in:

Every company has an eye open to the outside. They investigate trends with customers, competitors and technology. However, many miss opportunities and trends as they tend to be too focussed on:

• Topics with an immediate impact on current performance, less on future performance.
• Current needs of their best clients and less on future needs or on other market segments.
• Actions of competitors, less on what they potentially could do in the future.
• Trends with clear signs and high probability, less on trends with less clarity or probability.
• What they know for sure, less what they do not know. After all, staff are being paid for what they know”, not for what they do not know.

Leading manufacturers bring the outside in through the following practices.

Explore beyond business as usual:

The key is to be looking for (potential) trends and changes which do not directly relate to the current business model and operations. These insights will help prepare the business well in advance and to be the first to benefit from the change.

Leading companies also address the following in their discovery habits:

Market:

• Current and future needs of market segments which they do not serve, particularly if they appear not to be so profitable at the moment.
• (Latent) needs of their current clients, beyond the needs which they fulfil with their current products and services.
• Current and potential future needs of the clients of their clients.

Competition:

• Changing visions and strategies of competitors, other actors in the value chain and potential new entrants into the industry.
• Trends in adjacent industries and industries like data, algorithm-driven industries.

New technology:

 

• Emerging technologies with a low rate of adoption and application, like big-data, augmented reality artificial intelligence and how these will impact their (future) clients.
• Obstacles which currently prevent rapid adoption of the new technology and how these obstacles could be solved in the future.
• Economics, social demographics, politics, natural resources, workforce etcetera.

 

Explore weak signals:

Many lagging companies make themselves vulnerable to disruption by disregarding the weak signals. They tend to assess emerging technologies on their current possibilities and threats. They often see many reasons the impact will not be that high, for example, because of poor performance, high cost and narrow practical applications.

Many lagging companies make themselves vulnerable to disruption by disregarding the weak signals.We tend to disregard the scenarios that these obstacles may disappear in the coming years and how the adoption of the emerging technology could accelerate rapidly.

Many disruptive changes take one or more decades of exponential development and growth. In the first phases, the change and its impact seems to be insignificant. However, at some point, it quite quickly becomes significant and in a few years becomes main-stream. For many, this change comes out of the blue and is totally unexpected.

Leading companies explicitly focus on the weak signals. They are the first to see changes accelerating and obstacles for adoption of new solutions being eliminated. At the right time, they assess if they are ready for the change and are the first to act on the new opportunities and challenges.

Thinking in scenarios:

It is a challenge to tell in advance which trends and changes will really become real and have an impact on our business and which trends will only be hype or just stall. I think it is key that we accept the fact that we do not know. The

challenge is not making sure you do know, but that we are prepared to sense and respond in time.

Leading companies continuously develop and maintain scenarios for potential trends, changes and alternative solutions to respond. They understand which signals to be on the lookout for.

2. Many sources 

Leading companies see their innovation and changes being fed from many different sources for in-depth and broad discovery.

Internal and external sources

People with different backgrounds and opinions add value to getting new insights and arriving at better decisions. The most successful companies actually include many internal resources, which traditionally the lagging companies tend to disregard, like:

 

• Employees from other cultures, with different values, views and experiences.
• Employees who have a lot of experience from other industries.
• Employees from specific departments like R&D, service, finance, compliance and employees at lower ranks.

 

Leading companies also activate a broader network of external sources, including those they hardly meet during daily business. They actively seek to exchange insights with:

 

• Peers from completely different industries.
• Clients of clients of clients.
• Peers from other companies serving the same value chain.
• Experts and academics from different domains.
• Other stakeholders of client-organisations, who are not talking about the products and services.

 

Experiments

Leading companies not only talk and think about potential challenges, opportunities and solutions. That would lead to paralysis by analysis. They also learn by doing by:

 

• Innovate and develop step-by-step, starting with a first minimal viable solution and running rapid cycles of learning, adjusting and taking the solution to the next level. These are the Lean Startup and Agile approaches.
• Doing experiments, where we learn from what could happen in certain circumstances with certain solutions. These provide new insights which can be included in further decision-making on the direction and timing of a solution.

 

Experiences and failures

Leading companies learn from the things they did which did not work. They rapidly adjust and find new ways. They emphasize that it’s all about the learning, not about the failure. Their employees are more open to trying new solutions and practices, discovering and pursuing new opportunities, also when the results are not yet certain.

More and more companies cultivate the belief that failure is an option.

More and more companies cultivate the belief that failure is an option.For example, they organise failure-celebration-sessions, where colleagues present a failure, what they learned from it and how they would adjust their approach.

Another approach is not to use the word “failure”, but “discovery” or similar.

Like Edison said: “I did not fail, I just discovered 10,000 things that do not work.” This seems to work better than only reframing “failure”, even more so in cultures where losing face is a major factor.

3. The power of everyone in some discovery-mode

The most dynamic businesses empower all employees to do research, explore and define new ideas to improve and innovate, not a small specialised team dedicated for this job.

Everyone Contributes

Everyone in the organisation owns part of innovation and change, whether it is about implementation or identifying new ways to improve. They all have and search for the necessary insights. They all read, talk with peers from other companies and clients, do experiments, visit conferences, do external training and conduct their discovery projects.

This engages them to own the ideas and the execution.

Exchange and share

However, they do not discover everything themselves. They also exchange insights, experiences, opportunities and challenges they have discovered, hence learning from their colleagues and having their colleagues learn from them. This happens through collaboration tools, meetings within and amongst project teams and other in company events.

Bottom-up and Top-down

Everyone, within boundaries, takes their own initiatives to explore certain topics. Some discovery assignments come from higher management levels. This way they are committed to the effort it takes and to the outcome the generate and their colleagues generate.

Benefits

These open and forward-looking discovery habits make an organisation much more adaptive to any new opportunities, challenges and solutions.

They shape a huge army of open-minded, engaged and change-oriented employees. This is mission-critical for any company that wants to thrive in a rapidly changing and complex world.

The Essence

It’s not about having smart analysts and experts creating smart intelligence.

It’s about having passionate and engaged employees learning and discovering and making great ideas work.

Want to know more? access our eBook: How to Thrive in a Disruptive World - an eBook of 42 pages about disruption, the 4 winning habits for momentum in continuous and rapid change and 3 case studies (including Mars Drinks and Volvo Penta) Field Service News subscriber can access the eBook @ http://fs-ne.ws/AcQf30jhl0S

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