In this episode of The Field Service Podcast, Field Service News Editor-in-Chief talks to Kevin McNally, Sales Director for Asolvi about how technologies such as Cloud, Mobile, Artificial Intelligence and IoT have enabled smaller companies to not only meet the service standards of their larger peers but in some instances exceed those standards...

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Want to know more? Field Service News have published a white paper sponsored by Asolvi that explores this topic in further detail. This white paper is available exclusively for fieldservicenews.com subscribers.

If you are not yet a subscriber and are a field service professional you can apply for a complimentary subscription below (after reading our T&Cs here first) and we will send you a copy of the white paper as soon as we receive your application.

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

Note: Please do take the time to our T&Cs (available in plain English at fieldservicenews.com/subscribe) and note that this content is sponsored by Asolvi)
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Atos, a global leader in digital transformation today announces that it has been identified as a ‘Leader’ by global research and advisory firm NelsonHall in its latest Vendor Evaluation & Assessment Tool (NEAT) for Cognitive IT Infrastructure Management...

Atos supports businesses in their digital transformation by providing the tools, services and consulting to enable them to successfully implement next-generation IT infrastructure and workplace services, such as those which use Artificial Intelligence (AI), cognitive, machine learning, deep learning, virtual agents, advanced analytics and robotics.

Atos’ brand new Codex AI Suite, announced recently, supports businesses and research institutes in the development, deployment and management of AI applications. It offers an easy-to-use, efficient and cost-effective solution to rapidly build and deploy AI applications, better extract value from data and develop new business opportunities.

Atos’ end-to-end Digital Workplace offering includes a range of intelligent solutions to enhance the user experience.Atos’ end-to-end Digital Workplace offering includes a range of intelligent solutions to enhance the user experience. This includes the Atos Virtual Assistant (AVA), which leverages Cognicor’s next-generation AI engine, to offer help and support for users, resulting in reduced downtime, increased user productivity, and cost reduction.

Commenting on this ranking, John Laherty, Senior Research Analyst at NelsonHall, said: “Atos is driving digital transformation across both infrastructure and service desk to improve business outcomes and end-user experience; it is embedding automation into all its standard infrastructure managed services offering for clients.”

Elaborating on Atos’ role as a leader in Cognitive IT Infrastructure Management services, Peter Pluim, Head of Infrastructure & Data Management at Atos, said: “We are delighted to be recognized as a Leader in Cognitive IT Infrastructure Management by NelsonHall. We offer an end-to-end approach to automation and robotics, thereby reducing costs, increasing quality, and creating differentiation with real-time insight for our clients.”

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In the penultimate feature from our exclusive serialisation of Jim Baston’s excellent industry focused book Beyond Great Service, we begin to see how our protagonist Charlie and his teams journey towards better understanding the balance of building revenue streams from the service department has begun to formulate into a clear and workable strategic approach...

You can catch up with earlier features from this series by clicking here

Based on the feedback from several customers, Charlie is ready to roll out the strategy of engaging his technicians in proactive business development.

He calls the initiative Intelligent Service. We join Charlie as he presents the concept details to his team.

The key components and actions/comments are summarized in the table below:

Charlie reminds the team that the focus is not to sell but to serve. He clarifies that serving means taking a proactive approach to speaking with the customer about the actions they can take to run their facilities more effectively.

Only if the technician feels there is a valid need that could be addressed by a particular service offered by Novus, should the tech promote that service.Only if the technician feels there is a valid need that could be addressed by a particular service offered by Novus, should the tech promote that service.

Charlie emphasizes that in no way do they want the techs to talk up Novus’ services just for the sake of sales.

Charlie is about to move on to the next slide showing the implementation steps and associated time frames when Peter stands up. Peter is a quiet, thoughtful technician and rarely speaks at the service meetings. When he does, he usually has something valuable to say. This was not to be an exception.

“Charlie, with all due respect,” opens Peter, as he pauses and looks down at the floor, “this is a good approach and I am all for the initiative. Frankly, it makes perfect sense to me. In fact, I think we all do this to some degree now...” Peter paused again, and Charlie waited in anticipation.

“But, if we do all the things that you point out here, we won’t have any time to do productive work. We’ll be spending all our time gabbing with the customer and I don’t think they’re going to like that, and neither will Novus.”

Charlie smiled. It was a good point and he was glad it came up, especially by someone as respected as Peter. It probably means that a number of techs feel the same way and it is important to clear the air on this.

“Thanks for that, Peter. You bring up a good point. I don’t think that this will have much of an impact on non-productive time if it has any at all. At the kick-off meeting, we will explain the program and ask the customer if they’re interested in participating. I expect that in most cases they will say yes, and by doing so, they will be giving us permission to discuss opportunities with them.

Also, as techs, you’re only going to be discussing items you feel are in their best interest, taking into consideration your experience and knowledge of the customer’s needs, so the time factor should be quite minimal.”

“Yeah, but what about this mid-year walkthrough stuff, and the time looking for opportunities. Won’t they take a lot of time?”

“It will take a bit of time,” conceded Charlie. “During the walkthrough, you can make the most of it by asking questions to get an even clearer idea of their needs and goals, along with pointing out areas where improvements can be made. I think it’s time well spent and I’m sure the customer will agree.”

Look and listen for evidence of problems as you walk to and from the work area. Be prepared to ask questions of the customers and their staff as you go about your normal routines“Remember too, that we will have already discussed the idea with the customer and gotten their buy-in at the kick-off meeting. As far as looking for opportunities, we only ask you to do that as you are doing your normal job.

Keep your eyes open for things that may not be right.”

“Look and listen for evidence of problems as you walk to and from the work area. Be prepared to ask questions of the customers and their staff as you go about your normal routines. Let’s see how things go. I suspect that the return on this effort will far exceed the time invested. Does that address your concerns, Peter?”

Thinking about your business:

• Is your business development strategy positioned as an integral part of the service you provide?
• Have you created a performance “dashboard” to monitor your progress?
• Do you have a plan in place to teach, coach and reinforce the skills development of your field team?

Next time Charlie reflects on the progress he has seen since implementing the Intelligent Service strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Commerce began with commodities.

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

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

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

But what’s next?

Welcome to the ‘Experience Economy’

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

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

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

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

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

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

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

Every touchpoint counts

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

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

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

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

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

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

So, how do you get to this position?

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

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

 

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

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

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

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

People provide context

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

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

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

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

Managing the unique and unusual

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

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

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

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

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

Hands off, humans

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

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

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

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

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

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

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

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

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Bill Pollock, President & Principal Consulting Analyst at Strategies For GrowthSM, takes a look at the biggest two tools being used for field service management and explore the merits of each...

In today’s business environment, too much attention is often focused on new technologies on the horizon, and whatever else might be “hot” in the blogs or other social media, rather than on the core attributes of substance and sustainability.

However, when it comes down to selecting the right Field Service Management (FSM) solution for your organisation, one thing remains very clear – it must “fit” your organisation with respect to functionality, application, accessibility, scalability and – of course – cost.

While some organisations may prefer an all-encompassing Enterprise Resource Planning (ERP) solution that addresses all areas within the company (e.g., manufacturing, engineering, distribution, sales, marketing, etc.) in addition to services, others may prefer to use a Best-of-Breed FSM solution that serves as a custom “fit” to its services operations.

Differentiators that Distinguish Best-of-Breed vs. ERP solutions:

There are many definitions of Best-of-Breed currently being used in the global services community, ranging from “best in segment”, to “best anywhere”, to “best currently available”, and so on.

However, much too often, “best in segment” may not necessarily reflect “Best Practices”; “best anywhere” may be too elusive, and “best currently available” may not be quite good enough. With so many alternative definitions, some organisations may eventually end up not quite knowing which “best” they should be aspiring to.

Further, what may be “best-of-breed” in the manufacturing sector may not even be relevant in the medical device sector, and vice versa.

The complexity of the concept of “best” as it pertains specifically to a field services organisation can cloud the ability of management to choose either the precise goals to target, or the appropriate technology solutions that will be required to attain them.

Research has shown that the ability to pick and choose the specific components to support an organisation’s FSM activities offers a much more tailored solution that is able to address all facets of this service-centric process.Research has shown that the ability to pick and choose the specific components to support an organisation’s FSM activities offers a much more tailored solution that is able to address all facets of this service-centric process.

That is not necessarily to say that an ERP solution will not, or cannot, support FSM – rather, that a robust, application-specific, Best-of-Breed solution may be able to do it better.

Further, many ERP solution providers go-to-market with messages that proclaim “everything your organisation needs to support its services activities”. However, the “everything” that is offered by some of these vendors may only follow the 80/20 rule; that is, providing only “80% of the FSM functionality required”, but delivered by a “brand name” company typically as an add-on to a more extensive – and expensive – ERP solution.

On the other hand, a Best-of-Breed FSM solution typically offers 100% – or close to it – of the specific functionality required by the field services organisation from a services-oriented solution provider that truly understands the user’s needs from the requisite functional specs; to the terminology and buzzwords to the requirements for installation and training; and ongoing technical and customer support.

In addition, Best-of-Breed solution providers in the services segment have typically supported clients in their field for decades, gaining a comprehensive knowledge and understanding of the market space including who the key and niche players are (i.e., vendors and users), how customers’ service organisations operate, what specific functionalities are required (and available), how usage has been and will be evolving over time, and what the key pain points are for all parties involved.

Most of today’s Best-of-Breed vendors represent the ones that have been successful in differentiating themselves beyond the enterprise-wide capabilities of the ERP generalists and the 80/20 CRM vendors.

Evaluating and Comparing Best-of-Breed vs. ERP Alternatives

Just as “you cannot tell a book by its cover”, it is uncertain – and unwise – to try to assess a solution provider simply by its marketing collateral.

Just because they say they can do it all, does not necessarily mean they can – and just because they say they support the field services segment does not mean they are specialists in doing so.

Many organisations have found that the difference between a generalist and a specialist can make all the difference in the world.

That is why it is so important to make sure that when selecting an FSM solution provider, the organisation evaluates all vendors with the same high level of due diligence – that is, assessing and comparing all vendors using the same criteria, and holding them to the same standards whether they are ERP generalists, FSM Best-of-Breed specialists, or anything else in-between.

Whether Best-of-Breed or ERP is better for your organisation will ultimately be your call – however, the results of a thorough needs assessment and long list/short list evaluation of potential solutions (and vendors) will take you to the point where you can make the right decision.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Sell More Initial Deals

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

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

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

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

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

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

2. Handle Fewer Train Wrecks

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

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

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

Services appropriately sold up front greatly improves the probability that:

[unordered_list style="bullet"]

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

[/unordered_list]  

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

3. Sell More Products and Services Later

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

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

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

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

4. Enjoy Predictable Revenue Streams

Want to see a CFO’s eyes light up?

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

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

GIST: Strong services help you manage your business more effectively

5. Differentiate Yourself

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

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

GIST: Services are the drivers of market dominance.

6. Create New Markets

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

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

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

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

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

Question: But aren’t services less profitable?

Answer: Normally not.

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

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

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

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

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

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

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

• Place your list items here

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

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

 

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

 

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

Endnotes

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

References

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

 

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