The latest research from Noventum consultants appears to have got to the heart of what drives success in the service industry today and what is required to continue driving it into the future. The success comes from constructing a successful strategy and delivering it into an effective operation. Creating loyal, satisfied customers, while strongly growing revenue and profit.
The research outlined in Figure 1 has shown as is normally the case that some of the strategies are proving to more successful than others. The two most successful have focused directly onto the customer interface, staff and customers.
One focused on fully utilising staff and developing a people driven operation which affords success through long-term personal relationships that enables the ability to:
• understand and address specific customer needs
• co-creating solutions generating customer centricity and intimacy.
The second focused on utilising a well established positioning (Brand) with their staff delivering the brand and the customers living the brand.
The power of these two strategies is that they enable the provision of intangible services and benefits. Brands today are established not as irreplaceable but as irresistible, many of us find it very hard to say why we like one brand over another and refer instead to a perception of value which effectively is an intangible which provides the value which keeps us as a customer. The real power of the brand is that it also drives the same positive attitude from the staff and this combination creates a unique driver of loyalty. The people driven strategy also drives positive behaviour from staff but is more dependent upon the individual than the company and therefore if not fully followed through can suffer if attrition amongst staff becomes an issue.
The other two strategies although successful to a point have not enjoyed the same level of growth in either revenue or margin and face the fact that the effort required to be successful is growing, questioning the need to revisit their strategic positioning.
These two strategies also use a similar methodology; one uses features and Service levels to try and raise value in the customer’s eyes but face the fact that their competitors find it very easy to copy and thus undermine them. The second uses price and volume which again falls prey to competitors who just force the price down through volume not quality.
The real insight was that the actual operations of the vast majority of these successful companies were very efficient; the problem lay in the fact that they were not very effective and their performance always seemed to come at a high cost. The effort required to deliver the efficiency and the overall effectiveness of the operation in driving value for the business always seemed high in the eyes of the business.
A simple example of this is that many service operations measure only the failed SLAs - because they do not possess the capability or have the systems in place to efficiently measure the detail necessary. One service operation revealed that it would be financially better off if a percentage of the SLAs failed and the penalty paid, rather than achieving the SLA and paying the additional costs of emergency parts, shipment and coping with the disruption. (Boasting about a close shave and how no cost was spared to achieve the SLA is not necessarily a success story). Improving the basic process in many cases would have produced a much lower cost result and provided capacity to deal with the calls failing SLA, as quite often the close shave would cause another call to fail.
Part of the success came from recognition that when the service operation became fully integrated into the business was the trigger point. This was the point at which the value of service was realised by the business and fully utilised. The point at which
• sales invested time in selling service to the customers instead of trying to minimise and ridicule its input
• R&D and manufacturing saw the input from service as a shortcut to rapid development and manufacturing improvement and not something to be shunned as poor value.
In reality the service operation has to become the voice on the Board, supporting its primary role to feed back the response from the customer to the business. This close alliance with the customer recognises the role of the customers in helping to continually improve product quality performance, and how to increase the relevance and usability of the products. The service operation has to gain recognition from the Board that it is not simply a provider of good service and satisfied customers but also generates and contributes to the profit of the business by working closely with product development, sales and marketing, and of course, the customers.
The conference attendees will be able to assess where their service operation is today and how to move it up the hierarchy of business value outlined in Figure 2, to become the fully utilised weapon of choice to help the total business to grow strongly in difficult times.
The conference is planned to provide a series of real life case studies of how success has been achieved, how service operations have moved from efficient engines into highly effective operations recognised by both the customer and the business as adding high value. We will explore with these companies anecdotally the empirical evidence produced by the research to help attendees understand the opportunities available and provide them with the tools to improve their operations immediately.
All the successful strategies have only being achieved through change that was a co-ordinated and concerted activity combining people (customers and staff), processes and technology. The biggest realisation for many of the successful companies understood that introducing new measures will mean learning new ways of working. A requirement to learn is often a good reason to react negatively to change because it implies that what went before was wrong, inappropriate or inept; the reality in service is usually that what went before worked, but is not now appropriate. They realised that the rate of change should recognise the level of communication and closeness of the individuals affected – customers and staff – and should recognise the quality (good or bad) of the processes and the level (high or low) of technology sophistication. Back to the keynote speakers
