The service industry has experienced a shift of emphasis, with efficiency considered as an absolute, and with much more attention paid to the effectiveness of the operation. Support staff are beginning to accept tighter management techniques, and convincing them that such changes improve their effectiveness is instrumental in aiding the business, accompanied with a move from “Time and Materials” to more “Contractual” work, which in turn has introduced the need for Service Level Agreements (SLAs) to provide a structure for performance, and expectation of delivery in the contract.
Service Economics
How effective is your company in measuring service employee performance?
Performance measurement is generally used to control and increase the performance of employees. Unfortunately, performance measurement does not always work out as planned. Therefore, Noventum Service Management in collaboration with the University of Twente, will investigate how performance measurement leads to better results of service employees. We are specifically focusing our research on the importance of employee involvement in designing the performance indicators for measurement of their performance.
Does your company use individual or group performance indicators to measure the performance of service employees? Would you like to learn how performance measurement can be done more effectively? Then we invite you to participate in this interesting research. We really value your contribution to our research and we will be delighted to send you a copy of the research results in return. These results may give you new insights on how performance measurement of employees can be improved to maximize the output of your employees and enhance service excellence and profits within your organisation.
How companies are deploying Service Economics to create profitable service operations (Summary)
Intangible benefits are difficult to quantify and then replicate; strategic solutions that enable these to be measured and valued by the customer are therefore powerful differentiators. Successful companies understand how to drive the growth of service businesses in general, and how to launch and promote a successful service business. New calculation models are now required to demonstrate the value of service. ; it is the personal experience that is valuable and must be created by unique combinations...
How a full understanding of Service economics drives success (Summary)
Service has struggled for a long time, to justify its role in business; regarded as a necessary evil and not considered as a source of excellent performance and profitability. It is necessary for this perception to change significantly as the economy and companies begin to grow after what has proved to be the most traumatic business climate for a generation. The service aspect of businesses is now proving to be an exciting area of opportunity for revenue and profitability growth.
Research undertaken earlier this year into service operations within businesses, demonstrates the profitability very clearly, with:
• Annual growth rates of 20-40%
• Gross margins of 50% or more
• Net margins of 25% or more
• Annual increases in profitability through productivity improvements of 10% or more
• Sales increases of 20% or more of total company revenue through development of staff as trusted advisors
Service Economics in the New Digital Y Generation Environment (Summary)
Businesses with past success built upon the quality and innovation of their products may falter if their concept of service (repair break/fix) is only as a support to the manufacturing operation. However if the quality and innovation of product is supported by a similar level of quality and innovation in service, this can provide an excellent way to build and sustain long-term relationships. Retaining customers means that a reputation has to be sustained over an extended period, and the service aspect of the relationship can provide a bridge should there be a problem with a faulty product. If the concept of service has evolved simply from one of reducing the cost of manufacturing errors, and does not focus on the optimum value derived by the customer from the application of the product, the relationship may not be sufficiently robust to resist a stress. This is best illustrated in figure 1, which shows the effort required to build satisfaction in a product into long-term loyalty. Unless satisfaction and loyalty are high, the value of a customer as a promoter is minimal, but promotion by a customer will have immense value.
Service Economics and Customer Management Relationships working together (Summary)
The internet has created availability, and global interaction has reduced the barriers to switching supplier, so retaining customers is about keeping aware of their changing needs and innovating as required, to respond to either spoken or un-spoken needs and provide a cost-effective, potentially unique solution, that will be highly valued and paid for. This apparently straightforward requirement recognises the need for information to guide and direct businesses into relationships that enable customer and supplier to perceive value in a customer-managed relationship.
Significant generational influences on product style, form and consumption, why and how service is a key to business differentiation and how communication has changed dramatically in just the last three years are factors that are having a profound impact, and businesses wanting to make their mark should take notice. We have examples all around us illustrating the dramatic changes that have occurred over the last couple of years and some of the issues created.
Service Economics – Providing the Board with the ability to assess service value in their own measures (Summary)
Strategies followed by successful service companies demonstrate that there may be a cyclical nature to business focus, emphasised during periods of growth and recession. Service is now firmly recognised as a mechanism that can and will deliver growth, and has proven to be a resilient revenue creator and margin builder. That does not mean product development or technological development will give way to service, quite the contrary; closer alignment means that they become integral. Cloud computing is an example – highly reliant on technology development, but fundamentally demonstrating value to the business through provision of a service offering.
Businesses are realising that good service is not something that can be “bought” as an instant solution. Convincing customers they are getting good value for money is a hard act when customers demand more for less, and unless service is a long-term strategy, the results may be fragile. Successful service companies have usually been persevering for many years, focused around delivering value at the customer interface, and have found that service works best when the business is closely aligned to customer needs. This alignment is only achieved if the board fully supports the role of service and in return they expect significant results from integrating service into the business – a growing trend.
Service usually represents a long-term sale with delivery and payment over a number of years – effectively annuity payments not one-off sales; appreciation of making the right decisions quickly for the longer term denies the manager the luxury of strategies worked out over months and lasting for years. Strategies need to be prepared in weeks to last for quarters and must accommodate continual refinement, and if strategies are fundamentally faulty, then no amount of tweaking or alteration is going to make them work.
