Service Strategy For Executives: An Analyst's Perspective

Service Strategy For Executives: An Analyst's Perspective

I'm Sumair Dutta, Research Director for Service Management with The Aberdeen Group. My research really covers the entire service lifecycle, if you will, from a customer service perspective. Look at it as there's a customer out there, whether it's a consumer or a business, and they reach out for a particular service issue. It could be a customer service request, it could be a repair, it could be that something is broken and they need a replacement. We talk about all of the channels with which the customer can reach out to a supporting organization, connect with that organization, and then get the service that they need.

From the supporting organization's point of view, you have many channels available on the back end to provide that level of support. If that support does not happen then you have to dispatch a technician, so you look at it from a field service perspective. Overall, we're really looking at how all of that fits together from the delivery of the eventual customer experience.

We look at something called service strategy. It's really how executives in the business are looking at service and support to differentiate themselves from their competition. All of this is meant to drive profitability within the service side of the business. We're seeing more and more that businesses are looking to use their service organizations as a profit center. In our research, about 61% of companies actually manage service now as a profit center as opposed to a cost center. 63% of companies are actually generating a margin on service. That's become a significant trend if you look at five years ago when companies were purely cost-centric on service and now they're profit-centric.

As we looked over the last 12 months and we look forward, obviously the economy is a big concern for businesses, but the major pressures or the major drivers for the service business, there are external pressures where customers are continuously demanding more and more and better service. That's not just from a speed of service perspective; it's from an efficiency point of view. Customers want technicians on-site and they want them on-site faster, but essentially they want the right technician on-site so that that problem is fixed. It doesn't really do me any value if a technician comes to fix my product and they can't do that. If it's not the right technician with the right part and information, I still have a product that's not fixed even though the technician was there in one hour or two hours, or even in 30 minutes.

The customers are demanding better service and more efficient service. From an organizational perspective of the organization that's delivering the service, the pressures are to meet and even beat those expectations but still manage it profitably from a cost perspective, from a revenue perspective, and driving a high level of productivity and utilization within the business.

Those pressures are primarily the ones that we see across the service organization. For example, in the field, productivity and utilization are really important and key. That happens in the contact center as well. We look at the parts in the logistics side of the business, and that's part of the research, the cost element is really one of the biggest factors. Managing your parts inventory, making sure they get out there on-site but still doing it at the lower cost. Then, when we look at the overall service strategy of the profit-centric view of the business, revenue is becoming more and more of a goal. Companies are really looking to drive more and more revenue from the service side of the business.

Within each one those pressures, productivity, cost and revenue, there are certain steps that companies are taking to get to those. I will touch upon one for each. Let's say from a field and from a revenue perspective, we see organizations really focused on better contract management. That is really built on the delivery of service as per expectations to your customers within SLAs or outside of SLAs. If it's within a service level agreement as long as you meet and beat those agreement standards you're going to get a contract renewal – and that means additional revenue streams for your business.

From a productivity perspective we're seeing an investment in mobility tools. Better service information, if you will, to the technicians, to the dispatchers, all of those components of the service ecosystem receiving better information so that they're actually spending less time on paperwork, they're spending less time on the actual search for information. Overall we find utilization rates at about 64% - 65%. That means an average technician is nonproductive for about a third of the day. They're spending that either idle or sitting in traffic or doing paperwork or doing stuff that's not tied to actually resolving customer issues. From a cost perspective it's all about efficiencies, getting the right technician there on a first-visit basis

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