Superstars in service management: Where and how masters excel
Narendra Mulani -- Logistics Management, 10/1/2009
The accenture research that was cited in last month’s column brought to light some startling insights: At many companies, after-sale services can account for up to 40 percent of revenue and up to 50 percent of inventory investment. Yet far less than half of all executives polled believe that service management is a key contributor to the customer experience.
Clearly, there’s a disconnect. In addition to potentially alienating customers by not fully supporting the after-sale relationship, many companies are ignoring a significant revenue-generation opportunity. However, service management masters—companies that finished in the top 10 percent of our survey based on approximately 20 service management metrics—are successfully making service management a resource for customer-satisfaction and retention, as well as revenue enhancement.
Here is a look at seven service management practices and capabilities, and how masters are using them to help achieve and sustain high performance.
Service management philosophy, organization structure, and offerings: Perhaps the clearest indicator of an enterprise-wide commitment to service management is that (compared to laggards and the survey population as a whole) masters are far more likely to approach after-sale services as a distinct unit with full profit-and-loss accountability.
A far higher percentage have dedicated support capabilities such as IT, R&D, and sales and marketing. And as shown in the graphic, more service management masters have developed formal after-sale and asset management/MRO services. Masters are also more inclined to develop professionals with focused service management specialties.
Service delivery model: Not unlike mainstream sales and services, segmentation is vital to service management masters. In fact, this group is more than three times as likely as laggards to tailor post-sale services to each customer or customer segment.
Part of what makes this possible is that masters have a broader range of capabilities and resources, including call handling/customer care, parts warehouses, repair depots, and remote diagnostic capabilities. Masters also are more likely to operate centrally, building global delivery centers and proffering more after-sale and asset management/MRO services via online portals.
Service offering portfolio: Service management masters are more than twice as likely to have a clearly defined portfolio of after-sale and asset management/MRO service offerings and (subsequently) to use simulation or modeling to continuously formulate the right mix of services; develop service and parts strategies in line with company strategy; focus sales and service professionals on selling a full portfolio of parts, services, and solutions; and analyze customer product usage and feedback data to create new parts and service solutions.
Partner relationships: Companies that excel at service management tend to work well with others. By more than four to one, masters outpace laggards in partner-strategy formulation. By nearly as large a margin, they also are likely to formulate service strategies in collaboration with partners and to integrate their service management processes and information systems with those of partners.
Resource planning: One important key to service management success is collecting, analyzing, and leveraging service data. Because masters use and leverage a greater range of information, they consistently get more “mileage” out of their service people, parts, facilities, and partners. Masters’ most-cited references include maintenance plans, service-level agreements, captured response times, and scheduled preventive maintenance data.
Service transparency: Masters are exceptionally competent at observing and understanding the performance of their service resources. One reason is technology: Masters were found to be six times more likely than laggards to have a fully integrated best-of-breed system or custom software that calculates metrics on customer satisfaction and financial targets. Masters also are more likely to have a complete set of integrated organization-wide metrics for monitoring customer needs and company financial targets.
Pricing and customer insight: Our survey found that the ability to price services optimally is crucial, and that masters consistently have better insights on the factors that drive returns on their service business. For example, masters were much more likely to indicate that they base their pricing on a specific value proposition and market intelligence, and that they conduct ongoing competitive pricing analysis, often via a third party.
What really matters
Accenture’s research into service management mastery is only one of several investigative projects that our organization has launched over the last year.
Similar efforts have been completed (or are currently underway) in fulfillment, manufacturing, sourcing and procurement, and new product development.
However, it is important to note that the often cited differential between masters and laggards serves only to illustrate the vast disparities among the players.
What really matters is what masters do that gives them the real edge in the marketplace—both from a cost efficiency and revenue generation perspective.
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