I first became involved in the world of mobile workforces in 1993. I was working as a consultant and was asked to select and implement a best-of-breed CRM application for a client with a multi-national field service operation. From that tiny beginning, I spent 13 years working with, and for, software vendors in this market.
Through this period, the question of whether “Service” should be managed as a cost- or a profit-centre sparked into life, generated lots of arguments and rumbled on – largely unresolved. Since then, I have spent five years working in the world of customer experience and enterprise feedback management. This period has given me a fresh perspective on this question – which I have found is still very much alive.
Mostly, the debate has been characterised by a lot of heat (emotion), but not a lot of light (insight and action). The present situation in many organisations can best be described as an uneasy truce. Service leaders are in a stand-off with financial and other senior executives; each suspicious of the motives and actions of the other. This impasse does not bode well for a quick or a friendly resolution. But, what lies behind this unhelpful situation? It is worthwhile taking a step back and looking at the origins of the debate.
It is a fact that delivering field-based services is expensive. Building the necessary infrastructure (people, vehicles, communication systems, parts inventory) means significant initial investment. Plus, the ongoing costs of maintaining that infrastructure, together with the actual day-to-day running costs, mean that dispatching an engineer to fix a customer issue (a “truck roll”) is likely the most expensive action the company will take when providing post-sales service. It is no surprise then, that people charged with protecting the organisation’s finances take a keen interest in the Service Department. There has always been, and will always be, pressure to minimise the cost-to-serve.
I do not know who first came up with the notion of flipping the regular conversation regarding cost containment on its head and suggested converting service into a profit-centre, but what a storm was to be unleashed! Superficially, it is an attractive idea. If Service is costing a lot of money, simply get the operation to generate more money than it spends – and everyone is happy. Often that is interpreted to mean additional revenue generated from new product sales, alongside so-called “added-value” services.
Except that, in practice, usually no-one is happy. Many service professionals do not readily relate to the idea of having to make sales, and see it as contradictory to their role. They are not motivated by being forced into uncomfortable territory – often not trained in newly required skills – leaving them frustrated. Performance is below the targets set to make service turn a profit, so senior management are not happy either. Most disturbingly, the customer is likely to be unhappy too.
To illustrate why the customer’s may very well be unhappy, here are a couple of examples from personal experience. The roadside rescue mechanic who having got my car started, proceeded to try and sell me a new battery. He was insistent that he needed to “advise” me on how urgent it was to replace the battery before it happened again, whilst I fumed at being made (even more) late for a meeting. Outcome? Embarrassed mechanic, no sale, and a longstanding customer lost to a competitor.
More recently, our dishwasher needed repairs a couple of times. On the second visit (an unrelated fault!) the engineer who came advised the potential cost of repairs before starting and suggested we consider replacement, as an old machine in such a hard water area would be likely to suffer more failures. He did not try to sell us a replacement, but performed the ‘trusted advisor’ role well by giving relevant information and allowing us to make our own decision. Result? we bought a more expensive replacement machine from the same manufacturer; and have told a number of friends of our positive experience.
There was no suspicion that the dishwasher engineer was motivated by any monetary reward, in fact we were not even charged for the call-out, and we trusted what we were told – a professional opinion straightforwardly given. The roadside mechanic, on the other hand, destroyed my trust in the brand by his behaviour and obvious unease with what he being made to do – in order to meet targets and generate bonus payments.
So, what should the purpose of a post-sales, field service operation be? In my opinion, there are three interlinked objectives:
- to repair and reinstate service for the end-user (or avoid future problems if a preventive intervention);
- to restore and recover lost reputation, by delivering a good experience to the customer;
- to protect loyalty by being a brand ambassador.
And, if the technician is not enabled and supported to carry out this role effectively and customer trust is destroyed, then the negative impact can be hugely costly. In fact, the true extent of the damage is invisible and unmeasurable to the business. Future revenues are destroyed and the ripples spread through negative stories told in person or, increasingly, through social media. Usually, this downside hugely outweighs any short-term upside from trying to generate additional revenue from service visits.
Does that mean that we should just accept Service as a cost centre, then? Certainly not!
Service can make a massive positive contribution to success. Their attitude and behaviour during visits to homes or business locations, and building on the relationship that already exists between company and customer, is a big influence on future revenues. So, rather than try to measure short-term sales, we should consider the lifetime value of the customer and monitor the contribution that a service operation makes to that.
To paraphrase the philosophy of a well-known coffee brand: are you serving a $4 cup of coffee or a $6000 lifetime value customer? The answer to that question will determine a lot about your attitude and behaviour towards customers, and equally how you measure and reward service success.