News: Articles
Playing the advantage game:
Generating revenue and profit from the frontline
By Steve Downton
Balancing the skills of engineers with the skills that customers
demand is a significant challenge for many businesses today.
Taking advantage of those skills to generate revenue and profit
is the next natural stepping stone—but one many businesses
have shied away from in the past.
At the moment, the industry is seeing an increase in attrition
levels through dissatisfaction of all types of engineering staff,
particularly the best ones, who are able to get jobs in different
departments within the same business as well as more senior
jobs in other companies offering better prospects, more money,
and ultimately more job satisfaction. They may look for new
pastures, because they are finding the existing role of the
engineer boring, and look outside the service operation for
a challenge. In addition service operations are experiencing
difficulties because they have realized that a large majority
of engineers are in need of training and that the skill sets
and requirements of a service engineer must be reassessed because
the growing technology is leaving them behind and their abilities
are becoming limited. Although training is in place to improve
the capability of engineers to deal with the challenges of new
technology, it is difficult to keep up with demand; customers
have stepped up their demands for increased flexibility to allow
for variability of volume, and customers expect the delivery
of full service not just “break/fix” support.
Both situations are causing major problems for hard-pressed
service operations focusing on service levels and profitable
delivery operations, particularly as the struggle to maintain
the quality of staff has raised the cost of resources, adding
to the woes of service operations struggling with eroding margins
resulting from increasing customer demands. Service operations
are under pressure to provide service in a number of different
ways, including:
- Low-cost technological support, with significant investment
in the product to improve its reliability as well as installation
of sophisticated remote monitoring diagnostic and repair operations
to reduce the costs of repair. Yet customers respond with
the sentiment “If I can’t see it or touch it,
it is not there,” so again forcing the price of service
down.
- Investment to simplify techniques of fixing equipment so
that intelligent couriers and even the customer can fix the
equipment themselves as though it were “plug and play”
parts. This unfortunately has underlined for the customer
the low value associated with service, captured by the phrase
“even my six-year-old could fix that.”
These exercises to reduce costs individually or in combination
have proven effective and produced efficient operations with
customers welcoming the reduction in maintenance costs.
Such mechanisms have served to delay the rate of margin erosion,
but in so doing they have created customers who are purely price
driven, coining the phrase “commodity service.”
As a result, service operations have been driven to distraction
trying to deliver more and more for less and less, sparking
the desire to even off-load problems to third-party subcontractors
and the like. Although the different types of processes have
dealt relatively effectively with providing service for the
commodity service products, there are now complex problems associated
with equipment and network software applications and firmware.
Situations are arising that demand an expert to find solutions
for issues; issues that include the skill level of the customer
using the equipment and the ability of the engineer to provide
significantly more than simple break/fix service.
If cost reduction isn’t the solution, maybe what is required
is to regard service as a generator of revenue and profit, thereby
creating a different attitude towards the role of a service
operation. Instead of seeking ways to reduce performance time,
the challenge is to increase the value. Instead of companies
wanting more fixes per engineer per day, they need to talk in
terms of touch time, contact time, value input, and additional
services. A customer-orientated engineer recognizes that businesses
need to sell more effectively and at a lower cost in addition
to using resources already available within the business. Engineers
can position themselves with their clients to listen and learn
effectively, efficiently, and continuously, when the client
needs support rather than when the salesman decides to show
up or the contract is due for renewal.
Many of the better service engineers already help customers
make good decisions and choices, in ways that only the very
best salesman can. However, they have to be motivated to do
so, be given the opportunity to do so, and be given the tools
to do so, including effective training. The service engineer
could be the focus of generating revenue in the future, with
the engineer establishing personal contact and providing added
value at every contact.
The effective engineer can build upon the basic service by
adding extras while on site, if he or she does not have to rush
off to the next call. “Time is money” will always
be an appropriate motto, but companies will benefit by stressing
the real value of effective application of time through engineers
trained to make the best use of their time with the customer—not
trying to avoid a conversation that they feel they don’t
have time for and are ill-prepared to conduct. Training will
ensure that engineers are fully equipped to optimize the opportunities
that may arise in the period between a successful repair and
their departure. This time, often referred to, as “golden
time,” is that period when, in the estimation of the customer,
the engineer has successfully delivered on the promise of the
business and has earned the right to be listened to. If the
engineer has appropriate knowledge and training, it is possible
for him or her to establish a rapport, understand key wants
and needs of the customer, and capitalize on the information
gleaned. At this point the engineer also has to be trained well
enough to know when to stop in the process and not suggest a
solution, but to promise to pass the requirement on to someone
who is better able to help the customer. This achieves two things:
it prevents the service engineer from being seen as a salesman
and losing the hard earned respect, and it also puts the salesman
in a much better position as an invited guest rather than an
unwelcome visitor.
The real secret to success is that the role of the service
engineer is not that of salesman but of service support geared
to adding value to the customer—generating revenue for
the business by helping others make product sales, service sales,
or a unique combination of both. In most companies today, this
positive development occurs almost by pure chance—that
the right engineer is in the right place at the right moment
and that the combination will produce a successful result. It
is possible to structure this process, and there are many leading
edge companies who have achieved that. They do not depend upon
luck; they plan for these opportunities by investing time and
money in establishing the environment through the following
exercises:
- Training their service staff to engineer the “golden
times” and be ready to take advantage of the opportunities
they present. They do not just put them through traditional
sales training.
- Ensuring that the engineer is trained on the broader portfolio
of solutions that their business can deliver, focusing on
how customers use the products and solutions. They should
not just be proficient in technical repair.
- Ensuring that the engineer can articulate customer requirements
effectively so that the business can develop an initial concept
that the salesman can share with the customer to develop a
full solution. It is not sufficient for engineers to know
only how to submit a form reporting an opportunity or lead.
Applying such training programs has produced service operations
that are highly successful in generating profitable business
with increased contract renewal levels.
But it is also essential to work with the rest of the business
to ensure that a business culture exists to support the service
business and can utilize leads in an effective and customer-sensitive
way.
Many businesses today are successful in utilizing their service
personnel to generate revenue, but in the majority of cases
their real focus is on getting the engineers to sell consumables
or to produce leads. Although these may be very effective methods
of increasing revenue, they are not the same as the process
outlined above, which is a much more subtle approach. In essence,
the process outlined is about extending the role of service
beyond the more obvious historic role into a support solutions
provision, where the role of the engineer is to provide a seamless
extension of the customer into the supplier, to ensure customer
centricity, and to enable the supplier to increase the provision
for customers without going through a more complex bidding process.
The result might not produce huge one-of-a-kind sales, and
it might appear to be a “slow burn,” but the result
is a continuous growth in secure, highly profitable sales at
a low cost to the business. The theory is that satisfied customers
are prepared to pay premium prices for premium services from
high caliber service support personnel (engineers).
Downton Consulting has established a reputation for providing
effective business advice within the Services Sector specializing
in guiding senior management teams and supporting service operations
both large and small to manage their customers, improve performance
profitability and deliver service excellence. steve.downton@downtonconsulting.com
www.downtonconsulting.com
© Downton Consulting 2004
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