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Much has been written about customer satisfaction, account management practices, and measurement systems for services businesses. Some of the approaches take a simple, monolithic approach and propose a standard model for management of all service businesses. We suggest a different approach and recommend that a service business should be managed and measured based on the maturity of the service business and the specific requirements of its’ customers.
To help operationalize this approach, we provide a framework for understanding how a services organization and its’ customer engagement should be measured. This framework is based on the premise that these organizations often progress through three distinct stages – Customer Centric, Profit Centric and Growth Centric – as they evolve. We specifically outline various information and reporting approaches to support strategic account management of services businesses at each stage of their evolution, we provide examples of what service metrics are most relevant, and then discuss the effective intersection of account practices and metrics by means of a customer dashboard tool used by many leading firms.
Service Business Framework
Service organizations have fundamental business objectives and service specific goals that guide their operating norms, business behavior, capability development and resulting key performance indicators (KPI’s). This is driven by multiple factors, including service organization tenure, competitive influence, business nature, customer maturity & requirements, specific corporate strategy, product enterprise mandates and synergies. Service entities can be logically categorized into three distinct stages: Customer Support Centric, Profit Centric, and Growth Centric. There is a recognition that objectives are not static and most organizations will migrate over time into subsequent stages as they and their customers mature. That said, it should not be implied that growth centric service organizations are “better” than those focused on pure customer support. It is, however, important for an organization to understand where they are to help guide their information and customer engagement approach.
At a summary level, service companies in each respective stage typically exhibit some or all of the following behaviors and focus:
- Customer Support Centric:
Primarily focused on providing baseline product related “break-fix” and warranty service to customers who purchased their equipment. Service is largely viewed as an entitlement by the customer. These business units are typically measured as a cost center. Initiatives and priorities are centered on delivery process improvements, service quality & responsiveness, and assuring baseline customer satisfaction.
- Profit Centric:
Primarily focused on driving service business gross margin and profitability. Initiatives are centered on automating manual processes and becoming more efficient in all service “back-office” functions (services delivery, services supply-chain, services order management, call center & technical support, etc). Some voice of the customer input is incorporated along with the introduction of some front-office process improvements (pricing practices, competitive positioning, product sales education of services, expanded service contract offerings, etc). The end customer is usually more open to alternate service offerings beyond traditional product break-fix work.
- Growth Centric:
Primarily focused on expanding the service business and contributing to proportionate enterprise-wide growth. These companies recognize that customer service innovation is a way to differentiate themselves from the pack. An emphasis is placed on introducing new offerings – both enhanced product-services and new value-added managed and professional services. Comprehensively understanding customer processes and total cost-of-ownership are fundamental. Front-office processes – services marketing, services sales and pricing – gain more internal mindshare. Executive leadership appreciates the ability of the services team to create product pull-through opportunities and generate long-term customer retention. Customers more often view and treat their service providers as strategic partners versus commodity suppliers.
We believe account management and service metrics should be top of mind for service executives since they both are foundational to execution and success. Regardless of what stage service company you are, leadership requires data-driven insight to guide their strategic decisions – spend time to get the metrics right, and then meticulously measure them. The mapping of services account management reporting requirements, service metrics, and customer dashboard usage within the prescribed Services Framework is discussed in the following sections.
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