10 Critical Success Factors to Stay Ahead of the Game in Services Management

(Originally published in the March/April 2004 issue of AFSMI's Sbusiness.)

By Leo A.P. Moerkens and William K. Pollock

It has always been a challenge for any organization to balance its attention between running the day-to-day operations and spending time thinking about the future of the business. Too often managers get caught up in the daily operational activities and do not find the necessary time to look at the future - and this can lead to potentially disastrous results for the business. We all know that any type of business, regardless of market segment or size - even large, well-established businesses - can lose their competitive edge by not planning ahead. Once the edge has been lost, it usually starts a downward spiral as other traditional competitors, as well as some of the newer start-ups, begin to execute their own plans for market growth and take over the lead. Among the likely outcomes for any business that does not plan adequately is the loss of customers, revenues, share, market position and, ultimately, its historical presence in the marketplace. The worst-case scenario? Being forced out of business altogether!

In the course of running our own businesses, we have probably all recognized the importance of dividing our time effectively between managing day-to-day operations and planning for the future; however, the reality of running the business typically forces us to divide our time less than optimally on the planning aspects. However, it is critical to change continuously, whether we use concepts such as Total Quality Management (TQM), "Re-inventing the Corporation", Customer Relationship Management (CRM), etc., or just common sense. All these initiatives have one thing in common; they are focused on ideas, concepts, and methods that can be used to improve our businesses, and help us to move beyond merely managing the daily routine.

Whatever tool we use, or name we give it, the basic areas that need to be addressed, and the methods that are available to address them, have been remarkably consistent - and successful - over the years and, as such, it is important to understand them, as well as what they can do for your organization. Everything comes down to the same basic principal: we need to be able to offer the right products and services to our customers, and deliver them in a timely fashion, at the lowest possible cost in order to maintain the margins that will lay the foundation of success for the future of our business.

Each of these elements is equally important to the success of our businesses, and each requires our attention on an ongoing basis. This means that we must continually focus on our products and services; the business processes to deliver them; the organization, and tools to support the people and the processes; and last, but not least, the ability to manage the change process to ensure the desired results at the lowest possible cost (Figure 1).

Figure 1

In assisting our clients over the years, we have identified the following 10 critical success factors that must be addressed to stay ahead of the game (Figure 2):

  1. Up-to-Date Products

  2. It sounds obvious, but keeping your product offerings up-to-date in this day and age is a challenge. The changing market requirements and expectations, intensifying competition, and continual advances in new technology are all drivers that lead toward both the need - and ability - to embed commensurate change in our products in order to remain attractive to our customers over time. Regardless of which industry segment you serve, we have seen product life cycles decline dramatically over the last couple of decades. The implication of this trend is that you will need to maintain a continuous effort to improve and upgrade your products over time to ensure that you consistently meet your customers' expectations. However, in order to do this effectively, you will need to be able to anticipate what your customers' expectations will be at the end of your development cycle - and this may be difficult, as the general rule of thumb is "the shorter the cycle, the easier it is to anticipate your customers' expectations".

    Therefore, it is critical to analyze and forecast your emerging markets to minimize the risk of launching new and/or enhanced product lines that may not satisfactorily address your customers' needs. However, the risks may be significantly reduced by conducting the appropriate market analyses, customer surveys, focus groups, and competitive business intelligence.

    Figure 2

  3. Value-Added Services

  4. Most products, especially the more complicated ones, neither sell nor work by themselves, and require additional levels of service and support in order for customers to benefit from their full use and application. This may include anything from routine maintenance and customer technical support, to customization and application training. This trend in the high-tech services industry is decades old, and yet, many organizations have not yet made a complete transition to the "new" way of providing total customer support.

    Thus, an organization's value-added services need to be focused on the specific needs of its customers, in conjunction with the technical specifications and requirements of the products. If done correctly, the total results in earned revenues and profits will be more than equal to the sum of the two individual components. However, this requires an in-depth knowledge within the organization of not only the technical applications and uses of the products, but also the specific needs of the customers with respect to their day-to-day operations. This may involve customization where necessary; consulting and applications training for the more complex uses of the systems and equipment; and the appropriate levels of user training and documentation to support the customers following the installation.

  5. Integrated Solutions

  6. In most cases, it may be assumed that the customer is not so much interested in the technical nature of the product, but rather in the solution it provides for his or her tasks-at-hand. It is important to recognize that in the customer's mind, if the product is not working optimally, regardless of the technology, it is "worthless". Conversely, it is the totality of the solution that the product provides that is most important to the customer. This may involve any and all aspects relating to the product, including connectivity, customization, reliability and (not necessarily the least), training of the operators and support for the maintenance personnel, if applicable.

    For example, in the early days of network support, where multiple parties were responsible for individual pieces of the total "pie", there was a great deal of fingerpointing whenever the system was not working or would go down, but not much certainty as to whom was really accountable for any particular incident. In these types of situations, the solution typically focused not only on the product and service delivery, but on the overall system maintainability as well. As a result, uptime and performance guarantees during the overall life cycle of products have become common requirements nowadays, typically requiring sophisticated solutions for total service and support including remote diagnostics and self-service via Internet technology, etc. For these reasons we, as an industry, have to make sure that these total requirements are always considered in the final specifications of the products and services we offer, and are fully integrated into the customer systems we support.

  7. Business Processes

  8. In order to be able to effectively deliver the products, services, and solutions that our customers need, we also need to ensure that the business processes we utilize are appropriate, up-to-date, and that they get the job done. If they are not, then we need to change them where necessary to meet our customers' expectations without creating an overly-costly solution that effectively eliminates our profit margins. In assessing business processes, it is important to understand that selling products is fundamentally different from selling services and solutions, thereby requiring totally different approaches, processes, and skills. As service and support offerings continue to be enhanced in order to provide customers with more comprehensive solutions, the processes that are required also continue to change, and require different and more sophisticated skills and tools, themselves. In many cases, services specialists need to be included in the mix, due to the complexity of the desired solutions.

    One of the most significant customer requirements that must be addressed in the business processes is the time factor. Next-day service is increasingly perceived by customers as "too slow" at best, and in some customer environments, completely "unacceptable". The requirement for same-day service remains a challenging factor, especially if the complexity of the solution is "high" and the density of the installed base is "low". However, technology can provide a solution to this issue through the use of remote diagnostics and web-based self-support, where possible, without breaking the bank - for either the customer, or the service provider. But, meeting this need generally requires some primary customer research, internal process assessment and, possibly, a fundamental re-design of the existing business processes and tools used, conditioning the customer, solution training, and a communication structure that allows for real-time escalation.

  9. Accountability

  10. As solutions and processes become more complex, it also becomes more likely that multiple people get involved at different stages along the way. Although technology can help manage this to some extent, there is still a big risk that something may go wrong, or may fall "between the cracks". To avoid these possibilities requires a different approach and - more importantly - a different attitude. The presence of any "not my job" attitude among existing personnel would be devastating in this kind of an environment. To have any chance for success requires teamwork, accountability, and follow-through, and the organization will need to make sure that it not only designs the business processes to allow for direct accountability, but that it also configures the automation systems to support it. Some companies have successfully implemented team efforts and accountability, deep within the organization via account teams that are dedicated to "taking care of the customer" versus merely "taking care of the problem". It is our experience that to implement this takes a great deal of time, and requires specific training in different skill sets, team building, and influencing the attitudes of people.

  11. Customer-Focused Front-Line Organization

  12. Since the customer should always be the main focus of the company, we need to make sure that the organization is structured appropriately to provide this focus. The most important interfaces with the customer are typically made through the Sales and Services parts of the organization, as they are in direct contact with the customer all of the time, either in person or over the phone. The way they interact with customers will ultimately determine the customers' perceptions of the organization as a whole. This means that the skill sets that are required must not only cover the technical aspects of customer support, but also the communications and interpersonal skills that let customers know that they are being cared for properly. This is especially true for an organization that is in transition (i.e., in growth mode, recently merged, start-up, retrenching, etc.).

    It is our experience that most personnel can always use some additional training to hone their existing skills and make them more aware of the specific "do's and don'ts" of customer interaction. By creating (or refining) customer-focused, integrated processes, we can adapt the organization to meet its customers' emerging needs, formalize the internal responsibilities for taking care of the customer, and reduce all other duties that could take the attention away from the organization's customer focus (e.g., miscellaneous administrative duties, etc.). By doing this effectively, the organization may focus all of the necessary attention to the customer, thereby greatly increasing its chances for success.

  13. Flexible and Responsive Back-End Organization

  14. However, to allow the front-line personnel to focus directly and effectively on customers, the organization will also require a flexible and responsive back-end organization. This part of the organization needs to be able to support its front-line personnel through the development of the tools and methods that enable the proper execution of the required tasks. This includes the formal documentation of the technology utilized, the instructions and guidance for applying it, the development of selling and maintenance tools, and, last but not least, a specific set of escalation procedures.

    The back-end organization is responsible for setting the stage and creating an infrastructure that allows the front-line organization to perform its tasks without hassle or interference. Functions in this segment of the organization may include, sales support and administration, technical and product support, training, and logistics functions. Despite the fact that these functions are typically more internally and product focused, they are still important factors that affect customer perceptions. We have seen in many organizations a lack of the sense of urgency and responsiveness in the back-end organization that ultimately affects the ability of the front-line organization to provide customers with the levels of performance that they require.

  15. Technology Trends

  16. Technology is one of the key elements for change, and can provide us with most of the tools we need to improve our business performance, as well as lowering the operational costs of the organization as a whole. We all know the rallying call to "do more with less" and, in most cases, technology, if applied correctly, is the principal tool that will allow us to do so. The real challenge, however, is to determine what is realistically available, and how we can best use it to our benefit. We have all seen the hype in various articles and advertisements that promotes "new" technology products; but we have to realize that some of these "new" technologies, despite the promise, are not yet mature - or truly available.

    For example, advertisements like "can you hear me now" clearly indicate that we still have problems with wireless coverage. Accordingly, if you base your communication and information flows solely on wireless technology, you might be in for some surprises. However, this does not necessarily mean that we should not investigate this technology further, and continue to pursue this direction. The potential is there and the existing limitations are likely to disappear over time, allowing us to take full advantage of these - and related - technologies to improve our businesses, as well as our ability to support the products, services and the business processes that are required to deliver them.

  17. Apply the Right Technology

  18. The availability and proliferation of technology solutions can be very confusing, and sometimes even misleading. The old saying that "you never should apply technology for technology sake" is still very true. For this reason, you will still need to carefully investigate alternative technologies, as well as their applications to your specific situations. The best way to do this is to design your business processes and structure around the most realistic technology solutions, and only focus on the ones that will directly help you in achieving your business objectives. If you do not do this, the solutions can become very expensive, despite downward price trends, resulting in only minimal returns on your investment. We recommend assessing the technical requirements to support your business processes from both an operational and functional point of view, but driven primarily by your business objectives. Technology should be the means by which you may attain your business goals, but not the primary objective. As such, you must realize that not all technology will provide you with the benefits you are looking to gain - it is simply a tool to assist you in meeting your overall business objectives.

  19. Manage Continuous Change

  20. This last factor might actually be the most important one: how to manage and control the continuous change process. We have seen many companies develop and deploy initiatives for change that have been very successful, but even more that have turned into disasters or are abandoned halfway through the implementation. From our experience, it is critical that senior management always has a clear vision of the future of the company. This requires future thinking, supported by market research and customer surveys that have to be translated into a clear vision and strategy. Once the vision and strategy are in place, an assessment can be made to determine a baseline for change, and a plan can be developed to make it happen. The gaps and opportunities that are identified for implementing change will need to be identified for all of the organization's products and services, as well as for the business processes, organization, and tools (i.e., technology) that will empower it to make the necessary changes. Based on this assessment, a product and services development plan can be designed and implemented, and the existing business processes can be adapted to meet the new requirements.

    This will undoubtedly also lead to new organizational, technology, and systems requirements which can then be combined into a detailed plan to commence the implementation. However, controlling this process is like a jigsaw puzzle, where all of the pieces need to fit together - and no piece can be missing - to complete the picture, and implement with success. We strongly believe that a structured approach is an absolute necessity for success (Figure 3).

Figure 3

The use of this structured approach will not necessarily guarantee success, but it will certainly help to increase the chances. However, while addressing only some of these factors for success will certainly bring some improvements to your business, the maximum effect will only be achieved if all 10 of them are addressed because they will all influence each other, either positively or negatively, as a whole.

We believe it to also be a myth that effecting change in the organization can be accomplished quickly. In fact, our experience has shown us that the total cycle often requires at least 18 to 24 months to be successful. This is primarily because we are not only talking about changing the organization and the tools it uses, but also the people within the organization, including their history, skills, and overall mindset. This is what will take a great deal of time, effort, training, and changing attitudes.

Nobody said it would be easy to effect change, but many companies have already done it successfully, whether we call it re-inventing the corporation, shifting paradigms, or something else. To stay successful, your organization will have to change, and then, change again and again - because the world around you continues to change.

William K. Pollock is president of Strategies For GrowthSM (SFGSM), the Westtown, Pennsylvania-based services consulting firm specializing in strategic business planning, services marketing, CRM consulting, market/survey research, and customer satisfaction measurement and tracking programs. Bill may be reached at 610-399-9717 or via e-mail at wkp@s4growth.com.

Leo A.P. Moerkens is president of Hands-on Management Consultants, Inc. (HoMC), an international management consultancy firm that assists clients in developing and implementing operational business improvement programs. Leo can be reached at 203-888-1671, or via e-mail at LMoerkens@Hands-onMC.com. HoMC's website is accessible at www.Hands-onMC.com.

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