21. April 2009 by Aidan.

David Mountain and Hernan Saenz have written a good article on Streamlining Support Services for Cost Reduction.  

When cost reduction is an urgent requirement, companies usually start looking at their G&A (General and Administrative) expenses before touching front line staff. If you have to reduce G&A expenses then you need to do so in a way that will have minimal or no impact on the service level that you provide to customers.

A typical approach to this is the slash and burn approach. It is quick but often you will find that over time many of the positions that were slashed and burned creep back into the organisation.

Your twin goals should be to maintain customer service levels and improve efficiency and productivity of support functions.

The first step is to look at your organisation chart in a new way. Typically your customer facing resources appear at the base of the org chart, with higher management levels above. By inverting this structure you place the most important customer facing employees at the top of the pyramid and all other support functions below. “Inverting the Pyramid”.

This allows you to examine the role and contribution of each support function in enabling your service delivery personnel to do their jobs. It helps executives determine which support functions are essential to the front line. It will also help decide where you can reduce some support functions and where to redesign other support processes while ensuring that you maintain the high levels of service excellence that your customers expect.

Posted in Selling "Services", Customer Service, General | No Comments »

20. April 2009 by Aidan.

When a new service is being developed a lot of effort is put into designing the ultimate customer experience. There is a lot of investigative work done on understanding the customer needs and also working through the customer journey and touchpoints.

These activities are essential. Unfortunately they are also a waste of time if the service you are providing is not profitable. Someone has to pay for the service or it will not be around for very long.

This is why it is critical at the design phase to consider the business side of the service in addition to the customer experience. You need to design profitability into the service.

There are a number of ways you can do this:

• The Service Offering

 When you are designing the service offering you need to consider what service levels you are going to provide, and crucially, what levels you will offer your customers to choose from. For example, you may decide to offer Bronze, Silver and Gold levels of service. Each with specific levels of service included and priced accordingly. This allows customer to see what they get and, more importantly don’t get, with the level of service that they choose to purchase and is an important mechanism in managing customer expectations. This is also very important in helping you to ensure that your costs and revenue are more closely aligned. That is, you are not incurring high costs on supporting low revenue generating customers.

• Revenue & Costs

It is obvious that you can improve service profitability by reducing costs and increasing revenue. But can you deliver the service at a cost that allows you to charge a fair and reasonable price?

At the design stage you need to ensure that you have fully considered the cost of providing service excellence (there is no point in designing any other type of service is there?).  If the cost of providing excellence is too high then no-one will pay the price you need to be profitable. The design phase is when you get the chance to really understand if you have a viable business. It also gives you an opportunity to identify key service attributes that will be cost sensitive if you ever find yourself in the position of having to reduce costs.

Why do you have to sell for a fair and reasonable price? Because if you don’t then your customers will stop buying from you as soon as they can because they won’t feel they are getting value for money.

• Alternative “funding” mechanisms

There are other mechanisms that can be used to fund the level of service that you want to provide and these should be considered at the service design stage. If your service offering is offered in conjunction with a product sale then there is an opportunity to cover part or all of the service costs in the product price. This is typically how new product warranty works. Alternatively, you can consider getting the customer to do the work for you by training them to be self-sufficient and taking care of certain steps of the service delivery themselves. We all do it now when purchasing goods on the Internet.  

Once your service is designed, from both the customer experience and business perspectives, you can continue to improve profitability in services by ensuring that you remain engaged with your customers. The closer you work with your customers the more feedback you will get on how to improve your service and this feeds into your service improvement activities.

So don’t forget, you may have the best customer experience in the business but if you don’t design profitability into your services you may not be able to afford to offer the service for very long.  

Posted in Servitize, Selling "Services", Customer Service, strategy, General | 4 Comments »

15. April 2009 by Aidan.

The first European SME Week, taking place from 6 to 14 May 2009, is a campaign to promote entrepreneurship across Europe and to inform entrepreneurs about support available for them at European, national and local level. It allows SMEs to discover an array of information, advice, support and ideas to help them develop their activities.

Check here for what it’s all about and what events are planned near you.

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15. April 2009 by Aidan.

The European Commission has launched a public consultation process to get insights on how to best improve the effectiveness of public innovation support mechanisms in the EU.

“The public consultation consists of two online questionnaires : The one asks the beneficiaries of innovation support measures, namely companies , to provide their views on the direction of future innovation support policies and instruments in the EU, while the other invites institutional stakeholders active in the design, funding, implementation, and evaluation of innovation support measures at regional, national and European level to give their opinion on the key issues of better innovation support in Europe. ”

The E.C. hopes to identify which types of support would have most impact on companies’ capacities to innovate. The Commission also seeks to advise member states on how to better focus their innovation support measures.  

The results of the consultation will be summarised in a Commission Staff Working Document scheduled for publication in June 2009.

More details are available on the Commission website.

Submissions must be in by midday on 4th May 2009.

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2. April 2009 by Aidan.

In order to design good services (or products) you need to ensure that the structure of your organisation does not get in the way. In most firms there are different departments with specific roles and responsibilities, e.g. Marketing, Design, Engineering, Sales, etc… 

This creates silos within the company and each department may have different objectives and success (& reward) criteria. All of this can get in the way of designing the best product or service.

Successful companies can break down these organisational barriers to really deliver high quality customer focussed offerings and the best way to achieve this is the use of cross-functional teams working together on a single project.

Peter Merholz talks about this in his recent Harvard Business Blog.   

Aidan

Posted in Selling "Services", Servitize, Customer Service, innovation, consultants, strategy, General | No Comments »