20. December 2009 by Aidan.

My daughter (14) has a mobile phone on the Meteor network in Ireland. It is a pay-as-you-go phone and once she tops up the credit (or in fact once I top up her credit) by €20 every 30 days she gets free calls and texts to everyone else on the Meteor network.

All of her friends are also on the Meteor network and topping up by €20 every 30 days to get the same deal.

I asked her about usage of the phone. We checked, and she sends about 85 SMS messages per day, so about 2,500 per month. Her calls total about 5 hours per month. (She assures me that this is conservative usage for a 14 year old). Most of these are included in the free text and calls package, unless she calls or texts myself or my wife, because we are on another network.

So the deal is that the phone company gets about €240 per year from her (actually from me) and my daughter gets 30,000 SMS messages and 60 hours of calls a year.

There are other deals out there from other phone companies that include calls and messages to all networks or charges less than €20 per month but my daughter won’t switch. The reason she won’t switch is because if she did then her network of friends would no longer be able to SMS and call her for free. So the power of the offer from Meteor is not only the bundled offer for a fixed price, it is the fact that everyone within my daughters network of friends are on the same deal and so no-one will leave the network.

I did ask her whether everyone would switch to another network if they could get the same deal from another network for less money. Her reply: “Only if you could get it for significantly less, say €10 per month!” So this market would need a significant incentive to switch to another carrier but if that incentive was there there would be a risk of large scale switching.

An eye opener for me was a few months ago when my daughter came downstairs after being on her phone for some time. I asked who she was talking to and she said she was on a conference call! Apparently each evening over the holidays 8 or 10 of her friends held a nightly conference call to catch up on what was going on and the latest gossip. This is a very switched on market!

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27. November 2009 by Aidan.

Here is a visual tool that I have put together to assist in outlining the key steps in the Service Design process.

The LADDER moves from assessing the LAndscape->Discovery->Design->Evaluation->Roll-out and it captures some of the key tools and thought processes involved along the way.

Here is a PDF version: SD LADDER PDF

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23. September 2009 by Aidan.

Here is an interesting article written by Nicole Sturgill in BAI Banking Strategies. [article]

Nicole gives lots of interesting examples about the evolution and success of self-service in the banking industry.

I added a comment to the article, as follows:

“Good article, however you also have to carefully consider the employees perspective. One of the main opportunities to reduce costs through self-service is, as you mention, in the reduction of staff numbers needed. However, we expect those same staff to be responsible for the roll-out of the new service and to be advocates for it. If they feel that they job is at risk they will not be motivated to make it succeed. This needs to be managed very carefully.”

Aidan 

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20. September 2009 by Aidan.

The term “service” is used everyday is discussions about business activities and performance. At times it can be confusing because of the lack of definition in exactly what is meant by the term “service”. In fact, when discussing service it is very important that the context is understood.

There are two main areas of service that are unique and distinct and need to be understood. One helpful way of considering these are as the “service that you provide” and the “services that you offer”.

The “service you provide” covers the interaction of your business with everyone else. It can be the interaction with your customers primarily, but also with your suppliers and your own employees. Every company provides this service by the very nature of being in business (you sell something and you charge for it, you talk to your customers, etc). Anyone who interacts with your company experiences the “service your provide”. To improve customer satisfaction you need to ensure that the level of service you provide is of high quality, responsive and meets your customers needs. Service Design is increasingly being employed to optimise this process and ensure that your service meets or exceeds customer expectations. Essentially, the provision of this service is a cost for your company however the quality of this service can be a differentiator for your business.

The “services you offer” are completely different. These are closer to the product you sell. Essentially they are value added or essential services that you need to actively provide in order to grow your business. In this case it will often be the customers choice whether or not to choose to purchase your service.  These services are value added for your business and can substantially grow your revenue and develop longer term customer relationships. It is critical that these services are designed from the outset and not just drifted into, this is being addressed by the growing field of servitization.

For many companies there can easily be confusion between the service you provide and the services that you offer. These need to be considered as two separate aspects of service (”service” V’s “services”) and there are emerging design techniques and tools that can optimise both.

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21. August 2009 by Aidan.

In a previous blog I suggested that Service Design could become the next Health & Safety. The point I was trying to make is that you need processes, and ultimately a culture, to harness the creativity and innovation within a business in order to be able to implement innovative services. It’s not innovation if you just had an idea, it only really counts if you implemented changes based on that idea.

I came across an interesting article from Business Week magazine from October 2008 in which Mark Jones and Fran Salamionis state that strategies at the frontier of service design need a blend of creativity and discipline. They offer a good 5 step framework for implementing innovation projects successfully.

One key point they make is that innovation is not just a matter of “aha” moments, it needs a process that takes a disciplined approach to identify and execute the most promising ideas.

The article also links to some great work that Ideo did with 1st Source Bank in Indiana. Here is a link directly to the case study.

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18. August 2009 by Aidan.

There are two key customer elements in Service Design and they are the customer experience and the customer result. In many cases, as Service Designers, we work to optimise both of these.

From a customer experience perspective we design a customer journey, involving multiple touchpoints, that ensures the service provider is providing the customer with an experience that they will at best enjoy and at least tolerate, in order to reach the end point, which is the result. The result may be the completion of a transaction or it may be the culmination of a process that the customer chose to engage in, for example paying your phone bill or having a massage.

In certain circumstances however, the result may not be something that the service provider can guarantee. For example, when a patient visits a doctor, we can design a service that makes the visit as pleasant as possible however we cannot design the result. We have no control over whether the patient leaves the doctors office feeling good or bad, happy or sad. In a way, the visit itself needs to be minimized in the light of the result that the doctor and patient will need to determine.

In sport too, we cannot design the result. That is the job of the team manager and players. (Although I do think that a more thorough design approach to sport performance can improve results- that’s a blog for another day). So from a customers perspective, the result of attending the game is out of the hands of the service provider and cannot easily be designed. Of course, the experience of attending the game is where the service designers can play a huge role. You can be disappointed by the result but still have a great day out.   

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22. June 2009 by Aidan.

You wouldn’t launch a product without knowing how you are going to pay for it. However all too often companies start to offer services without giving a lot of thought to the funding mechanism.

Here are 5 ways to fund the services that you offer:

1. Bundle the cost of the service in with the product. This is one of the most common methods for product manufacturers and is essentially the warranty that you offer. However you need to know what the warranty is going to cost you so that you can ensure the product price covers this additional cost. If you don’t have a product sale to fund the service then you need to consider one of the following:
2. Charge customers for the service. This is the direct revenue model, you provide the service and the customer pays for it. Sounds easy, however it can be difficult to determine the right price for the service. To remain in business for the long term you need to sell your services for a price that is fair and palatable for your customers. You can rip them off once but they won’t give you a second chance. Benchmark yourself against what is a reasonable price for the market you are in and what your competitors charge. You don’t have to charge the same, it can be more or less, but you do need to be able to tell people why it is different.
3. Service delivery is a two way street and relies on interaction and effort from both the service provider and the customer. Since the effort required from each side will influence the cost why not see if the customer can take over more of the work from you. It will allow you to reduce the cost of providing the service, which is one way to fund it! If you are really good, you can charge the customer for training them on how to serve themselves…:)
4. Review your process for service delivery to determine where you can remove steps from it. This can have two big benefits. Every step you can remove from the service delivery process will reduce your operating costs and get the service to the customer quicker…a winner for both sides.
5. Look at the long term. Are there investments (hardware, software, staff training, etc.) that you can make now that will reduce your costs in delivering the service in the long term. Spend now to save later.

  These tips give you some ideas to look at when you are designing your service offerings, and that is the time when you should be examining how to fund your service. Service excellence is not cheap and someone has to pay for it.

There is of course a 6th tip, but that’s called Charity…..

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18. May 2009 by Aidan.

Here are 5 tips for delivering poor customer service:

1. Quality - start with an unprofessional service and ensure that you are as unresponsive as possible, inconsistent in your interactions with your customers and more interested in what’s in it for you.
2. Expectations - ensure that you create great expectations among your customers and then don’t meet them.  In addition, don’t meet the standard of service that is expected (see 1 above).
3. Value - Ensure that the price you charge is not only above what your competitors charge but also out of line with the market you are in. In addition, ensure that the payment terms and ease of doing business are adapted from the dark ages. You are trying to run a business after all!
4. Staff - Ensure that all of your staff are as de-motived as possible, are unsure what you are actually selling, don’t know why they are there in the first place and have been given none of the tools that they need to do their job. As little training as possible also helps.
5. Customers - You can deliver poor service with good customers but it is much easier if your customers are unhappy to need your service in the first place, want special treatment every time and usually ”must have” your service while all of your organisation is sleeping. It helps if you spend no time trying to understand your customers or building a relationship with them.

So these are some of the secrets to delivering poor service. Of course, if you avoided them then you may have some chance to improve the service you have in place today. Good Luck! 

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15. May 2009 by Aidan.

Hilti is one of the world’s leading tool manufacturers who’s motto is “to passionately create enthusiastic customers”.  

As they go about this, they ensure that they are constantly innovating their products and now innovating the services that they offer also.

Hilti has introduced a “Fleet Management” program that allows customers to purchase the capabilities that their tools can deliver rather than having to buy the tools themselves. As Hilti Chairman Dr. Pius Baschera said in a recent interview, their customers can “buy the holes they have to drill instead of the drill”.

Hilti’s history of innovation and close contacts with their customers helped them identify an unmet need. This was that the management of the tools that they sell is not one of their customers core competencies. As a result they developed their Fleet management program to help customers manage their tool fleet.  Under this program the customer does not have to worry about broken or obsolete tools. The customer simply pays Hilti a monthly fee.

This could be a high risk strategy because Hilti is accepting a lot of the risk in this program however they believe that they can do it because of two key factors. One is their belief in the quality of their products and the other is their close direct relationship with their customers. By being in control of everything from the manufacturing of the tools through to the final customer, Hilti can adequately manage the risk that they are taking.

The introduction of the program led to changes in how their Sales and Marketing staff worked. Now, instead of selling tools, their sales people are effectively selling a financial concept. In addition, they had to ensure that their service and logistic operations were running effectively in order to minimise their costs.

The program has been very successful for Hilti to date, with some markets selling 50% of their tools through the Fleet Management program. It is a great example of the servitization of products to enhance value for the customer and for the product manufacturer.

You can read more about it here.

Posted in Servitize, Selling "Services", Customer Service, innovation, General | 1 Comment »

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.

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