In this new article, Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, discusses how service leaders should make decisions based on data and research, rather than opinions...

According to Clayton Christenson, the late Harvard University Professor and strategy expert, “To find the biggest opportunities in the world, seek out the world’s biggest problems.” This is wonderful advice if your goal is to win a Nobel Peace Prize, but what if you are a senior executive in a business trying to survive? What to do? Substitute “Your Market” for “World.”

“To find the biggest opportunities in your market, seek out your market’s biggest problems.”

This is true if you are responsible for growing your company or your service business. The problems are the same but the resources available to help solve the problem at the business level are much greater than the resources at your disposal in the service business. This resource limitation frequently causes service leaders to make their plans based on opinions, not actual research. The outcomes are usually disappointing. The formal name of the solution process is Evidence Based Problem Solving.

THE BUDGET

Annually, most service leaders are asked to prepare a budget including a revenue and profit projection. These two commitments are then rolled into the next higher level’s budget. At that time, either the budget is accepted or more likely, the higher-level executives will come back with a comment like “We need an additional 10% on both revenue and profit” or “How much more can you deliver next year?” The only way to answer these questions is by having actual evidence to back up your projections. And when you finally settle on the new budget, you will first have to convince your team that you knew what you were doing when you submitted the budget and second, that you have an actual plan on how to deliver on your projection.

The implementation of your decision will require some service marketing. For example:

• Evaluate the profitability of all your services
• Create and price new services
• Update and reprice existing services
• Grow the number of people purchasing your services
• Align your branding with the corporate image
• Other things that effect your customers

EVIDENCE BASED PROBLEM SOLVING

This simple drawing shows the four steps that IMPORTANT customer impacting service decisions should follow to minimize the likelihood of having the outcome fail to meet expectations:

When trying to solve your important problems, following these four steps will not guarantee success, but not following these steps make it highly likely that you will miss the real opportunity.

Step 1: Brainstorm to define growth objectives

Defining your growth objectives seems easy – just accept your boss’ target. But doing this will be a big mistake because:

• The target may be unreachable within the time or operating budget set.
• The target may be to low and achieving it would leave money on the table.
• Your original proposal may have been spot on, but you were not able to defend it because it had been a guess and not backed by facts.
• Over time, every business tends to become less effective. You should use this opportunity to evaluate all your assumptions and make appropriate changes.
• Your operating environment may have changed. You need to update your plans to account for current situations.
• It is likely that your business experienced significant staff changes because of COVID-19. Some people retired, some may have been made redundant, others joined but were not fully on-boarded into the organization. They may not be the right people for the long-term or they may have undiscovered skills which will influence your plans.

The first thing you must do is identify any and all useful data. Some of it will come from your financial, CRM, and service management systems. Other data will come from external sources like industry projections, management articles and books, webinars, and discussions with thought leaders in your network.

Data collection should be an ongoing activity. Data from internal systems are usually reviewed daily, weekly, or monthly and reviewed to identify areas that are doing well or need help. The external data is a different story. The members of the service management team at all levels should be assigned one or more sources to follow and create and circulate summaries of useful content. Some of these summaries may result in group discussions and actions leading to operational or strategic changes. Be sure to give full credit to the people participating in these activities and take their actions into consideration when evaluating promotion candidates.

In the “crazy busy” world of field services, the organization can benefit from a periodic ½ day to multiple day meeting to just go off the grid and focus on continuous improvement. This is a fantastic way to prepare up-and-comers for future positions while getting their unique insights on your business.

There are two desired outcomes from this brainstorming - actions:

1. A set of growth targets for the coming year or two that everyone believes is attainable with a little stretch.
2. A list of potential ways to achieve these targets.

At the end of step 1, you will have gone from data to insight to action!

Step 2: Internal audit to find growth capabilities

Remember that step 1 was all about brainstorming to identify your 1 to 3-year targets and to create a list of potential ways to achieve these targets. In step 2, we begin to expand our list of potential services we created in step 1, understand the resources we have available to grow the business, and identify some of the underutilized resources in the organization.

There are two desired outcomes from this stage:

1. A prioritized list of all the possible ways the organization can grow revenue and profit. This list must include:
   1. A brief description of the offer
   2. Your best quantified guess (a range) of the contribution to achieving your target
   3. The advantages and disadvantages of each from both the customer’s and business perspective
   4. The key resources which will significantly increase over current conditions
   5. The resources that will be needed and are not currently available at all
   6. The resources which currently are used and will no longer be needed at all
2. A list of the underutilized resources in the organization including people, parts, equipment, space, etc. These will be candidates for redeployment or removal as the organization changes.

At this point, no decisions have been made about the way forward. You only have a list of potential offers and constraints. You still must interact with customers and find out how likely they are to purchase them if made available.

Step 2 can be done using internal resources only although a facilitator (either internal or external to your company) may be helpful if your team hasn’t done many of these activities.

Step 3 - Market research to discover growth opportunities

Step 3 will have the most impact on your evaluation since this is when your customers get to tell you what they want and don’t want and how much they are willing to pay for any novel offers you are thinking about. They will tell you their biggest problems, how much they are willing to pay you to solve them, and if they have enough confidence in your business to trust you and buy your new services.

This step is best done by an outside resource who understands the service business and will not bias or spin any findings or opinions. You need honest insights if your decisions are to turn into positive outcomes.

These are the steps most likely to be used to arrive at an understanding of what your customers want and need and are willing to pay for:

• Segment products and services in your normal way and then decide on which segment(s) to concentrate on initially. This could be product, geography, application, type of user, etc.
• Prepare to interview at least 15 customers in each segment.
• Develop questionnaire including the importance of every proposed offering or modification and other relevant information about how the customer feels about their relationship with your service business.
• Randomly select enough contacts to ensure being able to complete the agreed number of interviews.
• Telephonically interview the agree number of customers in each segment.
• Prepare recommendations and findings:
  • Importance of each proposed offering or modification
  • Contract elements for one or more levels or types of contract
  • Value proposition(s)
  • Acceptable price range
  • Recommendations for initial and long-term metric deployment
  • Ideas for a sales strategy
  • Other information learned from discussions

A project like this for one product and one segment in one geographical area can easily yield 2500 unique data points plus numerous comments. Compare this to the opinions of one or a few internal people and you see why this article is titled “Make Decisions Based on Data, Not Opinions.” And why your plans and commitments will carry enough weight that it will be difficult for anyone to challenge your decisions.

Step 4 - Service marketing to commercialize best opportunities

Recently I was thinking about the differences between a product and a service. One of the differences that nobody mentions is “There is no Kickstarter for services." I know that Kickstarter is for startup companies and rarely B2B, but the point is that companies can Beta test hardware products (including software), but how do we try out our services on our captive audience? The only way is through Step 3.

After we review the recommendations from the interviews, we are ready to choose one or more new offerings. Now we have to GTM (Go To Market). Here are the steps in their approximate order:

• Get buy-in from the C-suite. Sales, Marketing, and Finance are probably the most important support you will need although HR and Manufacturing may have a strong say depending on what you propose.
• Training will be critical to the success of your plans. People you must train include:
  • Your team.
  • Marketing to modify the standard quote forms and update the website to include your new stuff. You may need some dedicated advertising and an appearance at your industries upcoming real or virtual trade shows. This is your opportunity to boost your sales so do not look at this as a chore.
  • Sales needs training on how to sell what you will offer and probably would like a slide deck to use when presenting the service package to a new prospect.
  • In Finance, the Accounts Receivables team should receive an introduction to your new services so they can talk knowledgeably while collecting overdue payments.
  • If some of your service is delivered by the channel, then they the same training as the Sales team.
  • Customer experience, wherever they report, should be asked to do follow-up surveys or interviews on some of the early users of your new services.
• You can now start selling your new products. And make sure the CX group is surveying all early customers. Any negative feedback must be promptly followed-up by a senior service executive. And lessons learned should be quickly incorporated in your offerings and messaging.
• Repeat.

CONCLUSION

This whole effort deserves the same attention as the launch of a new physical product. If you have done everything well, the impact will certainly be the same in both cases. After all, new services are new products. Give then the same chance of succeeding as the product side of the business does.

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, analyses the five global trends that will drive the future of field service...

In the science of dynamics speed is defined as the rate of displacement of a moving object over time (d/t). Acceleration is defined as the rate of change of speed over time (d/t2). And then comes jerk – the rate of change of acceleration over time (d/t3).

Why, you ask, do we care? Because until March 2020, we have been experiencing a period in which the rate of change of our “world” has been steadily accelerating. And then COVID-19 came along and changes that were projected to take years to accomplish were somehow accomplished in weeks or months. Mentally we felt as though the car we were riding in suddenly crashed into a bridge support and we were thrown into an airbag. We experienced jerk!

When we operate in a period of acceleration, we have time to prepare our self and our team to adapt to new operating conditions. It is still hard for many people to adapt as quickly as the change occurs, but they still have warning and can frequently participate in designing the new “world.” Unfortunately, the side effect of jerk is that changes suddenly appear and people must adapt without having the time to figure out how they will be affected. They don’t get a clear answer to the age-old question WIIFM (what’s in it for me?).

Since the world of Field Service depends on people, our own, our partners, and our customers, we must be sensitive to how our new operating procedures will impact them and effect their personnel and professional lives. We must consider all these people as we specify, design, implement, test, and go-live with sub-projects that will come together to create the new world that is rushing towards us.

THE five trends driving the future of field service

First a word of warning! On the morning of January 2, 2021, I read this in a Bloomberg News daily mailing:

Last year taught us that sweeping forecasts are pretty much a waste of time. Amid a raging virus, a global recession and a rapid markets turnaround, no one could have guessed that a record $120 trillion of stock would change hands on U.S. exchanges in 2020, that Tesla short-sellers would get burned so badly, or that Bitcoin would be such a huge hit with Wall Street. It’s hard to say which trends will continue into 2021. The forecasts to watch are those that only look one or two months ahead, or 10 to 20 years ahead, Jared Dillian writes in Bloomberg Opinion. As for all the prognostications in between—better to ignore them.

These five trends will drive the future of field service:

In the long-term, climate change will have the greatest influence on field service - how it is performed, who does the actual service work, how are parts managed, and how value is created. And because mitigating climate change is so critical, so complex, and so expensive, we will see unique changes being implemented in each industry and in each geographic entity and finally in each business.

In the medium term, there are two major changes which have already started to impact us:

• New business models like XaaS, IoT, and use of machine language and AI

• The circular economy and refurbishing and/or remanufacturing major assemblies or even complete products

In the short term, we are already seeing major changes due to the desire of customers for touchless service and the continuing trend of the aging workforce. What is not known is how must each of these trends will impact any specific industry or company. Knowing requires a familiarity of the specific details about what is happening behind the closed door of all the major players plus any potential entries. So, this article will discuss each trend and you, the knowledgeable reader, can pass each idea through your specific knowledge filters. You can then decide how much time, effort, and money to invest in getting your business ready to take advantage of any opportunities that develop. Now let’s look individually at each trend starting at the top of the pyramid. We start here because you should always keep this trend in mind as you address each lower level trend to make sure you do not have to redo some lower level change as you address the longer-term drivers.

CLIMATE CHANGE

We are all familiar with the need to make a major reduction in global greenhouse gases. It now appears that in the US, the Biden administration will kick our country’s response to the problem into high gear. In most other developed countries, the effort is already underway. As manufacturers and service providers of energy-driven machines, we will find ourselves on the front lines of the action. The greatest fear for OEMs business is that the environment will cause disruption in manufacturing operations. Think about the forest fires we have seen in the American west and Australia, the need for barriers to hold back tides and storm surges in London and Venice, and the drought in the American south-west during the 1930’s.

In October 2020, Boston Consulting Group published an article Climate Disruption And The Path To Profits For Machinery Makers. Here are five of the identified reasons why machinery OEMs, and their service organizations, will be impacted.

1. End users are disrupted – Reduced use of coal will reduce railroad shipments. Oilfield service will be reduced by decreased production of oil and gas. Power generated by solar and wind equipment will increase.<
2. Product design priorities shift – As manufacturers shift to the circular economy, the service groups may assume responsibility for refurbishment and rebuilding instead of on-site service. And new products will likely be more reliable than the models replaced and use fewer parts.
3. Business models change – Value will shift as manufacturers offer Product as a Service and IoT. Newer design will include fewer wear parts and the need for spares will decline. Increased use of digital twins will reduce on-site troubleshooting of failures. On the upside, newer items will include more software, which presents new service and support opportunities.
4. Value chains become circular – Field engineers will have to become experts in both recycling their equipment and consulting on a facility’s total operation to reduce their carbon footprint.
5. Weather, sea-level, and operational risks increase – Service contracts and warranties will have to change to minimize liability risks due to temperature and water-level changes

NEW BUSINESS MODELS LIKE XAAS

Businesses have been evaluating XaaS since it took off with SaaS. Now they are trying to tie XaaS and IoT into a new service based long-term contract where they are selling customer outcomes instead of hardware and service. The main advantage of the XaaS/pay for performance model is that customers and OEMs goals and objectives are totally aligned by focusing on meeting the customer’s needs. It makes their relationship a win-win partnership, not a win-lose contest. Unfortunately, according to Cooperberg in 2019, currently less than 3% of asset operators buy outcomes instead of assets. This trend is in the medium term because there is a long way to go. A secondary advantage of the hardware as a service model is that the OEM always retains ownership of the product. At the end of life, it can be brought back to the factory (possible a part of the service business) and either totally broken down into recyclable pieces or reusable spare parts or disposed of in an environmentally sound method. The challenge is that the OEM loses the initial sale and revenue when your product ships but gain the recurring revenue which can last over the total lifetime of the products and then extend as upgrades or replacements are installed. When it comes to servitization, where services are merged with products so the buyer can buy outcomes, there are a few obstacles that have to be cleared first. For example, again according to Cooperberg:

• Only 36% of asset operators have data and use it effectively
• 35% of asset operators still use in-house spreadsheets/excel to track current maintenance operations
• Only 35% of OEM’s connect all their new products
  

And a report prepared by The MPI Group in April 2020, The Power of Industry 4.0 in New Product Development stated:

• 40% (average) of revenues are from products with embedded smart devices/intelligence.
• The profit margin on these products is 34% (average), significantly higher than margins for other products (29% average).
• Significant improvements were likely to occur with access to data from products or services in the field.

In other words, most asset operators and OEM’s still are in the install-fix-decommission world. The transition to servitization will take more than 5-years unless something happens to accelerate the transition. And the improved margin may be that driver.

TOUCHLESS SERVICE

Right after COVID-19 hit, asset operators shifted from wanting on-site service to demanding touchless service. They wanted to keep as many outsiders out of their facility because any one of them could be primed to infect their whole workforce. And fortunately, merged/augmented reality product were on the brink of exploding for other reasons. OEM’s liked them because a highly skilled field service technician could stay in one place and support multiple relatively inexpensive and more junior field tech at the same time as one on-site call would take.

As the internal application worked so well, some OEM’s decided to try using the same systems with both B2C customers (even unskilled homeowners) and B2B operators or internal maintenance techs. And it worked! Less response time to get in from of the equipment and a quicker than expected restoral time.

The major challenge, and hence the major opportunity, is spare parts availability. OEM’s do not dispatch service technicians unless 1) they believe the fix will not require parts or 2) the technician a local service engineers carries spare parts as trunk stock, or the OEM coordinates the arrival of the field technician with the arrival of the needed parts.

When the internal facilities’ technician does the work, they don’t usually stock replacement parts. So, the tradeoff is technician travel time or parts delivery time. Or the OEM can stock spare parts in their customer’s facility either as an outright sale or as consigned inventory. This is an opportunity and can come in several ways including:

• Consigning or selling spare parts to the asset operator.
• Creating a local stocking location which is available to all customers in a selected area and located in one of them.
• Stocking parts in a controlled location available to a select group of customers.
• In all these examples, any parts used must be returned to the OEM. The OEM will then ship a replacement part to the stocking location.

Logistics and spare parts availability will be an area that OEM’s focus on as they try and roll-out more touchless service contracts.

AGING WORKFORCE

In September 2020, I published a Thomas Insights post “The Silver Tsunami: As Older Employees Plan for Retirement, It's Time to Plan for the Future of Your Workforce.” The article provides guidance about how to move forward and get ready for a different type of workforce. However, it assumes that your business will be the same in the future as it is today.

But we can see that what you do depends on these five trends. They will impact the number and backgrounds of your internal workforce going forward. And this mix will change depending on how quickly both you and your customers adapt to the solutions you both work together to create. In other words, you can make a one to five-year plan for dealing with each trend, but your labor plan has to be no more than one year because you are dealing with people’s livelihood and you don’t want to be known as a company that hires and fires often.

CONCLUSION

The future has at least five significant initiatives that all manufacturing companies will have to manage. The good news is that you now have the time to plan and test potential decisions.

Remember – “What got you here won’t get you there.”

 

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Read more exclusive FSN articles by Sam Klaidman @ www.fieldservicenews.com/sam-klaidman
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog

 

Sam Klaidman, Principal Advisor with Middlesex Consulting, reflects on the drivers behind why your customers buy the service service contracts you offer, and outlines if and how that has changed since the pandemic...

For over 20 years, I was the Vice President of Service for two companies. In one company I had global responsibility and in the other I was responsible for the Americas. To keep up to date with industry trends, I attended local, and some Global, AFSMI meetings and I read as many service-related articles as I could find.

I was always jealous of people who published articles and got their name “out there.”   Then I retired and started my own consulting business. I felt like the time was right for me to share my ideas and collected information with my peers.

Thanks to an introduction from a friend, I was able to get an article published in the September 2008 issue of American Laboratory. The topic I chose was “Why Companies Sell Service Contracts and Why People Buy Them.” Since then, I have written 16 articles and whitepapers and posted approximately 220 blog posts. Most of these were about some aspect of the business of Field Service. Yet when I searched through the 220 post titles, I realized that I had never updated my original article even though our industry has gone through major changes since the original piece was published.

 

Buying a service contract pre-COVID

Before COVID, the people who purchased service contracts were Manager level. They had day to day responsibility for whatever their equipment was being used for. In that first article, I listed the four reasons why people purchased contracts:

• Maximize Uptime
• Predictable costs
• Peace of Mind
• No hassle

When I have an assignment to grow service revenue, I survey customers and ask them to rate these same four characteristics where one is most important. Here are the results of three of my pre-COVID engagements:

The first and last columns are part of the same survey for the same client. The last column is for a small number of customers with many instruments that provide the company with excess testing capacity. Yet the managers were interested in a service contract for all their instruments! Not because they were worried about maximizing equipment uptime, but because they were interested in minimizing their daily hassles. They were willing to spend company money to reduce their job-related stress.

 

 

Changes in customer’s wants and needs now

Today, the reasons people want service contracts are more varied than ever before. When it comes to buying hardware service contracts, we are seeing two significant changes:

1. The purchasing decision is being made by a more senior individual than the department manager.
2. The reasons to buy a contract are frequently based on more and different strategic factors than in the past. They are as varied as the reasons they purchased your product as well as the high-level strategic goals of the company.

Here are some of the challenges that most business executives (including your customers) are dealing with today and which will continue for the foreseeable future:

• Grow revenue and reduce costs
• Minimize CapEx
• Digitize their business
• Introduce a servitization business model
• Mitigate known and unknown business risks
• Provide a safe and secure environment for their employees
• Figure out how to retrain key employees
• Deal with an aging workforce

Your customer’s challenges will result in changes to how you create, price, and deliver your services in 2021 and beyond. Here are a few well know changes:

• Enable customer self service
• Move to a blended workforce of direct and contract field engineers
• Migrate from a transactional to an outcome driven service organization
• Innovate to embrace the notion of touchless service
• Personalized and multichannel services

 

Changes in the Sales environment

These three snippets from a recent report, 2021 Predictions for Sales Leaders: THE YEAR OF VALUE, highlight some of the changes that sellers must be prepared to manage. These conclusions are generic and impact both product and service selling:

1. In 2020, CFOs got more involved with every purchase being made and every dollar of spend was scrutinized. Those who were able to quantify the outcomes associated with their spend were able to get their projects completed. Those that were not able to articulate value saw their projects overlooked by those who had a higher level of perceived value to the business.
2. To succeed in virtual B2B sales cycles in the coming year and beyond, it’s critical that CROs (Chief Revenue Officers) work with their sales leadership to ensure that their teams are intentional in discussing and quantifying value early in buying conversations and that every opportunity is substantiated with the strongest business case possible based on true economic impact and outcomes. To thread the value conversion through the full customer journey and ensure retention and expansion remain positive, sales leaders will also need to work with the customer success leaders to ensure that the company is proactive in communicating the outcomes of their solutions in order to maintain renewals NRR (Net Recurring Revenue) remains high.
3. Unlike in the beginning of 2020, sellers can no longer take clients to hockey games or dinner to build rapport. Instead, all information sharing happens digitally, via email or a web conference. You have minutes, not hours, to make an impact. According to McKinsey, “digital self-service and remote rep interactions are likely to be the dominant elements of the B2B go-to-market going forward, when selling to both SMBs and large enterprises.” And 89% of companies expect these changes to stick, anticipating they will need to sustain these virtual go-to-market models for 12+ months, per McKinsey.

 

Selling services now and post-COVID

The best time to sell a service contract is at the time of equipment sale. This is because your product sales teams are dealing with customers with the same issues your service sellers are experiencing. But the product people have successfully addressed their prospects challenges when presenting and closing your product sales. Therefore, the sales team can integrate your services into the overall justification (use case) and close the product and service sale at the same time if they are professionally trained and properly compensated. Also, adding services into the use case will likely differentiate your company and help close the deal.

Obviously, we all have a sizeable number of service contracts which are already in place and renew every year or so. If you are experiencing difficulties in securing renewals on a timely basis, then I suggest you spend some quality time with your sales management peer and get some help on how to dig out customer’s most pressing challenges. You can then present your solutions in a way that shows the customer how you can help them achieve their objectives while feeling that they are minimizing their personal risk.

If you find that there is a large gap between what you are offering and what you believe the customers want, then you have to put on your service marketing hat and find out their needs and the price they are willing to pay. Then you must update your offerings and create new value propositions for each customer segment and the services and contracts you want them to buy. Sometimes you can do it all by yourself and sometimes you will need a more experienced consultant to interview a representative number of customers and find out what your customers are willing to pay for. The consulting investment is generally minor compared to the contract sales you achieve.

Whatever you do, you must make sure that your contracts and other services create enough value for your customers so they will find it exceedingly difficult to move to a time and materials model or worse, move to a third party vendor.

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Further Reading:

• Read more about the impact of COVID19 on the field service sector @ https://www.fieldservicenews.com/hs-search-results?term=covid
• Read more about Service Innovation and Design @ https://www.fieldservicenews.com/blog/tag/service-innovation-and-design
• Read our exclusive series of articles exploring the findings of our research study on the pandemic @ https://research.fieldservicenews.com/
• Read more exclusive FSN articles by Sam Klaidman @ https://www.fieldservicenews.com/blog/author/sam-klaidman
• Connect with Sam Klaidman on LinkedIN @ https://www.linkedin.com/in/samklaidman/
• Find out more about Sam Klaidman's work with Middlesex Consulting @ https://middlesexconsulting.com/

 

Post COVID-19 customers are looking for their equipment service providers to minimize their risks by deploying a touchless, or low touch, field service system.  Fortunately, a change like this can be quickly implemented and if you price and market them properly, you will likely enjoy higher revenue, profit, and customer satisfaction.  Sam Klaidman, Founder and Principal Adviser at Middlesex Consulting, makes his debut as a Field Service News associate columnist with an extensive look into the subject.  

I just finished participating in an IFS webinar titled “How COVID-19 Has Permanently Changed The Future Of Field Service” featuring Tom Paquin.  There was a great message on one of Tom’s early slides . 

It read: 

Yesterday: Your empowered customers demanded that you service them  

Today: Your empowered custoemrs are looking for the tools to serve themselves.  

I believe the message in Tom’s this slide is spot on and correctly describes the pre- and post- COVID challenges that Service Executives are and will be facing for years to come.

In this article we will look at the following:

• The high-level role of the service organization 
• The customer’s new challenge 
• Touchless support - how service delivery will change 
• How service marketing should respond to these changes 
• The impact of the new model on service revenue 

THE HIGH-LEVEL ROLE OF THE SERVICE ORGANIZATION

Think about why people buy a product or service. It's not because the product or service is cheap, looks cool, or they know someone who has one and loves it. No, they buy a product or service because they want the benefits they will get from using it. These are their desired business outcomes and what the customer value creation experts call “value from use.” 

Now, why do they buy from you instead of from someone else?  Easy.  They buy from you because you deliver the greatest value when compared to all other alternatives.  And value is defined in two ways: 

• The difference between what they get and what they pay, measured in money ($, €. £, or ¥). 
• Their internal quantification of intangible benefits like great service, peace of mind, and ego boosting. 

What is the role of customer or field service in this discussion?  Service’s role is to allow the buyer to continue to generate desired business outcomes plus the intangible benefits after they pay for the product and continue to use it during the complete product lifecycle. When service does this well, the customer will not change suppliers, will repurchase when they again have a need, and will buy add-ons that create additional incremental value. 

No matter how your service delivers on these outcomes, the end results must meet the customer’s expectation at the time of purchase. 

THE customer's new challenge

In March 2020, OEM’s services businesses starting hearing lots of new pushback:

• From the end user customers they heard “My XXX is down and I need to fix it but we cannot bring any outsiders into our facility”

• From customer Purchasing people they heard “WTF - Your travel costs are over the top plus you can’t get here for 3 days”

• From your company’s best salesperson they heard “Our key customer needs to find a way to service our products remotely and you have not come up with anything useful…”

• And from their service technicians they heard “I can’t go to that customer.  I hear they had 20 COVID-19 infections just this week and I have a sick grandparent that lives in my house.” 

Yes, customers are demanding a new way to service their equipment, and this will probably be the new normal when we come out of this current pandemic.

TOUCHLESS SUPPORT - HOW SERVICE DELIVERY WILL CHANGE

Almost all end users are looking for what the media calls “touchless support.”  This means no outsider must come into their facility to diagnose and repair any of their products.  And that is not such a strange concept considering the risk of bringing an outsider into what the customers believe is a controlled environment.  Also, these days everyone is risk adverse and is looking for ways to mitigate all future risks, no matter how unlikely they are.  However, please note that the end-users are fully aware that this kind of support has a price and they are prepared to pay a fair price if their value delivered exceeds their costs.

This means that customers want a form of enhanced self-service for break/fix service and possibly external help for scheduled events like preventative maintenance and upgrades.  Here is a quote from an August 2020 McKinsey and Company article From defense to offense: Digital B2B services in the next normal: 

Now let’s briefly look at each of the tools and technologies listed above. 

Simple knowledge base (FAQs)

Every product focused website should have at least these three types of separate FAQs for current customers:

• How do I work with the OEM? – This list covers subjects like reaching scheduling an installation, technical support, getting and RMA number, finding out the latest software and firmware versions, upgrading software and firmware, location of service centers, buying consumables and spare parts (with a link to your ecommerce site), and warranty terms. 
• For each product, answer the basic and medium complexity how do I…questions. In addition to answering questions, this section should contain links to manuals, training videos, checklists and other documents that can be downloaded, and parts lists and drawings. 
• For each product or application, answer questions about available service contracts with a chat feature or a link to service sales.

These simple knowledge bases have been around for many years and yet many businesses do not even have the most basic type of FAQ’s -the how do I work with the OEM? page.

Merged reality virtual assistance

Merged reality is the simplest digital application imaginable, which is why it so popular these days.  I know of one supplier that helped an OEM purchase and deploy a merged reality application for over 1000 field engineers in six days with no capital expenditure other than making sure these engineers have either a smartphone or a tablet.

In its simplest form, the field engineer and the tech support person each use their smartphone or tablet to stream a video image to the app.  The app them merges them together and send it back to both parties.  The field engineer’s video stream shows a view of the product being worked on and the support person shows either a finger, a tool, a meter, or something like that.  The support person places his finger to point at something he wants the field engineer to work on, which they both see.  And they also talk to each other while this is going on.  For example, the field engineer can transmit a picture of a control panel and the support can point to an adjustment knob and say, “turn this knob about ¼ turn clockwise.  There is no ambiguity about which knob to turn.

Another notable feature is that the whole session can be recorded and linked to the appropriate work order.  This is important since the videos can also be uploaded to either a YouTube channel or to a robust searchable knowledge base so other technicians or customer’s maintenance technicians can easily visualize the troubleshooting and repair process.

Of course, these applications have many other equally simple features. To learn more, I recommend that you look at either Help Lightning or Sightcall.  They have both made a major impact on field service delivery.

Remote computer support

Remote computer support has also been around for ages and once set up, it is as easy to use as merged reality virtual assistance.  Using something like LogMeIn Rescue, the support engineer can take over control of the client computer, run diagnostics, direct the computer operator to perform specific keystrokes and see what happens.  This makes troubleshooting desktop problem easy to handle remotely.

Other solutions come bundled into the computer itself.  For example, Google Chrome and Windows have remote control included while Apple technical support people can access Apple computers with the user only granting access during a support call.

Robust, and growing, multi-media knowledge base

For most products, it would be extremely difficult to store and list all troubleshooting and repair videos.  Just think about how difficult it would be to describe a problem the way a customer would.  That is why good knowledge bases are built with an artificial intelligence (AI) engine to instantly search a multimedia data base indexed with tabs and that works like Google search.  Yet that is what is needed when a qualified end user technician is trying to repair a system that has an intermittent fault she has never seen before.

This is why I said that the stored videos from a merged reality virtual assistance session can be so useful.  While these videos should be edited to eliminate standby time, repetitions, and side conversations, it is especially useful to go through all the trial and error troubleshooting since the same symptoms may have different causes and the more thorough the video, the more likely it will be that the system gets repair quickly. 

AnswerAnywhere is a database designed to be used by field technicians and appears to offer many of the capabilities I described above.  It is worth looking into as you start building out your robust service knowledge base.

Embedded diagnostics, Remote diagnostics, and Internet of things (IoT)

These are three variations of the basic data collection and transmission scenario.

Embedded diagnostics is used when the product has an onboard processor, sensors, and data transmission capabilities.  The embedded diagnostics look at information available inside the product and determine if it is working properly or has a fault.  We are all familiar with this from our cars.  When the air pressure inside our tire goes below a preset limit, the car displays an icon of a tire and a message.  When we travel more than a set limit without changing our engine oil (assuming we drive a car with an internal combustion engine), we get a “change oil” message.

In the mid-1980’s, I was the VP of Service for a data communications company.  Our product was nearly completely redundant, and our internal computer monitored the status of each module.  When any module sent an error message to the internal computer, it compared both like modules and if they differed by more than a set amount, it compared each module to the expected output.  When it determined which of the pair had faulted, it took that module off-line and notified the user.

Remote diagnostics is like embedded diagnostics only in reverse.  A remote computer interrogates sensors, on-board memory, and a devices control system to determine if the system is working properly. The advantage of remote diagnostics is that the computer is generally more powerful that the computer in the machine.  This means there is a good chance it can track accurately sensor outputs and detect any subtle changes.  The computer can also have AI software and perform machine learning (ML) so it can identify when a true failure is likely to occur.  It also may be able to determine the likely fix and so it can schedule a repair at an off-shift time when there is no substantial cost of downtime.

The diagnostics I just described are not easy to create and program and therefore are expensive.  But in the right circumstances, they can me unbelievably valuable.  Consider the case of the jet engines that power an Airbus A350 or a Boeing 787.  On a transatlantic flight, each engine can produce about 1Terabyte of data.  The data can be transmitted in real time to a central location when the software looks for anomalies and, when it finds one, can notify the repair people at the destination so the repair can be made (sometimes) in the turnaround period.  Not having a mid-flight engine failure can be priceless!

Internet of Things is like the remote diagnostics that I just described except that the IoT computer can easily import data from any other device or website to make a more robust calculation then just looking at one product.  In the jet engine example, an IoT system can also import weather data, flight parameters, airplane weight and balance data, and data from all the engines on the same route with all their related data and come up with a strong recommendation about what to fix and when.

Today’s technology for identifying equipment problems and solutions is getting both incredibly power and seriously expensive.  But, for the right product and use case, these software systems can save lives, lots of money, and jobs.

HOW SERVICE MARKETING SHOULD RESPONDE TO THESE CHANGES

Each of the technologies has a unique cost/benefits equation. That means that each implementation has a unique value proposition and should have a unique cost.  And when you combine multiple solutions the customer value can increase dramatically. This is where service marketing comes into play.  They should be charged with answering the following questions:

• How should our latest offers be structured? 
• What should we charge for each offer? 
• What happens went we replace a free offer (e.g., telephone support) with a higher value offer (telephone support + virtual assistant)?  Do we remove the free telephone support or charge for all non-warranty calls? 

• How do we sell the offers? 
• How do we get product sales on-board?  
• How do we train all out International channel partners? Do we charge them for supporting the customers? 
• What metrics do we want to use to evaluate our decisions?

This is when you will be glad you have a service marketing professional to help solve all these non-technical challenges.

THE IMPACT OF THE NEW MODEL ON SERVICE REVENUE

Of course, we all want to know how using these tools and technologies will impact our revenue and profit.  The simple answer is “It all depends.”  It depends on:

• What services you currently sell and which you do at no charge. 
• What services your customers are willing to pay for and you do not currently offer. 
• How much business you are losing or how much money you are earning because your field engineers must travel from a great and expensive distance. 
• How much growth the product side of your business will enjoy because you were able to best satisfy the needs of prospects. 

• How many contract truck rolls you can avoid while fixing a problem in a shorter time then when you dispatch a service technician.

Overall all, if you implement only the first three items on the list (simple knowledge base, merged reality virtual assistance, and remote computer support) and price and market them creatively, you will generate higher revenue, profit, and customer satisfaction.  Not a bad set of outcomes from investing in satisfying your customer’s desires for a touchless, or low touch, field service system.<

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Further Reading:

• Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
• Connect to Sam Klaidman @ www.linkedin.com/samklaidman
• Find out more about Middlesex Consulting @ www.middlesexconsulting.com
• Read more from Sam Klaidman @ middlesexconsulting.com/blog