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.
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:
- A set of growth targets for the coming year or two that everyone believes is attainable with a little stretch.
- 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:
- A prioritized list of all the possible ways the organization can grow revenue and profit. This list must include:
- A brief description of the offer
- Your best quantified guess (a range) of the contribution to achieving your target
- The advantages and disadvantages of each from both the customer’s and business perspective
- The key resources which will significantly increase over current conditions
- The resources that will be needed and are not currently available at all
- The resources which currently are used and will no longer be needed at all
- 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.
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.
- Read more about Leadership and Strategy @ www.fieldservicenews.com/leadership-and-strategy
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- 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