Insights to Accelerate Services Growth: Account Management, Service Metrics and Customer Dashboards

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Introduction

Much has been written about customer satisfaction, account management practices, and measurement systems for services businesses. Some of the approaches take a simple, monolithic approach and propose a standard model for management of all service businesses. We suggest a different approach and recommend that a service business should be managed and measured based on the maturity of the service business and the specific requirements of its’ customers.

To help operationalize this approach, we provide a framework for understanding how a services organization and its’ customer engagement should be measured. This framework is based on the premise that these organizations often progress through three distinct stages – Customer Centric, Profit Centric and Growth Centric – as they evolve. We specifically outline various information and reporting approaches to support strategic account management of services businesses at each stage of their evolution, we provide examples of what service metrics are most relevant, and then discuss the effective intersection of account practices and metrics by means of a customer dashboard tool used by many leading firms.

Service Business Framework

Service organizations have fundamental business objectives and service specific goals that guide their operating norms, business behavior, capability development and resulting key performance indicators (KPI’s). This is driven by multiple factors, including service organization tenure, competitive influence, business nature, customer maturity & requirements, specific corporate strategy, product enterprise mandates and synergies.

Service entities can be logically categorized into three distinct stages: Customer Support Centric, Profit Centric, and Growth Centric. There is a recognition that objectives are not static and most organizations will migrate over time into subsequent stages as they and their customers mature. That said, it should not be implied that growth centric service organizations are “better” than those focused on pure customer support. It is, however, important for an organization to understand where they are to help guide their information and customer engagement approach.

At a summary level, service companies in each respective stage typically exhibit some or all of the following behaviors and focus:

Customer Support Centric: •

Primarily focused on providing baseline product related “break-fix” and warranty service to customers who purchased their equipment. Service is largely viewed as an entitlement by the customer. These business units are typically measured as a cost center. Initiatives and priorities are centered on delivery process improvements, service quality & responsiveness, and assuring baseline customer satisfaction.

Profit Centric: •

Primarily focused on driving service business gross margin and profitability. Initiatives are centered on automating manual processes and becoming more efficient in all service “back-office” functions (services delivery, services supply-chain, services order management, call center & technical support, etc). Some voice of the customer input is incorporated along with the introduction of some front-office process improvements (pricing practices, competitive positioning, product sales education of services, expanded service contract offerings, etc). The end customer is usually more open to alternate service offerings beyond traditional product break-fix work.

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Growth Centric: •

Primarily focused on expanding the service business and contributing to proportionate enterprise-wide growth. These companies recognize that customer service innovation is a way to differentiate themselves from the pack. An emphasis is placed on introducing new offerings – both enhanced product-services and new value-added managed and professional services. Comprehensively understanding customer processes and total cost-of-ownership are fundamental. Front-office processes – services marketing, services sales and pricing – gain more internal mindshare. Executive leadership appreciates the ability of the services team to create product pull-through opportunities and generate long-term customer retention. Customers more often view and treat their service providers as strategic partners versus commodity suppliers.

We believe account management and service metrics should be top of mind for service executives since they both are foundational to execution and success. Regardless of what stage service company you are, leadership requires data-driven insight to guide their strategic decisions – spend time to get the metrics right, and then meticulously measure them. The mapping of services account management reporting requirements, service metrics, and customer dashboard usage within the prescribed Services Framework is discussed in the following sections.

Services Account Management & Reporting

Leading manufacturing and capital equipment service organizations are now “playing offense” and engaging with their customers in a truly interactive fashion. Customer dashboards, key performance indicators (KPI’s), and reports have long been available to internal account teams. Now, however, leading edge organizations are making these same tools and data available to their suppliers and customers through business portals with aggregated information from multiple enterprise and transactional data systems. Both internal service, and customer personnel, can now see the same view of service performance and activity. This is really the next frontier, which can generate not only internal efficiency but can also create opportunities for real customer “stickiness” and business growth. As indicated by Jonathan Byrnes, a prominent customer service thought leader and author, service innovation and growth requires proactive account management and intimate customer understanding.

Today, leading companies are redefining customer service . Phrases like “building a relationship with the customer,” and “understanding the customer better than the customer understands herself” underscore this new objective.

Jonathan Byrnes HBSWK, Jul7, 2003, “Out-of-the-Box Customer Service”

Exhibit 1 portrays the respective characteristics relating to account management and reporting across the various stages. Generally speaking, as organizations move from customer support to the growth stage their account management reporting tends to:

Include customer profitability & productivity metrics in addition to classic internal measures•

Have more cross-functional account ownership and input•

Leverage and aggregate data that is housed in multiple departments and sources•

Provide more sharing and easier access to data for strategic suppliers and customers•

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Require a much deeper understanding and segmentation of the customer base to drive priorities and •assure resources are optimized for strategic customers

Exhibit 1. Account Management Reporting

Customer Support Profitability Growth

Break-Fix Delivery Metrics•

Internal Metrics •

Typically No Account Owner•

Limited X-Department Data •

No Data Aggregation•

Internal Data Access Only•

Limited Customer Segmentation•

Account Profitability Metrics•

Service Partner Metrics•

Account Owner•

Additional Data Sources•

Functional Data Aggregation •

Supplier Data Access•

Large Account Focus •

Customer Total Cost Metrics•

Customer Productivity Metrics•

Cross-Functional Team•

Multiple Data Systems•

X-Function Data Aggregation•

Customer Data Access•

Customer Experience Map•

Account management teams that are armed with metrics, reports and analyses that are populated from different departments and databases can have more immediate impact. By definition, the team’s information is richer, providing for a better customer experience and easier identification of growth opportunities.

By way of example let’s consider the experience of a multi-billion $ OEM of analytical equipment and reagents. The OEM recently formulated cross-functional account teams for their strategic customers and are proactively evaluating how to enable these teams with a reporting and dashboard solution that leverages data from multiple sources. The solution would likely include such items as installed equipment utilization data, service revenue data, service delivery and call center performance data, service supply-chain spare parts & reagent consumable data, and customer survey/satisfaction scoring to name a few. Data currently resides in at least 3 disparate systems. This reporting solution must enable the ability to investigate and “slice and dice” the data across multiple business hierarchies (regions, segments, customers, product lines, fiscal periods). Benefits to customer-facing teams and account managers are numerous, and include:

Quickly determine how well the most strategic and largest revenue sites are being serviced•

Map actual service delivery performance to perceived customer satisfaction in a Customer Experience Map •(sidebar)

Review equipment utilization and compare this to contract terms and design intent•

Proactively monitor equipment usage and synchronize this to inventory and services supply-chain orders – •opens the potential opportunity to offer an outsourced material procurement service

Identify regions and service teams that are not meeting contract delivery terms•

Better customer integration by providing direct access and views of the data & reports – drives customer •“stickiness”

The ability to associate intelligent machine data and remote diagnostics with other service relevant data is perhaps the best example of the power of aggregated data and context. The above example of linking equipment usage (measured by cycles, hours, samples, etc) to supply-chain and service contract fulfillment is just one of many envisioned scenarios. Many have wondered why remote diagnostic enabled equipment technology, as compelling as it appears in theory, has not really become ubiquitous. One explanation might be that this rich machine information largely sits alone and is not connected to other transactional and execution data elements within the service and product enterprises. Aggregating this data with other service ecosystem data in a BI framework which account teams, service personnel, and customers can access, will clearly help to facilitate the intelligent machine vision.

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Most organizations in the growth stage have the ability, sophistication and data access to carefully map their strategic accounts into a Customer Experience Map (sidebar). This tool provides the opportunity to map your actual service delivery performance – Operational Index (higher percentage indicates better performance) to the customer’s perceived opinion of you – the Loyalty Index (higher score indicates higher loyalty). Loyalty Index is really a proxy for whatever means an organization is using to calibrate and measure their customer’s opinion of them – Net Promoter Score, surveys, focus groups, etc. As indicated, mapping this loyalty to actual service performance presents the opportunity to categorize individual customers, segments, and regions into respective “zones” – Defection, Apathy, Growth as examples1. The elasticity of loyalty for each customer or segment can then be established with saboteurs on one end and evangelists on the other end of the continuum.

Using this mapping, service leaders and their account teams can design thoughtful plans on what action to pursue for customers in each zone. These guidelines would likely vary depending upon the segregation and strategic ranking of a company’s customers – different focus, resource allocation, and desired state depending upon this strategic ranking. The sidebar provides hypothetical, and high-level, examples of what these guidelines might look like. In summary, these service organizations should be armed with a very thorough comprehension of actual performance, customer perception, proposed actions, and desired outcomes for their responsible customers.

1. Zones are just examples – actual categories and definitions are determined as part of a Customer Experience Map design session

2. Measure, Analyze, Improve, Control improvement scorecard

Example Guidelines

A. High Operational score provides leverage to move to the right on loyalty. Review loyalty surveys (and possible re-format) to evaluate and react to the apparent operation/loyalty mismatch relationship

B. High Operational score provides leverage to move further to the right on loyalty. Review loyalty surveys (and possible re-format) and understand stakeholder issues and drivers preventing movement to quadrant C.

C. Cultivate these customers, learn what is working well and leverage to other accounts. Take a moment and congratulate the team!

D. Aggressively implement the MAIC2 scorecard improvement plans to improve Operational Index. Evaluate to what degree higher Operational Scores translate into increased Loyalty Scores.

E. Aggressively implement the MAIC scorecard improvement plans to improve Operational Index. Evaluate to what degree higher Operational Scores translate into increased Loyalty Scores.

F. Focus on your Operational metric improvement plans so as not to risk losing the loyalty of these key customers.

G. First determine the strategic significance of these accounts within your business. It will be expensive to influence them. If aligned, a serious evaluation of strategies and personal may be required.

H. Aggressively implement the MAIC scorecard improvement plans to improve Operational Index. Evaluate to what degree higher Operational Scores translate into increased Loyalty Scores.

I. Aggressively implement the MAIC scorecard improvement plans to improve Operational Index. Lagging operations result in an apathetic customer despite historically high Loyalty Index Score.

G

0.5 0.0 0.5 1 .0

OperationalIndex

(ServicePerformance)

1 0 0%

6 6%

3 3%

0%

SABOTEUR

Defection Zone

A

Loyalty Index (Net Promoter Score, Survey, etc.)

D

G

B

E

H

C

F

I

Apathy Zone Growth Zone

EVANGELIST

Customer Experience Map

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Service Metrics

According to a recent Aberdeen Research Study3 of services executives, best-in-class service organizations are nearly two and a half times more likely than laggard firms to analyze service data daily or near time. Additionally, Aberdeen found that nearly 80% of service executives either have in place or plan within the next twelve months to implement a Business Intelligence (BI) and analytics solution for their service operation. These executives are using better data analysis to balance customer, competitive, and cost pressures. Increasing customer demand for faster and more efficient service performance and rising costs are challenging service executives to make faster and more accurate decisions.

While the above may not be a surprise, the question really is what the call to action is. Executives might be wondering what they should measure – everything without bias or a prioritized set of metrics and key performance indicators that are relevant to their service business objectives? And what are some relevant metrics to consider? We suggest targeted focus (less is more), accuracy, and the availability of supporting drill-down data versus metrics that are a mile wide and an inch deep. Within each stage, there are any number of key metrics and KPI’s that a leadership team might consider. Exhibit 2 represents some examples of metrics in each stage.

Exhibit 2. Service Business Metrics

Customer Support Profitability Growth

Response Time•

Resolution Time•

Call Center Performance•

Order-Fill Ratio•

On-Time Delivery •

Training Quality•

Service Engineer Competency•

First Time Fix Rate•

Warranty Compliance•

Equipment Utilization (OEE)•

MTBF•

Service Engineer Utilization•

Productivity •

Sales Discounting•

List Price Historical CAGR•

Gross Margin •

Contract Profitability•

Concession Expenditures•

Warranty Expenditures •

Inventory Turns•

Accounts Receivable •

Logistics Costs•

Parts Scrap & Obsolescence•

Portfolio Mix Ratios•

New Service Intro•

Warranty Conversion•

Agreement Renewal•

Install Base Contract %•

Contract Duration•

Customer Advocacy (NPS) •

Services Sales Cycle Time•

Lifetime Services Revenue•

Projected Service Growth•

Price Premium •

Sales Win / Loss Ratio•

Metrics for organizations focused on service growth are centered on gaining a deeper understanding of their customer’s business and on services innovation. As a result, New Service Introduction metrics are important and might include the number of new service offerings, new offering market adoption rates, and time-to-market cycles. Service portfolio mix is also important and might include metrics that indicate actual and variance to target portfolio mix ratios – blend of product, managed, professional, and multi-vendor offerings.

The metrics shown in Exhibit 2 are of course not exhaustive, and it should be recognized that organizations may in fact span various phases for different product lines, customers, service offerings, regions, etc. Generally speaking, however, the examples should provide directional guidance and ideas of the type of metrics and

3. Aberdeen Group, November 2007, “Get Smart: Business Intelligence for Service Organizations”

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factors that are relevant within each stage. It is the responsibility of the services leadership team to select and prioritize these metrics for their situation.

Customer Dashboards

Many service groups are using a customer dashboard tool to facilitate engagement with their key customers. In large part, this tool represents the intersection of an organization’s account management practices and the targeted metrics that are used to measure customer engagement and service delivery performance. Customer dashboards should provide:

A mutually established (with your customer) set of metrics that are measured and reviewed on a periodic •basis

Representative “Critical To Quality” (CTQ’s) drivers of your customer’s business•

A platform used by both organizations as the centerpiece to have meaningful dialogue around customer •satisfaction, performance trends, concrete improvement plans, and executive ownership

An effective communication tool for the Customer Account Team and all who “touch” the customer•

Exhibit 3 portrays the respective characteristics relating to customer dashboards across the services framework. Generally speaking, as organizations move from the customer support to the growth phase, customer dashboards tend to:

Have metrics that are mutually defined with customers•

Include jointly defined thresholds and limits•

Include process variation as well as average indicators•

Include qualitative as well as quantitative measures•

Contain robust cross-functional Six Sigma based MAIC (measure, analyze, improve, control) scorecards•

Involve executive leadership from both the internal organization as well as the customer•

Exhibit 3. Customer Dashboards

Customer Support Profitability Growth

Internal Metrics•

Internal Defined Thresholds•

Average Measures•

Quantitative •

Limited X-Functional •Improvement Plans

Limited Leadership Involved •

Internal & Partner Metrics•

Internal/Partner Defined •Thresholds

Average Measures•

Quantitative & Qualitative •

X-Functional Improvement Plans •

Department Level Leadership•

Joint (w/ Customer) Metrics•

Jointly Defined Thresholds•

Average & Variation Measures•

Quantitative & Qualitative•

Six Sigma MAIC Scorecards•

Executive Sponsorship •

Growth oriented service organizations utilize customer dashboards to become better aligned with their customers, internalize their customer’s processes and key success factors, and access more insightful customer information to help ideate and design new service offerings. Effective dashboard design and deployment requires a level of commitment and resources from both the service provider and their customer. This is truly a partnership with shared mutual benefits. According to Jonathan Byrnes, “out-of-the-box customer service requires commitment and entails understanding the customer well enough to dramatically increase the customer’s profitability.” Imagine that, actually worrying about your customer’s profitability!

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To do this properly, the service provider perspective needs to morph. Metrics that are tracked and monitored on customer dashboards now reflect the real impact on the customer’s business and processes. For example, instead of measuring classic repair depot turn-around-time (TAT) from shop induction to shipment from the depot, one would calculate end to end TAT as time measured from unit shipment from the customer facility until the time it was received back at the customer facility for re-installation (dock-to-dock).

Perhaps the best example of an organization who approached this rarified air of true customer partnership was General Electric (GE). By the 2000/2001 time period, GE had clearly established itself as a leading practitioner of Six Sigma concepts, driving outstanding productivity and bottom line results. At the same time, GE re-energized the Six Sigma program with an “At The Customer, For The Customer” campaign. Six Sigma projects were identified and launched to directly improve some aspect of the customer’s business. In 2001 GE initiated more than 3,000 Six Sigma projects in the airline industry (1,500 since September 11), which were targeted to achieve $400 million in savings for their customers who were contending with crisis and change. Similarly, GE Medical Systems (now part of GE Healthcare) focused on improving clinical efficiency at customer facilities, and these efforts helped customers save more than $50 million. In 2002 the company estimated 10,000 projects were initiated “At The Customer, For The Customer”.

As part of this customer focus, GE established a very robust customer dashboard process to work with customers, identify issues and drive improvement plans. The customer dashboard process allowed GE to better understand the customer environment .

“ Six Sigma continues to bring us closer to the customer while growing our own productivity. In 2001, we completed more than 6,000 Six Sigma projects “At the Customer, For the Customer,” meaning we literally took Six Sigma to our customers, working on very specific projects with them at their sites”

Jeff Immelt - GE Chairman & CEO, GE 2001 Annual Report

Parting Thoughts

So as your organization thinks about account management and relevant metrics it is important to review where you are at and what your primary services objective is: customer support, profitability, or growth. While not mutually exclusive, successful service companies usually excel in one of these areas. Remember that the framework that has been outlined is exactly that – a framework. However, it does provide examples of typical behaviors and characteristics across stages for Account Management Reporting, Service Metrics and Customer Dashboards.

Behind the vision, goals, and expectations we reviewed lies a series of execution realities. Some revolve around organization dynamics & leadership, others are customer dependent, and still others are infrastructure and reporting solution related. It is imperative that a reporting and analytics solution be deployed that can:

Easily be accessed and used both internally and externally•

Leverage data from multiple departments and source systems•

Provide the ability to slice and dice data across business dimensions and down to transactional levels•

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Enable end users to retain control, request and make modifications with relative ease •

The importance of a robust Business Intelligence / analytics solution within the service organization is critical and validated by the Aberdeen Research Study3 highlighting that nearly 80% of service executives either have in place or plan within the next twelve months to implement a Business Intelligence (BI) / analytics solution for their service operation.

Let your customers’ success begin!

Oco provides a unique reporting, analytics and dashboard solution for services businesses. Our pre-configured services module includes a dashboard, key

performance indicators, and a library of pre-designed reports with appropriate business hierarchies that allow users to “slice and dice” data along any

conceivable dimension to gain insights into their business and to monitor services performance.

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