By Annick Perry

Customers are increasingly questioning the value of product-related services, and price pressure on product support services is increasing. However, many companies cannot afford to follow the reduced prices tactic as this would translate directly to lower profits. What they really need to do is re-engineer their service models to create low cost but high value services.

Such a model drastically improves profit margins by completely redesigning traditional service models to incorporate new enabling technologies, processes and customer experience designs, which increases your customer’s perception of value (for example through increased availability) and reduces the cost of delivery.

Adding Higher Value

To improve the Total Customer Value, you can either improve the brand experience, lower your price or implement improvements in the customers’ service experiences. All of these options mean that your service requires less effort on the customer’s behalf and therefore becomes more convenient and increases the total value for the customer. Simply explained, Customer Value is customer benefits minus customer sacrifices. Services are intangible so customers can’t evaluate your service offerings before buying them but do so via your brand promise. Improving the customer’s perception of value associated with your brand can be achieved by pro-actively managing the customer experience. Increasing value requires enhancement of this Customer Experience by actually designing it rather than leaving it to chance. Once you understand your customer’s expectations in relation to your brand and the brand promise, you then have to satisfy those expectations. This can be achieved for example, by analyzing various customer touch point opportunities i.e. points of interaction between the service provider and customers (a field visit, support center call, an invoice, website, app, etc.), then you can design a customer experience for each touch point.

By using information systems (IS) and looking at the management practices and policies guiding your staff, you can design the sequence and content of the customer experience, defining what will be done and by whom. Information systems should make it possible for your customer to have the right information at the right moment and from the right person. What’s more, this doesn’t necessarily increase costs because if you invest in developing your staff’s capabilities that means that they will become more effective with your customer and that in turn will lower customer complaints and losses.

Lowering Costs

One way to improve profit margins is by lowering costs. This means by using technologies like remote monitoring or remote diagnostics applications, your service provider can remotely monitor your customers’ machine or technology 24/7. This presents a significant cost saving opportunity because the more accurate your information, the better your ability to provide preventive maintenance before your equipment breaks down or the better you are able to diagnose and resolve remotely. If you integrate the equipment into the service delivery process, you will no longer require a customer call reporting the break-down; it will automatically trigger a request for repair so there’s no need for manual intervention. Cutting costs can also be achieved by using Knowledge Management (KM) applications, which can implement a better recording of the history of a machine or technology and can build reliable statistics about typical errors, causes and solutions. This knowledge can be distributed to your people in supports centers and field service engineers in order to guide them towards the right diagnosis and, hence, a faster repair time and lower service delivery costs. In addition, encouraging self-service can also lower service delivery costs. When customers are reluctant to pay a comprehensive price, you can encourage them to do some work for themselves. Self- service could mean ordering spare parts or consumables necessary to work their equipment, or it could be that the customer conducts self-help online through forums for example, or you could even offer assisted self-service (also known as looking-over-the-shoulder-service), whereby you remotely coach a customer to perform a certain action or repair. All in all, the use of Remote Services and the Internet of Things is the way to go about in lowering your costs in service delivery, while increasing the value you offer to your customers. The question is, do you have the service model that will allow you to join the game?