Perfecting Service Management

Issue #41

Tuesday, March 30, 2004

Managing the Enterprise Customer Relationship (Part 4): Service is the Product
by Craig Bailey

This is the fourth article in the series "Managing the Enterprise Customer Relationship," where we discuss how managed service providers (MSPs) can effectively manage complex customer relationships while delivering solutions to the enterprise customer. In this article, we will discuss how focusing on service as the "product" can facilitate the proactive management of the customer's entire experience with your firm.

This exact sentiment was reinforced by senior executives from several New England-based MSPs at a recent Massachusetts Telecommunications Council event, where a key theme was "We are increasingly focusing on service, because it is no longer just about the technology we provide." The reality is that product feature/function typically becomes commoditized with increased market adoption and competition. What then differentiates companies is "service." To respond to this situation, we offer two items: Baking Service in "Before Market" and the "Operations Supervisor."

Baking Service in "Before Market"

It is our experience that companies typically consider service in an "after-market" mode. That is, a new product/feature is launched to the market-place, to complement a company's existing set of capabilities. After launch, questions come up such as "How can we increase efficiencies (cut costs) in supporting our customer-base? How can we improve the customer experience in their use of this product?" What if these questions were asked during the product development lifecycle? Instead of launching a product and THEN determining how to put web-based self-help in place, why not design it into the product itself (pre-launch)? That is, engineer the product in such a way as to enable the customer to view performance details and/or make minor modifications to their configuration online vs. having to call into the service organization.

What frequently occurs is that, as customers increasingly implement the new product/features, the service organization observes inefficiencies in supporting the customer base. And, at the same time customers realize that, while the MSP is an extension of their IT department, they have become a bottleneck to getting day-to-day things done such as responding to (what they believe to be) minor inquiries and requests.

In an effort to increase efficiencies and supportability, the MSP service organization must then retrofit service and support capabilities into the product "after market." To be clear, there will always be a need for "after market" modifications to a product's service and support model. However, considering service "before market" goes a long way towards increasing operational efficiencies and customer satisfaction, from the beginning.

The Operations Supervisor

MSPs provide multifaceted capabilities to the market-place, of which various elements of their offerings are combined to form a complete solution for their enterprise customer. A key challenge, though, is that MSP service organizations are often made up of highly specialized teams, focused on the individual technical capabilities which are implemented to form the complete customer solution. To keep costs down the service organization typically designs its processes to be "transactionally efficient." Each service team (of highly specialized resources) is efficient in "clearing their queue" and reducing MTTR (mean-time-to-repair). However, no one is considering each customer's entire solution.

While there is a need to have depth in skill-set and understanding for each aspect of a company's offerings, there also needs to be an overall "operations supervisor." That is, someone who is orchestrating ALL the service / operational activities that are taking place, in such a way that the customer is supported holistically. This person would not only ensure that MTTR times are meeting customer expectations, but would also want to ensure that root-cause resolution is implemented for recurring issues. Additionally, this person would be responsible for monitoring the overall performance of the customer's solution, to proactively identify any problematic trends. This would also include looking for opportunities to offer suggestions (to the customer and/or Sales Rep for the account) on how to more effectively meet the customer's business needs. This would result in add-ons or upgrades to the customer's existing solution.

Implementing the concept of an "operations supervisor" is absolutely critical, to ensure that the customers experience holistic management of their solutions. Otherwise, their experience will be that of each specialized service team supporting the individual piece-parts, with no one holding it all together on their behalf.

In the next article in this series, we will expand on the role of the "Operations Supervisor" which if properly implemented will ensure that effective communications are occurring between the "four quadrants" of the relationship discussed in part 2 of this series (see previous newsletters). This is critical to ensure that the customer:
  • Clearly understands the value delivered

  • Observes the MSP proactively pointing out existing or impending areas of concern

  • Is presented the "full context" of day-to-day service and support issues, why they occur, what was done to resolve them and why they won't occur again

  • Feels comfortable that they are doing business with a "partner" that truly cares about their success

If you would like to learn more about overcoming the common challenges that managed service providers face with their enterprise customers, feel free to contact us.

A Logistics Perspective (Part 6): More Common Pitfalls in Pursuing Preferred Supplier Strategies
by Craig Thompson

This is the final article in the series about the importance of achieving preferred supplier status as a strategy for building stronger relationships with your customers. In the last issue, we presented some concerns, risks and pitfalls that often haunt programs designed and implemented to achieve (and retain) preferred supplier status. In this issue, we discuss two more: Capability and Realization.


Probably the most common pitfall encountered is that of finding out your enterprise can't reliably and efficiently perform in accordance to the commitment. Whether due to the desperation or naiveté behind the original commitment or the lack of know-how, enablement or motivation of the enterprise, the fact is that all the right people weren't involved at the beginning.

One consumer hard goods manufacturer I worked with had identified a preferred supplier strategy it hoped would be the catalyst they thought they needed to raise overall delivery performance. At another, the goal was to restore brand prestige by "getting on the wall/shelf" of a highly regarded retailer. Predictably, both programs failed, beset by erratic performance and negative net value received. Not only was preferred status not gained but the failure to deliver on the commitment resulted in setbacks in the supplier/customer relationships.

This isn't the place to learn "blocking and tackling". Those are prerequisites. The lesson here is to understand the characteristics of preferred suppliers, discussed in the 2nd part in this series (see previous newsletters). Possible supply chain partner roles can be settled at this time as well.

Once the enterprise has gained these attributes, however, it can renew its efforts to become a preferred supplier. At one of the firms identified above, subsequent to its regaining control of its operations and building performance credibility, a hugely successful 'instant-response' fill-in program was developed in conjunction with its largest retail customer and, once perfected, was rolled out across all channels.


This can be the most insidious trap of all. You have committed to a valuable customer, made the resource investments in people, capital and systems, and modified ongoing operations. But, after all this, is it paying off? Is your enterprise (along with your customer) enjoying the benefits originally targeted or are you just spending money and spinning your wheels? Have other benefits arisen that weren't specifically predicted? Have there been downsides that partially or wholly offset the gains? How do you know?

The original goal(s) should be quantified (or represented) by the use of performance measures (e.g., volume, margin). These metrics can then be computed and reported at intervals sufficient to determine actual achievement as well as how their value is trending. This is normal performance management.

There are potentially big gaps in this normal approach to performance management. One leading beverage manufacturer I advised was caught in this trap – all the meters on the dashboard were reading favorable but the car ground to a halt. What was wrong was that something was missing – everything else! In other words, they weren't also keeping an eye on those other metrics - those not specifically associated with the preferred supplier program yet that were fundamental to the normal business.

Was a Value Assurance Program in effect? Did the actions required by the preferred supplier commitment impair performance elsewhere ultimately increasing overall costs, reducing total net margin, etc? Did the Program Manager have overall visibility? Was a balanced scorecard being maintained? Were problems recognized and root causes identified?

In conclusion, we all know that customers can be wonderful things. Their care and feeding dominate our enterprise activities. Their 'favors' are our stuff of life. Yet, they can also be fickle gold-diggers - expensive to acquire, hold and lose. Being one of their preferred suppliers is one successful strategy in keeping the shared value-producing relationship alive and positive. In addition to product and pricing, it can be a prominent lever in managing and preserving the relationship and in increasing your long term competitiveness. I hope that this series of articles gave you an appreciation of this approach along with a better sense of how to become a preferred supplier and keeping the program on a value track. If you would like more information on this or other logistics topics, please contact us.

View previous articles in this series



Managing the Enterprise Customer Relationship

Recommended Reading

More Common Pitfalls in Pursuing Preferred Supplier Strategies

White Paper: Distinguishing Your Business Through Excellent Customer Service


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Recommended Reading
A common question for hi-tech companies is whether their technical support salaries are in-line with industry standards. To assist companies with this, the Association of Support Professionals (ASP) conducts an annual survey that provides the industry's most detailed look at support compensation trends.

The 2004 ASP survey, to be published in May, supplies comparative salary benchmark data by job title (seven categories), company size, product price, and employee skill level. You can help with this project by filling out a brief questionnaire, by April 16; in return, ASP will send you a complimentary copy of the final report as soon as it is published.

In addition, last year's survey is available from their website.

White Paper: Distinguishing Your Business Through Excellent Customer Services
If you like our articles, you'll love our white papers! Our editing team has been hard at work generating white papers from the many articles we've written over the last year.

This issue's featured white paper is "Distinguishing Your Business Through Excellent Customer Service" by Craig Bailey.

In an environment and economy where every dollar matters, it is important to focus on your revenue source: your customers. This white paper offers guidance for achieving excellent customer service and using this superior service to distinguish your company from your competition.

All of our white papers are available under the resources section of our website.

About Customer Centricity, Inc.
We strengthen overall company performance through better service delivery and management.

We boost efficiencies in front-line customer service and technical support teams, order processing, fulfillment, field service, logistics and other key operations functions.

In short, we align the resources of your organization to exceed your customers' expectations in the most effective and efficient manner possible.

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