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
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
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
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
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
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
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
View previous articles in this
Managing the Enterprise
More Common Pitfalls in Pursuing Preferred
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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
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
brief questionnaire, by April 16; in return, ASP will send you a
complimentary copy of the final report as soon as it is published.
year's survey is available from their
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