White Paper Introduction (Excerpt):
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.
Oco Web Site: http://www.oco-inc.com/
Monthly Market Risk Update: March 2024 [SlideShare]
Insights To Accelerate Services Growth (Oco White Paper)
1. Insights to Accelerate Services Growth:
Account Management, Service Metrics and
Customer Dashboards
www.oco-inc.com
2. 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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3. • 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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4. • 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 • Account Profitability Metrics • Customer Total Cost Metrics
• Internal Metrics • Service Partner Metrics • Customer Productivity Metrics
• Typically No Account Owner • Account Owner • Cross-Functional Team
• Limited X-Department Data • Additional Data Sources • Multiple Data Systems
• No Data Aggregation • Functional Data Aggregation • X-Function Data Aggregation
• Internal Data Access Only • Supplier Data Access • Customer Data Access
• Limited Customer Segmentation • Large Account Focus • 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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5. Most organizations in the growth stage have
the ability, sophistication and data access to Customer Experience Map
carefully map their strategic accounts into a
EVANGELIST
Customer Experience Map (sidebar). This tool
provides the opportunity to map your actual 100%
service delivery performance – Operational A B C
Index (higher percentage indicates better
performance) to the customer’s perceived 66%
opinion of you – the Loyalty Index (higher score Operational
Index D E F
indicates higher loyalty). Loyalty Index is really (Service
Performance)
a proxy for whatever means an organization is
33%
using to calibrate and measure their customer’s
opinion of them – Net Promoter Score, surveys, G
G H I
focus groups, etc.
0%
As indicated, mapping this loyalty to actual 0 .5 0.0 0.5 1 .0
service performance presents the opportunity SABOTEUR
Loyalty Index (Net Promoter Score, Survey, etc.)
to categorize individual customers, segments,
and regions into respective “zones” – Defection Zone Apathy Zone Growth Zone
Defection, Apathy, Growth as examples1.
Example Guidelines
The elasticity of loyalty for each customer
A. High Operational score provides leverage to move to the right
or segment can then be established with on loyalty. Review loyalty surveys (and possible re-format) to
saboteurs on one end and evangelists on the evaluate and react to the apparent operation/loyalty mismatch
relationship
other end of the continuum.
B. High Operational score provides leverage to move further to the
Using this mapping, service leaders and their right on loyalty. Review loyalty surveys (and possible re-format)
and understand stakeholder issues and drivers preventing
account teams can design thoughtful plans movement to quadrant C.
on what action to pursue for customers in C. Cultivate these customers, learn what is working well and
each zone. These guidelines would likely vary leverage to other accounts. Take a moment and congratulate
the team!
depending upon the segregation and strategic
ranking of a company’s customers – different D. Aggressively implement the MAIC2 scorecard improvement
plans to improve Operational Index. Evaluate to what degree
focus, resource allocation, and desired state higher Operational Scores translate into increased Loyalty
depending upon this strategic ranking. The Scores.
sidebar provides hypothetical, and high-level, E. Aggressively implement the MAIC scorecard improvement plans
to improve Operational Index. Evaluate to what degree higher
examples of what these guidelines might look
Operational Scores translate into increased Loyalty Scores.
like. In summary, these service organizations
F. Focus on your Operational metric improvement plans so as not
should be armed with a very thorough to risk losing the loyalty of these key customers.
comprehension of actual performance, G. First determine the strategic significance of these accounts
customer perception, proposed actions, within your business. It will be expensive to influence them. If
aligned, a serious evaluation of strategies and personal may be
and desired outcomes for their responsible
required.
customers.
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.
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
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6. 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 • Service Engineer Utilization • Portfolio Mix Ratios
• Resolution Time • Productivity • New Service Intro
• Call Center Performance • Sales Discounting • Warranty Conversion
• Order-Fill Ratio • List Price Historical CAGR • Agreement Renewal
• On-Time Delivery • Gross Margin • Install Base Contract %
• Training Quality • Contract Profitability • Contract Duration
• Service Engineer Competency • Concession Expenditures • Customer Advocacy (NPS)
• First Time Fix Rate • Warranty Expenditures • Services Sales Cycle Time
• Warranty Compliance • Inventory Turns • Lifetime Services Revenue
• Equipment Utilization (OEE) • Accounts Receivable • Projected Service Growth
• MTBF • Logistics Costs • Price Premium
• Parts Scrap & Obsolescence • 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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7. 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 & Partner Metrics • Joint (w/ Customer) Metrics
• Internal Defined Thresholds • Internal/Partner Defined • Jointly Defined Thresholds
Thresholds
• Average Measures • Average & Variation Measures
• Average Measures
• Quantitative • Quantitative & Qualitative
• Quantitative & Qualitative
• Limited X-Functional • Six Sigma MAIC Scorecards
Improvement Plans • X-Functional Improvement Plans
• Executive Sponsorship
• Limited Leadership Involved • Department Level Leadership
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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8. 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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9. • 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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