Monday, May 16, 2005
Managing Service as a Strategic Profit Center
Managing Service as a Strategic Profit Center
© 1991 by Donald Blumberg
The service opportunity is significant in terms of both value and worth. Service can be used to add value to tangible products. Products generate service needs. Service is governed primarily by the customer's perception of time. Service pricing is different from product pricing. Service must be totally managed, delivered, and controlled just like a product line of business.
The typical customer spends more than twice the initial tangible product price over the life cycle of use.
Service and support can be used to extend the basic product lifecycle.
Comfort in knowing that the service is available when it is required. For the user, the need for service is created as soon as the requirement exists - not when the vendor is notified of the service need.
It is essential to provide a constant level of service quality over time. This consistency is critical added value in developing a long-term perception of quality service commitment.
Product-related services include: design and engineering and other professional services related to the application, installation, or use of the product, supply of consumables and other materials used by the product, refurbishment and replacement, upgrades, additions, and changes.
Service time: Waiting time to obtain service, reaction time to deliver service, length of time of the service.
Creating a service portfolio geared to the requirements of a specific market segment or customer group can generate a significantly higher perception of service quality than delivering an average level of service to all segments.
Some customers are simply willing to wait longer than others. Others want accelerated service performance.
Customers want a single source vendor. Customers want to reduce total service costs and charges from all service vendors; to avoid finger pointing; to improve overall service responsiveness and quality; to reduce time and effort required to find the correct service provider and report the service needed.
The service-based firm primarily utilizes labor, parts, and data to provide both a service capability on a timely basis and the actual service performance. The capability to produce can generate revenues directly, even though there is no apparent production of a "unit of service."
Service is a mechanism for long-term market control. Service has considerable value in "pulling through" future product and service sales.
Provide specific services and service related products: installation, initial warranty, maintenance and repair, remote diagnostics, moves and changes, training, documentation, software, parts and supplies, depot or rehabilitation.
Elements of Service Strategy Plan:
1) The dimensions of the services or products to be supported
2) The desired level of service revenue and profit and the expected profit margins
3) Levels of support and service to be offered
CUSTOMERS VALUE TIME ABOVE EVERYTHING ELSE!!!!
The purchaser will recognize that the product or service will fail to perform at some point in time.
Service factors of importance: availability of a full range of services, quality of the maintenance service, cost of the maintenance service, reputation of the service organization, service response time, speed of equipment repair, ability of service rep to fix equipment right the first time, technical skill and ability of service engineer, availability of software support, ability to perform self-maintenance, availability of extended hours of service, availability of preventative maintenance service, availability of spare parts, long-term service commitment, availability of site surveys and consultation, availability of turnkey systems and support, availability of equipment leasing programs, availability to service multiply types of equipment, single point of contact, proximity of service locations.
Call avoidance and remote diagnostics - what possibilities for call avoidance exist? What mechanisms and technology exist which can be used to identify problems and avoid service calls. What procedures for employing call-avoidance mechanisms exist?
Customer characteristics, site installation, status, service requirements, failure rate and service demand data, service performance data, service resources, call escalation, unassigned calls, call history, MTBF, MTTR, inventory status, open purchase orders.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0070061890
© 1991 by Donald Blumberg
The service opportunity is significant in terms of both value and worth. Service can be used to add value to tangible products. Products generate service needs. Service is governed primarily by the customer's perception of time. Service pricing is different from product pricing. Service must be totally managed, delivered, and controlled just like a product line of business.
The typical customer spends more than twice the initial tangible product price over the life cycle of use.
Service and support can be used to extend the basic product lifecycle.
Comfort in knowing that the service is available when it is required. For the user, the need for service is created as soon as the requirement exists - not when the vendor is notified of the service need.
It is essential to provide a constant level of service quality over time. This consistency is critical added value in developing a long-term perception of quality service commitment.
Product-related services include: design and engineering and other professional services related to the application, installation, or use of the product, supply of consumables and other materials used by the product, refurbishment and replacement, upgrades, additions, and changes.
Service time: Waiting time to obtain service, reaction time to deliver service, length of time of the service.
Creating a service portfolio geared to the requirements of a specific market segment or customer group can generate a significantly higher perception of service quality than delivering an average level of service to all segments.
Some customers are simply willing to wait longer than others. Others want accelerated service performance.
Customers want a single source vendor. Customers want to reduce total service costs and charges from all service vendors; to avoid finger pointing; to improve overall service responsiveness and quality; to reduce time and effort required to find the correct service provider and report the service needed.
The service-based firm primarily utilizes labor, parts, and data to provide both a service capability on a timely basis and the actual service performance. The capability to produce can generate revenues directly, even though there is no apparent production of a "unit of service."
Service is a mechanism for long-term market control. Service has considerable value in "pulling through" future product and service sales.
Provide specific services and service related products: installation, initial warranty, maintenance and repair, remote diagnostics, moves and changes, training, documentation, software, parts and supplies, depot or rehabilitation.
Elements of Service Strategy Plan:
1) The dimensions of the services or products to be supported
2) The desired level of service revenue and profit and the expected profit margins
3) Levels of support and service to be offered
CUSTOMERS VALUE TIME ABOVE EVERYTHING ELSE!!!!
The purchaser will recognize that the product or service will fail to perform at some point in time.
Service factors of importance: availability of a full range of services, quality of the maintenance service, cost of the maintenance service, reputation of the service organization, service response time, speed of equipment repair, ability of service rep to fix equipment right the first time, technical skill and ability of service engineer, availability of software support, ability to perform self-maintenance, availability of extended hours of service, availability of preventative maintenance service, availability of spare parts, long-term service commitment, availability of site surveys and consultation, availability of turnkey systems and support, availability of equipment leasing programs, availability to service multiply types of equipment, single point of contact, proximity of service locations.
Call avoidance and remote diagnostics - what possibilities for call avoidance exist? What mechanisms and technology exist which can be used to identify problems and avoid service calls. What procedures for employing call-avoidance mechanisms exist?
Customer characteristics, site installation, status, service requirements, failure rate and service demand data, service performance data, service resources, call escalation, unassigned calls, call history, MTBF, MTTR, inventory status, open purchase orders.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0070061890
