Category: Business Management
Customer Interfaces: Comparing Apples and Blackberrys
Just over ten years ago, Apple announced the iPhone. Blackberry was the smartphone king with a great keyboard and wheel/ball for email power users. Now Apple is the most valuable company in the world, and Blackberry is out of the smartphone market. More applications and a better user interface won the day by a landslide. How would your customers grade the applications you provide and your user interface? Apple? Or Blackberry?
Think about it. Maybe you used to trade in labor rates and parts. Today you trade in information and convenience. Pressure readings, amperage readings, inspection intervals, flow rates – the information you manage is your stock in trade. What type of user interface are you providing your customer for them to value your stock? Phone calls and ad hoc emails with files attached? Uh, can you say “worse than Blackberry.” What will happen when your competitor shows the customer an iPhone? Oh, right. We already know how that movie ends.
Maybe now would be a good time to figure out a strategy for giving your customer more applications and a better user interface. Maybe your website should be something other than a billboard on a screen. Maybe the customer should have access to the information that you collect regarding their equipment through applications that help them make decisions regarding the maintenance and repair of that equipment. Don’t wait for the competitor to introduce the customer to iPhone. In fewer than 10 years they will be the most valuable company in your market and you will be out of business.
One final pro tip – this is not an accounting problem, so don’t bother asking your accounting application provider to solve it with a “customer service module.” Instead, look for built-in customer engagement features like an online customer portal and service history reports from providers who are evolving like Apple did over the past ten years that will help keep you at the front of your market.
Want to be the winner in your market? Be the first to innovate.
These words of wisdom were imparted by Reese Bobby to his son Ricky Bobby in the movie Talladega Nights: The Ballad of Ricky Bobby (clip and clip). Winners get more than their fair share, and a loser is just a loser. No one cares about second place. In our fast-moving world, the winners often take all of the profit, and the losers are just losers.
Ten years ago last week, Blackberry was the world’s number one smartphone. It had a keyboard that was awesome. Apple introduced the iPhone with its innovative user interface, and ten years later Apple is the most valuable company in the world. Apple takes over 100% of the profits in the smartphone market, and Blackberry does not even make smartphones any longer. If you ain’t first, yer last! The winner takes it all, and a loser is just a loser.
Ten years ago, Blockbuster was number one in the video rental market. Today, Netflix is number one with a market value of over $57 billion. They introduced an innovative user interface for renting movies over the Internet, and Blockbuster went out of business. If you ain’t first, yer last! The winner takes it all, and a loser is just a loser.
Ten years ago, taxi companies were protected, regulated operators in the local markets they served. They proudly paid huge sums of money for their operating medallions. Today, Uber is an enterprise worth over $80 billion – more than all of the taxi companies in the world combined. They introduced an innovative user interface for hailing a car and paying for the ride, and the taxi companies have been decimated in their local, protected markets. If you ain’t first, yer last! The winner takes it all, and a loser is just a loser.
How good is your user interface to the customer? Is it still phone calls and triplicate forms? Is it ad-hoc emails with files attached? No organization or intelligence, just a dump of PDF files? What happens to your business if you are not the first in your market to introduce an innovative interface for customers to receive your services? Are you going to be first or last when the change comes to your market? Will you be the winner that takes a bigger share? Or a loser who is just a loser?
Maybe it is time to start thinking about technology as a way to please your customers instead of simply a way to seek operating cost leverage. The lesson of Apple, Netflix, and Uber is also the lesson of Blackberry, Blockbuster, and the taxi companies. It does not matter how long you have been around or how good your internal operations may be. An innovator in your market can turn your business into a loser. So, are you going to be first in your market to innovate with a better customer interface? Or will you just become one of the losers when someone else innovates first?
This blog post is part of our Business Lessons From Rednecks collection. Also see Don’t get gigged by software.
Read ideas about how to be first in Billy’s book The Digital Wrap: Get out of the Truck and Go Online to Own Your Customers.
Best of 2016
As 2017 kicks 2016 to the curb, take a minute to revisit our most-loved blog posts of the year.
Whether they’re new to you, or you need a review, check out these blog posts for inspiration to start the new year.
The Metal Benders Will Steal Your Customers
If you ask equipment manufacturers (metal benders), they will claim that your customers are technically their customers. What’s changing now is that they want to have their customers pay them for maintenance and repair services instead of you.
I am, of course, speaking about how manufacturers are increasingly embracing the service business as the next leg of profit to be mined in the market. The days of distribution channel loyalty are gone. Prepare to do battle with the well capitalized companies that you used to call “partners.” Where is the evidence that the drums of a channel war are beating? Consider these two recent news stories:
GE Buys ServiceMax for $915M
GE just spent almost a billion dollars to buy a software company that specializes in technology for service delivery. The price tag for that purchase was an estimated 15-times ServiceMax’s current revenue. GE REALLY WANTED THIS TECHNOLOGY to pay that kind of price. Note that ServiceMax is built on top of Salesforce’s CRM platform, NOT AN ACCOUNTING APPLICATION. GE’s aggressive activity in the market says that customer service and sales are the new battlegrounds for manufacturer competitiveness. They want to control the entire customer experience from initial consideration of their equipment through the maintenance and repair cycle and then finally the upgrade and replacement at end of life. ServiceMax helps them deliver on this promise with great efficiency and customer visibility.
Boeing Hires GE Exec to Focus on Service
GE was in the news again because Boeing has hired a GE exec from the GE Aircraft Engine business to run the Boeing Commercial Airplane Group (CAG). Kevin McAllister was selected as the new CEO of Boeing CAG because he specializes in monetizing “after the sale” services for maintenance and repair. At GE, they sold a program to the airlines that delivered jet engine maintenance and repair for a fixed fee based upon the number of hours on the engines. That program was just what the airline operators wanted – a no hassle, no risk, fixed cost plan sold by an expert in jet engine technology. Now, Kevin is heading to Boeing to concentrate on the same type of program for commercial aircraft.
So why are the manufacturers so interested in service these days? Because lifetime value of the customer is everything, and service is easier than ever to deliver because of technology. Historically, service was hard because it was unpredictable, and it was not possible to be everywhere the customer needed you to be at one time. Now, with advanced instrumentation and the Internet, the manufacturers can “see” what is happening in order to better manage a service delivery plan. Also, customers have come to understand that the company responsible for service needs to be the one with all of the data required to do the service right, and it really doesn’t matter who employs the technician that shows up to turn the wrenches so long as the owners of the data give him good instructions. Manufacturers can build an enduring ownership bond with the customer throughout the product lifecycle to earn a premium on their stock value. Check out chapter 5 in my book, The Digital Wrap, about how Tesla has become the envy of the manufacturing world because of this dynamic.
So what are you going to do when the metal benders come after your customers? Are you just going to hand over the relationship and the data so that you can become the labor bureau and the truck depot for their profit machine? Or are you going to seek more data and more technology so that you can become the trusted advisor to the customer? The advisor that informs them of the failure modes of each type of equipment and teaches them how to negotiate with the manufacturers at arm’s length to get the best equipment deal? The advisor that implements the best customer service technology and sells the best program for hassle-free and risk-free maintenance and repairs?
The great news about the metal benders is that they are still metal benders, and they would struggle to spell customer service if you gave it to them in an anagram. It will take some time for software applications and technology to overcome their metal bender cultural habits. The bad news is that they have LOTS of capital, and while they are “figuring it out,” it may still cost you lots of pain and profits if you don’t have a better program.
Here are my tips for preparing to win the battle for customer loyalty:
- Focus on technology for customer service and sales, NOT OPTIMIZATION OF YOUR ACCOUNTING FUNCTION! Your perfect back office process is perfectly irrelevant to a customer looking to eliminate risk and hassles. Stop looking to the accounting application providers to solve your customer service and sales challenges.
- Systematically collect customer connections. Every interaction with a customer should result in an email address and a mobile phone number. These can be used to connect the customer with the information you generate to demonstrate your value.
- Innovate in programs for service management. These innovations can be data collection and mining for predictive service, warranties you sell to those that enter your premium maintenance tier, system monitoring services, fixed price payment plans, or whatever application of technology and business process to limit risk and hassle for both you and the equipment owner.
- Diversify your expertise across as many manufacturers and brands as you can credibly support. You want to be in the position of the trusted advisor to the customer, and knowledge is power in this position. You also want to have credible data and experiences to back up your representations to the customer.
- Stop concerning yourself with parts margin and instead focus on total margin per applied labor hour. Parts are not going to be in short supply, but skilled labor will be precious. Lower your inventory carrying costs by setting up fast response partnerships and technology connections to the best parts suppliers. Focus on speed and proactive service with the customer, not parts margin.
- Begin experimenting with non-proprietary, independent monitoring and controls solutions that you can apply across equipment brands. Use these to build data that leads to credible recommendations and solutions for the customer.
This cultural shift to an information-based service approach with lots of online connections to your customers and their equipment will place you in a position to be the valuable brand that the customer trusts with their important equipment purchases and maintenance programs. The manufacturers are guaranteed to show up with proprietary solutions because of their metal bender culture. If you are prepared, you can laugh all the way to the bank as they throw money at a problem that you have already solved.
Also read:
What’s your company worth?
In The Digital Wrap Book, Chapter 14 was titled the Digital Wrap Formula for Maximizing the Value of Your Business. The chapter covered the technical, financial calculus that can be used to determine the amount a financial buyer might pay for a service contracting business (read the related blog post). It also offered a good deal of advice regarding how an owner might maximize that value by lowering sales costs for new customers, demonstrating consistent revenue growth, expanding margins, and retaining customers. While all of the math and advice in the chapter is accurate, I have come up with a simplified slogan for focusing company value building efforts. How Many, How Much, How Long.
How Many refers to the number of customers your company has. A customer is not a location where you do work, but instead it is an entity that pays an invoice. How many unique invoice payers does your business have? How easy is it to add new ones? If the answer to these questions is “a few” (whether big or small) or “difficult,” then the value of your business is marginal. Having only a few customers, even big ones, is risky. More is better. Having an undefined sales process is also risky. If you do not know how to add new customers systematically, growth is a crap shoot. If you have a lot of customers and you can demonstrate how you reliably add more every year, your business will command a premium from a potential buyer.
How Much refers to the amount you can reasonably expect to be paid every year by each of your customers. If you can do more for them and if they pay you a premium relative to the market because you provide a unique experience, better outcomes, or great customer service, your business will command a premium from a buyer. If there is a great deal of uncertainty regarding how much each customer pays annually, a buyer is going to demand a risk premium from you and the value of your business will be marginal.
How Long refers to the number of years the typical customer stays with your company. Churn in the customer base is a bad thing, and your business value will be marginal if you have a lot of churn. Do you know how long the typical customer stays with you? Do you measure churn every quarter to see how well your customer service activities are being received? Ideally, your business has less than ten-percent gross churn (the number of clients that you serviced last year during the current quarter compared to the number serviced this year) and zero or negative net churn (the amount of revenue achieved from customers that you serviced last year in the current quarter that also received service this year). If your net churn is zero or negative, it means that you are becoming more valuable to your customers as a whole each year even as you lose some of them. It means you are raising prices and expanding your portfolio of services consumed by your customers.
How is your business doing on the How Many, How Much, How Long scale? Are you tracking these metrics every quarter? Are you putting programs in place that make it easier to sell your services, allow you to charge a premium, and make it hard for the customer to let you go? If not, why not? These programs will make your business more valuable when the time comes to move it along to the next owner and spend more time on the boat.
Make your Business more Valuable by Being more Valuable to your Customers
Billy Marshall often speaks to industry association groups on topics that help service companies be more valuable, successful, productive and more important to their customers. This past May, he spoke in Indianapolis to fire protection companies about The Digital Wrap.
What is Billy talking about? Watch the video to see!
This 15-minute recording is crash course on what a digital wrap is, and how it helps commercial service contracting companies become more important to their customers – and in turn – increase the value of their business.
Billy uses funny and interesting stories to relate how service companies should:
- Engage customers online like Amazon
- Make information useful like Google
- Innovate by using mobile technology like Uber
If you like what you see here, read a free chapter or get the book at digitalwrapbook.com and consider joining us for the Digital Wrap Conference in October.
ps. Don’t have 15 minutes? You can watch short segments from this presentation at digitalwrapbook.com.
The Google Lesson for Service Contractors
About two weeks ago, Google (or Alphabet, if you want to be strictly correct) briefly eclipsed Apple as the most valuable company in the world. Apple is back on top today, but Google is much more valuable as a multiple of their sales to the stock value of the company. Google’s stock value is trading at a multiple of 6.34 of sales and Apple is trading at 2.24 (according to the Key Statistics section of Yahoo Finance). Why is Google so valuable? And what can service contractors learn from this value to enhance the value of their businesses?
It is easy to say that Google is valuable because they continue to grow at a pretty fast clip and they make tons of margin on their sales. Certainly these are true statements. I am more interested in the strategic nature of Google’s value proposition to the world. The mission of the company reads:
“To organize the world’s information and make it universally accessible and useful.”
So, if this mission has led to great value for Google users and great wealth for the shareholders, what can a service contractor do to repeat that trick? Perhaps part of the strategy as a service contractor should read as follows:
To organize the information relating to equipment performance, repair, and maintenance such that it is universally accessible and useful to my customers.
If you were able to accomplish this mission, do you feel that your company would be more valuable to your customers? Do you think you would hold onto them longer and be able to charge some premium above the prevailing skilled labor rate for services?
I can give you an answer if you are wavering. Your company will become more valuable when your company becomes more valuable to your customers. The best way to become more valuable to your customers is to extend your relationship beyond the telephone and the crumpled, handwritten invoice that you leave behind. When you use data to drive your services and when you put your brand in the palm of their hand through online interfaces (email and web), your company becomes more memorable and easier to engage . . . . and more valuable.
We call this concept of using data to drive services and going online with your service activities the “digital wrap.” It is how you make your business more similar to the business of Google – by organizing information such that it is more useful to your customers. It’s a great way to build a more valuable enterprise. Stay tuned for more stories on this “digital wrap” concept.
Also read:
Why Google’s Relationship with Home Advisor Matters to Service Contracting Businesses
Deliver More Service Calls to Get More Service Leads!
Daydreaming of Big Jackpots and 1975 Fuel Prices
I had to chuckle every time that I walked by the Powerball signs last week that couldn’t display full $1,500,000,000 jackpot because the signs have just 3 digits to show the number in millions.
This past weekend, there was the opposite situation in Houghton Lake, Michigan where they didn’t need the dollar digit when the price of regular unleaded gasoline briefly fell to 47¢ per gallon. Wow.
Gas prices are the lowest across the US that they’ve been in some time — even outside this extreme example. It presents an interesting question to field service companies about how to forecast their 2016 fuel budget.
Each year, GasBuddy.com forecasts fuel prices for the year ahead. They predict that 2016 will be the fourth straight year of a declining national average price for a gallon of regular unleaded and diesel fuel.
GasBuddy is forecasting a national average of $2.28/gal of regular unleaded – down 12¢ from the 2015 average of $2.40.
They’re also forecasting lower diesel prices of $2.16 per gallon, down 55¢ from the $2.71 2015 national average. Read through the 2016 forecast at GasBuddy.com, including a month-by-month forecast. (2015 data source: AAA Fuel Gauge Report)
What should you budget for fuel in 2016?
Based on today’s situation, it seems conservative to carry your 2015 fuel expenses over as your 2016 budget (assuming the same number of trucks and general service area.)
The Potential Gotchas
It goes without staying that it is an extremely volatile time at home and abroad. The lower fuel prices that are good news for field service companies are leading to cutbacks in oil and gas companies and adding instability across some sectors of the US economy.
Instability around the globe could mean changes at any time that would put gas back at $4/gal. Be prepared for the possibility not just for your own fuel expenses taking a jarring jump upward, but for what it also means for your customers as they would have to invest more in automobile and heating fuel and spend less in proactive maintenance.
Control What you can Control
Besides keeping your fingers crossed and hoping that the 2016 forecast holds true, there are a few areas where you have more control over your fleet management budget.
1. Lower your total cost of fleet ownership (TCO).
Finding the balance point between replacing vehicles too quickly, but getting optimum resale value before you start to feel the pain from an increase in maintenance for an aging fleet is tricky. The acquisition cost is certainly the biggest factor in the TCO, and not a cost you want to incur any more often than necessary. But it is a one-time cost and just part of the lifetime TCO.
Calculate a simple TCO per mile per vehicle with this calculation:
(capital costs + operating costs) ÷ total miles traveled = TCO per mile
edmunds.com has a TCO tool for many vehicles. While it has more data for personal vehicles, there are some light commercial vans and pickups that many of you may use.
Identifying the vehicles in your fleet with the highest and lowest TCO will surely be helpful in making future purchasing decisions.
2. Get more miles per gallon and cover fewer miles.
You can’t control the cost of gas, but you can control how sensibly your crew uses it. This is where a good field service management solution will help you assign trucks to regions, and build fuel-efficient routes in those regions.
Also take a look at cutting your total vehicle weight. Heavy loads burn more fuel, so take a truck inventory, and unload the tools and materials that don’t need to be on the truck all day, every day.
3. Lower your opportunity costs.
Not only does common sense routing reduce your fuel consumption, it also cuts into your opportunity costs that grow when techs aren’t on the job site. Building optimized routes for each truck keep those costs as low as possible. Take a look at how customers set efficient routes with the ServiceTrade map-based scheduler.
GasBuddy.com and its mobile app are good tools for locating the lowest gas prices in your neighborhood. We wish you safe driving throughout the rest of the winter!
And about that jackpot…
We are happy to announce that the ServiceTrade crew won $8 in last week’s Powerball drawing! We immediately spent it on delicious, conciliatory donuts from Rise.
Why Google’s Relationship with Home Advisor Matters to Service Contracting Businesses
There is a new chapter to the story of Google’s expansion into home services.
In a ServiceTrade blog post that generated a lot of conversation among our readers, we told you how Google has been experimenting with changing search results for home services in San Francisco. (Re-read Google Home Services and its Impact on Small and Medium Businesses).
Now Google has partnered with Home Advisor to take advantage of the work they are doing to screen service contracting businesses, collect information about their services and connect them with interested prospects.
Google is trying a few different things.
Google obviously sees the opportunity to insert themselves between service companies and their customers and take a cut for streamlining the process. They have invested in three initiatives related to services:
- Home service ads
- Home Advisor partnership
- Investments in ThumbTack and Homejoy
These are just the initiatives that we know about. It’s fair to assume that they’re cooking up more ideas and writing a story that ties them all together.
Here’s the latest.
- Google home service ads are looking a little thinner as we head into the holidays. The company is now testing a smaller initial window instead of what we saw in the first test program:
The initial search result window.
Service options are listed in the new home service ad window.
Once you submit the previous info, you’ll see a list of vendors to choose from.
- Book an Appointment through Home Advisor on Google. From the partnership announced in mid-November, it appears that Google will leverage the work that Home Advisor is already doing to identify and promote reputable service companies.
About Home Advisor Home Advisor is a pay-to-play website where service contractors apply to be part of the Home Advisor network. Home Advisor screens applicants and only promotes those that meet their background, business verification and financial standards (a rundown of the criteria is here.)
Home Advisor provides instant booking services where customers request an appointment from a chosen vendor. Google is testing a Home Advisor instant booking widget directly on search engine result pages.
Impact on small and medium service contracting businesses.
The impact on search engine results remains a concern for our customers. Google’s experiments with search engine results are good for a select few vendors, but potentially damaging to the visibility of reputable companies that aren’t paying to play.
Google is banking on customers using their tools that put the process in one place instead of clicking through to your website from the organic search results. It’s an attractive proposition for people who are busy and content to choose a vendor based on a prescreened list of highly reviewed companies.
While the efforts we see from Google are focused on residential services, it’s guaranteed to affect companies that serve commercial businesses, too. My searches for commercial services return the same Google Home Service Ads and Home Advisor widget results as when I search for those residential services. Don’t be lulled into false comfort if you don’t provide residential services.
What to do to maintain your visibility to potential customers.
Google is in a position due to its size, deep pockets, and its search engine to drive a wedge between service companies and their customers and prospects. Here are a few preemptive steps you can start to take while we wait to see what Google is going to do and when it’s going to happen.
If you are already listed on Home Advisor, great. If you’re not, we don’t see a reason to sign up for increased visibility in Google search result pages at this time. If you’re considering Home Advisor, this may be another reason for you to go ahead. If not, we don’t think you should make it a priority to join their network, especially if you primarily have commercial customers.
I’m just as curious as you to see what the next chapter will be and how the story will end.
Icon made by Freepik from www.flaticon.com is licensed by CC BY 3.0
Don’t Let the Back-Office Tail Wag the Company Dog
All too often, as field service companies are considering new software, they base decisions on their historical software usage patterns and let the tail wag the dog. Since accounting software is the primary, and often only, business application in use, companies search for ways to extend back-office capabilities to the front office and beyond. This line of thinking is understandable, but flawed because it ignores the needs of the majority the organization including the:
- Front Office – Your schedulers/dispatchers, service managers, etc.
- Service Delivery – Your employees in the field who interact directly with your customers.
- Customers & Prospects – I hope you know who they are…
Click the “Start Prezi” button below for a quick visual representation of the current mode of thinking about software I am referencing. Click the right arrow button to continue the Prezi.
If this Prezi does not load for you, click here to view the summary.
Notice that little to no consideration is made for customers and prospects; the source of revenue. In addition, less functionality is desired for the considerably larger divisions of the organization that drive this revenue. I propose a slightly different, proportional perspective on technology selection wherein a stronger consideration is made for the needs of customers and prospects while the needs of the back office are met through loosely coupled integrations with existing systems to reduce double data entry.
If this Prezi does not load for you, click here to view the summary.
From this customer-centric perspective of a service contracting organization, software purchases have the potential to bring more than efficiency to the table. Unlocked from the constraints imposed by the back office, applications can be used to generate inbound leads via brand evangelism, increase customer retention, and reduce customer price sensitivity. This software approach is what we call the Digital Wrap.
Much like your physical truck wraps, the Digital Wrap is a low-cost marketing approach that requires no extra work on behalf of your company other than normal daily service activities. By thoughtfully engaging your customers on the internet in educational and informative ways, you can gain the benefits mentioned above. For example, you can:
- Create brand evangelism by delighting customers and soliciting online reviews that will drive traffic to your website.
- Increase customer retention through trust built upon rich information such as pictures and videos of services performed.
- Reduce price sensitivity through differentiation in quality of customer engagement and education of customer service needs with rich media.
Simply put, a digital wrap will lead to more inbound leads to the front office, and an overall increase in customer lifetime value through customer retention and the amount of work performed for each customer annually. See here:
If this Prezi does not load for you, click here to view the summary.
When considering technology for your field service company, think about the needs throughout your organization, including those of your customers and prospects. Ultimately, applications that benefit your customers will help your company grow. Check out our book The Digital Wrap: Get out of the truck and go online to own your customers to learn more about the Digital Wrap.
Icons made by Freepik from www.flaticon.com is licensed by CC BY 3.0
