Redesign service strategy

Smart companies don't drive revenue by reducing and cutting costs, but by redesigning their service strategy. While cost control is necessary, where and how a company cuts costs can have a huge impact on a company's customer service. Cost cuts that lead to lower service quality and drive away customers are very harmful. Therefore, effective cost control only solves half of the problem, and the key to solving the other half is to make enterprises shift from product-centric to service-centric, thereby increasing service revenue.

How to be service-centric

The top companies often take a variety of measures to increase revenue, control costs, and provide the most perfect service. Take the following steps to increase customer loyalty, increase revenue, and reduce costs. All of this means not only higher profits now, but also guaranteed profits in the future.

● Develop an effective service positioning strategy.

● Build a service matrix, not just provide a service.

●Marketing and selling products and services together.

Develop an Effective Service Positioning Strategy The first step in developing a service positioning strategy is to determine what to include in a service strategy, from providing the most trivial service to your company's product, to not only your own product but also other companies' products Also provide services. The next step is to follow a structured approach to building a service portfolio.

Define and describe what is included in the company's service portfolio. The description should include the name and content of the service, the main customer segments who are purchasing or want to purchase the service, the regions in which the service is provided or will be provided, which products are related to the service, and the average contract for a typical customer What is the value, past sales of this service and expected future sales prospects.

A segment-by-segment comparative analysis of the performance of each service. For each service, design a visual model and compare the income brought by the increase in purchasing power by segment. This facilitates the assessment of the profit potential of a particular service. Other analysis of potential customers can be conducted through expert interviews, manager interviews and market research.

Identify and verify which segments of the service have the highest profit potential through customer interviews. Identify differentiated service attributes through intensive research or surveys of customer groups. This step helps to create a service composition that integrates related properties.

Evaluate this service portfolio against the company's strategic service vision. The service vision guides the organization's service positioning, repositioning, financial budget, and execution of existing and future services.

Building a Service Matrix Many companies offer a solution to a problem. In order to maximize service revenue, it is more effective to include these scenarios as part of a service matrix. One axis of the matrix is the various types of services provided around the customer life cycle, and the other axis is the provider of each service. Every service and every layer of channel influences, enhances, or conflicts with each other, forming an intricate relationship. With this service matrix, the marketing department can help customers understand when, where and how to obtain service, and partners and distributors are also very clear about their role in service.

Marketing a service is very different from marketing a product. Because the service is intangible, the company sells a relationship entirely. Services include not only the specific behavior agreed in the service contract, but also the ability to perform the specific behavior. Businesses must be cautious about offering free services, as the cost of this decision may rise more than expected.

For example, let's say someone's computer manufacturer offers a three-year warranty on each computer. Because the price of computers has fallen rapidly, while maintenance costs have not, this has led to a decline in corporate profits. If the service is cancelled, the image of the company will be damaged in the eyes of consumers. When marketing services, it is important to keep in mind that it is difficult for consumers to make direct price comparisons between different services, especially when the service and product are bundled together.

Servicing All Products Businesses must commit to servicing all products they sell. To increase sales of services, you can quote services individually, or quote services and products together. If the corporate strategy is to use services to drive product sales, specific markets and channel marketing can be used to drive sales of services; otherwise, opportunities can be sought by training salespeople and call center personnel. At Citibank, for example, customer service representatives are trained to track customers through their product lifecycle and provide appropriate services.

Thinking about service delivery and cost

While maintaining a lean service organization is imperative, cutting costs in the wrong places can cripple a company in the near and future. The real challenge in cutting customer service costs is to cut costs while improving the customer experience. When done right, self-service or outsourcing can help companies achieve both goals.

Self-service includes problem reporting/resolution/tracking, technical support, account inquiries, self-diagnosis, product and service information acquisition/updates, transaction management, returns management, and answers to frequently asked questions. Telephone, Internet and fax are the most used forms of self-service.

Sometimes some cost-cutting measures end up hurting service quality and losing customers. Businesses can improve cost management in many ways, including: taking a holistic view of service costs; leveraging self-service to improve customer relationships and cutting costs; developing outsourcing strategies after careful investigation of needs, costs, and benefits; leveraging a structured approach to select the best dealers and use incentives to increase their motivation. With a global analysis in place, actions can be prioritized based on effects and benefits, while also recognizing the potential negative impacts of certain actions.

When considering customer service and support costs, it's easy to focus on certain techniques and just try to improve them. The experience of companies with good customer service shows that only by considering the whole problem can the greatest business benefit be achieved. Creating a comprehensive customer service network map enables companies to recognize where cost reductions can be considered and the interdependencies among various behaviors.

Integrating Self-Service into the Service Chain

Self-service is a relatively inexpensive way for businesses to manage customer service and supporting support systems, but it is no less effective than others. The advantage of self-service is that it allows customers to do it themselves and improves their service experience while cutting support costs. According to a survey by the Radclyffe Group, a company that studies customer interaction engineering, 61% of customers prefer to track shipments themselves, and 81% prefer to check accounts on their own.

Even if a business implements self-service, it's still important to take customer feedback on service seriously. When designing and improving self-service channels, customer input must be considered to ensure the quality of service. Ask more, what motivates customers to self-service?

For example, Medtronic provides online self-service services including: finding a doctor, updating medical records, seeking medical guidance and finding organizations to help patients, and outpatients can also receive medical bills paid by the Medicare. FedEx's tracking system allows customers to know the status of their shipments anytime, anywhere. Both Medtronic and FedEx customers see these as upgrades, not cost-cutting.

In addition, the company's design of self-service channels should be integrated into the overall CRM strategy. Only by doing so can information from the self-service channel be automatically delivered to each employee. For example, what customers say about a product after shopping online is passed on to the product development department, inspiring designers to add new elements to the next generation of products.

There are four steps that companies do well to integrate self-service into the customer service chain.

Connect with Target Customers Build a plan to target potential target customers and then identify needs. Who are your target customers? How do you relate to them? What do you want to discover from them?

Identify Customer Needs Detail customer needs and determine which self-service features will be acceptable to customers. For example. American Airlines selected customers who frequently use online self-service to ask them what they wanted to see on the site. The company then redesigned the page based on customer input and invited a sizable group of regulars to try it out before opening it to the general public.

Solving Problems If problems persist in self-service, customers may leave, or call in multiple times to complain. Therefore, it is necessary to actively seek the opinions of customers and continuously improve the practicability and functionality of self-service channels.

Learn from Customers Disseminate what is learned from customers about products and services throughout the enterprise. For example, with real-time customer information from self-service channels, marketing departments can better target customers and improve marketing strategies.

Leverage the value of outsourcing

Outsourcing is another best way to manage costs. Enterprises must first study the objectives of outsourcing, and then choose the mode of outsourcing, so as to ensure that the expected objectives and service requirements are met.

When researching the cost-reduction benefits of outsourcing, it is important to assess the strength of the business itself before deciding whether to outsource some or all of the services. Services that can be outsourced include maintenance, field service, web support, answering customer correspondence, telephone support, direct mail, telemarketing, and specific marketing campaigns. The risk of outsourcing can be analyzed qualitatively or quantitatively.

Selecting the right contractor is one of the key success factors for outsourcing. A well-chosen contractor can help a business provide better service to customers, while also reducing the cost of the overall service. Utilizing a systematic and structured approach can help businesses find the best contractors. The entire process includes: determining the business needs; researching the cost bottom line acceptable to the business; establishing contractor selection criteria; identifying potential contractors; interviewing, visiting and evaluating contractors; making a list of eligible contractors; Finally, the most suitable contractor is selected.

After a contractor has been selected, the next step is to develop a service level agreement. The agreement not only specifies the responsibilities of both parties and the work to be done by each party, but also establishes corresponding incentive standards for the contractor to perform the service to the maximum extent. For example, pay is based on performance, rather than hours worked or headcount.

The vice president of a computer company that outsourced customer service said: "The beauty of pay-for-performance is that if the contractor doesn't provide a satisfactory level of service, the contractor doesn't have to pay as much. It also helps incentivize contractors to do their best."

A penalty clause can also link compensation to performance. For example, the risk ratio clause is simple but very effective. The clause usually stipulates that 5% of the total compensation be deducted from the total compensation for which month if there is a problem, and this rate is increased if the problem continues.

By adopting these best service practices, businesses can proactively identify opportunities to increase profits in a structured manner. With cost-cutting in mind, with self-service and outsourcing, businesses can create opportunities, improve cost management, and keep customers happy.

This text is reproduced with permission from management consulting firm PRTM (www.prtm.com), their semi-annual magazine PRTM's Insight, August 2003. Translated by Xiao Dongyan.