Recently, I had a very candid conversation with a CEO who I’ve known for a long time but who has never shown much interest in elevating service at his business. During that conversation he said something like, “Joseph I know you believe service is an important value proposition and intuitively it makes sense BUT I can’t monetize the value of service”
Well, I am glad I had reviewed Service Economics by Downton, Rustema and Van Veen before my CEO friend shared his quandary. As you probably know Service Economics was based on three years of research funded by Oracle analyzing the service industry. The goal of the research was to uncover and understand productive service strategies and examine if excellent service really did produce tangible financial rewards.
So imagine you are a fly on the wall, as I gear up my response to my CEO friend…
“Funny you should ask, the data from the Oracle study suggests that companies who successfully execute a high service value strategy enjoyed annual growth rates of 20-40%. By broadening the role sales people play and functionally availing them to serve as trusted advisors, businesses on average enjoyed a 20% sales increase. Companies that effectively made improvements in customer experience which lead to a 5% increase in customer loyalty consistently enjoyed profit increases between 25 and 85% and did I mention that successful service initiatives consistently resulted in productivity improvements which in turn produced annual profitability on both gross and net margin.”
My friend, who realized he had thrown a slow hanging curve ball right down the center of home plate, followed-up by asking how those companies changed their service culture to derive such benefits? Honestly, I tried not to pounce on that question with the ferocity of my first response but it is hard to hold back on things you are passionate about so I said….
“The path is clear. Leaders in those companies took a hard and long look at their actual strategies and realized that they were often overly product focused. They also were quick to market with new service offerings which were designed around the needs of consumers not around what the business wanted consumers to buy. Those leaders also committed to creating different customer experience offerings for different consumer segments and customized service as much as possible for consumers who represented the greatest overall value. These service oriented businesses also served customers through the preferred channels of those customers and viewed service in the context of an immersive experience and not simply through transaction.”
I bet you can guess what happened next. Yes, my friend stopped asking me questions.
However, a week later I did get a call from his CFO inquiring about my consulting services.
For far too long, “improving service” was one of those intangible good ideas that business owners and leaders often talked about, thankfully recent research findings have crystalized the benefits of creating an exceptional service experience and a lot of talk is turning into action.
You don’t have to wait for the data any longer… its time to keep taking steps to elevate your service culture. What will your next step be? A shift in emphasis away from product to service. Maybe its a customer survey looking for unmet needs or preferred channels of service delivery.
Whatever you do, I recommend not asking me questions about service excellence because you don’t have time for my answers. You have better things to do in order to drive greater customer loyalty and 25 to 85 increases in profitability.