Best-in-Class, Best Practices, or Benchmarking? Which Way Should You Go?

“Best-in-class” customer service and support is what all services organizations strive to achieve. However, many experts suggest that attaining “best-in-class” status in all aspects of customer service is – well – impossible! Even the very best customer service-focused organizations typically have one – or more – areas where they are not able to provide “best-in-class” customer support. However, whether a “best-in-class” organization really does – or can – exist, one thing remains absolutely clear: your organization must do everything it can to be perceived by its customers as being as close to “best-in-class” as possible.

In order to effectively move toward attaining “best-in-class” status, services organizations need to rely heavily on the formulation, development, and implementation of what is commonly referred to as “best practices” to support their customer service operations. The United States Government, General Accounting Office (GAO), defines “best practices” as “the processes, practices, or systems identified in public and private organizations that perform exceptionally well and are widely recognized as improving an organization’s performance and efficiency in specific areas”. The agency goes on to say that, “successfully identifying and applying best practices can reduce business expenses and improve organizational efficiency.”

However, in order to actually know whether your organization is currently performing at – or near – a “best-in-class” level, it will first need to “benchmark” exactly where it stands with respect to the customer service performance of other organizations – both in and outside of its field. This, of course, is commonly known as “benchmarking”. The American Productivity & Quality Center (APQC) defines “benchmarking” as “the process of improving performance by continuously identifying, understanding, and adapting outstanding practices and processes found inside and outside the organization.”

We like to define “best-in-class” primarily as “customer service performance that successfully addresses the gap between the organization’s performance and the customers’ needs and requirements, and taking the necessary steps to close that performance gap.” While this may not take you all the way to a “best-in-class” level compared against all industries and all other services vendors, it will at least take you to where you are providing the highest levels of customer service and support you possibly can.

The GAO suggests the following guidelines as to what “best-in-class” is all about, based on the results of the benchmarking research it has conducted in the private sector:

1.  Make it easy for your customers to voice their concerns, and your customers will make it easy for you to improve.

Nobody likes to receive constructive criticism or have someone complain about their customer service performance to a supervisor. However, you should accept every customer-voiced concern or complaint as just another one of your “marching orders” to improve – or fine-tune – your organization’s customer service and support skills.

2.  Listen to the voice of the customer.

Customer service leaders demonstrate their commitment to resolving customer concerns by listening directly to the voice of the customer. By investing your time in communications with your customers, the payoff will be an easier path to get the job done – regardless of whether it is a service call, responding to a customer request or inquiry, or anything else that the customer feels is important.

3.  Respond to customer concerns quickly and courteously with common sense, and you will improve customer loyalty.

Customers tend to “reward” vendors who can quickly – and repeatedly – resolve their problems by remaining loyal customers. Quick problem resolution can add greatly to the foundation that you are trying to build in support of customer loyalty – and repeated quick problem resolution will all but certainly “close the deal”.

4.  Resolve problems on the initial contact – build customer confidence, and save money.

A customer callback that requires two or more company personnel to follow-up will typically cost much more than a call that was handled right the first time. Resolving a customer problem on the initial contact can also significantly build the level of confidence your customer has in your organization’s ability to get the job done. And once you earn this level of trust, it will be difficult to lose it.

5.  Technology utilization is critical in problem resolution.

Your company probably already uses a number of technology-based tools to support its field engineers’ ability to quickly resolve customer problems – but they need to use them! These tools should be used – as a matter of course –as support in providing customers with quick and effective solutions.

6.  Continue to train your employees in customer service and support.

Regardless of what customer service training you may have provided to your employees in the past, chances are they already need more training in order to remain effective. There are always new technologies and tools being developed to support their ability to provide “best-in-class” customer support.

7.  Focus on getting the job done; not just dealing with the symptoms.

If routine equipment and/or customer problems are effectively being resolved initially at the front-line, company management can focus more on improving the core processes, policies, and guidelines that drive customer service performance and customer satisfaction throughout the organization. “Best-in-class” companies use formal processes to, first, identify the problems and; then, to empower their employees to resolve them as quickly as possible.

The main lessons to be learned from approaching customer service from a “best-in-class” perspective are as follows:

  • Satisfying the customer must be your top priority.
  • View customer concerns and criticisms as opportunities for improvement – not just as problems.
  • Make it easier for customers to voice their concerns; this will make it easier for your service engineers to resolve their problems.
  • Effective customer service and support relies heavily on two-way communications
  • Well-managed customer service and support processes make everybody’s job easier – and customers more satisfied.

All of the tools you need to become a “best-in-class” provider are already in your hands; but, you have to make them available to all of your employees – along with the empowerment to use them!

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SFG℠’s Analyst Take Perspective on the PTC – Rockwell Automation Partnership

Rock Solid? Or, Just Another Stop Along the Way to PTC’s Next Partnership and/or Acquisition

On June 11, 2018, PTC, a global leader in assisting companies to “reinvent the way they design, manufacture, operate, and service things in and for a smart, connected world”, and Rockwell Automation, “the world’s largest company dedicated to industrial automation and information”, announced that they have entered into a definitive agreement for a strategic partnership that is expected to “accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology”.

Based on a comprehensive review, augmented by interviews with key PTC executives, SFG℠ believes that there are many aspects to the PTC-Rockwell Automation partnership that are generally positive, with only a few potential red flags that may potentially become somewhat problematic down the road. Basically, it will all depend on the ability of both organizations to execute effectively, and in sync with one another.

[To download a complimentary copy of the full SFG℠ Analysts Take paper that provides additional details, please click on the following Weblink: @@@ PTC-Rockwell Partnership Analyst Take Paper (18-07-24-01)]

Service Lifecycle Management: The Catalyst for Integrating All of the Organization’s Services Operations

The concept of Service Lifecycle Management, or SLM, has been around for some time now; however, the tools and technologies used to actually make it work within the organization are still emerging and evolving. Not only that, but as they continue to evolve, they also build upon themselves to provide users with more power and flexibility to manage their services operations than ever before.

The upside of this growth in empowerment is that if your organization has already implemented SLM, then it is already on the fast track toward being able to effectively manage its total base of capital equipment, mission-critical assets, and human capital. The downside, however, is that if you have not already embraced the concept, you may be wasting precious time.

We define SLM as “a solution that supports the complete service lifecycle, from lead generation and project quotation, to service and billing, through asset retirement”. We further define SLM to encompass the integration and optimization of critical business processes including the contact center, field service, depot repair, logistics, professional services, and sales and marketing. We believe a comprehensive SLM suite also extends into portal, business intelligence, data analytics, dynamic scheduling, and mobile solutions; and must be applicable to services providers supporting customers in all vertical segments, and in all geographies.

While we have witnessed a great deal of growth in the acceptance of SLM over the past several years, many services organizations still find comfort in relying on their existing solutions essentially on an à la cartebasis. That is, they may have a Field Service Management (FSM) solution already in place, along with Customer Relationship Management (CRM), Services Parts Management (SPM), Supply Chain Management (SCM), Warranty Management (WM), Asset Management (AM) and others. The problem is, however, if these individual solutions and applications do not interact with one another, the organization will not be benefiting from the full value of their collective – once integrated – impact.

In an age where FSM, CRM, SPM, SCM, WM, AM and all of the other acronym-based solutions simply cannot cut it in and of themselves, only SLM addresses each of the factors that are important to services organizations for whom downtime is not an option, and resource utilization directly impacts financial performance. This is what SLM is designed to do, and an SLM solution is what the most progressive types of services organizations are now using to differentiate themselves from the also-rans.

The servicesmarket is constantly looking for proven solutions, based on practical business operations functionality, and powered by the latest technologies, to maximize their respective bottom lines. As such, the primary drivers behind the growing acceptance of SLM are also fairly universal – and quite compelling – as business managers across-the-board are essentially looking for the same things. Things like the ability to:

  • Streamline and automate their business processes;
  • Compress the contract-to-cash cycle;
  • Identify incremental sales opportunities and improve revenue recovery;
  • Collapse non-value-added workflows;
  • Enhance resource utilization and reduce downtime;
  • Coordinate the efforts of their sales, marketing and service organizations;
  • Improve compliance with Service Level Agreements (SLAs), contracts and warranties; and
  • Synchronize every customer touch point for increased customer satisfaction and retention.

While other disciplines like CRM, SCM, WM AM, et al, may only address one, two or more of these drivers, only SLM addresses them all – and this is critical, as no organizations in today’s business economy either have the time, resources or money that would allow them to build an effective service delivery model, piece- by-piece, on a non-interrelated basis, and hope to have it function as an all-encompassing solution. Only SLM affords them this opportunity.

Service Lifecycle Management is a fluid, or dynamic, discipline. It is also an agile tool that can evolve with the trends in the market, the needs of the user, the integration of new technologies, and the evolving goals and objectives of the customer. Choosing the right SLM solution to get started is critical; but so is the need to choose the right vendor, as well as the appropriate technologies to make it all work. It is not just another acronym – like CRM – to simply be tossed around interchangeably with customer service or satisfaction, asset or supply chain management, or any of the other “acronym” solutions and applications.

SLM is virtually a living, breathing entity that helps poorly run businesses run better, marginal businesses run more profitably, and well-run businesses excel in their markets as acknowledged leaders in customer satisfaction and profitability. The concept itself is sound, the technology is readily available, the need is irrefutable, and all you need to move forward is the recognition that there is an SLM solution out there that meets your organization’s specific – and often, unique – needs. By choosing the right solution, fully supported by the right vendor, and empowered by technology, your organization will certainly have a better chance of thriving in an increasingly complex and customer-focused business environment.

The Importance of Truly Knowing Your Customers

The field technician’s role in supporting its customers may be extremely varied, and no one job description is likely to be able to describe or define everything he or she does – either from the customer’s perspective, or from the organization’s. In some cases, a field technician is called on to be nothing more than the repair person – they arrive on-site, fix the equipment, and leave without causing any undue disruption; however, in other cases, they may serve as anything from a consultant (i.e., being asked to provide advice on how to most efficiently use the equipment), to a trainer (i.e., being asked to teach the customer how to operate some of the equipment’s more advanced features), to a sales person (i.e., being asked to suggest what new types of equipment should be acquired to replace the existing model), etc.

If the question is “Which one of these roles is the field technician supposed to play when interacting with its customers?”, the answer is – simply stated – “All of them!” The customer will, at one time or another, expect their field technicians to serve in all of these roles, as they will typically be the only representative of your company that physically visits or speaks to the customer once the original equipment sale has been made (save for an occasional sales call made as the equipment nears the expiration date of the warranty or service agreement, etc.).

Basically, field technicians need to serve in whatever role their customers expect them to serve as they will be their only “true” connection to the company that provides them with their operating systems and equipment service and support. The irony is that, if all they do is repair the customer’s equipment whenever it fails, they will typically be perceived as “not doing their job”. However, by also becoming their customers’ systems and equipment consultant, advisor, and (pre-)sales person – if only on a casual, or as-needed basis – they will certainly place themselves in a stronger position to become the most important individual to the customer with respect to any and all of its systems and equipment service and support needs.

It doesn’t take customers a very long time to get to know who their field technicians really are. In fact, with just a few on-site service calls under their belt, they probably will get to know them very well in terms of how well they communicate with customers; how quickly they react to what they would define as “emergency” or “urgent” situations; how quickly they tend to arrive on-site; and how much attention they pay to the details once they get there.

Can your organization say the same for each of its customers? If the answer is “no”, you may find yourself in a situation where your customers are “managing” their relationships with you better than you are with respect to managing them. If this is the case, you may ultimately find yourself at a relative disadvantage in dealing with your customers in the future – especially if they believe that you don’t really know who they are (i.e., what makes them “tick”; what “ticks” them off; etc.).

So, what do you really need to know about your customers? It once again comes down to having a basic understanding of their specific and unique needs, requirements, preferences, and expectations for the types of service and support you provide, and the way they react when their equipment goes down. And, how can you best get to know your customers on this basis? By listening, observing, and thinking before you speak!

However, while understanding the customer’s need for basic systems and equipment service and support is relatively simple, understanding their need for “value-added” service and support may be a bit more complicated, as their interpretations of exactly what “value-added” means may be “all over the place”.

From the customer’s perspective, “value-added” may mean anything from performing additional maintenance service on peripherals hanging off of the equipment; to servicing additional equipment while the service technician is already on-site; to installing new software; to installing another piece of equipment they had recently purchased from your company that you were not even aware they had; to walking them through an unrelated problem that they might be facing; to anything else in-between.

While these may all represent realistic “needs” from the customer’s perspective, it will ultimately be up to company policy (and the service technician’s daily schedule) to determine what really represents acceptable “value-added” service and support while the service technician is already at the customer site – and what will require an additional, or separate (and, sometimes, billable), work order.

Some examples of the various types of value-added service and support that both the service technician and its customers may agree on while the tech is already on-site may include:

  • Answering questions or inquiries about other installed equipment that they presently have covered under a service agreement with the company;
  • Double-checking the integrity of the connectivity and/or interfaces that the equipment that was just repaired has with other units in the user’s network;
  • Ensuring that everything that was just worked on is operating properly, doing what it is supposed to do, and interfacing properly with other systems and equipment; and
  • Assessing whether there are any other potential problems or possible “flags” that both the service technician and the customer should be aware of before closing up the equipment and leaving the customer site.

Other types of value-added service and support that may be requested include showing the customer how to operate the equipment more efficiently after they have told you what they were doing that ultimately caused the machine to jam, crash, or otherwise stop working in the first place.

While it is not necessarily the service technician’s role to provide on-site, on-the-job training to its customers, it is still within the realm of his or her responsibility to ensure that they are operating the equipment properly, and performing their own equipment maintenance and management (as permitted) in an appropriate manner (i.e., neither neglecting nor abusing the equipment during the normal course of operation).

The bottom line is that you really do need to know your customers, because they probably already have you (and your service technicians) figured out!

Stepping Up to a “World Class” Service Delivery Model

Many businesses that have historically striven to provide their customers with merely “satisfactory” levels of customer service and support have now begun to move closer to a “world class” service delivery model in order to provide their customers with “total support” beyond merely product acquisition. Today’s customers are looking well beyond the product, and are focusing just as much on other pre- and post-sales support offerings such as implementation and installation; equipment training, field and technical support, Web-enabled self-help; remote diagnostic and predictive support capabilities; professional services, including consulting and application training; services management outsourcing; and a whole variety of other value-added services. More importantly, many are still wondering when their primary suppliers will truly be able to provide them with the levels of “world class” service delivery they now require!

In fact, we believe that now represents a critical time for virtually every business to update, or refine, its strategic plan for moving closer to a “world class” service delivery model. This plan may encompass many components, including:

  • Reassessing the company’s existing customer service and support mission, goals and objectives, capabilities, resources, and infrastructure;
  • Identifying and prioritizing the existing and emerging customer/market demands, needs, requirements, expectations, and preferences for customer service and technical support, across all classifications of the company’s market base; and
  • Developing specific recommendations for action with respect to the engineering/reengineering of the existing services organization and processes in an effort to arm the company with a more competitive – and effective – “world class” service and support portfolio.

In more specific terms, the overall goals and objectives of such a planning effort, simply stated, should be to:

  • Examine, analyze, and assess the company’s service and support mission with respect to its desired ability to ultimately provide customers with a full range of service and support offerings that will position the company as a “world class” product and services provider;
  • Identify, from management’s perspective, what the most important elements of a “world class” service operation would be expected to comprise, and within what framework it would envision such an operation to be created and managed;
  • Determine, from the customers’ perspectives, where the company should direct its primary attention with respect to creating a more customer-focused service and support organization and service delivery infrastructure;
  • Define how the desired service delivery organization should be structured in terms of human resources, roles, responsibilities, and functions; organizational components and structural hierarchy; internal vs.outside components (i.e., in-house vs. outsource); strategic partnering and channel alliances; management and staff training; and other key related areas;
  • Recommend how the optimal service operation should be structured in terms of defining and establishing the appropriate service operations, processes, and procedures; logistics and resource management controls; operating targets and guidelines; management control and performance monitoring parameters; and other key related areas; and
  • Provide specific recommendations for the establishment of a more “flexible” services organization and operational infrastructure that addresses all key elements consistent with the delivery of “world class” service and support to the company’s present and projected marketplace.

The specific areas where the services and support strategic marketing plan should focus include:

  • Identification of customer needs and requirements for “World Class” service – including recommended goals, targets, and desired service parameters based both on input/feedback gathered from existing and potential customers, as well as from an assessment/evaluation of other state-of-the-art service organizations/operations in the general marketplace.
  • Composition of the recommended customer service and support portfolio – including the development and packaging of a “tiered” customer service and support portfolio matched directly against the specific needs and requirements of both existing and prospective customers.
  • Service operation structure and processes – including recommended service and support operations supporting the overall service portfolio, focusing on customer service, call handling, help desk, technical support, on-site support, order entry, call logging, administrative, and other processes (to be determined).
  • Determination of key performance indicators – including identification and recommendations for the selection of the most appropriate industry metrics, and guidelines for measuring and tracking service performance over time.
  • Definition of service organization, functions, and responsibilities – including recommendations for the general structure, roles, and responsibilities of the service organization and infrastructure; inter- and intra-departmental roles and responsibilities; organization functions and activities; updated job descriptions; in-house vs.outsourcing decisions; channel management; etc.
  • Selection of operational tools – including recommendations for the most effective use of information and communications technology (ICT) tools, services management and CRM software, and other segment-specific support tools, etc.
  • Formalization of the implementation plan – In-house: including system selection, investment plan, organization development, training, etc.; and outsourcing: including strategic partner selection criteria, performance measurement/management requirements; and general timeframe and rollout plan.

Providing customers with “world class” customer service and support is generally not achievable without a well thought out and orchestrated “world class” planning effort. Good products don’t sell themselves anymore than they service and support themselves. All of these functions must first be developed and implemented as part of an overall business plan. However, we believe that the most successful – and profitable – businesses are those that have managed to effectively deal with both sides of the issue – that is, they know how to sell, and they are prepared to service and support the “total” needs and requirements of their constituent market base. And, by doing it on a “world class” basis, they can benefit from one of the most effective competitive differentiators.

If your organization still operates primarily as a manufacturing- or product-focused business, if service is managed basically as a cost center, or if it is still using the same service delivery model it has used for as long as you can remember, it may be totally missing the boat! Regardless of what product lines your organization has historically manufactured, sold, or distributed, one thing remains certain – your customers want “world class” service and support, and the only way you will be able to provide them with what they want is to plan for it; implement an effective service delivery strategy; acquire all of the necessary tools,  and get all of its resources and processes in place – and, then, roll it out and reap the benefits!

Knowing What and How to Cross-Sell and Upsell

Every business has a portfolio of products and services that it markets, promotes, and sells to customers. In fact, most businesses make their product and service portfolio information available through a variety of means, including published product literature and general marketing collateral, service guides, company catalogs or brochures, and various other types of printed matter. In addition, most of the product and service information is also typically accessible viathe Internet through company and/or dealer Websites, trade association or other industry clearinghouse Websites, online commercial buyers guides and/or directories, and others.

However, even your own company’s brochures or Website may not be 100% complete – or completely up-to-date – with respect to the information it provides on its portfolio of products and services. In fact, in a competitive marketplace where new products and services are being introduced on a virtual daily basis, it is more than likely that some product and service information may be missing – and most likely, these will be the newest additions to the overall portfolio. Further, what the company may make available to the general marketplace, may not yet have landed on the desks – or the desktops – of your customers.

You can probably assume that most of your customers do not keep running tallies of the various advances that are being made to the products and services that have been using for some time. Nor do they typically keep brochures or copies of new product and service information in a readily-accessible file folder. Outside of your more sophisticated and organized accounts who monitor such things as the ongoing cost of utilization of their systems and equipment, or expected product life spans and/or life cycles, and build all of this information into their annual planning processes, it is a safe bet that most customers will not begin collecting information on new products or services until their older products stop working, or the existing service level agreements are no longer doing their jobs.

For this reason, your company will be depending largely on its field technicians to make sure that you are always current, up-to-date, and well-informed on the various types of products and services it offers. In fact, if they are doing their jobs properly, they should have a more current, comprehensive, and accurate “read” on the company’s products and services than any other single document, brochure, web site, or other piece of marketing collateral.

After all, the technicians are the ones who are out in the field every day dealing with dozens of customers and all types of equipment – small, large, new, old, and everything in-between. They have probably already attended all of the most relevant training classes, or have seen a demo, for all of the new types of equipment well before the market base has even learned of their existence. They have probably even installed some of the newer products for which your company may not yet have released a formal brochure or product spec through its typical customer, dealer and/or media channels.

As a result, who better than your field technicians to know what products are available, why they may be better in some business applications than some of the company’s historical products, and which of their accounts may benefit from adding some of these new products to their own installed base of equipment? The answer is, of course, nobody else does – certainly, nobody else who deals directly with the company’s customer base on a day-to-day basis.

The bad news is that they may never actually gain access to all of the company’s new product and service information on an automatic basis. There are just too many products and services to keep track of – both new and old, and too many individual sources of information that keep passing across their tablets, through texts, or via e-mail.

The good news, however, is that it should be relatively easy for them to keep their own tabs on what new products and services are becoming available, and immediately see opportunities for where it may be beneficial to make some suggestions to some of their accounts with respect to replacing older equipment, upgrading to higher-volume machines, or generally stepping up to a more efficient business system.

They should also already have a good understanding of what the specific needs and requirements of their customers are with respect to their existing products and services; and by keeping current with the new products and services that are continually being made available, they will find themselves in an excellent position to assist their customers in matching these new products and services to their evolving needs – or basically upselling them to a more efficient operating scenario.

When you think about it, upselling should be a lot easier than making the original sale. The rationale behind this is that in order to make an initial sale you’ve got to take non-customers, and convert them into customers by selling them something for the first time. However, in order to upsell, all you have to do is sell an existing customer an additional one of your company’s products or services. What makes this easier is that once a customer has already been “sold” on your company’s reputation, qualifications and capabilities, it does not have to be “re-sold” on the company before it makes a second, or third – or twentieth – purchase.

By the nature of the word itself, “upselling” is different than “cross-selling”. When you “cross-sell” a customer, you are typically selling them a companion piece of equipment or service to what they already have. For example, if one of your customers already has an extended warranty contract on one piece of installed equipment, but not on another, you may find it relatively easy to “cross-sell” them an extended warranty on the second unit as well. Or, if a customer is already receiving preventive maintenance support on two of their three units, you may be able to sell them a PM contract for their entire installed base. Basically, in these cases, “cross-selling” simply means selling the customer “more of the same”, or more variety for the same base of equipment.

However, upselling is more vertically-focused than cross-selling. By that, we mean that upselling goes beyond simply selling your customers “more of the same”, typically involving the sale of upgraded, enhanced, and/or upscaled products and services. For example, if a customer currently has three older units installed, but you believe that they can actually handle more throughput, at less expense, by upgrading to two of your company’s newer units, this could conceivably lead to an upselling opportunity. In addition, if one of your customers is repeatedly calling for service on a time and materials basis, this may represent a good opportunity to upsell them to an extended warranty service agreement instead.

The best way to decide whether a customer sales opportunity would be better represented as a “cross-sell” or upsell situation is to first determine what the specific customer needs are. In situations where a customer’s business systems and services needs are fairly static, and the existing equipment appears to be meeting most of their requirements on a regular basis, you may still be able to “cross-sell” them additional units, or certain add-on coverages to an existing service level agreement (i.e., more frequent PMs, remote diagnostics, extended hours of coverage, etc.) as a means for making them somewhat more productive in the way they utilize their equipment (and the company’s services).

However, for customers whose businesses are continually growing or expanding, whose needs are becoming much more demanding (i.e., using new technical applications, increasing throughput quotas or expanding the number of daily shifts, etc.), or who are continually outgrowing their existing installed base, perhaps these represent situations where upgrading to an entirely new suite of business systems, or moving to a much more all-inclusive extended warranty agreement, would be a more logical solution.

Sometimes a cross-sell solution is all that is required to keep the customer operating at full efficiency; however, in some cases, it will only be an upsell solution that takes the customer to where it needs to be in order to utilize its equipment at maximum, or optimal, efficiency. The better you understand your customer, the better prepared you will be to determine whether a cross-sell or upsell solution is required.

The Global Warranty Services Community Is Reflecting a Return to Growth – and Profitability!

[The following Blogpost is an edited version of the article originally published in the May 3, 2018 issue of Warranty Week (i.e., accessible at: http://www.warrantyweek.com/archive/ww20180503.html.) For more information on the “The State of Warranty Management in 2018 – and Beyond”, we invite you to register for our upcoming Webcast on Thursday, May 24, 2018. To register, simply click on the following Weblink: http://app.demand.ptc.com/e/es.aspx?s=2826&e=2100908&elqTrackId=c346145430f045a9a4a8ab0ad69df3d1&src=View_Online&elq=ec4b7ad031c5442e85dca16a47774a24&elqaid=29101&elqat=1.]

After conducting its fourth annual Warranty Chain Management Benchmark Survey, Strategies For Growth℠ president and principal consulting analyst, Bill Pollock, has put together a results package consisting of an Analysts Take paper and companion Webcast on the subject of “The Global Warranty Services Community Is Reflecting a Return to Growth – and Profitability”. The Webcast will be hosted by PTC iWarranty on May 24, 2018. PTC will also be making the companion Analysts Take paper available via download at the same time.

According to, Pollock, “The 2018 survey results reveal that nearly three-quarters (71%) of respondents believe effective warranty chain management to be at least ‘very important’ to the overall financial performance of the business, with just under a quarter (22%) believing it to be ‘extremely important.’ The results further reveal that this sense of importance continues to increase substantially, year-over-year, as one-quarter (25%) believe effective warranty chain management to be ‘more important than one year ago,’ compared to only 3% believing it to be ‘less important’ – a ratio of roughly 8:1 citing ‘more important’ over ‘less important’. As such, we know the segment is based on a sound foundation moving forward.”

Managing Extended Warranty Programs

Presently, 85% of respondent organizations manage at least some portions of their extended warranty programs in-house, including 78% that do so entirely. As such, it becomes incumbent to ensure that they have the most effective tools and resources available to maximize the impact that sales of extended warranties can bring to the bottom line. Metrics such as warranty accrual and warranty renewal rates become critical in their respective efforts to maximize projected revenue streams and build a stronger customer account portfolio over time.

The survey results also reveal that, presently, more than a third (36%) of respondent organizations expect their annual warranty budgets to increase over the next 12 months – with 20% expecting increases in excess of 10%! During the same period, only 17% expect decreases, with most (i.e., 14%) being of less than 10%. All told, the ratio of organizations expecting increases in their annual budgets is more than twice that of those expecting declines. 

Warranty Management Organizations Are First and Foremost, Customer-Focused

The respondents to the survey have also once again clearly identified the specific drivers that are pushing them to aspire to the attainment of higher levels of performance. In fact, they have provided responses that solidify that there are three main “clusters” of factors that drive their respective businesses: Customer-focused, Product Quality-focused and Revenue/Profit-focused – and in that order.

For example, among the Customer-focused drivers, post-sale customer satisfaction issues (58% – up from only 42% in 2017!), the desire to improve customer retention (42%) and customer demand for improved warranty services (35%) remain as the top three drivers with respect to optimizing overall service performance. No other drivers are cited by more than just over one-quarter (28%) of respondents.

The next “cluster” of drivers is Product Quality-focused, and is represented solely by dealing with inferior/deficient product quality at 28%. The third “cluster”, Revenue/Profit-focused, is comprised of two closely-related drivers: internal mandate to drive increased service revenues (26%) and internal mandate to improve service profitability (25%). As such, the warranty chain management community has made it clear that it is squarely focused on, first, satisfying – and retaining – its customers; second, dedicated to improving product quality-related issues; and third, mandated to drive increased warranty revenues – and profitability – through improved warranty management services – again, in that specific order.

These results signify a continuation of the relative “normalcy” that has characterized the Warranty Chain Management segment over the past several years – that is, a return to focusing on customers, rather than spending most of their time and resources wrestling with cost reductions and other financial issues. Obviously, while financial considerations are still critically important, the industry focus has shifted back, as it always does, squarely on the customer’s needs, requirements, preferences and expectations.

The Benefits Realized by Improving Warranty Management Activities Are Many

The number one benefit realized by warranty management organizations through the improvement of their respective activities is improved customer satisfaction (62%). No other single factor is cited by more than 38% of respondent organizations. The next greatest benefits cited by respondents include: reduced service and warranty costs (38%), enhanced product and service performance (35%), improved warranty operational efficiencies (33%) and improved customer retention (33%).

Based on the survey results, Pollock suggests that, “the top benefits realized by improving warranty management activities closely align with the key drivers that influence services organizations; namely, that they need to continue to place their principal focus squarely on the customer, with the end goal being to improve customer satisfaction and retention.”

Complacency with Their Current Warranty Management Solution

However, building upon the survey findings from previous years, a majority of warranty management solution users are notas duly impressed with the vendors that are currently providing these solutions. For example, Pollock claims that “only 40% of respondents are presently ‘satisfied’ with the services and solutions provided by their primary warranty management solution vendors – including a stunningly low 2%, or only one-out-of-50, who are ‘extremely satisfied’. These percentages reflect a further downtick from just one year earlier.”

Pollock believes that there are probably a number of reasons for why users are not particularly happy with their current WCM solution vendors: “In talking to a number of warranty chain managers over the past several months as part of our benchmarking program,” Pollock claims, “many have said they are unhappy with their current provider because their needs for this year and beyond are simply no longer being met by their existing warranty management solutions that may have been implemented a number of years earlier. Basically, their needs have raised the bar regarding what they now expect out of their solutions; but, in many cases, their vendors have not raised their own bars in terms of performance delivery.”

Madhu Kunam, director of software development at PTC for the iWarranty product, concurs with Pollock, but adds that, “Even with an implemented warranty management system, the “still manual” processes may make the overall system inefficient or unproductive.” He goes on to say, “Other reasons may include that the features and functions of the existing vendor-supplied solution do not work as advertised, due to a poorly implemented system, or one that has been constantly plagued with bugs.

“It may also be that the vendor-supplied solution simply doesn’t deliver the expected value, or that the vendor is either unable or unwilling to help with consulting or professional services support – or is not able to provide other types of customer-specific support. Then again, it might all just be about cost – although a solution structured for small and medium businesses and sold on a subscription pricing basis can certainly mitigate any problems in this area!”

However, these are only some of the potential problems that he believes PTC’s iWarranty solution can help its customers avoid. For example, Kunam explains that, “PTC’s warranty management approach defines, manages and analyzes all of the organization’s warranty processes from initial product registration through to the end of the standard or extended warranty period. This unique approach to warranty analytics and service lifecycle management focuses on a product-centric data model that allows users to manage warranty information and capture service history in the context of the product itself, thereby allowing this important data to provide feedback to the enterprise for continuous product and service improvement.

“In this way, no matter how high the customer raises the bar, or how customer-specific the solution needs to be, PTC stands ready to support its customers in all facets of their warranty operations. PTC believes that this is one of the key areas that can make a difference between a satisfied customer, and a dissatisfied one.”

On May 24, 2018, PTC will be hosting a complimentary hour-long webinar featuring the executive-level results of this survey, to be presented by Bill Pollock. It will also be making available the companion Analysts Take paper that provides further insights relating to the findings. To register for the Webcast, or to obtain a copy of the companion Analysts Take paper, simply click here: http://app.demand.ptc.com/e/es.aspx?s=2826&e=2100908&elqTrackId=c346145430f045a9a4a8ab0ad69df3d1&src=View_Online&elq=ec4b7ad031c5442e85dca16a47774a24&elqaid=29101&elqat=1.