How Service Managers Can Meet Today’s Most Pressing Service Management KPIs: MSI Data’s Interview with Bill Pollock

Field service industry expert, Bill Pollock, explains how service management KPIs in 2016 are shifting back to the basics, although the ways they measure and exceed those goals are changing fast.

[Reprinted, with permission, from MSI Data.]

A seasoned field service analyst, Bill Pollock, president and principal consulting analyst at the Westtown, Pennsylvania-based research analyst firm Strategies For Growth (SFG), has his eye on service industry standards and provides no shortage of advice for service managers looking to run a top-flight field service department.

In this interview, Bill breaks down how business leaders can improve key metrics, such as profitability and customer satisfaction and what service managers can to do exceed key performance indicators (KPIs) using today’s technologies.

Today’s service KPIs are back to the basics, but also back to the future

Even though there have been many changes in how companies do business, and there are many new technologies that have transformed business processes, many of the traditional service KPIs have stayed the same. For example, customer satisfaction is still #1. “The best practices organizations have 90% or higher customer satisfaction,” said Bill.

Service Management KPIs

Here are the top KPIs Bill highlighted for today’s service organizations:

1. Customer Satisfaction
2. Total Service Revenue
3. Total Service Cost
4. Technician Utilization

Returning to Normalcy: The Evolution of Service Management KPIs

In fact, the priority of these top KPIs have evolved significantly in the last decade.

“Recently, we’ve been seeing total service revenue surpass service cost. In 2016, we’re seeing 72% of organizations looking at total service revenue, and 69% at total service cost.”

While this isn’t a huge difference in percentage, it’s reflective of the trend to increase revenue from service since the cost-cutting days of the 2008 recession. According to Bill, best practices organizations are more focused on revenue than cost.

“During the recession, KPIs were cost oriented: cost, per product; cost, per field engineer; cost for service. But, after 2-3 years, the most aggressive – and progressive – organizations had cut all the costs they could, and the market started coming back to revenue generation.”

Service organizations are prioritizing revenue-production over cost-reduction. But, in 2016 they’ve started coming back around to placing the highest importance on customer satisfaction.

“Today, now that best practices organizations have implemented everything they could to generate more revenue; they’ve come full circle, back to normalcy, and back to customer satisfaction as the most important measure of success.“

How Service Managers Can Help their Team Meet KPIs

As a service manager, it’s one thing to set goals and another to meet them. Empower your team to meet the KPIs you’ve set by following these tips:

  • Set targets: Decide on the baseline, and define standards or targets. Then create a plan to reach them.
  • Define a scoring methodology: Determine how you’ll measure success and assign individual scores that roll up to a total score for each category; for example:
    • 95-100% = Exceeds expectations
    • 85-95% = Meets expectations
    • 0<85% = Does Not Meet expectations
  • Link KPIs to critical factors that drive the performance of the organization. If the metric is not directly linked to a critical organization success factor, it will probably not be worth the resources to measure.
  • Assign someone to take ownership of the data coming in. If you don’t have accurate data to report on, there’s no chance you’ll achieve your goals.
    Communicate KPIs clearly to everyone involved.
  • Invest in resources necessary to achieve goals. You can’t expect someone to increase measurement in an area without listening to their needs and giving them the resources to make improvements.
  • Foster collaboration between sales and service. Give sales-reps an incentive to sell more service contracts and turn the service department into a profit center.

Technology is Changing How Service Organizations Set Goals and Measure KPIs

Manual or paper-based service processes make it nearly impossible to track the data necessary to manage and measure KPIs. That’s part of the reason why FSM software is a crucial piece of the service management puzzle. Not only does it improve service operations, it also enables you to collect the information you need to measure improvements.

“You could be looking at the right KPI for your business, but calculating it the wrong way. You can use technology to figure out what the problem is. Then, once you know the problem, it’s a synch to fix.”

Conclusion: Always Room for Improvement

In closing, Bill emphasized the importance of continuous improvement and measuring success. “Even if what you’re doing is rated as excellent today, you still need to improve it. How are you going to do that? You need to measure where you are and make improvements from there.”

Even if you’re turning a profit today, if you’re not taking steps to stay up-to-date and relevant, you’ll find yourself slipping to competitors.

Bill suggests that “Now is your time! You have the technology; you’re collecting the data. Now you have to use it effectively!”

____________________________________________________________________

Bill Pollock is President & Principal Consulting Analyst at Strategies For Growth (SFG), the independent research analyst and services consulting firm he founded in 1992. In 2015/2016, Bill was named “One of the Twenty Most Influential People in Field Service” by Field Service News (UK); one of Capterra’s “20 Excellent Field Service Twitter Accounts”; and one of Coresystems’ “Top 10 Field Service Influencers to Follow”. He writes monthly features for Field Service News and Field Service Digital, and is a regular contributor to Field Technologies. Bill may be reached at +(610) 399-9717, or via email at wkp@s4growth.com. Bill’s blog is accessible @PollockOnService and via Twitter @SFGOnService.

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Building a Best Practices Warranty Management Program for 2016 – and Beyond

How Best Practices Organizations Are Positioning Themselves to Drive Revenues, Reduce Costs and Compete More Effectively

Putting Warranty Management Metrics in Perspective

Each year, Strategies For GrowthSM (SFGSM) conducts a series of Benchmark Surveys among its outreach community of more than 40,000 global services professionals. Total responses for the updated 2015 Warranty Chain Management Benchmark Survey, conducted over a six-month period ending in Q3 2015, are in excess of 225

Overall, global survey respondents identify the following as the top factors that are currently driving their ability to optimize warranty management performance:

  • 56% Desire to improve customer retention
  • 50% Post-sale customer satisfaction issues
  • 37% Customer demand for improved warranty management services
  • 27% Product defect-related costs
  • 24% Mandate to improve service profitability
  • 21% Mandate to drive increased service revenues

However, in order to effectively execute on each of these drivers – and strive to attain Best Practices – respondents then cite the following as the most important strategic actions already in place at their respective organizations:

  • 52% Develop / improve metrics, or KPIs, for advanced warranty chain analytics
  • 39% Streamline parts return process to improve overall efficiency
  • 35% Improve warranty management-related planning and forecasting activities
  • 32% Restructure for improved Warranty Management oversight & accountability
  • 31% Foster a closer working collaboration between product design & service

How well an organization steps up to each of these drivers by taking the most appropriate – and effective – strategic actions will ultimately determine its prospects for successfully attaining a desired Best Practices position in the global warranty management services marketplace.

Based on the updated results of the original SFGSM benchmark survey, this report provides additional insight into each of these and other related areas that may be impacting your organization’s ability to attain Best Practices with respect to its overall warranty chain management processes – and it all starts with the need to have a full understanding of the numerous processes, policies and procedures used to run your warranty management operations, coupled with the development of a Key Performance Indicator (KPI) program that can be used to measure your success all along the way.

For the purposes of this report, we define Best Practices Warranty Management organizations as those that have attained both 90% or higher customer satisfaction, and reflect average warranty claims processing times of four days or less. Accordingly, approximately 11%, or 25, of the total respondents are classified as Best Practices.

[To obtain a copy of the full White Paper report, or to register for the March 3, 2016 Webcast of the same name, please visit the Tavant Technologies Webcast landing page at: http://info.tavant.com/Warranty_Webinar_2016.html.]

“7 Simple Strategies to Increase Revenue in 2016” – Our Take

[The following is a transcript of the “One Simple Strategy Recommended for Increasing Revenue in 2016” material we submitted to Field Service Digital in response to their request. The full interview was published in the December 18, 2015 issue of the magazine; however, only some of this material actually made the cut (i.e., there are six other industry experts who also had their say in the Field Service Digital piece).

Read our response first, then read the Field Service Digital piece to gain a perspective from among the seven of us. A link to the magazine is provided at the end of our Blog, for your convenience.]

One Simple Strategy to Increase Services Revenue in 2016

“The best services strategies are typically the simplest ones – particularly the ones that target improved service revenues and profitability. But, whatever the strategy, it should always follow a process of ‘Measure, Assess, Adjust & Track’ (MAA&T). What that means is, whether you’re looking at overall service operations, or individual components of service, such as warranty management, parts/inventory management, customer relationship management, or the like, you will need to, first, measure where you stand today, how you got there, and where you’re likely to end up if nothing else changes; second, assess what needs to be changed, modified, upgraded or replaced; third, make the necessary adjustments to facilitate – and in many cases, expedite – change, as appropriate; and fourth, track your progress over time as you implement new and/or revised processes, policies and procedures, or new technologies.

Supported through the ongoing review of input and feedback, the process then starts all over again on a virtual continuous loop, thereby fostering continuous quality improvement that goes directly to the bottom line.

Using warranty management as an example, a sound strategy might be to (1) measure its current contribution to the bottom line in terms of revenue generation and profitability, (2) assess alternative scenarios for process improvement; (3) make changes to the current program to stimulate improved revenue generation; and (4) track your progress over time. Then, you start all over again!

The old adage goes something like, “You can’t know how much you’ve improved if you don’t know where you’ve come from” clearly supports the MAA&T approach. And the ability to continue cycling through the process time after time allows this strategic approach to foster continuous quality improvement.”

[To read the full Field Service Digital article for which this information was prepared, please visit: http://fieldservice.com/2015/12/18/7-simple-strategies-increase-revenue-2016/.]

The Evolution of Enterprise Field Service Operations

Enterprises Embracing On-Demand Workforce to Drive Growth in a Hyper-Responsive Service World

[Excerpted from the SFG℠ White Paper of the same name, sponsored by Work Market.]

Historically, Field Service Organizations (FSOs) within enterprises had a relatively easy time dealing with the staffing and management of their own field service workforce – basically, they recruited, hired, trained and placed their service technicians in strategic locations situated within a city, throughout the region, and across the country.

However, in the last several years, the field services market has grown ultra-competitive. Increasing customer expectations, pricing pressures and growing talent shortages mean enterprises are facing a perfect storm. They must find new ways to adapt in a rapidly evolving market or succumb to being left behind. And this is especially true for enterprises that are supporting a large installed base of equipment, comprised of a large variety of products, distributed in multiple geographic locations.

Historically, almost every major platform, device or piece of equipment had its own set of metrics, or Key Performance Indicators (KPIs). It was by these KPIs that services organizations – and their field technicians – could track their performance over time to ensure that the customer’s equipment was always running as smoothly and efficiently as possible – and with as little downtime as possible.

Equipment performance was optimized, for the most part, by strict adherence to a periodic schedule of both routine and preventive maintenance. KPIs such as MTBF (i.e., Mean Time Between Failures) and MTTR (i.e., Mean Time To Repair) were the two most commonly used metrics in an age when equipment typically failed up to several times a year.

Fast forward to today. The field services landscape has changed quite dramatically – largely as a result of the introduction of new and improved technologies, an intensely demanding and volatile market economy, and an increased emphasis on technician skills, training and certifications. For these reasons, many enterprises and original equipment manufacturers (OEMs) now find themselves either overwhelmed by the demands typically associated with the recruiting, training, on-boarding, managing – and paying for – their respective field service technicians. Others have decided to get out of the direct business of performing services themselves – even on their own equipment.

[Click here to read the entire white paper, compliments of Work Market, the company that provides an end-to-end Workforce Solution to help organizations manage their freelance workstream.]

[Click here to register for our July 29, 2015 Webcast on the same topic, also compliments of Work Market.]

Measuring Field Service Success: The Essential KPIs

[The following are just a few of our quotes about Field Service KPIs, taken from the April 21, 2015 issue of Field Technologies. Read the full article to learn more about which KPIs you should be measuring, monitoring and managing at your services organization.]

  • “Overall, KPIs should be directly linked to the critical factors that drive the performance of the organization. If the metric is not directly linked to a critical organization success factor, it will probably not be worth the resources and dollar expenditures to collect and process. Regardless of how your organization defines KPIs, the following factors should always be taken into account: The KPIs must reflect, and relate directly to, the organization’s stated goals; be quantitative and quantifiable; and be linked directly to the measurement of the organization’s success.”
  • “Field service organizations (FSOs) aspiring to attain best practices do not merely look at outcomes, such as improving the bottom line or increasing customer satisfaction; they also look at ways in which to identify the root causes of major problems and leverage process improvement opportunities through the implementation of effective technologies and tools to support their resources both in the field and in the front and back offices that support them.”
  • “At best-practices organizations, which are attaining 90 percent or higher customer satisfaction and 30 percent or higher profitability, the average number of KPIs used is as high as 14. The key is to measure the right KPIs.”
  • “The basic rule of thumb is, simply, that you will need to measure and track any and all areas where your organization is consistently performing below expectations. Areas that require improvement need to be measured regularly — especially before, during, and after the requisite improvements are being made. Once you hit your goals on a consistent basis, and over a long enough period of time, the specific KPIs you have been using may be ‘retired’ from active duty. They can be reinstated if, and when, your performance in those areas begins to decline.”

To read the full article, please visit the Field Technologies Website by clicking on the following Weblink (or pasting it onto your Web browser): http://www.fieldtechnologiesonline.com/doc/measuring-field-service-success-the-essential-kpis-0001?sectionCode=Articles&templateCode=Single&user=1929567&source=nl:42973&utm_source=et_6212910&utm_medium=email&utm_campaign=ISWIR_2015-05-07-DigitalMag&utm_term=BD231469-8790-42B5-9E55-F794372F4453&utm_content=Measuring%2bField%2bService%2bSuccess%253a%2bThe%2bEssential%2bKPIs

To view a companion Best Practices Service KPI Infographic prepared by Strategies For Growth℠, and sponsored by ServicePower, simply click on (or paste) the following Weblink: http://cdn2.hubspot.net/hubfs/380173/KPI_Infographic-1-1.jpeg?t=1431451714116

UK & EMEA Services Organisations Clearly Understand the Value of “Minding the Metrics”

The services sector has traditionally been guided by a succession of rules, regulations and policies that, hopefully, make us all better at supporting our customers and the global business economy, as a whole. Many of these guidelines mirror other aspects of our lives as well, such as “Mind your Manners”, “Mind your Own Business” and – of course, “Mind the Gap!” However, no guideline may be as important to the services community as “Mind the Metrics” – and this is particularly well evidenced in the UK & EMEA geographies.

In fact, a special cut of the results from Strategies For Growth’s (SFG) 2014 Field Service Management Benchmark Survey reveal that, for the UK/EMEA services community, “developing/improving the metrics, or KPIs, used to measure Field Service Performance” is the number one strategic action currently being taken, as cited by nearly two-thirds (i.e., 64%) of survey respondents.

No other strategic actions are cited by as many as half of respondents, although “investing in mobile tools to support field technicians” rates fairly high at 49%, followed by “improving planning and forecasting with respect to field service operations” at just over one-third (i.e., 34%).

This is no surprise to Steve Alderson, Managing Director at Cognito, a leading, UK-based provider of mobile workforce management solutions to field service organisations, who corroborates that “This exactly reflects what we are hearing from the industry with service organisations facing intense pressure from competitors and rising customer expectations. These survey results confirm the strong sense in the market that getting a better understanding of field service metrics is critical to improving overall performance.”

The primary Key Performance Indicators (KPIs), or metrics, currently being used by a majority of UK/EMEA Field Services Organisations (FSOs) include:

  • 78% Customer Satisfaction
  • 75% Total Service Revenue/Turnover
  • 68% Total Service Cost
  • 53% Field Technician Utilisation (i.e., time spent performing repairs ÷ total hours)
  • 53% Percent of Total Service Revenue under Service Level Agreement (SLA)
  • 51% Service Revenue, as a Percent of Total Company Revenues
  • 51% Service Revenue, per Field Technician

It is interesting to note, however, that most of the primary KPIs that were being used when many of us were just breaking into the business, while still important, are typically only used today by a minority of services organisations (i.e., on-site response time and first-time-fix-rate, each cited by 49%; SLA compliance and mean-time-to-repair/MTTR, each cited by 47%; and several others). However, what the data do not show is a diminution of importance among the old ‘tried and true’ KPIs, but, rather, an increased emphasis among those factors that are most influential today with respect to customer satisfaction, field tech utilisation and – oh, yes – the bottom line!

Most services industry analysts would also agree that you cannot – and should not – merely collect and tabulate the data – that is basically what a market research analyst firm does. Running a services organisation, however, is quite different, according to Alderson who suggests that, “Information without action is useless”. He continues, “As service organisations mature, and implement the next generation of mobile workforce management systems, sophisticated data gathering and analytical capabilities will be mandatory. However, the ability to act on the insights and knowledge gained, to improve field service performance, will be the key to thriving, not just surviving.”

But, why are KPIs so important to the overall well-being of the organisation? Because, for many, their service performance goals are simply not being met! For example, in the UK/EMEA services community:

  • 32% of FSOs are not attaining at least 80% Customer Satisfaction; (UK/EMEA average is 82% Customer Satisfaction)
  • 28% of FSOs are not attaining at least 80% SLA Compliance;         (UK/EMEA average is 81% SLA Compliance)
  • 26% of FSOs are not achieving at least 20% services profitability; (UK/EMEA average is 35% Services Profitability)

For these reasons alone, between a quarter and a third (or more) of the UK/EMEA FSOs probably find themselves in the need for new and/or upgraded mobile workforce management technologies to run their organisations. Then, of course, they’ll still need to measure their performance along the way. It’s definitely time to “Mind the Metrics!”

Complimentary Distribution of this Article has been made possible through Cognito:

Cognito is a leading provider of mobile workforce management solutions to field service organisations. For more than 20 years, we’ve been at the leading edge of innovation and best practice when it comes to helping our clients drive field force performance, exceed customer expectations and deliver consistently excellent service. Recently, Cognito has embraced a series of key innovations in mobile workforce management software, culminating in our flagship Fieldforce iQ solution. Cognito operates throughout Europe and North America. Our customers typically have mid-size to large mobile work forces ranging from 50-plus field workers to many thousands. For more information, please visit our Website at www.cognitoiQ.com, email us at info@cognitoiQ.com, or call +44 (0)1635 508200.

Best Practices Field Service Organizations (FSOs) Use an Expanded Variety of Tools and Technologies to Directly Support Their Field Techs and Customers

(Drill-down Results from SFGSMs 2014 Field Service Management Benchmark Survey – Part 6)

A three-quarters majority of Best Practices organizations (i.e., 75% or more) currently support their field technicians with a variety of online capabilities, including the ability to track and update the current status of work orders (86%), the ability to initiate service orders (81%), access to customer/asset service history (76%), and access to product schematics/documentation (76%). This generally compares to a two-thirds or greater (i.e., 67% or more) majority among the general population. Ability to provide customers with an Estimated Time of Arrival (ETA) / Estimated Time to Complete (ETC) is additionally cited by a 65% majority of respondents.

Other capabilities currently being provided by a majority of Best Practice organizations to their respective field technicians include:

  • 60% Access to real-time parts inventory / availability
  • 56% Availability of required parts, either in van or en route
  • 56% Access to problem resolution scenarios

Whether it is access to data and information that represents the past (i.e., customer/asset history), the present (i.e., current status of work orders), or the future (i.e., providing customers with an ETA / ETC), the Best Practices organizations already recognize the importance of real-time data and information access.

However, the key to success for most Best Practices organizations is that they are also providing their customers with a comparable set of online tools to make both their – and their field technician’s – lives much easier. By providing customers with the right mix of Web-enabled self-help capabilities, the leading organizations have essentially been able to run their respective services operations more effectively, while also increasing existing levels of satisfaction by allowing customers to become part of their own “support team”.

The primary online capabilities currently provided to customers of Best Practices organizations include:

  • 71% Ability to order parts (up from 65% among the general population)
  • 65% Ability to view current status of work order (up from 59%)
  • 63% Ability to initiate / create service tickets online (up from 59%)
  • 58% Ability to update status of current work order (up from 55%)
  • 46% Ability to track service parts shipping status (up from 45%)

By making the customer part of the service delivery team, Best Practices organizations can continue to benefit from reduced time and cost-related factors – while increasing existing levels of customer satisfaction. Customer access to online service order data and information is clearly a “win-win” scenario for both parties.

However, the greatest impact on the future of Field Service Management is most likely to come as a result of the growing acceptance of Cloud-based technology. The results may be somewhat surprising to some, as they suggest that there is little difference between Best Practices organizations and the general population with respect to their preferences for how they will be acquiring their next (or first) FSM solution and/or upgrade – the vast majority seem to be leaning toward a Cloud-based solution (i.e., by a ratio of nearly 3:1).

Among those Best Practices organizations currently planning an FSM implementation in the next 12 months (or considering doing so in the next 24 months), a Cloud-based solution is preferred by 56% of respondents, compared to only 19% citing a preference for Premise-based. Another one-quarter (25%) remain undecided at this time. The corresponding percentages for the general population are virtually identical at 54% preferring Cloud-based, 20% preferring Premise-based, and 26% undecided – a corresponding ratio of 2.7:1 in favor of Cloud.

In the two years since the previous Field Service Management Benchmark was conducted, this represents a sea-change from a market that historically had gone Premise-based for a majority of its Field Service Management software solution needs. As such, the Cloud now allows some of the smaller FSOs to attain – and maintain – Best Practices status and, in many cases, compete directly against the historical market leaders who had previously been the only ones invited to join this elite group.

Based on the results of SFG’s 2014 Field Service Management Benchmark Survey, the key takeaways for Best Practices FSOs are:

  • Best Practices services organizations are significantly more driven than the general population of Field Services Organizations (FSOs) to meet their respective customer demands for quicker response time and improved asset availability; improved workforce utilization, productivity and efficiencies; and increased service revenues.
  • A majority of Best Practices organizations are adding, expanding and/or refining the metrics, or KPIs, they use to measure service performance; they also use a larger variety of KPIs to measure their performance than do their non-Best Practices counterparts.
  • Over the next 12 months, more than 84% of Best Practices organizations will have integrated new technologies into their existing field service operations, and roughly three-quarters (74%) will have invested in mobile tools to support their field technicians.
  • Best Practices organizations are increasingly providing their Field Technicians with enhanced access to real-time data and information to support them in the field; they are also taking the lead in providing customers with an expanded variety of Web-enabled self-help capabilities (i.e., ability to order parts or initiate service calls, track the status of open calls, etc.).
  • Best Practices organizations are currently attaining the industry’s highest levels of Customer Satisfaction and Service Profitability (i.e., 95% satisfaction, and 49.6% service profitability).
  • Best Practices organizations are no different in their preference for Cloud-based FSM solutions – in fact, they share the same preference for Cloud as the general population of services organizations.

In 2014 and beyond, the proliferation of Cloud-based FSM solutions may serve to further normalize the competitive playing field between Best Practices organizations and all others with respect to their ability to use the same tools to reach out to, and serve, their customers. However, the larger enterprises that have already mastered attaining Best Practices status are likely to still maintain a marketing and competitive advantage based at least on their getting there first, and having already dealt with most of the other issues that have historically impeded the ability of smaller organizations to rise to the top.