“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/.]

Effective Warranty Management for Improved Customer Satisfaction and Profitability in 2015

Each year, Strategies For Growth℠ (SFG℠), the independent Westtown, Pennsylvania-based research analyst and consulting firm, conducts a series of Benchmark Surveys among its global outreach community of services professionals. There were a total of 228 responses for the firm’s 2014 Warranty Chain Management Benchmark Survey, conducted over a six-month period in 2014.

According to SFGSM president and principal consulting analyst, Bill Pollock, “The survey results reveal that roughly three-quarters (76%) of respondents believe effective warranty chain management to be at least ‘very important’ to the overall financial performance of the business, with just over a quarter (28%) believing it to be ‘extremely important’. The results further reveal that this sense of importance is increasing substantially, year-over-year, as nearly one-third (32%) believe effective warranty chain management to be ‘more important than one year ago’, compared to only 1% believing it to be ‘less important’ – a ratio of more than 32:1 citing ‘more important’ over ‘less important’.”

However, while the importance of warranty management is sufficiently validated by the respondents to the firm’s survey, a majority of warranty management solution users are not as duly impressed with the vendors that provide these services. For example, Pollock claims that “only 39% of respondents are presently ‘satisfied’ with the services and solutions provided by their primary warranty management solution vendors – including a stunningly low 12%, or only one-out-of-eight, who are ‘extremely satisfied’.”

In fact, Pollock goes on to say, “the majority of users (51%) rate their perceptions of the performance of their primary vendor as ‘neither satisfied nor dissatisfied’ – or what we would normally describe as a ‘complacent’ user base. While less than 1% of users claim to be ‘not at all satisfied’, there are still a total of 10% that fall into the ‘dissatisfied’ category.”

Vibhor Mishra, Director Marketing at Tavant Technologies, a leading global provider of warranty chain management solutions, agrees that many providers need to focus on meeting their customers’ needs, requirements or expectations, and says “That is why we base much of our company’s success on the fact that we share a firm belief that software providers need to deliver value while meeting quality standards. As a result, we are continually leveraging our global experience to provide best-of-breed solutions to our customers in all of our offerings.”

This is also one of the main reasons why, according to Mishra, Tavant holds its premier marquee annual event, “engage”, now in its sixth year, as “a collaborative gathering of employees, customers, industry luminaries, and the leadership team, to discuss and exchange ideas about the latest in business and technology”. He also believes that “It serves as a venue where everything can be discussed openly, and our customers have direct access to the executives of the company to share their thoughts and suggestions.”

On the surface, while it may appear somewhat encouraging that 70% of respondents are currently running their warranty management operations using at least some “partially automated” processes, this finding is, unfortunately, not actually that encouraging. In fact, only about one-in-five (21%) claim to have “fully automated” the warranty management processes currently in place at their respective businesses.

By aggregating the various categories of partial-to-full automation, the current market base reflects one where, although 70% of respondents claim to be using at least some “partially automated” warranty management processes, there are a nearly equal amount (69%) where some manual processes are still being relied on.

However, regardless of the current state of automation – or lack thereof – within the broadly defined warranty claims management segment, Pollock says “One thing is extremely clear: businesses plan to increase their annual warranty budgets over the next 12 months (i.e., through mid-2015) and beyond. For some, about 14%, or roughly one-in-seven, the increase will be modest, at less than 5%; however, another 16%, or about one-in-six, plan to increase their respective budgets by between 5% and 9%. Still another 10% plan to increase their budgets by more than 10% – typically in the plus or minus 20% range.”

Mishra echoes that “This growth is also manifested at Tavant where the company is on track to double its revenue in only two years (i.e., from 2014 – 2016). In fact, Tavant is presently achieving a year-on-year growth of 40 percent, which is significantly above the industry average.”

All told, by the close of 2015, twice as many organizations plan to increase their annual warranty budgets, compared to those planning to decrease. This two-to-one ratio suggests a strong – and growing – global warranty chain management segment, and is further supported by the finding that the percent of work orders currently being serviced under warranty is also expected to increase over the next 12 months by an even greater ratio – i.e., 24% expected to increase, compared to only 11% expected to decrease.

So, how are the leading organizations planning to leverage their increased warranty management spending into improved customer satisfaction and increased profitability? To attain these goals, the top strategic actions currently cited by at least one-quarter (25%) of survey respondents include:

  • 52% Develop/improve the KPIs used to measure advanced warranty chain analytics
  • 39% Streamline the parts return process to improve overall efficiency
  • 35% Improve warranty management-related planning and forecasting activities
  • 32% Restructure for improved warranty management oversight and accountability
  • 31% Foster a closer working collaboration between product design and service
  • 29% Institute/enforce process workflow improvements for supplier cost recovery

However, there are many other strategic actions that the leading warranty management organizations are also currently taking, including purchasing and/or upgrading an automated warranty chain management solution (20%), restructuring/updating existing warranty pricing schedules (19%), providing additional training to extended warranty sales personnel (17%) and outsourcing some, or all, of their warranty management activities to third parties (16%).

Based on the results of SFG’s 2014 Warranty Chain Management Benchmark Survey, the key takeaways that best describe the global state of warranty management in 2015 – and beyond – are:

  • Warranty management organizations are being driven, first, by Customer-focused factors; second, by Cost-focused factors; and third, by Revenue-focused factors
  • Through 2015, annual warranty management budgets are expected to increase, with more than twice as many organizations planning more increases than decreases
  • In 2015, warranty services managers will be focusing primarily on developing and/or improving their KPIs and warranty analytic programs, streamlining their parts return processes and improving warranty management-related planning and forecasting activities
  • Nearly three-quarters (73%) of organizations are currently integrating warranty management with all other services functions, and almost as many (64%) already have an end-to-end workflow process in place to handle claims and returns
  • The top uses of data/information collected from warranty events are basically to improve processes (i.e., field service, depot repair, parts returns, etc.) and effect changes (i.e., product design, manufacturing, etc.

________________________________________________________________

For an expanded version of this content, including a Q & A session with SFG‘s, Bill Pollock and Executives from Tavant Technologies, look for our feature article in the January 29, 2015 issue of Warranty Week magazine.

For more information, to download a complimentary copy of the companion White Paper to this article, or to register for the companion Webcast of the same name, hosted by Tavant Technologies, please go to http://info.tavant.com/Warranty_Webinar.html.

Also, be sure to stop by the Tavant exhibit for more information at the 2015 Warranty Chain Management Conference, March 10 – 12 in Miami, Florida.