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A Support & Maintenance Industry Imperative: Moving to a New Level of Value-Added Services |
A P R I L 2 0 0 6
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By Shawn Santos, Senior Program Manager, SSPA In a recent survey conducted by Harris Interactive, 85% of U.S. adults indicated that if they consistently received excellent customer service from a particular company, they would be most likely to increase their business with that company. On the down-side, a whopping 96% of U.S. adults indicated they’ve encountered bad customer support experiences in the past year. Surprising? Not really. Customers hold service levels to a very high standard, and more than any other measure, customer service ranks highest in importance as a factor that strongly influences customer loyalty.
It is easy to recognize the significant benefits associated with providing a higher echelon of service and support—both in terms of customer loyalty and the long-term financial rewards that come from having a loyal customer base. But can the current “break/fix” technical support model withstand the increasingly higher-expectations and complex business needs of enterprise customers and consumers? In this article, Part III in the series “Six Big Challenges Facing the Service & Support Industry” will answer the question: What is the Future as We Move from Fixing Problems to Driving Product Value? The Growing Technology Services Economy
The chart above trends services revenues from 1999-2005 for thirty-seven of the largest software and hardware vendors that publicly report services financial data. The services revenue percentages are in relation to total company revenue. Not surprisingly, services have been the financial driver of many companies for the last six or seven years. At the close of 2005, services represented 60% of revenue for software companies and 37% of revenue for hardware companies (source: Technology Professional Service Association's "Service 50".) With these impressive numbers in hand, it may seem like a good time to sit back and wait for the flood of corporate congratulations to arrive. But this isn’t that time. As expectations and business needs evolve, so must the way we are delivering support. Success in any marketplace comes from a keen understanding of the customers’ needs as well as the market’s hidden challenges and opportunities—a clear vision of how a business or an industry anticipates and unlocks the latent potential inherent to every market. The Evolution of Support Moving away from the current “break/fix” technical support model by providing a value-added customer experience, organizations can gain a significant business advantage. Indeed, it may be the key to the long-term success of support and maintenance industry. We’ve seen that positive customer support experiences have a measurable impact on customer loyalty, brand perceptions, purchasing behavior, and most importantly, a customer’s willingness to make recommendations about a company and its products or services to other interested buyers. Positioning maintenance and support as a true value-add rather than an insurance policy that provides protection in the event of problem in not yet a mainstream approach. Yet there are clear signs that the traditional reactive support offering is no longer meeting the needs and expectations of customers. One need only look at the increased trend around discounting on maintenance and support that is being driven by customers. While partly financially motivated, it is also being driven by a higher degree of scrutiny being placed on of the value of the maintenance contract. Customers want to know why they’re paying for it and what business benefit it is providing. To learn more about this, please read the SSPA Defending Support and Maintenance White Paper. Some technology vendors are responding by increasing their sophistication in using ROI-based sales and marketing techniques to defend support pricing. This is a great defensive move. However, the SSPA believes it is not enough and that more radical change is required to sustain the business over the long-term. Moving Up the Value Continuum The SSPA has identified four levels of services that should comprise a technology service vendor’s support portfolio. The four levels extend from basic services such as troubleshooting, to value-added services such as best-practices consulting. A key consideration is that as service organizations climb up through these levels, the nature of the customer relationship is altered – from transactional relationships involving commoditized services, to partnerships that create real value.
Today the support industry is in the midst of basic, reactive and preventive services which represent the core of most vendors’ maintenance and support offerings. Value-added services are where the industry is headed, but there needs to be more focus on the part of vendors to understand customer requirements and develop offerings that are focused on helping customers unlock the full potential of their product investments and accelerate the customers’ time to ROI and business impact and ideally a new state of IT-driven competitive advantage. The Time to Innovate is Now Altering customers’ perceptions of support and how it should be delivered is a challenging task, to say the least. The future of our industry can hinge on the ability of its strategists, marketers, and the SSPA to help plan and execute relevant and compelling solutions to tackle to the problem. In his recent book “Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution,” best-selling author Geoffrey A. Moore (a keynote speaker at the SSPA Conference in San Diego) isolates four zones for innovation: Product Leadership, Customer Intimacy, Operational Excellence, and Category Renewal. The challenge for technical support executives is to focus on areas of innovation where they can evolve their service offerings to achieve the greatest degree of differentiation from their competitors and a best fit for their customer set. Moore’s suggestion (although not specifically applied to the support industry) is that this focus should be in relation to three factors 1) Core Competence, where companies need to recognize their strongest capabilities, 2) Competitive Analysis, where companies identify prime areas to exploit, and 3) Category Maturity, where different phases of the category life-cycle are assessed for development opportunities. "That's what evolution is all about, a continual raising of the bar. It's how countries raise their standard of living. It's why new companies get formed every year. It's why each of us must learn new skills throughout our careers. We may get tired, but we are not likely to get bored. Mostly we just have to perform. Welcome to the race."- Geoffrey A. Moore ............................................................................................................. This article is one in a series summarizing the key services issues that our industry is facing. There's more to come—this series is only a brief introduction to the key industry issues the SSPA will be exploring in coming months. The SSPA strives to help you understand the emerging trends in the service and support industry, and to compliment that effort with effective solutions to your business challenges. So far, we’ve looked at the following Critical Services Issues:
Next month, look for the fourth part in the series in which we will cover: Critical Issue #5: What are the Implications of Moving to an On-demand Model? |
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Comments? Suggestions? We would like to hear from you. Please email the editor at sspanews@thesspa.com. |
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“For a list of all the ways technology has failed to improve the quality of life, please press three.” - Alice Kahn, author 
©2005 SSPA