Service Profits and Raving Customers: The CFO's Agenda in 2013

Service Profits & Raving Customers:The CFOs Agenda in 2013

Speakers

Aly PinderSr. Research Analyst

Aberdeen Group

Rick GustafsonCFO

ServiceMax

© AberdeenGroup 2013 4

Agenda

Service Management Practice and Aberdeen Research Framework

Introduction to the Study Key Trends

Service profitability Service margins vs. product margins The increased impact of service on financials Trends in service differentiation

ServiceMax Field Service Overview Final Thoughts Q&A

Not for Distribution


Dom

ain

Expe

rtise


Supply ChainManagement

Global SupplyManagement

Product Innovation

and Engineering

Manufacturing

EnterpriseApplications

CustomerManagement

Retail andBanking

Service Management

IT Infrastructure

Human CapitalManagement

Communications

BusinessIntelligence

GRC/Financial Management

IT Security



Aberdeen Maturity Class Framework

What are Best-in-Class companies doing differently?

What pitfalls are they avoiding? Why are they achieving greater

success? What technologies and services

are enabling them to succeed?

P

A

C

E

Pressures:External forces that impact an organization’s market position, competitiveness, or business operations.Pressures:External forces that impact an organization’s market position,

’competitiveness, or business operations.

Actions:The strategic approaches that an organization takes in response to industry pressures.Actions:

The strategic approaches that an organization takes in response to industry pressures.

Capabilities:The business competencies (organization, process, etc…) required to execute corporate strategy.Capabilities:The business competencies (organization, process, etc…)required to execute corporate strategy.

Enablers:The key technology solutions required to support the organization’s business practices.Enablers:

The key technology solutions required to support the ’ organization’s business practices.

Selected Performance Criteria (KPI)

Total Respondents:

- Top 20%

-Middle 50%

-Bottom 30%Respondents are scored individually across KPI

Best -in-Class

Industry Average

Laggard

Customer Satisfaction Rate

Service Revenue Change

Customer Retention Rate

Service Cost Change



The Importance of Service Management

Objectives – To understand: State of Service

Management Best-in-Class Trends Key Challenges Impact on the Financials

Top Performance Investments in Technology Profitability Differentiation Margin Disparity



72%

24%

56%

38%

0%

20%

40%

60%

80%

Yes No

Is S

erv

ice

Ru

n a

s a

Pro

fit C

en

ter,

P

erc

ent

age

of

Re

spo

nd

en

ts, n

=1

38

Best-in-Class All Others

State of Service ManagementProfit-centric View

Source: Aberdeen Group, December 2012Not for Distribution


Yes, 70%

No , 26%

Don't Know, 4%

In 2013, will Service be Managed as Profit Center,Percentage of Respondents

State of Service ManagementCost vs. Profit-Center for 2013



Yes, 67%

No, 22%

Don't Know, 11%

Did service generate a profit in 2012, Percentage of Respondents, n = 138

State of Service ManagementProfit Achieved in 2012



State of Service ManagementService Revenues Increase in 2013

Yes, 53%No, 28%

Don't Know, 14%

Anticipate service generating a greater proportion of overall revenues in 2013, Percentage of Respondents, n =

138



40%

5%

23%

3%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Higher by10% or more

Higher byless than

10%

Same Lower by lessthan 10%

Lower by10% or more

Service Margins vs. Product

Margins, Percentage of Respondents,

n=138

State of Service ManagementService Margins vs. Product Margins



Less, 51%

The Same, 18%

More, 8%

Don’t Know, 23%

Cost of Service vs. Cost of New CustomerAcquisitionPercentage of Respondents

State of Service ManagementCost of Service vs. Cost of New Customer Acquisition



Metrics

Average Result

Customer Satisfaction

> 90%

Customer Satisfaction

< 50%

Customer Retention 89% 48%

Customer Loyalty Score 77 32

Revenue Growth (Previous 12 Months) 3.7% -1.7%

Service Revenue Growth (Previous 12 Months) 6.1% -2.9%

State of Service ManagementLink Between Customer Satisfaction and Loyalty / Revenue



Top Goal Drive Service Revenue – 22% Enhance the Customer Experience – 17% Improve Customer Satisfaction – 13% Improve Customer Loyalty – 13%

2nd Most Important Goal Drive Service Revenue – 23% Drive Service Resource Productivity / Utilization – 16%


State of Service ManagementGoals

Source: Aberdeen Group, December 2012


State of Service ManagementTop Metrics Being Measured

Not for DistributionSource: Aberdeen Group, December 2012

57% 57% 56%

40%

0%

10%

20%

30%

40%

50%

60%

CustomerSatisfaction

Service Revenue ServiceProfitability

Service Costs(Overall)

Top

met

rics,

Per

cent

age

of R

espo

nden

ts

n = 138


State of Service ManagementService Roadblocks

Not for DistributionSource: Aberdeen Group, December 2012

29%

32%

33%

33%

0% 10% 20% 30% 40%

Current technology infrastructureis insufficient

Lack of budget for investment inservice

Economic concerns hinderingservice business growth

Cost cutting initiatives takeprecedent

Challenges, Percentage of Respondents, n = 138

Imagine Flawless Field Service

Perfect your service delivery

Maximize your service growth/revenue

Delight your customers

Flawless Field Service, End to End

The only complete field service solution. Delivered in the cloud.

The Results?

We surveyed our customers to assess the true impact of ServiceMax

The Road to Service Delivery Perfection

We surveyed our customers to assess the true impact of ServiceMax

31%

14%11%

16%

Productivity Servicerevenue

First time fixrates

CustomerSatisfaction

scores-16% -16%

Field service

costs

Average time

to repair

ServiceMax Extends Salesforce Capabilities

ServiceMax transforms Service Cloud into acomplete Service Life Cycle solution

Sales Cloud

Marketing

Cloud

Service Cloudpowered by

Summary

Grow Revenue

Perfect ServiceDelivery

Delight Customers

Technology Vision & Field Service Expertise

Culture of SuccessRealize Flawless Field Service


Final Thoughts


The Rise of Profits in Service Service Margins vs. Product Margins

Service-centric Organization New Service and Services Focus on Current Customers, Avoid the Expense of New

Acquisition Delight the Customer and Find New Revenues Measure Profitability, Drive Customer Satisfaction IT Service Budget Increasing (or at least not in decline)

But Service Still Needs More Insufficient Technology Infrastructure

Q&A

Aly Pinder [email protected]

@pinderjr@Aberdeen_CESM

Rick [email protected]

mailto:[email protected]


https://twitter.com/Pinderjr

https://twitter.com/aberdeen_cesm


Thank You!www.servicemax.com

Service Profits and Raving Customers: The CFO's Agenda in 2013

Business

Transcript of Service Profits and Raving Customers: The CFO's Agenda in 2013