What Every Service Provider MUST Know

Regardless of your current company position, business focus,or market position, if asked the following question, how would your clients respond?

• How do you feel about our service performance?
• Are you happy with how services are currently being delivered?
• What (if anything) could we do differently?

Often, we might answer, “I feel things are going fine … we are not receiving many complaints”, and follow with a line we have all heard, namely, “no news is good news.”

As Dwight D Eisenhower once said, “Plans are nothing; planning is everything.” To that extent, I would argue that our inability to implement a viable performance scorecard process, which clearly denotes performance against goal, ultimately minimizes our ability to reach our true potential in the effectiveness of our business in the areas of client satisfaction and loyalty, growth, employee satisfaction and overall profitability.

Clearly, in today’s increasingly challenging business climate, there are added pressures being placed on clients across a diversity of vertical markets. Facilities Management firms, suppliers and contractors alike have added pressure to drive sustainable cost savings while creatively implementing systems and processes to meet service level objectives.

According to International Facilities Management Association, one of the more significant missed expectations as communicated by various clients across multiple market segments continually revolves around the same premise, namely, that service providers lack a well-documented, quantifiable, and objective process to measure service performance against goal. In short, they lack a meaningful process to more effectively measure service performance in a manner that contributes towards improved management, service delivery, and continuous improvement. Now, if suppliers, aren’t showing steady improvements through objective metrics, while continually improving their overall business model, they are, in fact, preparing to fail!

What strategy does your organization utilize to engage your customers and monitor levels of client satisfaction? How do you know whether or not you are fully aligned with your customers in overall cost, quality, delivery, and safety performance? We have all certainly experienced the discussion to varying degrees – the client informs the on-site Project Manager, Operator and/or Engineer, that he/she felt they were entitled to additional services and programs, whereas the salesperson who ultimately coordinated the sale from the onset indicates that either 1) “they never made such a promise,” or 2) “what we communicated during our presentation is essentially the basics of what we do… nothing more.” Either way, we are faced with a dilemma. Perhaps we oversold our products and/or services, or perhaps the client misunderstood communications during those final meetings prior to contract signing. Either way, it highlights a very repetitive challenge within the facilities management and building services industries, namely, selling what you do, and doing what you sell.” Our ability to bridge that gap, while delivering improved management, performance metrics, comparative benchmarking, among other things, generates more opportunities for growth and increased longevity in the client relationship.

World-class organizations maximize their opportunities for both organic and external growth through achieving high levels of customer satisfaction – easier said than done, right? To be clear, all or most organizations genuinely care about their clients – they want their customers to be happy … to say good things about their product or service … to expand their business through added volume and services. According to a recent Gallup poll, organizations that have strong processes in place to effectively manage and improve client satisfaction have outperformed their competitors by 26% in gross margin and 85% in sales growth. For these organizations, their customers spend more, buy more, and continually renew their contracts.

Measure. Manage. Improve.

For some companies, they either lack the desire to implement an improved TQM model (Total Quality Management), don’t clearly understand the value of doing so, and/or simply perceive that they lack the resources and/or work tools necessary to drive the program.

So how are we defining customer satisfaction? The dictionary might tell us that it is simply “a measure of how products and services supplied by a company meet or exceed customer expectations.”According to Marketing Metrics: the Definitive Guide to Measuring Marketing Performance, in a survey of nearly 200 senior managers, 71% responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.

Clearly, fundamental to any companies business operations and success is to engineer a meaningful measurement process, driving accountability and sustained effectiveness at all levels within the organization. Customer satisfaction is a key differentiator and increasingly has become of utmost importance in the development of overall business strategy. Customer satisfaction scorecards can have powerful effects within organizations of all sizes. If managed properly such metrics provide specificity to performance defects in service delivery, as well as focus employees on the importance of fulfilling customers’ expectations.

To be sure, service providers that fail to effectively articulate their value through viable key performance indicators whereby the client is fully aligned with what is being measured, opens the door for competitors to capture their clients imagination and ultimately earn (or take) the business. Yet, many organizations lack a definitive performance scorecard process and as a result, fail to see those metrics improve performance, while educating their clients regarding their performance to target and overall contractual compliance.

So what does the data tell us regarding the importance of implementing and sustaining an effective performance scorecard process for your business

Customer Satisfaction:

• 91% of unhappy customers will never purchase services from you again.
• For every customer who bothers to complain, there are 26 others who remain silent.
• Typically only 25-30% of a firm’s clients are completely satisfied – Such low satisfaction means that 70% or more of the firm’s clients may be open to pitches from competing firms.
• 70% of complaining customers will do business with you again if you resolve the complaint in their favour.
• Each one of your customers has a circle of influence of 250 people or potential customers who hear bad things about you.
• 96.7% of unhappy customers never let out even a squeak of dissatisfaction to the organisation that has given them bad service. . . according to research they will tell at least 15 other people, while satisfied ones will tell six at the most.
• Almost 70% of the identifiable reasons why customers left typical companies had nothing to do with the product. The prevailing reason for switching was poor quality of service.

Client Retention:

• It costs about five times as much to attract a new customer as it costs to keep an old one.
• Raising customer retention rates by 5% could increase the value of an average customer by 25-100%.
• The probability of selling service to a new customer is 1 in 16, while the probability of selling service to a current customer is 1 in 2.
• Loyal customers who refer others generate business at very low or no cost.
• It’s easier to get present customers to buy 10 percent more than to increase your customer base by 10 percent.
• The average business loses between 10 percent and 30 percent of its customers each year.
• If a credit card company can hold onto another 5% of its customers each year (increasing retention rate from, say, 90 to 95%), then the total lifetime profits from a typical customer will rise, on average, by 75%.

Measuring Customer Satisfaction:

• 96-100% of clients interviewed say they approve of client satisfaction surveys.
• 60% of clients interviewed in person will give a firm new business within 60 days of the survey.

These are truly staggering numbers in my opinion, which further demonstrate the importance of “telling one’s story” as it relates to business performance. Candidly, it has always been of particular interest to me why some suppliers of various commodities often fail to effectively demonstrate their value through sustained metrics, continuous improvement strategies, technology, innovations in service delivery, cost-containment methods … all of which, if managed AND communicated effectively, have been show to dramatically increase customer loyalty while strengthening the bond between both the client and service provider.

Truth be told, I have observed many organizations who maintain the right business formula AND work culture, which, in turn, have been best reflected in their outstanding results in service delivery, increased customer retention, and overall business growth. What about the well-intentioned service providers who truly want to excel in every area of their business, yet lack the tools and methodologies to do so?

This is such an important topic that there are countless books, seminars, training collateral, all focused on the subject of customer service. In James C. Collins book, Good to Great, he begins by noting one simple truth … Good is the enemy of Great!  Candidly, I couldn’t agree more!

A service provider, regardless of what products and/or services they may deliver, should be intensely focused on “thrilling” their clients. In this highly competitive marketplace, it is simply not enough to deliver “good” products or services … indeed, we must deliver “Great”. Indeed, it’s not so much what you (the supplier) accomplished (for your clients) lately that matters … the question we should be asking is what are you doing for them (the customer) today?”

I believe it is of tremendous value for suppliers to maintain, or develop, the “daily discipline” of engaging their customers in a very short and concise manner, defining their value and reinforcing what they are doing to contribute to the success of the client … indeed, this is what separates those organizations that are perceived to be average-to-good, vs, the champions of “Great”!

In this increasingly competitive market whereby (some) service providers are often high on promise and short on delivery, one must assume that their existing customers are being contacted by competitors on a  regular basis. If your goal is to mitigate these concerns, you must improve your client relationships, supporting those relationships through exceptional service delivery, reflected and further supported by strong performance scorecard metrics. It would seem reasonable to include that outside of creating a great work environment for one’s employees, developing a process by which one can more effectively measure, manage, and improve all aspects of their business is critical to the overall health and future of the organization.

To speak with us and/or to schedule a meeting, please contact us at info@fmadvisors.com, or toll-free at 888-656-0740.

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