The idea of “service delivery” as we know it is in transition, with many forward-thinking organizations moving toward a new approach that reimagines the traditional provider/customer relationship. According to the Technology & Services Industry Association, the digital transformation has, while bringing about new possibilities and more complex operations, shifted the responsibility of generating value from the user to the provider.
As a result, the term “outcome-based service” has likely flashed across your radar screen; perhaps you’ve even read some insider commentary touting it as the wave of the future but lacking actionable takeaways. Outcome-based service is a different way of looking at service delivery — where the service provider plays a much larger role in coordinating with clients to achieve certain goals and reach specific milestones.
So we’d like to take a closer look at service delivery and drill down on four key actions that you can take to move toward reaping the significant benefits of outcome-based service delivery. These four actions are closely connected to the following four traditional, now outdated, pieces of advice for improving service delivery:
- Provide better communication
- Negotiate service-level agreements
- Identify and address barriers to quality service
- Respond efficiently to specific customer concerns
Updating your service delivery requires some additional forward thinking — a future focus. We’ll cover the basics of what service delivery entails and then drill down on a few key actions — five, for starters — that you can take to move toward the significant benefits of outcome-based service delivery.
What Is Service Delivery?
Service delivery is a business framework where a company provides a service that a customer either needs but doesn’t have access to or lacks the resources or knowledge to handle themselves. Provided services are distinct from tangible products, though some service delivery models may offer a combination of goods and services. A service delivery company will be in constant communication with their customer to ensure that they’re receiving the amenities, to troubleshoot any problems and to get feedback about the quality of their service.
Service delivery is managed by a service contract agreed to by both the provider and the customer. Most traditional models of service delivery set the conditions for product delivery and break-fixes, usually covering things like how much to charge for labor, the number of visits over a time period or the fixed cost of a project. However, most future-focused providers are shifting toward an outcome-based service partnership, which moves away from the break-fix model to a more proactive service designed to help customers achieve established goals and realize a return on their investment.
In an outcome-based model, the provider is responsible for all aspects of the service until an agreed-upon outcome is reached. The advantage of this service model is service providers can sell positive business outcomes that both parties agree are measurable and attainable. This service dynamic offers a win-win situation — customers get the exact services they require to achieve desired outcomes, and service providers know exactly what is expected of them.
Just as delivering ground-breaking products is no longer enough to meet customers’ increasing demands for real-time, personalized service, traditional break-fix models don’t offer the outcomes that can truly satisfy your customers. Instead, you’ll need to find more effective ways to transform your service delivery to meet your customer’s desired outcomes — starting with the four following strategies.
Common Areas of Service Delivery
Service delivery plays essential roles in many areas and takes different forms depending on the industry:
- IT Service Delivery — Information technology providers will provide customers with access to technological and communication resources such as data storage, access to applications, AI services, streaming services and other related hardware, software, systems or infrastructures. They’ll provide the guidelines, standards and procedures that define how to use the services. IT service providers will also monitor the performance of all hardware, software and services and may also provide managed services through service desk and help desk operations.
- Health Service Delivery — Service delivery in health care delivers the treatments and supplies that patients need and deserve under their specific healthcare coverage. Medical professionals, health institutions and insurance companies will coordinate to provide different areas of service, from reminders and updates to prescription refills and home visits.
- Field Service Delivery — Specific to technology and equipment providers, field service dispatches technicians out to customers “in the field” to install, maintain or repair equipment or systems. Field service providers will often have service or maintenance contracts that will define the terms of how assets are monitored and maintained.
- Consulting Service Delivery — Consulting services are utilized by organizations that need to complete a process but lack the volume, knowledge or capacity to complete internally. Consulting firms provide insights into any business area, including legal, product development, content creation, human resources and finance.
Five Actions to Transform Service Delivery
These five new actions are closely connected to five traditional pieces of advice for improving service delivery:
- Provide better communication
- Negotiate service-level agreements
- Utilize automation
- Identify and address barriers to quality service
- Respond efficiently to specific customer concerns
This conventional wisdom is helpful as far as it goes, but future-focused service providers are finding ways to go beyond these incremental improvements to transform the relationship between their frontline service delivery people and their customers. A classic article from the Harvard Business Review noted that redefining service required deep insight into how to meet clients’ needs. Specifically, service providers needed a “systematic way to question basic assumptions about how a service is defined and delivered and to see the opportunity to achieve dramatically better results.”
If this type of shift feels right for your organization, here are some tangible strategies to evaluate your existing service delivery. Following these steps should help you achieve service delivery that is future focused.
1. Don’t just provide better communication to your customer.
Engage your customer in communication designed to gain a deeper understanding of their big picture.
Imagine if your field service technicians and other frontline service providers were equipped not only with the tools and expertise to handle immediate issues and problems, but also with the communication skills to turn every interaction into an opportunity to gain important insights into the customer’s deeper needs and goals — to better understand what we call the customer’s “big picture.”
The big picture will differ from client to client, but typically includes such short- to long-range objectives as focusing most intently on:
- Reducing costs
By equipping your technicians with enhanced interpersonal communication skills and encouraging them to develop a more thorough understanding of each customer’s big picture, you enable them to do more than simply get the job done and move on to the next service call.
Instead, you empower them to:
- Discover new ways to help the customer
- Build an ongoing rapport as a trusted adviser, and
- Nurture a relationship that over time adds value for both parties
2. Don’t just create a service-level agreement between you and your customer.
Reimagine the traditional SLA “negotiation” model in favor of “collaboration” on an outcome-based agreement that balances both parties’ interests.
Yes, service-level agreements are a valuable and essential tool for providers and customers to codify expectations and specify the metrics by which service is measured, as well as to spell out remedies or possible penalties if the terms of the agreement are not met. However, metrics like response rate, first-time fix rate and equipment downtime no longer tell the whole story in a business world where customer expectations are shifting.
The enhanced communication strategies and heightened focus on customers’ big-picture goals discussed above can be used to lay the foundation for a new type of outcome-based agreement. Such agreements are now being put in place between some forward-thinking manufacturers and service providers and their customers.
The traditional SLA, with its emphasis on traditional metrics, is typically still part of the outcome-based agreement. However, the concept of service delivery is evolving toward a more collaborative type of contract agreement that — by focusing on each customer’s larger goals and rewarding providers for helping to achieve them — leads to longer, stronger, “win-win” partnerships.
Here’s an example from our own experience. A service supplier in the hospital equipment business was approached by a major customer that had been hit with a 20% reduction in reimbursement rates and wanted to cut the service agreement by a similar amount.
Leveraging an understanding of the customer’s big-picture challenges, the supplier saw an opportunity to help the customer use a suite of state-of-the-art productivity tools to improve its overall profit and cash flow from the utilization of the supplier’s equipment. A new outcome-based agreement was put in place and, as a result, the supplier avoided a potential $300,000 reduction in their service agreement and reinforced their position as a trusted partner.
3. Don’t just utilize automation in your internal processes.
Incorporate it into all aspects of your service delivery.
Process automation has long ceased to be solely the domain of large enterprises. Even mid-size and small businesses understand how automating formerly manual (and often headache-inducing) processes can greatly increase efficiency. However, automation can also play a transformative role in service delivery.
Automation can be applied to numerous backend operations such as scheduling, dispatch management, warranty and inventory management. However, some of the biggest trends in B2B sales also involve the effective use of automation and AI systems.
Areas of service delivery that can benefit from automation include:
- Elements of customer on-boarding can be automated to ensure the process is consistent while freeing up your customer service specialists.
- Predictive maintenance can be utilized to look at historical data to predict and warn about equipment breakdowns or failures.
- Natural language processors can develop more conversational chatbots to instantly connect with customers, gather information about a question or issue and then send along to the appropriate department.
- Data pulled from devices and equipment can inform and direct more personalized information and marketing, allowing for easier upsell and cross-sell opportunities.
- Back office coordinators can automate certain tasks, enabling them to efficiently manage a greater number of field workers.
The biggest benefit of automated processes is freeing up more time and more resources to connect with customers to build trust, confidence and relationships. Transforming your service delivery should start with taking stock of your current business processes, including your current capabilities to capture data, and determining where automation can be of the most use.
4. Don’t just identify barriers to quality service at your organization.
Enable each of your team members to discover new opportunities for delivering exceptional, “above and beyond” service.
By encouraging your frontline service delivery people to continually develop a more comprehensive view of your customers’ big-picture objectives, you are essentially collecting “data” about how you can help them achieve their most important goals.
Such data can be used to discover new ways to help them during onsite visits. For example, field service techs on a call to fix a problem will be better equipped to apply their technical prowess to diagnose underlying issues that may be related to, or even causing, the immediate problem.
Discovering opportunities to deliver exceptional “above and beyond” service also hinges on doing some extra homework about the customer, their industry and their competition.
Doing so positions your organization to do much more than identify potential internal barriers to higher-quality service delivery. It opens the door to using your unique expertise to identify potential barriers to the client’s success — thereby adding value and further building the foundation for mutually rewarding, longer-term customer relationships.
5. Don’t just respond efficiently to specific customer concerns.
Anticipate current and future customer concerns and needs by being proactive.
As always, it is essential to respond quickly and efficiently to address specific concerns your customers may have about your products or services. However, this doesn’t mean just plugging in your predictive IoT technology and flipping switches or going onsite to fix a problem.
That’s an important part of it, of course, but leaving it at that represents a missed opportunity — or hundreds, or even thousands of missed opportunities — to interact with the customer in ways that deepen your understanding of how to deliver next-level service that differentiates you from your competitors.
Let’s look at one real-life example of how you can find ways to add value for customers by shifting from reactive to being truly proactive. In this case, a service engineer for a telecom network provider applied his deep knowledge of the customer’s big picture, as well as his own company’s capabilities, to address his customer’s strategic challenges and generate new business for his own company.
The telecom network provider’s customer was confronted by two conflicting cost-control challenges — reducing its internal team that was building out its network while also using fewer outside resources.
Instead of taking the usual course of simply cutting service levels while minimizing the impact on the customer, the supplier’s service engineer decided to take a proactive approach. He suggested that while his team was on-site performing standard site surveys, his team would also propose which on-site adaptations they could do more efficiently than the customer’s team.
To help expedite the process, the telecom network service engineer proactively documented all of the issues that would normally slow down the process from the customer side as well as from his own company. The new strategy delighted the customer, and to save on overall cost the customer actually ended up placing new orders for expanded services from its network provider without the usual slow and painful negotiation process.
Future-Focused Service Delivery [Additional Benefits]
In the past, field service training often has been split into two separate functions:
- Technical training that teaches service people how to provide new technical solutions, install new products, etc., and
- So-called “soft skills” training that focuses on customer interaction and “people skills.”
Future-focused customer relationship training for field service employees emphasizes, and unlocks, the essential connection between these two types of training, enabling field service techs to use their technical skills and their advanced knowledge of the customer to add value and build the relationship.
In addition to developing stronger, mutually beneficial relationships with customers, this forward-looking approach to improving service delivery also offers potential benefits when it comes to productivity, business outcomes and customer satisfaction.
Integrating customer relationship training and technical training enables your people to become trusted partners from an interpersonal as well as technical perspective. For example, with expanded knowledge of the customer’s needs and how they connect to the customer’s overall forward-looking business model, your team will be better positioned to use both your technological tools and onsite visits more efficiently and effectively.
Employee engagement is another benefit when you consider that your field service technicians are newly empowered to not just patch and fix problems, but to use their creativity and ingenuity by adding value in ways that enhance their status as trusted advisors in the eyes of their customers.
Best of all, nurturing customer relationships in this way ultimately leads to new, predictable, longer-term revenue opportunities. Why? Because even though your customer appreciates what you have done for them lately, what they care most about is having a reliable supplier who proactively helps them look around corners to create a winning future.
If all of this sounds good on paper, we should talk — because we have deep experience working with major companies across multiple industries to put the ideas and strategies outlined above into practice. (Learn more about our Total Customer Focus training programs.)
We have been providing hands-on, experiential customer relationship training to global field service teams for over 15 years. Contact us today to exchange ideas about how our customized programs can help you create new value for both your company and your customers.