On various occasions, virtually all of us have thought about the associations that are linked to our companies and our brands. We’ve observed situations in which positive associations have helped companies grow and prosper, creating equity in the process. We’ve also observed situations in which negative associations proved to be too great a hurdle for some companies to overcome. And we’ve all spent time thinking about the associations to which we aspire. That is something that we do as individuals as well as business leaders.
Recently, at a conference sponsored by the Institute for the Study of Business Markets, the program included a panel of three manufacturing company CEOs who shared their perspectives as to the most significant challenges facing firms like theirs in the coming years. One of the questions posed to the panel focused on their goals as to how customers thought about their companies. The answers were quite interesting. One of the CEOs said that he wanted his customers to see his firm as “helpful” and a source of “positive surprises”. A second hoped that customers saw his firm as the “#1 call when there was a problem”. And the third hoped his customers saw a “relentless aim to please”.
What makes those answers, all of which focused on the service relationship that the firm has with its customers, even more remarkable is that all three of the firms have strong records of innovation, emphasize investments in new product development, and offer products that are used in highly demanding settings. Roberto Clemente, the great right fielder for the Pittsburgh Pirates, once said “I want to be remembered as a ballplayer who gave all I had to give.” These CEOs said they want their firms to be remembered for their commitment to and excellence in customer service – they wanted their firms to give all they had to give in terms of service.
In many ways, it’s not surprising to hear executives tout the importance of services. Sam Walton said that “The goal as a company is to have customer service that is not just the best but legendary.” Jeff Bezos similarly said that “It’s our job every day to make every important aspect of the customer experience a little bit better.” But for manufacturing companies like those represented on the panel mentioned above, building strong service competencies is a major challenge, one that requires active leadership involvement. Services are different from manufacturing, along multiple dimensions, and delivering legendary services is a rarely-reached accomplishment, regardless of the industry in which you operate.
Certainly compared to the everyday service demands on companies like Wal-Mart and Amazon, many of the service demands on manufacturing companies are unpredictable and often unprecedented, with requests arising at unexpected times and usually involving a high degree of urgency. To respond to such requests often requires the manufacturing firm to draw upon company resources that probably have a “full-time day job” that isn’t centered on customer support. Many service requests are ill-structured, with customers often unable to define their needs clearly, sometimes only able to communicate that they have a problem requiring attention. Responses to such requests frequently require 24x7 resources and processes. And the problems that spark such requests are frequently unbounded, with many service requests having little (and sometimes nothing) to do with the products made by the company.
Meeting these service-related challenges requires active leadership involvement, particularly in the manufacturing environment where the focus on services is a relatively new phenomenon. It was not too long ago when as many manufacturing executives viewed services as “the hole in the income statement out of which profits drain” as there were executives who saw services as a key basis of differentiation and competitive advantage. The perspective on services has changed, but there is still a long way to go in terms of realizing the potential that exists for value creation and capture. There are several key steps that executives can take to help their firm ensure that services are among the positive associations in the minds of their customers.
The first challenge that a firm’s leaders must address often involves selling the importance of services throughout the organization. My research into the challenges of changing a firm’s business model, as reported in an article in the September 2011 issue of Business Excellence, concluded that the two most frequent causes of failed attempts to introduce a new business model are “Internal resistance to the new business model” and “Implementation process was poorly managed”. Both of these situations can derail efforts to incorporate services into a firm’s offering.
Making services an important part of your firm’s offer typically implies a major change to most manufacturers’ business model, with its typical emphasis on the processes that are associated with the firm’s products. The concept that customers must think of services as a top-of-mind association with the firm has to be sold, over and over again, and the selling has to be lead from the top of the organization. Not everyone in the organization will see services as a good idea, and others will implicitly offer resistance through some combination of ignorance, errors, lack of skills, and conflicts between service delivery and their other goals and priorities.
Avoiding failures associated with a poorly managed implementation process starts with a commitment to avoid the “ridiculous resourcing decisions” that have been reported in far too many organizations. More than in any other business function, I’ve seen under-resourcing of service delivery by such a substantial margin that failure should have been easily predicted.
If service delivery is to become one of the positive associations linked to your firm, you must give the service delivery team a chance to succeed by providing the right level of resources and the right competencies. This is especially true when existing business units that are being asked to add services to their roster of responsibilities. Most likely, those units are already stretched by their current responsibilities, and equally likely, the people in them don’t come from a background of service delivery. The challenge is not only ensuring that there are enough resources, but also that the right resources are in place.
Most manufacturing companies have strong quality programs, and know that “if it isn’t measured, it doesn’t matter”. Yet far too often, these same firms fail to establish clear performance metrics for services. Successful service delivery requires the same thoughtful decisions as to standards as are given other business functions. Achieving success requires setting goals, measuring results carefully and frequently, and giving leadership attention to the attainment of those goals. Meeting the service goals must be seen as being of consequence throughout the organization. That not only means reviewing results against goals and taking actions to correct shortfalls, but it also requires that achieving goals makes a difference to the firm’s employees in terms of incentives, promotions, and business reviews.
I recently worked with a manufacturing client that was part of a relatively compact industry, including a few major players along with a few niche specialists. Most customers were extremely loyal to one of the major competitors, with only about one-fourth of the customers regularly considering more than one brand when making a purchase. The rest were regular, repeat customers, buying the products of their preferred manufacturer. As part of the work with this client, interviews were conducted with a substantial number of the customers in this market, including ones that preferred a specific manufacturer and ones that were in the “willing to switch” category.
What was remarkable about what had created loyalty in the first group and what drove choices in the second group was that the messages from the market in both cases were centered on services. When “product” came up, the typical message was that all of the major firms in the industry were “pretty comparable” and “had good products and a good product line”. When “price” came up, the common message was that “the industry was competitive, and you could count on getting a fair, competitive price”. But when “services” were discussed, the comments of the interviewees often became passionate. Customer after customer underscored the importance that they gave to the services that surrounded the products that they were buying. Excellence in service delivery was for many customers the basis for their loyalty to a supplier, and, in other cases, it was the factor that separated the winner from the losers in competitive situations.
Services can become an important means by which manufacturing firms create value for customers and capture it for their shareholders. As the CEO comments that I summarized at the start of this article suggested, they are frequently so important to the customer that they create long-lasting memories that shape, for better or worse, the customer’s impression of the company and their willingness to do business with it. Aspiring to have “great services” become the first thing that comes to customers’ minds is a quite worthy goal.
But knowing of the importance of services is only the first step in the process. Service success stories don’t come easily, and usually only emerge in firms where there is active leadership attention to the task of creating a strong service culture within the firm. That reason alone, in addition to the significant difference between service delivery and traditional manufacturing-related activities, calls for active leadership involvement to communicate the importance of services throughout the firm, to resource and implement programs that have a realistic chance of succeeding, and to make the commitment to services a meaningful part of the company’s culture through measurement, review, and rewards.
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