Perpetual ServiceCreating a Premium Service Contracting

Brand in a Connected WorldPresented By:

The Internet is making the world smaller. Technology for collecting and sharing information is so cheap and ubiquitous that we can communicate, collaborate, and build meaningful relationships independent of physical proximity. This trend has already reshaped the retail landscape where companies without an Internet commerce model are hardly relevant these days. Customers can research products and engage vendors to make even the most expensive and important purchase decisions in their life without ever seeing or touching the product whatsoever. There is almost no category of retail merchandise that is not suitable for online commerce. Retail brands that are great at online commerce thrive, and those that are not disappear.

The trend toward a smaller world driven by technology is going to dramatically alter service industries as well. Knowledge services such as software development, technical support, and even basic research have already been impacted with Internet connectivity shifting capacity around the globe in search of more effective economic outcomes. Taxi services have been upended by Uber, which provides the customer with a rich customer service experience via the mobile phone. Information regarding the driver, pick up time, and billing are all streamlined with Uber and the mobile phone.

Until now, trade services have largely been spared the brutal competition brought about by technology. Everyone knows that you cannot fix a toilet in Chapel Hill with labor from China, or even from Chicago for that matter. The shifting of capacity around the globe that has altered the knowledge services industry is unlikely to affect trade services. Turning wrenches requires physical access to the nuts and

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bolts. However, the Uber example above proves that local services of all shapes are at risk due to the evolving technology landscape.

Is turning wrenches actually what makes trade services valuable? Is skilled labor really the driving force in the economic model? What role do expertise and customer service play in setting the price and building the relationship with the customer?

All trade services professionals already know the answer to these questions – nearly all of the profit lies in the realm of expertise and customer service, and almost none of it is based on the value of the labor itself. Expertise, trust, information, and communication are the key elements of extracting a brand premium in a service relationship. Getting paid for what you know is much more lucrative than getting paid for where you go. As great customer service becomes increasingly defined by online collaboration with the customer, service contractors will be forced to either adopt technology that enables this engagement, or they will become the labor bureau and the truck depot for other brands on the Internet. Service contractors can get paid a brand premium for expertise and customer service, or they can manage labor and trucks for a small markup on the cost of labor. They can own the customer relationship and get paid for what they know, or

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they can be dispatched to service another brand’s customer and get paid a labor wage for where they go.

Perpetual service is a new approach to customer service that emphasizes the use of technology to attract, engage, and perpetuate profitable long term service contracting relationships. Communicating with the customer via the Internet throughout the service cycle creates a brand that is memorable and accessible. Collecting and displaying rich information that demonstrates quality stewardship during the repair, maintenance, and upgrade of customer equipment builds the trust that supports a premium price. Delivering information via the Internet lets the customer browse and learn on their time and on their terms and does not create an administrative burden for retrieval and review. Information on the Internet is richer and much easier to store, search, review, and appreciate than a crumpled, coffee and tobacco stained carbon copy of cryptic accounting codes documented with bad handwriting. The digital service artifact is perpetually available at zero cost, whereas the crumpled paper no doubt ends up in the trash.

Perpetual service is about changing the trade service approach to continuously engage prospects and customers online in order to create relationships that last forever. Technology will continue to make the world smaller and introduce new and extraordinary competitive pressures. Similar to the retail space, this transformation is likely to create powerful new service brands and bury once powerful brands that could not adapt. Ironically, the same forces that are creating the threat also enable a bright future for service contractors with the will to act. The dynamics that reshaped the retail industry may actually help preserve the existing competitive landscape in service contracting. Specifically, access to extraordinary technology no longer requires

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access to extraordinary capital thanks to companies like Apple, Amazon, and Google. To borrow and twist a phrase from Sir Isaac Newton, service contractors can see and embrace perpetual service if they will simply “stand upon the shoulders of giants” and adopt technology to create customer relationships that last forever.

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The Lessons from Retail

Since the late 1990s, the retail commerce industry has been completely reshaped by the Internet. Brands like Amazon and eBay deliver an extraordinary retail experience based on their expertise in processing information. They present rich interfaces and engagement online that helps the customer make an informed buying decision. They also engage an army of small niche retailers that use their platform to fill in the gaps for unique items that do not sell in large volumes. The result is that customers can shop and compare and select almost any merchant item online with high confidence that they are getting a fair value. In addition, the customer receives extraordinary customer service information delivered via their online accounts (shipping notices, purchase history, reviews, return instruct ions, etc) which makes the experience even more memorable and rewarding. Old brands such as Borders, Circuit City, Blockbuster, and Radio Shack that did not adapt to this new online reality f o r c u s t o m e r s e r v i c e h a v e b e e n marginalized or have simply disappeared.

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New brands are now emerging on the Internet that are focused on trade services. Angie’s List and HomeAdvisor are household names, and other brands like Porch, Pro.com, FM Facility Maintenance and others are emerging with new business models that rely on information, connectivity, and expertise and not local service presence. As with the online retail revolution, some of these will be successful and others will fail in spectacular fashion. Independent of the winners and losers among the new Internet brands, the old brands that do not adapt to t h e s e n e w requirements for in format ion and customer service will surely be losers w h e n t h e d u s t settles. Customers will be the ultimate winners because they will be able to use the Internet to research, review, connect, and purchase services with a new and extraordinary focus on information, expertise, and customer service. Ubiquitous connectivity and free flowing information will lead to new levels of accountability, transparency, collaboration, and service efficiency. Local service contractors will either adopt technology that helps them display their expertise and connect with their customers to build a premium brand, or they will slowly and inevitably shrink as their technicians become freelancers supported by the Internet brands.

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Customers will be the ultimate winners because they will be able to use the Internet to research, review, connect, and purchase services with

a new and extraordinary focus on information, expertise, and

customer service.

The positive news for the service contractor is that the massive technology infrastructure spending that characterized the build up of the Internet retail titans will serve to benefit the coming revolution in trade services. Progressive brands in the trade services space will be able to implement extraordinary capability for online customer service with very small incremental monthly expenditures. The old capital outlay model for information infrastructure is being wiped away by low-cost software as a service (SaaS) and cloud computing models where everyone shares in the expense of the infrastructure. Amazon in fact

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The key lessons from the retail market that predict the future of the trade services market are:

New Internet brands will emerge that emphasize information, expertise, and customer service without any requirement or expectation from the client of local service capacity.

An army of individual freelance laborers will fill the local labor capacity requirements of the Internet brands at a small markup on the prevailing labor wage.

High volume service purchases (water heater replacements, HVAC preventative maintenance, burner startup) will experience extreme price pressure as transparency and online comparison shopping replace the race to the driveway.

Old brands that do not adopt technology to gain an edge in customer service and build customer loyalty will become marginalized or disappear.

has emerged as the largest purveyor of cloud infrastructure with a “pay as you go” commerce model that most software providers are adopting to deliver applications to their customers - at a fraction of the capital costs that were formerly required.

Service contractors will have the opportunity to assemble a portfolio of applications for delivering great customer service if they simply commit themselves to being great. The biggest expense will be the time they must invest to become educated about the new breed of applications and to build a strategy that suits their goals for their business and their customer service promises. The key tenets in assembling this portfolio of new age customer service applications are:

Service contractors will have many applications from many vendors because no vendor will have a monopoly on great customer service innovations. These applications are very different from accounting applications where by definition you should only have one as a control point for your business.

All customer service applications will be delivered in a SaaS or cloud model because no business will be in a position to afford the infrastructure costs to do truly great things with technology on a standalone basis. The expense and the rate of innovation are simply too great for a single company to bear that burden.

The applications will integrate with other applications where necessary to enable seamless business processes and sharing of data. These integrations will be accomplished by public Application Programming Interfaces (APIs). No need to

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understand them, but ask the vendor how they work and what partners they support.

None of the applications should seem expensive or burdensome from an adoption perspective. If they seem that way, you are dealing with a poor vendor that will not survive the revolution.

The retail revolution of the late 90s and the first decade of the twenty-first century foreshadows both change and opportunity for service contractors. Those companies that embrace the opportunity to build an incredible brand via Internet technology will have the chance to do so at a price and pace unimaginable just ten years ago. Those that do not change to reflect new requirements for customer service will face a competitive barrage from the Internet that will be very difficult to survive.

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Creating The Digital “Wrap”

Why do service contractors wrap their trucks and vans with logos, brand promises, and contact information? These wraps can cost anywhere from $1,000 to more than $5,000 per vehicle depending on the complexity and size of the scheme. The answer is simple – as they deliver service in their coverage area they want both their customers and prospective customers to see their brand in the neighborhood. Ideally, the logo and the brand promise are memorable, and the simple act of delivering service will yield future service opportunities.

There are a couple of important principles that are demonstrated by the near-universal popularity of the truck wrap as a brand building medium:

1. It is ideally targeted because it only appears in the areas you serve. Absent joy rides by the technicians on the weekends, the impressions you deliver have a near 100% probability of being relevant to the audience.

2. It requires no extra effort by the technician that could potentially distract from the most important task of delivering quality service

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to the customer. The technician does not have to remember to turn on the wrap or do anything extra to get the impressions.

The truck wrap works because it is targeted and easy to administer. Using these principles, how might a service contractor gain impressions in their coverage area as easily as the truck wrap delivers impressions? What other simple artifacts of delivering good service, similar to simply driving the truck to the service location, m i g h t y i e l d f a v o r a b l e cus tomer and prospect awareness?

The “digital wrap” is the proactive and modern system for delivering exceptional c u s t o m e r s e r v i c e , f o r uncovering new opportunities with customers, and for remaining constantly visible to customers so they know whom to call when service is needed. The “digital wrap” is valuable and available to customers before, during, a n d a f t e r s e r v i c e appointments.

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“Go Paperless”When service contractors migrate their existing customer service administrative processes to a digital approach, they have the opportunity to deliver lasting impressions to the customer without any incremental advertising overhead. The “go paperless” call to action that so many technology providers squawk about completely ignores the benefits of truly digital customer service. This uninformed “go paperless” soundbite focuses on the office administrative benefits of migrating from bad handwriting and expensive triplicate forms to electronic forms, and it completely ignores the potential brand building leverage of a fully digital approach to customer service. Electronic paperless forms are better from an administrative perspective – cheaper, faster, and easier to share and store. However, keeping all of the same processes with a singular change in the medium of the form is a weak transformation at best.

The “digital wrap” only works, however, if the service contractor truly embraces a digital approach that does not incur extra steps on the part of the technician or the office staff to get the benefits. Anything extra will be ignored in the chaos of everyday operations. Changing operations so that digital impressions happen automatically is the benefit of going digital instead of simply going paperless (read more about the “go paperless” buzz). However, what is the roadmap to going digital? What are the essential principles?

• Systematically collect and store customer email addresses. Make this requirement part of every interaction.

• Find opportunities to migrate processes like scheduling, dispatch notifications, job review and invoicing, and estimates/quoting to email and the web. NOTE – electronic copies of the same tired old forms used scanned into digital format and attached to an email does not cut it. That approach is just extra work in the office or the field and will promptly be ignored by your staff.

• Use photos, video, audio and other rich media to spice up your impressions and engage the customer more dramatically in the service review process. Seek service management solutions that integrate these critical elements seamlessly, not as an afterthought.

• Collect and manage more information (equipment information, service preferences, key contacts) for each customer to provide better context for your communications and to demonstrate the quality of stewardship regarding their property and equipment.

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Let them be surprised by the thoroughness and organization of the engagement.

Why is the truck wrap more limited than the “digital wrap?” The truck wrap is fleeting. When the truck leaves the neighborhood, the impression is only valuable if the customer can remember the logo, the promise, and the contact information. Similarly telephone calls to arrange service call logistics are also not optimal because they are expensive to administer, and they are inconvenient for the customer because it interrupts their day to speak to the caller. Like the truck wrap, it is also hard to remember the content of the interaction because it is only stored in their memory or perhaps a scratch pad on the desk or kitchen table. A “digital wrap” that engages the customer at their email address and the service contractor web address does not suffer from these limitations.

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5 reasons the “digital wrap” is superior as a customer marketing tool

A key principle in going digital with service artifacts is to change where the customer is engaged. Instead of the limitations of the physical street address and even the phone number, a digital approach engages the customer online to lower the administrative burden of the interaction and increase the likelihood that the impression sticks with the customer.

Easy to search

Easy to store Rich and engaging

Measureable Cheap

Customers do not have to remember much because of the power of email and web searches.

Customers probably will not throw away the electronic communication because it costs nothing to store it. They throw away their pink copy of the triplicate form left behind by the technician, rendering it worthless as a brand-building medium.

On the web, the richness of the interaction can be extraordinary. Photos, references, recommendations, links to other items of interest all draw the customer into the brand and make it memorable.

Web engagement is easy to instrument and measure. The digital footprints of the customer through the online experience can be used to improve the reaction to their needs.

The computer processing power to deliver the impressions is much less expensive than the labor associated with phone calls or the expense of actually showing up at a physical address.

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All of these relatively small online innovations add up to a customer experience that mirrors what the online retailers have done to attract and retain customers. In the online retail world, it is normal and expected that you have an account where information reflecting typical customer service capability is stored and actionable. All the artifacts of the shopping and buying process are there – shopping cart, shipping notices, return instructions, reviews, complementary items, etc. Expecting service contracting businesses to be held to a different and lower standard for customer service in the future is not reasonable. The “digital wrap” is the service contractor equivalent of the online account for retail customer service. It completes the shopping and buying experience for services and makes the

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Examples of how your company can “Go Digital”

Email that the technician is on the way, with a photo of tech, time of arrival, and services to be delivered.

Thanks for the business, here is your online service report with helpful links to other resources you may find valuable.

Digital quote with photos and videos of impaired equipment and one-click acceptance with an “approve now” button.

Online reviews integrated with the after service email summary.

Service due and scheduling reminders with interactive scheduling wizards.

Access to service history via the website.

Email campaigns when customer equipment is nearing the end of life. It will be cheaper to replace before an emergency failure. Provide the service data to back it up.

contractor memorable and valuable beyond the value of the service labor.

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Expanding Services – The Case for Artisanal Cheese

As the Internet shrinks the world and arms consumers with information on how much things should cost, the service contractor’s service area will shrink as well. Customers will have information on which contractors serve their area, and they will make judgments on who can likely deliver the service for less based upon information they find online. Customers will be also armed with information regarding what service calls for common repairs and replacements should cost. They will simply Google:

“How much should it cost to repair [insert service item here]?”

Google sends back advertisements, forums, customer reviews, articles, and a whole host of information to arm them in negotiating for better pricing on common “bread and butter” service calls. With a shrinking service area and pricing pressure on “bread and butter,” how can the service contractor maintain margins and growth? One strategy is to offer the customer “artisanal cheese” to complement the “bread and butter.”

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Why do grocers always place the bread, butter, eggs, milk, and other daily consumption items at the back corners of the store? So the customer has to walk past craft beer, tasty snacks, soda, candy, fine wine, and artisanal cheese to get to the commodity items. Everyone knows what bread and butter should cost, so grocers do not make any money on it. Artisanal cheese does not face the same pricing pressure because it is a niche item that does not suffer the same comparative price scrutiny. It is a treat that customers will splurge to enjoy. If you are a service contractor, offering the service equivalent of artisanal cheese is a great way to maintain growth and profit as the Internet inevitably shrinks the service area for bread and butter.

Artisanal cheese, however, needs to be packaged differently than bread and butter. It is typically merchandised in a fancy wrapping inside an attractive display that also contains complementary items that likewise command a premium margin. It is offered in the context of the consumption habits of the customer, often with expert reviews that help the customer feel good about the purchase at the inevitable high price.

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Customers will have information on which contractors serve their area, and they will make judgments on who can likely deliver

the service for less based upon information they find online.

So, the service item analog should be thoughtfully packaged for consideration by the customer as part of a standard call for delivering bread and butter. During the bread and butter call, the opportunities to sell artisanal cheese should be documented and presented back to the customer in a way that relates the thoughtfulness of the recommendation. These are upgrades, improvements, and retrofits that all bring incremental value to the customer. How might they be received if they are laid out in bad handwriting on a coffee and tobacco stained accounting ticket? How much more receptive might the customer be if they are laid out online with photos and other rich supporting documentation that purports the superior quality of this premium service item (artisanal cheese)? Fancy wrapper? Check. Attractive showcase? Check. Complementary items offered? Check. Premium margin? Check.

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Smart Devices mean Smarter Services

The “Internet of Things” is a popular phrase describing a future where lots of currently dumb devices become smarter because they are connected to the Internet. The devices themselves are really not much smarter, but because they can connect to cloud computing infrastructure that monitors their output for fault conditions, these smart devices can enable smarter services. It is not difficult to imagine the value to service contractors when fault conditions on all types of equipment are immediately available to enable fast response for the benefit of the customer.

Imagine a refrigeration contractor monitoring the compressor motor current and the interior temperature of a walk-in freezer. As both the current and the temperature climb to some threshold point, an alert can be issued that calls attention to the plot of these numbers indicating the compressor will not continue to hold temperature much longer. When this type of information is instantly transmitted to the experts at the service provider, along with the maintenance history and specifications for the equipment, the path to a repair is much more efficient – ideally before a failure results in an expensive loss of food inventory.

Service scenarios of this type are not far in the future, and in fact they are regularly occurring today. Fire alarm and security alarm companies have monitored sensors for detecting fire conditions and security breaches for decades. These monitoring systems are now commonly connected to the central station infrastructure via low-cost Internet connections instead of dedicated phone lines. The history of

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these services can provide a blueprint for how service contractors in other trades might begin to establish monitoring and maintenance contracts for all manner of other sensors and monitors at customer facilities.

There are literally hundreds, if not thousands, of central station monitoring companies around the world that monitor fire and security alarm systems. In most cases, these companies provide wholesale services that are sold to the end customer by a local dealer of alarm equipment – often a service contractor that also provides installation, maintenance and related services for the equipment. Typically, the local alarm service contractor maintains the relationship with the customer, including the billing and collection of the monthly fees associated with monitoring. The service contractor keeps about 50% of the collections as margin for the service and passes the balance along to the central station to cover the monitoring service charges. In the case of an alarm signal, the monitoring company sends the information to the appropriate entities, including the property owner, the fire department, police department, and the service contractor. These entities then follow certain procedures and protocols depending on how the alarm situation progresses.

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Smart devices, monitoring,and predictive service align perfectly

with the concept of perpetual

In the case of smart devices enabling smart services a similar arrangement will likely emerge. Central station companies that provide specially tailored data collection, analysis, monitoring, and notification services will emerge to serve various types of monitoring equipment and the related servicers of that equipment. These wholesale monitoring companies will provide blueprints for setting up the monitoring services for various types of equipment that then lead to alerts and alarms that help the customer and the service contractor respond appropriately to a fault condition. In some cases, the forward thinking service contractor will setup and manage unique monitoring services especially tailored to the type of equipment they service. Technology building blocks such as sensors and cloud data services will emerge that allow these savvy service contractors to create their own unique monitoring and response offerings tailored to their customers and equipment maintenance agreements.

The key preparations for the service contractor to undertake to be ready for this new market offering are:

1. Consider key equipment failure modes that lead to expensive recovery processes for the customer. How might these failures be predicted? What are the critical one or two measurements that could be taken periodically to detect a pending failure? What are the values and correlations that should be monitored as thresholds?

2. How might the equipment be monitored? What sensor options exist that are open and cheap (instead of proprietary manufacturer solutions)? Look for devices that are easy to connect to an IP

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network. Ideally with simple power options – i.e. hopefully you can avoid batteries that must be replaced.

3. Who are the cloud data storage providers that might capture and monitor the output from these sensors? Are there early experiments to test solutions for customers? Look for low-cost solutions, and be creative in how these might be harnessed to serve the monitoring needs of the customer.

4. How will alerts create service calls? What information should be inserted into your customer service application from the monitoring application to engage both the customer and the technician in the resolution of the fault condition? What information will be sent to the customer setting up the service context for review or approval?

When these preparations all align, they will deliver a powerful new revenue engine for the service contractor. A monthly monitoring fee can be levied on customers who will gladly pay it to avoid expensive business disruptions created by unplanned equipment failures. In addition, new service call revenue will be generated in a manner that enables remediation of a problem BEFORE it disrupts the customer’s business. Service can be delivered in the positive context of prevention instead of the negative context of an emergency. A low cost, non-proprietary approach to monitoring coupled with the positive outcomes of a proactive service approach will certainly help create a premium brand for the service contractor. Smart devices, monitoring, and predictive service align perfectly with the concept of perpetual service. Technology enables service that is always on and lasts forever.

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Conclusion

The Internet is going to change service contracting. Brands that do not embrace technology to enable perpetual service for the customer will disappear or become marginalized as the labor bureau and truck depot for stronger brands. Engaging the customer online cannot be an afterthought or an extra process. Just like the truck wrap, the “digital wrap” should provide favorable customer impressions as a zero cost artifact of executing the service process. As margins shrink for common service items due to customer education via the Internet, service contractors need to embrace the change and expand their capabilities to offer more value. Expanding capabilities means providing a richer product set with better customer service and a predictive approach to service. Technology and the Internet are the only cost effective path to perpetual service. For the service contractor that seeks it, low-cost capability is available to avoid the fate of becoming a slave to an emerging virtual service Internet brand. Creating a premium brand with excellent customer service that lasts forever is within the grasp of those that will reach for it.

Questions? Comments? Join the conversation about delivering perpetual service in your industry at go.servicetrade.com/perpetual-service.

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