What about on a 1-to-1 basis? That’s how success is achieved, isn’t it?

For example, how well are you doing with that specific customer/end-user? Or that one…or that one…or…

How can success be measured 1-to-1?

Customer Satisfaction Ain’t All It’s Cracked Up to Be

Typically, the burden falls on a single satisfaction score. The happy face survey results.

Customer satisfaction is a feel good measurement and it’s still important. But it’s an attitude, not a behavior.

People will describe how they feel - but their actions may be different. They say they love you, and then do something less than love. Familiar, huh?

Trust is King in the land of 1-to-1

However, if you’re an in-house service provider or outsourced vendor, a good measure of your success is how much you’re trusted.

Isn’t that what you want from customers/end-users? To be more trusted than their alternatives?

How Can You Measure Trust?

Trust can be measured in utilization.

For example, how much your customers/end-users use everything you have to offer. That’s the key: using everything you have to offer.

Think about it. The more customers/end-users trust you - the more they’ll use your services.

Not just the one service they have to because of in-house/contract requirements. But all those other services you’re capable of providing. It’s the 2nd, 3rd, and 4th services that show you’re trusted.

When customers/end-users trust you, they rely on you to help them, to work for them. This goes beyond the usage of the mandated/base contract.

In-House Service Providers

Trust as measured by utilization might be hard to comprehend at first.

If you’re like most in-house service providers your end-users have no choice. They have to use your service, it’s mandated.

But what about all those other services that you COULD offer? Are your end-users coming to you for them? Are they even aware of what else you could do for them?

In addition to your basic service, there are probably 10-20 other services you’re capable of delivering. Any of those associated services, end-users might use, if they know you offer them.

There are even some services farther out there that you might offer. Consider:

• Planning with end-users to get the most from your service
• Liaison with end-users to help them engage service from other providers at outside locations

In-House Service Mission

As a sign of success, using more in-house service may seem counterintuitive. The more your end-users use you, the higher your department’s spend goes.

But that’s what your department is there for. In-house support services enable end-users to focus on their jobs. And its your fellow end-users who are working directly on your company’s survival and success.

So, the more end-users can concentrate on their jobs, and trust you to do more of what you do well, your company wins.

Outsourced Service Vendors

Trust as measured by utilization (aka add-on sales, or share of wallet) is right in your wheelhouse. At least it should be.

Add-on sales to the same customer typically provides:

• Higher profit levels
• Lower cost of customer acquisition (you’re already serving them)
• Faster revenue due to the above

Please tell me you’re measuring share of wallet, along with all those other aggregated measurements.

The Trust Index

Measuring trust is not easy, but not impossible either.

Think of it as an index, a combination of several measurements mashed together. Simply put it only takes 3 steps:

#1 Figure out everything you offer & quantify/price it

#2 Find out what your customer/end-user can use (ask them)

#3 Calculate the percentage they are using of what you offer (%)

Not easy, true. But you can tell the degree to which you’re succeeding with customers/end-users. On a 1-to-1 basis.

How do you determine how much your trusted?

~~~~~~

Chris Arlen
President, Service Performance

Technorati: in-house services, outsource services, trust

Image by: superk8nyc

Recently a client brought up the question of “who defines service”. Not WHAT the specs were. But HOW the end-user should receive service.

This client is a large corporate service department of a large, very large corporation (did I say they were large?). They provide service to their end-users, all who are part of the same company. Get the picture?

So, my client, as a service provider, asked “who defines service”?

The Dilemma

My client was concerned their end-users would expect Nordstrom’s type service. When obviously that wasn’t possible even with their significant resources.

Their end-users are mandated to use my client. They’re not supposed to have the option of going outside for service.

Mandated or not, end-users still have some expectations of HOW they want to be served.

And my client felt they couldn’t give everything that their end-users wanted. And so the question arose “who defines service”?

An Answer?

We did our best to provide an answer. And it may not have been as definitive, or as satisfying as our client would have wished. But reality is like that sometimes.

Here is one answer in two parts to “who defines service”?

Part #1 Service Scope

The budget and business contribution of the end-users defines WHAT is done for them. You’ll recognize this as scope defined in service specifications.

The more important and/or valued the end-users, the more services will be scoped, budgeted and paid for to take care of them.

Part #2 End-User Expectations

End-users define HOW they want to be served.

Just ask ‘em. They’ll tell you.

The service provider must do everything they can to bring end-users expectations as close to reality as possible.

Then the provider must work hard to help end-users perceive as much of the services that were delivered, and the quality of those services too.

Expectations Aren’t Always Fulfilled

Seems a bit too simple, but there it is. Just because end-users might expect Nordstrom’s service within their corporate office, doesn’t mean they’ll get it.

But the burden to communicate to end-users falls fully, and entirely on the service providers’ shoulders. It’s their job to influence expectations and raise perceptions.

And that’s in addition to doing the work on time, on budget, and in compliance with contract, environmental, social and legal requirements.

Tough order? Nah, it goes with the territory of service provider. Doesn’t matter if you’re an internal department serving your fellow employees, or an outsourced contractor. It’s all part of the game.

How, and who, defines your service?

~~~~~~

Chris Arlen
President, Service Performance

Technorati: service, service scope, specifications

If your business touches those lately hit by the downturn, you’re already feeling it. Hopefully, those in charge of your firm’s diversification have planned for it in advance .

If you’re a service contractor, and the bulk of your business is serving customers like those chain restaurants, you’re probably looking at new vertical markets. Good hunting, so are lots of others.

In either case, customer or contractor, diversification of your business base isn’t a bad idea. But who thinks about it in good times?

I guess the lesson to be learned is “in good times try and remember the bad times”. But not by missing out on some portion of the gold rush.

How is your business base diversified?

~~~~~~
Chris Arlen
President, Service Performance

Image by: night86mare

Technorati: diversification, service contractors, vertical markets

Determining expectations explicitly and fully understanding them is essential to successful engagements.

But it’s rarely done to the degree that’s needed. And when they’re not, lawsuits, red ink, torched reputations and hurt feelings can result.

Looking at Gap 5

In “Gap 5 & Roswell” you’ll find the key driver to service quality is Gap 5, which is from the ServQual model by Zeithaml, Parasuraman & Berry.

Gap 5 is the distance between customers’ expectations and their perceptions. The closer the gap - the higher the service quality. And once engaged, service quality is a big driver to happy business.

Yes, price and product quality count too, but once engaged price is compared to the quality received to see if they match. And product quality isn’t a major driver in services.

Starting a service engagement screams for really understanding those expectations. Before service starts.

Specifications are not Expectations

Specs define “what” is done, sometimes “when” and by “who”. But rarely do specs spell out how exactly the results buyers/users want. Even if they do, there’s a world of different interpretations.

Sellers/providers can work through processes with buyers/users describing their expected outcomes in writing, even by pointing to physical examples to agree on what they’re seeing.

SLAs & KPIs are Not Enough

Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) are great tools and necessary components for determining expectations. But there’s more to it than customer satisfaction and inspection scores.

Understand Communication Preferences

How and when expected information is communicated is also a part of buyers/users expectations.

Sellers/providers must find out how and when buyers/users want to be contacted. And in what circumstances.

Emergency Contact Lists are Not Escalation Protocols

Sellers/providers must get specifics from buyers/users about triggers for communicating incidents in progress. Security services and IT providers typically do this well.

However, all service providers should document a series of common incidents that can happen and find out their buyer/user wants to hear about it and when. Best to work this out during the pre-start up phase of a contract/provider transition.

Asking is a Great Way to Raise Awareness

When sellers/providers ask for these specifics from buyers/users it points out several things, all good:

1) This seller/provider is proactive, process-oriented and experienced enough to deal with more than the incidents - but also to keep their buyer/user in the loop and blood pressure down.

2) The buyer/user gets to think about how they want to work with their seller/provider. As a result the working relationship has a better chance for smooth interactions during tough times.

How do you determine expectations?

~~~~~~

Chris Arlen

President, Service Performance

Technorati: Gap 5, KPIs, ServQual, service expectations, contract services

He’d started with the company 9 months ago and wanted to formally communicate his achievements to the owners.

The professionally printed and bound report highlighted financials, technology improvements, service innovations, and sales and marketing efforts.

This was a smart move on his part - to explicitly get recognition.

Wherever you are on the food chain, you’re accountable to somebody - to your boss, shareholders, customers, employees, regulators, the environment, the public at large. Any and all of the above.

How is your personal performance communicated?

Most businesses attempt an employee performance review annually. But those reviews can be perfunctory, or skipped altogether when the latest crisis calls all hands on deck.

Then you’re left with another year of great work and accomplishments, but unsure if anyone upstairs knows your name.

Upwardly mobile career path

Ever wonder why some executives rise up corporate org charts faster than other, more qualified ones?

It’s due to their skills communicating personal success. And although it’s self-serving, it’s made not to appear so. It’s described in terms of the business’ success. And they were its engineers.

Create an Individual Annual Report

Take a page from the fastest rising among us - communicate your success. As it helps your business and stakeholders get what they want.

1) Create a 1-page annual report of your achievements.

Make it easily read within 45 to 60 seconds. Stay away from dense text paragraphs. Make it fact-filled with bullets, charts and tables. Define accomplishments.

2) Send it to your boss shortly before your annual review.

You can then spend your time talking about your future. And how you’re going to help the business further, and in the process make your boss look good.

How do you communicate your success?

~~~~~~

Chris Arlen

President, Service Performance

Technorati: annual report, career path, personal performance

Bandwagons are for jumping on.

And Green is playing loudly everywhere, especially in the facility services arena.

Greenwashing was inevitable. There’s always a population of businesses and individuals trying to capitalize on deception and misinformation.

Why? SourceWatch lists a number of reasons why companies greenwash, but the one they list I believe is the main driver is:

“…seeking to expand market share at the expense of those rivals not involved in greenwashing; this is especially attractive if little or no additional expenditure is required to change performance; alternatively, a company can engage in greenwashing in an attempt to narrow the perceived ‘green’ advantage of a rival…”

Not all green marketing claims are false. But add a healthy dose of cynicism and some investigation to the claims.

And it’s never black and white for those who are, and who aren’t greenwashing. There’s always a location on a sliding scale that gives a rationale for claiming Green.

Is it using a few Green Seal products? Or is it being certified ISO 14001:2004 at all a companies locations?

Who’s to say?

In the very near future Green will be a requirement, like following OSHA. Really, who markets their contract business is OSHA compliant. It’s a given, an expectation. So it will be with Green, evenutally.

But for now, here’s an excellent guide to greenwashing (it’s a large file, 2.82 mb) from Futerra Sustainability Communications. Though written for the U.K. it gives a great window into greenwashing.

Where have you seen greenwashing lately?

~~~~~~
Chris Arlen
President, Service Performance

Technorati: environmental marketing, Green, Green cleaning, Greenwashing

Image by: .klash

And life now a days is just as befuddling as it was in his time. Media and experts pour out spin that can overwhelm our native intelligence.

Sometimes things are as simple as they appear. And that’s encouraging when wrestling over a complex decision or planning something.

Here are several examples of what appears to be lapses in common sense.

Too many Starbucks?

Starbucks is closing 600 stores because they’re unprofitable.

“For years, Starbucks was known for aggressive growth, opening some stores only a few city blocks away from others.”

Too many stores too close together? You’ve seen it. One Starbucks within frappucino distance of another. Starbucks fell to their own propaganda.

Auto crisis follows rising gas prices?

Car Sales at 10-Year Low.

Evidently gas prices affect auto sales. Sound new? Here’s a personal story.

My father purchased a Chrysler dealership after years of being a very successful salesman. He’s in his new dealership for six months when gas prices rise above levels anyone can imagine.

Now, all of a sudden big cars and trucks aren’t selling. Gas is too expensive. And Chrysler doesn’t have enough high-mileage cars to sell. Chrysler hamstrung dealers because they didn’t see it coming and aren’t prepared. As a result, my father gets rid of the dealership.

This took place in 1973 - not 2008.

Today, auto makers’ common sense appears to have been OTL (out-to-lunch) since OPEC‘s oil embargo 30+ years ago.

Two more thoughts while I’m at it

“All other things being equal, the simplest solution is the best.”
Occam’s razor

“If you can’t explain something to a 5-year old so they understand it, you don’t understand it yourself”
…paraphrased from Kurt Vonnegut

Where else do you see common sense hiding?

~~~~~~

Chris Arlen

President, Service Performance

Technorati: common sense, Kurt Vonnegut, Mark Twain, Occam’s razor, Starbucks

Image by:re-ality

There’s not one style of procurement, but many. From traditional to progressive (my term for high-tech). And infinite hybrids in between. Procurement’s style leads them to operate differently.

And that matters if you’re trying to sell contract services to them.

Procurement’s style seems to be driven by the type of business their company is in. So, let’s look at the two end styles (you’re on your own for everything in between).

TRADITIONAL STYLE PROCUREMENT

A traditional procurement style buys products and services primarily for in-house operations. This style held the informational reins on the purchase, from specifications to sourcing/vetting vendors to bid/negotiation, even through to vendor performance and compliance.

The traditional style buying was done by people who really knew a great deal about what they were buying. This is the world of deep analysis and cost-basis pricing. And the recipients of their buys (business owners) lived and died by procurement’s acumen.

Today, this style lives in manufacturing and industrial businesses - with big spend, complex buys, long lead times, and often limited number of suppliers.

What This Means to Vendors (Contractors)

Contractors would do well to recognize this style of procurement and explore the following:

OPEN KIMONO

Consider presenting full disclosure pricing. Even if the bid doesn’t call for it. Why? Because this is how traditional procurement works. They seek to understand vendors’ cost basis and then back into a vendor’s pricing to see if it’s reasonable.

QUANTIFIED VALUE PROPOSITIONS

In proposals, send only well-defined, quantified value propositions. Tie the value of service into measurable business outcomes, showing clearly where and how it impacts their businesses’ bottom line.

LONG-TERM RELATIONSHIPS

Invest in long-term relationships for developing credibility and personal connections. Churn in procurement in these businesses tends to be more stable, so you’re likely to work with the same individuals for years.

PROGRESSIVE STYLE PROCUREMENT

Again, the term “progressive” is mine. This style is seen in high-tech businesses, particularly software and online services.

The progressive style outsources non-core services as well as buying products for in-house consumption. But here, unlike the traditional style, procurement isn’t the deep knowledge base for what they’re buying.

Progressive procurement doesn’t have time to gain the expertise of all their buys. They’re focusing on their core business buys. For everything else they’re spread thin. Often they rely on their business owners to identify preferred vendors to include on bid lists.

What This Means to Vendors (Contractors)

By understanding the progressive style, contractors can more successfully engage procurement. Consider:

HOMEWORK UP FRONT

Do a great deal of homework up front to know what’s important to them. Don’t waste their time being unprepared.

HYPER-SUCCINCT

Send only hyper-succinct snapshots presenting the vendor’s value proposition. Cut all smoke and mirrors. Include similar clients as references they can contact, and include specific dollar savings or improvements your reference will allow.

DEVELOP CREDIBILITY

Develop credibility with business owners around vendor’s expertise. In both interviews, procurement said their business owners found vendors who were speaking at trade shows and seminars, or publishing articles and blogs. These weren’t self-serving vendor promotions, but education for their clients’ (business owners) industry.

QUANTIFIED VALUE PROPOSITIONS

In proposals, send only well-defined, quantified value propositions (same as the traditional style)

EDUCATE WITHOUT PREACHING

Don’t assume procurement understands the vendor’s business. Procurement wants to know more, so they can buy a better deal. It’s in the vendor’s interests to be the one that helps them do that. But avoid preaching that wraps a vendor pitch in with the goods.

What style of procurement to you deal with?

~~~~~~
Chris Arlen
President, Service Performance

Technorati: procurement, service contracts, value proposition

Understanding each other.

Sharing perspectives is a first step along the way to success. To that end I recently interviewed a Procurement Manager at Microsoft. And there’s another interview coming the end of this month with the Senior Director of Procurement at Expedia.

Having worked with contractors for many years, it was interesting to hear some of their commonly-held beliefs confirmed. However, a number of their beliefs were off the mark too.

From procurement’s side, both interviewees understood contractors pain in the process. But confirmed procurement’s role as helping their companies succeed - by buying the best value, at lowest cost.

Simple, Not Easy

These interviews provide great insight into the buyer’s mind from the procurement perspective. If contractors want to sell more, they’ll need to understand buyers very well.

Conversely, if buyers want more value from their spend, they’ll have to better understand what they’re buying. And how it helps their company succeed.

A few insights popped out during these interviews. Here are a few:

Procurement doesn’t buy low price only

Sellers (contractors) have heard this before but may believe it’s not true. Many believe buyers are lying to trick contractors out of profits.

I heard clearly in both interviews that price is rarely the only factor. And not always the most important. Despite contractors believing low price is the only consideration.

Procurement is more interested in how the purchase (contract service) can help their company. That was always the first consideration.

Contractors’ sour grapes may be more an indication of not knowing what’s important to procurement or the business owner.

Buyers want to understand what’s being purchased

This may seem obvious, but if sellers take it for granted they’ve missed the boat.

Procurement (and business owners who’ll manage the contracted service) don’t always know how their purchase will help their business succeed.

Or, they’re unable to articulate it. When that happens, buyers can only fall back on the lowest cost to their company as success defined.

Contractors can help buyers better understand the business impact of their services. Not more sales and marketing smoke self-congratulating the contractor.

Procurement does not manage vendors

Procurement does their bit up front. When the contract is finished it’s handed over to the business owner to manage the vendor. Procurement doesn’t have the expertise, or time, to oversee the service.

When the contract date comes up, procurement will follow it’s bid evaluation process, which may or may not include an RFP process or renegotiation. But it’s only the business owner’s feedback on whether the contractor delivered what was promised.

How well do you see the other side of buying and managing contract?
~~~~~~
Chris Arlen
President, Service Performance

Technorati: procurement, facility services, vendor management

I first heard this saying yesterday from a senior manager of corporate support services at a Fortune 100 company. She uses in-house employees and outsourced services to deliver support.

“Can’t save your way to success” says bluntly no matter how good or cost effective support is, if the revenue generating parts of a company fail, the company goes down the drain.

Note: I’m including all cost of goods sold in the revenue generating part. And for support services, I’m thinking facility services, i.e. janitorial, physical security, O&M (operations & maintenance), etc.

It made me think how contractors must deal with the reality that their customers are only expenses within their own companies.

Then it’s no surprise that support services impact a company’s profitability but not it’s viability. Logically companies look to provide support as cost-effectively (lowest cost) as possible.

Voila! Procurement has it’s marching orders. Highest value at the lowest cost, but mainly the latter. Why? Because purchase savings are easier to show than value. And service value can be hard to determine.

How can this help service contractors avoid procurement’s low-price hunting?

In two ways:

#1 Discovering how business success is defined
#2 Telling a compelling value story

#1 Discovering how business success is defined

Contractors must fully understand what success means to that particular company. Asking procurement or the business owner “What does success for you look like?” is key.

And success is never defined in monetary terms alone. There are other criteria, such as legal and regulatory compliance (just ask the former Enron CFO about that one).

Procurement is going to drill all contractors on cost savings and low pricing anyway. But what other areas help/hinder the company in increasing revenue and profits, compliance, or public image?

Contractors must understand this specifically per customer. Before making their pitch for partnership.

Otherwise they’ll sound like a used car salesperson spouting meaningless hyperbole at customers.

#2 Telling a compelling value story

This is non-fiction, not fairy tales. Contractors must articulate how they can meaningfully help a customer’s business succeed.

With a specific understanding of success, it comes down to the contractor’s ability to tell a compelling story.

Doing so is the difference between persuasively winning and doing an informational data dump.

How do your customers define success?

~~~~~~

Chris Arlen
President, Service Performance

Technorati: contract services, facility services, procurement