Your people and Service Thinking:

Today many manufacturing companies tend to take an approach to services from a perspective that is similar to how they create value with their products. They see services as a unit of output, so the value is created by the company and then transferred to a customer. In this situation services are just a means to an end (e.g. fixing the machine when it breaks down so the customer can get back to using the machine). Although services are not simple to deliver, the value perceived by the customer on simple product-related services is limited. Just like with products this results in commoditisation of product-related services causing declining revenues and margins. Again, companies find themselves in a situation where competition and differentiation are mainly based on price and features.

So, back to the question of how can you turn services into an area of sustainable growth and profit? The answer is Service Thinking.


What is Service Thinking?

Service thinking is a mind-set. With this mind-set the focus is no longer on making something (a unit of output), but rather on assisting customers in their value creation processes. The value of services is not solely created by the manufacturing company, but instead it’s created through a co-constructive process together with the customer, by applying technical or business knowledge to improve whatever it is the customer is trying to achieve for example ; a laboratory equipment customer analysing more specimens, a coffee machine customer serving more people, a medtech customer caring for more patients.  When a business truly understands what their customers need, they can offer services aimed at helping the customer to achieve their end goal in a more efficient and effective way, which often goes beyond the basic break-fix services.  This view dramatically increases the potential to create value for the customer.

Moreover, a service is a package of both ‘’explicit’’ and ‘’implicit’’ elements. By seeing service as a co-constructive process, Service Thinking allows us to recognise the more implicit element of a service: The customer experience during the process of delivering the service (how you make the customer feel). In other words, value is also created by satisfying intangible needs at every moment of customer interaction. This is something that is often ignored by companies and their people.


The Importance of People

The importance of people in the service business is crucial. People represent 60-80% of the operational costs of a service operation and at the end it’s people who have the biggest impact on the customer experience and the satisfaction level of the customer.

Moreover, to apply Service Thinking it is imperative that your people become ‘Trusted advisors’ to your customers. This means that they can understand customer expressed, as well as unexpressed needs. Apart from technical or business knowledge, this also requires the ability to create a relationship with the customer. A relationship built on communication, trust, flexibility and adaptability. This allows the service provider to collaborate with customers in order to provide support in their value creation processes and lead to a positive experience.


The Challenge that Organisations have to face

The big challenge for the organisation here is that nearly every change, improvement or transformation requires change in behaviour and attitude of your people. The first step in doing this is making sure that each layer of your company knows what the strategic change means and understands why it is needed. The next step would be to develop the required skills, knowledge and attitude people need to fulfil their role in this new situation.

When you manage to transform your people into Trusted Advisors and not merely customer service employees then your customers continue to be your customers, they recommend you to others, thus helping increase your market share, cross-selling and up-selling becomes much easier and your differentiator becomes hard to copy.


What can the organisation do?

In this route for applying Service Thinking an organisation can do the following:

  1. Create awareness and explain why Service Thinking is so important to the organisation and what it means for its employees. It’s really important for them to understand the value perspective and what the new situation will look like, otherwise no change can be effected.
  2. Help its people to change their behaviour and develop their skills, by providing them with training for acquiring new skills, as well as by providing them with specific tools and coaching.
  3. Improve customer insight to get a deeper understanding of real customer needs by putting yourself “in the shoes” of your customers.
  4. Design your desired customer experience instead of leaving it to chance. This ensures that all elements required to deliver a good and valuable customer experience are included and delivered in a consistent manner.

Furthermore, technicians and support employees should be guided into also developing their customer skills. This means their ability to communicate, build relationships, sense customer and company needs and so on. For instance, when technicians visit a customer to fix a product, they can also give the customer advice on how to better use the product. For example, a technician of Miele, during one of his visits to a customer who was casually using his coffee machine, suggested to him to not fill up the water reservoir to the maximum so that the coffee is always fresher. This is not just delivering service as a product, but supporting customers in their process to achieve an end-result.

Developing these skills and attitude is definitely something an organisation can begin to do internally. However, it is often more effective to kick start such a program by using an external more experienced facilitator who is able to bring real-life examples and case studies to accelerate staff engagement. At Noventum we know how to develop your staff more efficiently and to ensure you achieve improved return on investment on training budgets and programmes. For example, our Trusted Advisor Programme is a perfect start to make your service operations more successful by beginning to apply service thinking. Broadening the skill of customer interface personnel through investing in service competency development (such as the trusted advisor) has proven to deliver 20% annual revenue growth rates, as loyalty amongst the customers grows.

We can also help with embedding service thinking in organisations, by helping you to obtain customer insights with regards to what customers really need, what they value in your company and what is not valued. This means we can identify what it is you are doing well, what could be improved and then help with developing a service design, taking into consideration all customer touch points that can create a positive or negative experience to your customers. In addition, we can help train your people to deal with each customer’s individual needs and deliver a service tailored to them.

Furthermore, changing the mind-set of sales people is also very important. Selling products is definitely not like selling services. The intangible nature of services requires that their value is articulated and linked to customer challenges and customer outcomes. We can help develop a new sales approach focussed on services, which includes training sales people, developing customer insight, providing support in developing sales tools to increase sales effectiveness, and help with defining the sales strategy and performance management.

All in all, it is clear that there is an enormous potential in services and companies which choose to take the path of unlocking this potential have to start applying service thinking. A prerequisite for this is a change in people’s behaviour and mind-set such that your company becomes truly customer centric.

Read more about how Noventum can help you unlock your full potential with regards to Service Thinking, as well as People Development

To discuss your challenges on Service Thinking contact us today.

Is ‘work harder and cut costs’ the only option?