- What Every Service Provider MUST Know
- By John Garrett — posted 06/13/2012
Regardless of your current company position, business focus, and/or market segment served, if asked the following question, how would you respond? “How do you feel about current service level performance?” Or perhaps, “Are you happy with how services are currently being delivered?”
Often, we might answer, “I feel things are going fine. We are not receiving many complaints,” and follow with a line we have all heard: “No news is good news.” As President Dwight D. Eisenhower once said, “Plans are nothing; planning is everything.” To that extent, I would argue that our inability to implement a viable performance scorecard process, which clearly denotes performance against goal, ultimately minimises our ability to reach our true potential in the effectiveness of our business in the areas of client satisfaction and loyalty, growth, employee satisfaction, and overall profitability.
In today’s increasingly challenging business climate, added pressures are being placed on clients across a variety of vertical markets. Facilities management firms, suppliers, and contractors alike have added pressure to drive sustainable cost savings while creatively implementing systems and processes to meet service level objectives.
According to the International Facilities Management Association (IFMA), one of the more significant missed expectations as communicated by various clients across multiple market segments continually revolves around the same premise: service providers lack a well-documented, quantifiable, and objective process to measure service performance against goal. In short, they lack a meaningful process to more effectively measure service performance in a manner that contributes towards improved management, service delivery, and continuous improvement. Now, if suppliers aren’t showing steady improvements through objective metrics while continually improving their overall business model, they are preparing to fail!
What strategy does your organisation utilise to engage your customers and monitor levels of client satisfaction? How do you know whether or not you are fully aligned with your customers in terms of overall cost, quality, delivery, and safety performance? We have all certainly experienced the discussion to varying degrees – the client informs the onsite project manager, operator, and/or engineer that he/she felt they were entitled to additional services and programmes, whereas the salesperson who ultimately coordinated the sale from the onset indicates that either “they never made such a promise,” or that “what we communicated during our presentation is essentially the basics of what we do, nothing more.” Either way, we are faced with a dilemma. Perhaps we oversold our products and/or services, or perhaps the client misunderstood communications during those final meetings prior to contract signing. Regardless, it highlights a consistent challenge within the facilities management and building services industries: selling what you do, and doing what you sell. Our ability to bridge that gap, while delivering improved management, performance metrics, and comparative benchmarking—among other things—generates more opportunities for growth and increased longevity in the client relationship.
World-class organisations maximise their opportunities for both organic and external growth through achieving high levels of customer satisfaction, but sometimes that is easier said than done. To be clear, all or most organisations genuinely care about their clients. They want their customers to be happy, to say good things about their product or service, and to expand their business through added volume and services. According to a recent Gallup poll, organisations that have strong processes in place to effectively manage and improve client satisfaction have outperformed their competitors by 26 percent in gross margin and 85 percent in sales growth. For these organisations, their customers spend more, buy more, and continually renew their contracts.
Measure. Manage. Improve.
For some companies, they either lack the desire to implement an improved total quality management (TQM) model, don’t clearly understand the value of doing so, and/or simply perceive that they lack the resources and/or work tools necessary to drive the program.
So how are we defining customer satisfaction? The dictionary might tell us that it is simply “a measure of how products and services supplied by a company meet or exceed customer expectations.” According to Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, in a survey of nearly 200 senior managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.
Clearly, fundamental to any company’s business operations and success is to engineer a meaningful measurement process, driving accountability and sustained effectiveness at all levels within the organisation. Customer satisfaction is a key differentiator and increasingly has become of utmost importance in the development of overall business strategy. Customer satisfaction scorecards can have powerful effects within organisations of all sizes. If managed properly, such metrics provide specificity to performance defects in service delivery, as well as focus employees on the importance of fulfilling customers’ expectations.
To be sure, service providers that fail to effectively articulate their value through viable key performance indicators whereby the client is fully aligned with what is being measured, opens the door for competitors to capture their clients’ imaginations and ultimately earn—or take— the business. Yet many organisations lack a definitive performance scorecard process and, as a result, fail to see those metrics improve performance while educating their clients regarding their performance to goal and overall contractual compliance.
So what does the data tell us regarding the importance of implementing and sustaining an effective performance scorecard process for your business?
- 91 percent of unhappy customers will never purchase services from you again.
- For every customer who bothers to complain, there are 26 others who remain silent.
- Typically only 25 to 30 percent of a firm’s clients are completely satisfied. Such low satisfaction means that 70 percent or more of the firm’s clients may be open to pitches from competing firms.
- 70 percent of complaining customers will do business with you again if you resolve the complaint in their favour.
- Each one of your customers has a circle of influence of 250 people or potential customers who hear bad things about you.
- 96.7 percent of unhappy customers never let out even a squeak of dissatisfaction to the organisation that has given them bad service. According to research they will tell at least 15 other people, while satisfied ones will tell six at the most.
- Almost 70 percent of the identifiable reasons why customers left typical companies had nothing to do with the product. The prevailing reason for switching was poor service quality.
- It costs about five times as much to attract a new customer as it costs to keep an old one.
- Raising customer retention rates by 5 percent could increase the value of an average customer by 25 to 100 percent.
- The probability of selling service to a new customer is one in 16, while the probability of selling service to a current customer is one in two.
- Loyal customers who refer others generate business at very low or no cost.
- It is easier to get present customers to buy 10 percent more than to increase your customer base by 10 percent.
- The average business loses between 10 percent and 30 percent of its customers each year.
- If a credit card company can hold on to another 5 percent of its customers each year—increasing retention rate from, say, 90 to 95 percent—then the total lifetime profit from a typical customer will rise 75 percent on average.
Measuring Customer Satisfaction:
- 96 to 100 percent of clients interviewed say they approve of client satisfaction surveys.
- 60 percent of clients interviewed in person will give a firm new business within 60 days of the survey.
In my opinion, these are truly staggering numbers and further demonstrate the importance of telling one’s story as it relates to their business performance. Having worked within the facilities management industry for 18 years, it has always been of particular interest to me why some suppliers of various commodities often fail to effectively demonstrate their value through sustained metrics, continuous improvement strategies, technology, innovations in service delivery, and cost-containment methods. All of these areas, if managed effectively, increase customer loyalty while strengthening the bond between both the client and service provider.
Regardless of what products and/or services an organisation delivers, the company should be intensely focused on thrilling its clients. In this highly competitive marketplace, it is simply not enough to deliver good products and/or services; rather, we must deliver great products and/or services. It’s not so much what you accomplished yesterday that matters—what are you doing for me (the customer) today?
The daily discipline of engaging our customers and defining our value and reinforcing what we are doing to contribute to their success is what separates those organisations that are perceived to be average-to-good, as opposed to great. .This is such an important topic that there are countless books, seminars, and training collateral focused on the subject of customer service. In James C. Collins’ book, Good to Great, he begins by noting one simple truth: “Good is the enemy of Great!” Candidly, I couldn’t agree more.
In this market whereby service providers are often high on promise and short on delivery, one must assume that their existing customers are being engaged by potential providers on a far-too-regular basis. If your goal is to mitigate these concerns, you must improve your client relationships, and more importantly support those relationships through exceptional service delivery, reflected and supported by strong monthly and/or quarterly performance metrics. It would seem reasonable to include that outside of creating a great work environment for one’s employees and developing a process by which one can more effectively measure, manage, and improve all aspects of their business is critical to the overall health and future of the organisation.
John Garrett serves as CEO of Facilities Management Advisors, LLC (FMA). Prior to founding FMA, Garrett maintained over 18 years of experience within the facilities management, corporate real estate, and building service industries. For more information about FMA, visit its Web site at www.fmadvisors.com or call 888-656-0740.