5 Principles for Service Success in 2020 and Beyond

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace.

5 Principles for Service Success

There are five principles of service success. Every company must have an established CX plan, attainable goals, well-defined offerings, optimized service capabilities and the means to measure and improve performance.  These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.  Each principle is described below:

Established CX Strategy

A well-defined Customer Experience (CX) strategy must describe the experience you wish to create with your customers and the means by which you achieve stated outcomes.  A well-defined CX strategy should include the following elements:

  • Clearly stated objectives about the type of experiences you wish to create for customers.
  • The expected outcomes from delivering these experiences.
  • The potential negative implications from not providing the stated customer experiences.
  • The practices and methods to be used to deliver targeted customer experiences.

See All Articles Related to Customer Experience (CX) and Customer Success (CS)

Clearly Defined Organizational Goals and Outcomes

A CX strategy will be executed by individuals and teams and it is imperative to clearly define the roles and responsibilities for everyone involved.  It is imperative to clearly define the roles and responsibilities for everyone involved with the execution of the CX strategy.  Organizational goals and outcomes should include:

  • Clear identification of all teams and individuals responsible for execution of the CX strategy – note that responsibility may cross organizational boundaries and include Sales, Services, Product Teams, and other groups.
  • Defined goals and objectives for teams involved with CX.
  • Individual goals to clearly describe how everyone will contribute to the attainment of team, organizational, and corporate objectives.
  • Incentive structure to reward exceptional performance.
  • Sustained performance management process to monitor individual and team performance to targets.

See All Articles Related to CX and Service Strategies

Well Defined Offerings

Offerings define the rights and entitlements customers receive and the price they pay.  The blending of rights to use a product and service entitlements through subscription programs and the opportunities to extend service portfolios with success programs requires careful definition of well-defined service programs and offers. Consider the following:

  • Determine if service entitlements will be combined with the rights to use a product or offered for a separate fee.
  • Establish the service entitlements customers need and want to effectively adopt and apply your products.
  • Determine which entitlements will be included and which will incur an additional fee.
  • Establish a pricing and payment model to define how customers pay for add on services.

See All Articles Related to Service Offerings

Optimized Success Capabilities

The ability to attain strategic outcomes and execute the CX strategy will rely on your ability to deliver services efficiently and effectively.   Optimization of success-focused service capabilities must include a commitment to the following initiatives:

  • Focus product capabilities and services on defining and achieving customer success.
  • Reduce service events through improved product quality, monitoring and proactive corrective actions.
  • Create opportunities for customers to serve themselves through self-help, communities and service automation.
  • Develop tools and content to streamline new customer onboarding and drive ongoing adoption activities.
  • Transition staff from reactive issue resolution to high-touch account management activities.

See All Articles Related to Service Capabilities: Support and Customer Success

Means to Measure and Improve Performance

Service success must be defined and measured.  Few companies will maximize performance immediately and the attainment of desired outcomes will take time to achieve.  It is imperative to implement ongoing and meaningful monitoring of key performance indicators with the means to take corrective actions to improve performance.  Consider:

  • Establish the metrics that will indicate performance against targeted outcomes including churn rate, satisfaction, Net RR, service efficiency and effectiveness.
  • Review individual and team contributions to attainment of performance.
  • Identify inhibitors to performance and develop corrective action plans.
  • Conduct regular team meeting to review performance and introduce corrective actions.
  • Review goals, measures of success and performance targets and timelines with executive sponsors and gain buying to execute.

See All Articles Related to Metrics and Measures

Featured: NET RECURRING REVENUE - Using Recurring Revenue to Identify Customer Service Opportunities and Risks

This report provides detailed instructions for defining, measuring and applying NET RECURRING REVENUE to identify customer service opportunities and risks.

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Related Articles

Customer Experience vs. Customer Success – Similarities and Differences

The terms Customer Experience (CX) and Customer Success (CS) are commonly used within the service industry. Sometimes CX and CS are used to describe the same or similar things and other times to describe complexly different actions, activities and outcomes. This article offers definitions for each term and identifies similarities and differences between CX and CS.

read more

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.

read more

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

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The Journey to Customer Success

The term Customer Success seems to permeate the industry with nearly every company engaged in some type of success initiative. The focus and awareness of Customer Success is timely and refreshing. This does not imply that technology companies have not been focused on making customers successful in the past, but this emphasis on Customer Success creates a new level of awareness and commitment to truly impacting customers’ ability to derive benefits from technology. Customer Success has profound implications for the ways that companies engage, serve, and retain customers.
This article introduces four key milestones to help you define essential Customer Success capabilities.

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Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction.  In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Net Recurring Revenue

Recurring revenue is, or should be, predictable and expected income earned from ongoing relationships such as subscriptions and service contracts. Measuring Net Recurring Revenue provides an indication of the performance and impact of service offers, products, programs, and customer-focused policies and practices.

Net Recurring Revenue measures the impact of additions and losses to recurring revenue over a specified period and the Net Recurring Revenue Rate indicates if the overall value of customer relationships is expanding or contracting. 

Inputs

To calculate the Net Recurring Revenue Rate, you need to know how much recurring revenue is added and lost within a period.  While you can calculate Net Recurring Revenue Rate by knowing the aggregate recurring revenue you add and lose within a period, it is ideal to have as much granularity as possible. 

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.

Net Recurring Revenue is a time-based measurement.  Choose a period such as a month, quarter or year.  The shorter the period the more likely you are to find variations from period to period due to time-based market factors and customer behaviors.

The Formula

The formula for Net Recurring Revenue is straightforward. Start with your existing recurring at the start of a period, subtract recurring revenue lost during that period and add recurring revenue added.  See the formula below.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue yields obvious findings including a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examine Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue?
  • What are the primary factors that contribute to revenue gains?

Net Recurring Revenue Trends

It is important to understand the trends in in recurring revenue growth or decline.  Of course, revenue growth is preferred, but decline may also occur.  Establish a reasonable representation of recurring revenue performance over a period that is long enough to accurately reflect typical customer buying behaviors and normal sales, adoption, and renewal cycles.

Measurement Period

The first consideration is the examined measurement period.  Short duration measurements (e.g. monthly) may reflect short-term factors that may overtime be normalized.  Measurement over longer periods can provide a more accurate reflection of the actual trajectory of recurring revenue performance.

The Sources of Growth

If Net Recurring Revenue is growing it is important to understand why so that growth can be sustained or accelerated.  Growth will come by establishing new customer relationships or from increased spending by existing customers.  Differentiation and understanding the sources of growth is important.

New Logos

Is growth coming from entirely new customer relationships?  If so, chances are that your product/services are in demand, customers are aware of your products, want access to your capabilities and that your reputation is positive.  This suggest that Sales and Marketing efforts are working.

Consider if growth can be accelerated.  Are your reaching your maximum addressable market or are there even more customers that you can win over.  Ask new customers why they choose your product over other possible alternatives.  Is it your reputation, your capabilities, price, other factors, or a combination of all the above?  You may be able to sharpen market messaging and enhance the overall value proposition to attract new customers.

Acquiring new customers is great, just make certain that you can nurture and sustain new relationships relationship.

Expanding Customer Relationship Value

How much revenue growth is coming from existing customers through increased spending? Perhaps one of the strongest indicators of customer satisfaction is their willingness to expand their relationship with you.  Expansion may be a result of the utility of your product and services and may indicate that your products are easy to use and/or that the success services you have in place effectively help customers successfully adopt and apply products.

Growth attributed to existing customers is something that every company must understand.  Engage your customers that increase their spending with you to understand why.  Determine how you can accelerate expansion of customer relationship value.

Low or No Expansion of Existing Customer Relationship Value

If you determine that very little growth is coming from existing customers, ask yourself why?  Are customers still trying to achieve value with what they already have.  If so, you may need to provide more assistance to help customers with onboarding, adoption training and success planning.  Its is also possible that growth may be inhibited by lack of value-added offers and extensions.  Examine your product and service portfolio.  Do you offer what your customers need?  Are there additional services that your customers are willing to buy from you?  If so, it is time to expand your portfolio of offerings.

Reasons for Loss

All the gains from new customer relationships and revenue expansion within your existing customer base can be quickly erased if you do not retain the customers you have.  Even if you have a positive Net Recurring Revenue Rate, losses are eroding your full revenue growth potential. 

Customer Loss versus Revenue Loss

Recurring revenue loss may occur because existing customers choose to spend less with you from period to period (e.g. downgrade their subscription level or number of licenses).  In these situations, you retain the customer relationship, yet you get less revenue from an existing customer.  Understanding why customers choose to reduce their spend level is important and should be examined so that underlying issues can be mitigated.

Most recurring revenue loses are likely the result of losing a customer relationship.  Customer attrition is inevitable.  Companies go out of business and sometimes legitimately no longer need to use your product.  Many of the reasons for customer churn can be mitigated when identified and understood.  If customers cannot derive value form your products understand why.  Perhaps it is simply a matter of not being able to achieve the outcomes they expect – if so, consider better onboarding, adoption and training programs.  Perhaps the products lack the features a customer needs or product capabilities are limited, or performance is unreliable.  These are issues that need to be raise to the attention of the product development teams. Customer attrition may also result from poor sales, service and renewal practices.

It is imperative to understand how much revenue you are losing and what percent of that can be retained if changes are made to products, programs and customer-facing practices and policies.

Retain, Expand and Grow

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction.  In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Retention and Recurring Revenue Model

This article is based on ServiceXRG’s Retention and Recurring Revenue Model which helps companies examine the financial health of customer relationships to identify the factors that affect recurring revenue retention and growth.  For more information contact Tom at tsweeny@servicexrg.com.

If you don’t have the time to review a lot of data, there is one metric that can provide a great deal of insight into the health or customer relationships and indicate the performance of Services and other customer facing departments. The one indicator that rules them all is Net Recurring Revenue.  When measured on a monthly, quarterly or annual basis you can learn a lot.

Featured: NET RECURRING REVENUE - Using Recurring Revenue to Identify Customer Service Opportunities and Risks

This report provides detailed instructions for defining, measuring and applying NET RECURRING REVENUE to identify customer service opportunities and risks.

This report is available for free – Register or login to get your copy.

Login to Access the Full Report

If you don’t have an account, create a free* membership.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

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Customer Experience vs. Customer Success – Similarities and Differences

The terms Customer Experience (CX) and Customer Success (CS) are commonly used within the service industry. Sometimes CX and CS are used to describe the same or similar things and other times to describe complexly different actions, activities and outcomes. This article offers definitions for each term and identifies similarities and differences between CX and CS.

read more

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.

read more

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

The Journey to Customer Success

The term Customer Success seems to permeate the industry with nearly every company engaged in some type of success initiative. The focus and awareness of Customer Success is timely and refreshing. This does not imply that technology companies have not been focused on making customers successful in the past, but this emphasis on Customer Success creates a new level of awareness and commitment to truly impacting customers’ ability to derive benefits from technology. Customer Success has profound implications for the ways that companies engage, serve, and retain customers.
This article introduces four key milestones to help you define essential Customer Success capabilities.

read more

The Journey to Customer Success

The Journey to Customer Success

Every step towards a Customer Success-oriented approach is positive, but if we truly want to pursue Customer Success, we need to understand what it is and why it is different from traditional Customer Support models.

Start Your Journey

The journey to Customer Success requires more than a name change or the addition of a team of Customer Success Managers. To fully embrace Customer Success, Support must rethink its role and adopt new ways to engage, retain and grow customer relationships and establish new ways to work with other customer-facing departments. This article introduces four key milestones to help you define essential Customer Success capabilities.

As we rush to embrace Customer Success it is imperative that we have a shared understanding about what Customer Success is and is not.  All too often we find examples of Customer Success initiatives that involve little more than changing the name of the Support department or adding a few new roles to focus on success-related activities.  Every step towards a Customer Success-oriented approach is positive, but if we truly want to pursue Customer Success, we need to understand what it is and why it is different from traditional Customer Support models.

Look to ServiceXRG to guide you on your Success Journey.  Use the milestones below to get started.

Milestone 1: READINESS ASSESSMENT

The first step in the transformation to Customer Success is to understand what it is and why it may be right for your business.  While we all want our customers to be successful, the implementation of a Customer Success capability can be costly and disruptive.  Before you commit to a customer success strategy it is essential to determine if this is the right approach and the right time.

Take the Customer Success Health Assessment > START NOW

Milestone 2: DEFINE YOUR SUCCESS STRATEGY

Customer Success does not just happen – you need a plan.  The foundation for an effective Customer Success initiative is a clearly defined strategy.  The Success strategy must: Define what you expect to accomplish; Justify why it makes good business sense; Articulate the resources and changes required to execute; and explain how Success performance will be measured.  Define your strategy, develop the plan, and gain champions and sponsors.

Review the Customer Success Operating Model > View Research and Best Practices

Milestone 3: INVEST IN SUCCESS

To execute your Customer Success strategy and achieve your target objectives you must implement the necessary capabilities. Customer Success demands that you have well defined practices, appropriate staffing levels and roles, and enabling tools.

Review Best Practices for Customer Success > Review Now

Milestone 4: OPERATE AND IMPROVE

Defining a Customer Success strategy and installing staff, tools and processes is just the beginning.  The needs and expectations of customers will continue change and Success strategies and offerings must evolve.  Focus on maximizing Customer Success performance by monitoring KPIs.  Look for opportunities to continually improve the efficiency and effectiveness of Customer Success initiatives. Create a success-focused culture and differentiate your brand by selling results.

Get in touch, we can help > Contact Us

Featured: Journey from Support to Customer Success

The journey from Technical Support to Customer Success requires more than a name change or the addition of a team of Customer Success Managers. To fully embrace Customer Success, Support must rethink its role and adopt new ways to engage, retain and grow customer relationships. This Playbook provides a guided journey across four key milestones to help you define essential Customer Success capabilities.

Login or register to get your copy of this playbook.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Related Articles

Customer Experience vs. Customer Success – Similarities and Differences

The terms Customer Experience (CX) and Customer Success (CS) are commonly used within the service industry. Sometimes CX and CS are used to describe the same or similar things and other times to describe complexly different actions, activities and outcomes. This article offers definitions for each term and identifies similarities and differences between CX and CS.

read more

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.

read more

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

The Journey to Customer Success

The term Customer Success seems to permeate the industry with nearly every company engaged in some type of success initiative. The focus and awareness of Customer Success is timely and refreshing. This does not imply that technology companies have not been focused on making customers successful in the past, but this emphasis on Customer Success creates a new level of awareness and commitment to truly impacting customers’ ability to derive benefits from technology. Customer Success has profound implications for the ways that companies engage, serve, and retain customers.
This article introduces four key milestones to help you define essential Customer Success capabilities.

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Service Onboarding

When new customers purchase service agreements you must make certain that they understand how to access and use the services they are entitled to through a formal service onboarding process. This article introduces the best practices for service onboarding.

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Support Imperative: Track and Report Defects

Support Imperative: Track and Report Defects

If a customer took the time to report an issue, Support has the obligation to document this event.

Defect or Design?

Many technology vendors define defects based on internal definitions and design specifications and not necessarily on customers’ perceptions of an issue that they perceive to be a limitation.

In some instances, a perceived defect is a legitimate product limitation and other cases is caused by user error, improper configuration, or a combination of non-defect related circumstances.

Whether or not the root-cause of an issue is truly a defect as classified by Engineering, what matters most is what the customer perceives.

If a customer perceives that a product is defective it will affect the tenor of the support transaction; will possibly influence a customer’s satisfaction with a support transaction; and may have broad implications for the relationship between the company and the customer.

See the article titled Customers think that your products are buggy – Now what?

Support Imperative: Track and Report Defects

If a customer took the time to report an issue, Support has the obligation to document this event.

Carefully and fully document defect related cases and the associated impact on customer satisfaction, future product purchases and subscription renewal rates to detect early indications that product defect rates are impacting the future of customer relationships.

Next Steps

ServiceXRG offers a wealth of expertise through coaching and research to help you define measures of success and to benchmark your performance.  Please review other reports and articles related to Metrics and contact us if we can help.

More Metrics Articles

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Related Articles

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.

read more

Using Net Recurring Revenue to Identify Customer Service Opportunities and Risks

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

Support Demand: Problem or Opportunity?

Is it a good thing if customers need support or is this a problem? The need for support is inevitable and communicating with your customers is always a good thing. What distinguishes support as good or bad is based on how you respond and what you learn from each customer interaction.

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Time to Resolve (TTR)

Time to Resolution (TTR) is a metric to measure the elapsed time it takes for Support to resolve a case. This article introduces the definition and inputs required to measure TTR.

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Segment your Customers

Segment your Customers

Your customer base contains a diverse population of customers each with distinct needs and expectations.

Similarities between customers’ needs, expectations and general business characteristics can be described by using common classifications and attributes.  Develop a system to organize customers by these common characteristics. 

Define a service segmentation model to organize customers by shared characteristics.

  • Shared characteristics may include service needs, usage, product adoption or life cycle stage and business characteristics.
  • You should identify a minimum of 4 distinct service-centric segments to defined to describe unique attributes such as customer needs, expectations, or business characteristics. 

Conduct customer studies to understand the defining characteristics of your customers.

  • Determine what customers need and expect from services.
  • Define how customers may use the services.
  • Establish how customers prefer to buy services – all-inclusive portfolios, base offers with add-ons or catalogs of available services to select from.

Align customers with common needs or expected business outcomes.

  • Assign all existing customers to one or more service-segment.
  • Note that customers may belong to one or more customer segment.

Develop service offerings and value propositions aligned with the needs of identified customer segments.

  • Target sales and marketing strategies and messaging to the unique needs of segments.

Evaluate service-segments each year to align current and prospective customers and to assure segments are up to date and relevant.

  • Customer needs change so make certain that your portfolio keeps pace with changing expectations.

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Featured: Service Segmentation Strategy Playbook

Not all customers are created equal nor do they represent the same value to your business. Nearly two-thirds of support and maintenance revenue comes from less than one-third of the customer base. It seems illogical to view all customers the same way, yet only slightly more than a third of companies (36%) have a formal customer segmentation strategy for managing support and maintenance sales and renewal activities. Companies that indicate that they have a formal service segmentation strategy have an average attach rate nearly 60% better than companies that do not. This playbook describes the steps necessary to define and implement a formal service segmentation strategy.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

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Bad Attach? Is There Such a Thing?

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