Seven Engagement Practices for a Successful Sales-to-Service Handoff

Seven Engagement Practices for a Successful Sales-to-Service Handoff

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Seven Engagement Practices for a Successful Sales-to-Service Handoff

Whether Sales in your organization is the responsibility of partners or a direct sales team, those responsible for selling and closing new business create the first impression of your product or service. A successful sales-to-service handoff is essential to maintaining that positive impression and promoting long-term customer success. To accelerate time-to-value, sustain customer relationships, and lay the groundwork for recurring revenue, leverage these seven proven practices for sales-to-service handoffs.

Effective customer engagement begins with the Sales process. This is when your organization identifies each customer’s desired outcomes and aligns its product and available services to them. In a successful sales-to-service handoff, Sales and Service need to collaborate so they can ensure that customers can successfully onboard, adopt, and realize the value of their purchase.

 During the pre-sale process Sales should invite Service to collaborate to help identify needs and formulate the right solution for the customer. However, Sales does not typically invite Services into the Sales process and in this case, Services needs to advocate for being part of the pre-sales process. Through this collaboration there is higher probability that customers will get what they need to be successful.

 The collaboration and information transfer should be complete and seamless—during the pre-sale process the Service team should know everything about the customer that the Sales Team knows.  And customer should not be expected to provide Service with information they’ve already given to Sales.

 

These 7 practices are proven to ensure successful Sales-to-Service handoffs:

  1. Establish clear expectations for the roles of new-sales and post-sales teams. Ensure that motivations and incentives are equally focused on closing new business and retaining existing customers.
  2. Provide information to Sales teams about service programs available to help customers adopt and use products.
  3. Help Sales teams understand pricing and discounting policies, prerequisites, and any other considerations for frictionless service sales.
  4. Create Customer Success-focused engagement teams and resources to help customers understand not only the product features but how they can apply products to achieve their business objectives.
  5. Involve the Service team during the Sales process to help understand and validate that customer expected outcomes can be delivered post-sales.
  6. Formally transition newly acquired customers from Sales to designated Support or Customer Success resources.
  7. Begin a formal onboarding process based on expectations set in during the Sales process.

How effective is your Sales-to-Service handoff process?

We can help you make it better.

Reach out anytime to get answers and insights about the best ways to engage and retain your customers. Use the chat button at bottom right, send an e-mail, or click on my calendar to schedule a specific time to talk.

Ready to commit to a Customer Success strategy? Learn the 5 critical milestones.

Exclusive ServiceXRG White Paper:

Ensuring a Successful Journey to Customer Success

Download the ServiceXRG whitepaper, "Ensuring a Successful Journey to Customer Success"

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Three Critical Metrics to Retain and Grow Customer Relationship Value

Three Critical Metrics to Retain and Grow Customer Relationship Value

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Three Critical Metrics to Retain and Grow Customer Relationship Value

​If you inventory all the metrics used by your customer-facing organizations – Sales, Marketing and Service – you’ll find an impressive collection of data elements that describe how you interact with your customers. But with all your customer metrics, what do you really know about your customers? How do you assure that you can sustain and grow relationship value? These 3 critical customer relationship value metrics can point the way.

Marketing metrics describe the ability to reach and influence customers.

Sales metrics provide insights into the time and efficiency to book revenue.

Service metrics describe the volume, timeliness, and effectiveness of interacting with them.

Add to this the insights provided from customer satisfaction assessment efforts.  As an industry we have a lot of customer data, but does it tell us everything we need to know about how to engage and sustain long term profitable relationships?

We know how much effort it takes to reach and influence customers, the time it takes to convert prospects to buyers and the time, effort, and costs to service customers.  These are all important, yet too many customer metrics focus on the transactional aspects of the customer relationship—volumes, speed, and efficiency. Too few of them focus on examining the quality of our relationships.

Now we’re not saying you should stop tracking transactional customer metrics!  BUT consider adding the following measurements to examine the strength and quality of your customer relationships:

Critical Customer Relationship Value Metric #1: Adoption

Adoption tracking provides important insights into the frequency and extent of customer product use.  Customer adoption metrics answer questions such as: Are your customers using your products?  Are they using them to the fullest extent possible?  It seems counter intuitive that customers would not use what they buy, but for many reasons lack of license utilization or under utilization occurs.

Why Adoption metrics matter

If customers are not using what they have already paid for or are not able to apply products to their business, then future subscription renewals or license sales are in jeopardy.

What to measure

Whether through automated tracking or customer surveys, it is important to understand if, how and to what extent your customers use your products.  Consider the following metrics:

  • Adoption: The percentage of licenses sold that are being used.
    • Metric: % of licenses adopted
  • Adoption Extent (Feature Adoption): The features are customers using.  Are they using a basic set of available features or do they take advantage of advanced capabilities?
    • Metric: % of basic users
    • Metric: % of advanced users

How to use Adoption metrics

If you determine that customers are not using what they already have, the next step is to determine why.  Are products too complex? Do customers lack necessary skills? Are products not aligned to customer needs?  The sooner you understand the barriers to full adoption, the sooner you can take corrective actions through services, training, or product enhancements to drive higher product and feature adoption rates.

Critical Customer Relationship Value Metric #2: Success

Customer success tracking builds upon Adoption and examines the extent to which customers realize tangible benefits from your products. Customer success metrics answer questions such as: Do customers consider your products to be integral to their business?  Are they able to apply your products to meet their business goals and objectives?  The very health of your customer relationships depends upon your customers ability to apply your products to drive success with their business.

Why Success metrics matter

Even with 100% adoption rates, it is possible that customers fail to achieve the outcomes they want with your products.  Understanding the extent to which a customer can positively affect their business with your products is a critical indicator about the overall health of the relationship.  Customers that indicate positive impacts from products are far more likely to continue or expand their relationship with you.  Customers that fail to meet performance objectives are at risk of lower spending or ending their relationship with you.

What to measure

Success can be a subjective measure, yet the perception of success is the basis upon which real decisions are made.   Success measurement is most effective when there is a mutually established definition of success.  Companies that work with customers to develop success plans and journey maps with measurable outcomes can track progress to plan.  Success can also be measured as the return on the original investment in a product.  The most subjective metric is based on asking customers to express the extent to which they believe they have benefited from the use of a product.  Although not ideal, this approach provides insights to alert you to situations where negative perceptions may impact customer relationships.

Consider the following metrics:

  • Success Plan Realization: The percentage of an established success plan that has been realized.
    • Metric: % Success rate
  • Return on Investment: A tangible measure to indicate the payback from the investment in a product over an established timeframe.
    • Metric: ROI
  • Success Perception:
    • Metric: % positive impact (success rate)
    • Metric: % Neutral impact
    • Metric: % None or negative impact

How to use Success metrics

Getting customers to adopt products is just the beginning of long-term profitable relationships.  You need to be able to help customers realize tangible positive benefits from product use.  Regardless of how you measure success you must be cognizant of when you fail to meet customer expectations.  The very practice of measuring success suggests that you are attempting to establish a baseline understanding of what customers need or want from the use of your products.  When you understand customer expectations and detect that your products have not met them, you can examine the reasons why and develop corrective actions to increase success rates.

Critical Customer Relationship Value Metric #3: Retention

How many of your current customers do you keep? How long do you retain established relationships?  While adoption and success tracking provides insights into the health of a customer relationship, they do not explain all the reasons for churn in your customers base.  Retention examines the rate and duration that you sustain customer relationships and provides an opportunity to identify and examine the reasons for lost relationships,

Why Retention Metrics matter

For many companies most revenue comes from existing customers, thus keeping the customers you have is imperative.

What to measure

Retention is a straightforward metric when you establish a clear definition of what it means to retain a customer.  For our purposes retention is defined as active, revenue-generating relationships.  This is clear for subscription-based / SaaS relationships, but less so for relationships based on perpetual licensing.  When SaaS customers stop paying for their subscriptions they lose their ability to use the product or service they subscribed to.  Perpetually licensed software is different.  A customer can continue to use a perpetually licensed product but pay no maintenance fees, nor purchase any future products.  Retention examines the net number of revenue-generating customer relationships from one period to the next.

Consider the following metrics:

  • Customer Retention (perpetual and subscription): Revenue-generating relationships carried over from previous period (e.g. year to year or quarter to quarter).
    • Metric: % Customer Retention rate (relationships)
  • Net Revenue Retention (perpetual and subscription): Net value of existing contracts carried over from previous period, plus new revenue and less losses (e.g. year to year or quarter to quarter).
    • Metric: % Net Revenue Retention rate

How to use Retention metrics

Retention analysis informs about the stability of your customer base.  You can strive to get your customers to adopt products and be successful with them.  Even then, you cannot prevent all existing customers (or contract value) from going away.  You must however be vigilant and monitor customer retention rates and examine the reasons why you lose customers and revenue (e.g. you may keep a relationship, but at a lower value).  Only when you understand why you lose customers can you act to retain them.

Your Goals: Retention, Growth and Long-term Profitability

We know a lot about customers, but let’s make certain that we understand the foundations of successful customer relationships.  By measuring the extent to which customers adopt and use our products successfully we can identify situations where products fall short in fulfilling their needs and expectations.  With these insights we can take corrective action to minimize churn and identify ways to retain and expand existing relationship value.

We’re here to help.

Reach out anytime to start your own conversation about recurring revenue and customer relationship value. Use the chat button at bottom right, send an e-mail, or click on my calendar to schedule a specific time.

 

Ready to commit to a Customer Success strategy? Learn the 5 critical milestones.

Exclusive ServiceXRG White Paper:

Ensuring a Successful Journey to Customer Success

Download the ServiceXRG whitepaper, "Ensuring a Successful Journey to Customer Success"

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5 Principles for Service Success

5 Principles for Service Success

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.

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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.

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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.

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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.

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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.

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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.

WE’RE HERE TO HELP.

Reach out anytime to start your own conversation about recurring revenue and customer relationship value. Use the chat button at bottom right, send an e-mail, or click on my calendar to schedule a specific time

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read more

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Beyond Service Metrics – Focus on What Really Matters

Beyond Service Metrics – Focus on What Really Matters

Your service organization is an incredible source of metrics and measurements that describe ongoing interactions with your customers. Of all the metrics your service team tracks there are 5 important areas that you should key a close eye on.

Your service organization can tell you how many customers they interact with on a daily, week or monthly basis through a variety of communications channels. They can tell you about the top concerns of your customers, the challenges they face using your products and the features they want to see in the future.  If you dig a bit deeper Services can provide statistics on the level of service provided, and the costs and revenues associated with delivering these services. 

1.   Defects

Customers contact your Services team for a variety of reasons, and if typical, more than half of all customer service requests are related to “how-to” type questions.  These are “good” interactions – your customers are engaged with your product and this provides insights into how they are using it.

Few customers (hopefully) are contacting you because your product does not work as expected.  Defect related interactions are not always pleasant but are inevitable. Tracking defect rates is critical since they are often costlier to respond to and result in higher levels of customer dissatisfaction.  What you need to know about defects:

  • What percent of all customer reported issues are directly attributed to product defects?
  • What is the total cost to handle defect related issues (total and as a percent of total service costs)?
  • How do defect related issues affect customer satisfaction?

Dis-proportionally high defect rates can indicate a failure in process or lack of appropriate resources in Development and Quality organizations.  By understanding the cost and customer impact you can act to mitigate negative impacts from defects.

2.   Customer Health

You may receive periodic reports indicating customer satisfaction or Net Promoter Scores (NPS).  These are good indicators, but with so many touch-points with your customers expect to know how healthy your customer relationships are. 

Don’t make assumptions that NPS or satisfaction ratings indicate the health of a customer relationship.  Expect to understand if customers are generally content, or if they are anxious about the future, restless and thinking about moving to another vendor, or just plain angry with you. What you need to know about customer health:

  • What percent of your customer base is at risk of defecting to another vendor?
  • What percent of customers are at risk and likely to reduce spending or discontinue buying future products and services?
  • How much revenue is at risk?

Nurture healthy relationships but pay special attention to at risk customers and attempt to understand and repair relationships.

3.   Service Sales Performance

Selling a perpetual or SaaS license is the just the beginning of long-term profitable relationship when additional services can be attached to the initial license sale. Look at the financials of larger public software companies and you can see how important support and maintenance contracts are.  If you don’t already sell add-on services, consider it.  If you do, make sure that service sales performance is optimized.  If your products are offered as a service, then look to add-on services to grow. What you need to know about service sales performance:

  • How many customers are under an extended service contract or success plan?
  • At what rate are new contracts attached to product sales?
  • How does this differ by geography and channel?
  • At what rate do existing customers renew?
  • For SaaS companies – what rate do customers buy a higher level of service than what is provided with the subscription?

Service sales performance begins with the initial “attachment” of a service contract, but the sales process continues indefinitely with an opportunity to renew the relationship year after year.  Great service sales practices require focus and investment to sell, renew and expand the service relationship.

4.   Engagement

Your services team specializes in engaging with customers – in fact this is their job.  The frequency and quality of engagements is important.  If you never hear from your customers is that a good thing?  It certainly costs less but you have less visibility into how they are using your products or their level of satisfaction.  Too much engagement may suggest that your products are difficult to use.  What you need to know about customer engagement:

  • What percent of your customer base do you actively engage with?
  • How often do you engage with them?
  • What percent of customer engagements are positive? Negative?
  • How does the health of customer relationships correlate to engagement frequency and quality?

The correct engagement model can make the difference in the health and profitability of a customer relationship.  Engagement focused on early and effective onboarding and success coaching can help customers get up to speed and productive with new products.  High-touch engagement models may be necessary for large critical customers.  In all cases the type and level of engagement is hopefully proportional to the value of the relationship.

5.   Profitability

When we consider the role of Service, we need to think about it as an instrument to engage and retain customers.  The basic assumption is that more interaction may be good, especially if it is positive interaction, but if it costs too much it is difficult and costly to scale.  We cannot simply throw unlimited resources at customers to keep them delighted.   What you need to know about customer service profitability:

  • How much does it cost to deliver services?
  • How much direct revenue does Services generate?
  • How much indirect revenue does Services contribute to?
  • Will incremental investments in Services generate more direct or indirect revenue?
  • What impact will investments in Services have on retaining recurring revenue streams?

Service profitability, and the impact of services on overall profit can be elusive, often because the tangible return from the investment in services can be hard to connect to the costs.  For service organization that operate as a profit and loss center the relationship between the cost of services and the benefits is more apparent.  Accounting for the cost and financial benefits of service is critical.

These service insights are different from traditional service metrics such as cost per incident or time to resolution and are intended to provide a more strategic customer view through the eyes of your Services team.  Tap into the insights and perspectives services has to offer.  Services is on the front line with customers and they can offer unique insights about your customers, your relationships and the very health and success of your business moving forward.

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