Archive for the ‘Service Profit Margins’ Category

New TSIA Benchmark Survey Lauched

Monday, July 26th, 2010

Last week, we launched the completely new and much anticipated Field Service and Support Services TSIA Benchmark Survey. This new benchmark survey is a significantly revised and updated version of the TSIA benchmark survey, which TSIA member companies have been using for the past 3 years.

I have been absent from these blog posts for the past several weeks because I have been feverishly working – along with others in TSIA – on finalizing this new benchmark survey and benchmark tool. I’m proud to say we’ve finished our initial efforts, and the new benchmark survey and survey tool is now available to our member community.

The benchmark survey has undergone a radical transformation. We’ve developed completely new online software members can use to access the benchmark survey. The old benchmark survey questions have been revisited, revised, and updated, and we’ve added more than 100 new questions to the new survey.

The new online software includes many features aimed at easing the process of completing the survey, including:

  • The ability to logon, log off, and log back on again later and resume the survey where you left off.
  • Multiple user logins, which allows different people in an organization to complete those portions of the survey with which they are most familiar.
  • Built-in “skip logic” automatically “hides” those questions in the survey that are not relevant to the survey respondent based on answers he or she provided to earlier questions.
  • Detailed explanations and instructions tied to the questions eliminate different interpretations of the questions, thus ensuring consistency in the answers.
  • And much, much more.

The new TSIA benchmark survey covers all major aspects of customer support operations:

  • FINANCIALS, including:
    • Service & support revenue and growth, margins, cost center vs. profit center, service revenue allocations, SaaS/Cloud revenue allocations to service, etc.
  • SUPPORT CENTER OPERATIONS, including:
    • Quality programs, direct vs. outsourced employee data, call handling statistics, service incident response & resolution times, multiple support channel data (phone, email, web portal, chat, social media, etc), priorities & types of incidents, support rep labor rates, costs per service incident, customer/support rep ratios, much more.
  • FIELD SERVICE OPERATIONS, including:
    • Assignent & dispatch methods, response & resolution times, first visit fix rates, call back rates, SLA compliance, remote diagnostics & remote problem resolution data, training, muti-vendor services, field service labor rates, costs per field service incident, more.
  • SERVICE SPARE PARTS, including:
    • 1st pass fill rates, backorder rates, call backs due to lack of parts, spares inventory values as a % of revenue, inventory variances to book values, parts used per incident, parts $ per incident, DOA & NTF data, security measures, spares planning methods, outsourcing practices, end-of-life practices, more.
  • DEPOT REPAIR, including:
    • Customer repairs, “walk-up” or “drop-off” repairs, field technician repairs, RMA processes, advance exchange practices, “new” vs. “equivalent to new” exchanges, 3rd party repair vendors, turn-around-times, not-economical-to-repair (NER) thresholds, repair technician labor rates, etc.
  • ENTITLEMENTS, including:
    • Maintenance contract & warranty data, methods of pricing contracts, list vs. net pricing, contract pricing fees, T&M fees & per incident fees, initial contract attach rates, contract attach rates during/at end of warranty, contract sales compensation practices, warranty credit allocations, much, much more.
  • CUSTOMER SATISFACTION, including:
    • Customer survey methods, survey completion stats, customer satisfaction scores, satisfaction data by support channel (phone, email, web portal, chat, etc.), satisfaction by direct employee vs. outsourced employee, customer loyalty data, compensation based on customer satisfaction.

Of course, we also gather DEMOGRAPHIC data in the survey, such as industry and company size. So we can segment the data we gather accordingly for meaningful comparisons among our member companies.

We can honestly boast that no other survey anywhere gathers the breadth and depth of the data the TSIA benchmark survey gathers about service and support operations. If you are a TSIA member, we urge you to complete the new benchmark survey at your earliest possible convenience.

If you are NOT YET a TSIA member, I personally encourage you to check out this valuable association for service and support organizations here. You can also CONTACT ME and I’ll put you in touch with right people who will explain all the benefits and details.

Thanks for your interest – IT MATTERS!

MICHAEL ISRAEL

“FACTOIDS” FROM TSIA FIELD SERVICE MAINTENANCE PRICING PRACTICES WEBCAST

Wednesday, April 14th, 2010

Here are some interesting “Factoids” I highlighted in the webcast I did on Wednesday, April 14. The topic of the webcast was Field Service “Maintenance Pricing Practices” in Enterprise Hardware environments. All data is from the TSIA Maintenance Pricing Practices Research Report, which was released in March.

When Technical Account Managers (TAMs) or similar dedicated resources are offered as part of a service portfolio:
  • Service Revenues see a 4.5% boost
  • Service Margins can increase by as much as 6%
The following efforts and tactics to minimize contract discounts and extend contract durations contracts pay off:
  • Requiring an executive in your organization to sign off on maintenance contract discounts can yield a 2.5% revenue bonus
  • Multi-year contracts tend to increase margins by nearly 1%
A sales team inside your service organization will be most successful at selling maintenance contracts:
  • Sales teams embedded in service organizations discount maintenance contracts 3% to 6% less on average than their counterparts in product sales.
Training the sales team responsible for selling maintenance contracts reaps rewards:
  • Training in the value proposition for service and support can increase service revenue by 2.5%
  • Sales skills training yields a 4.5% jump in service revenue
  • Basic negotiations skills coaching can produce up to a 6% rise in service revenue
The initial maintenance contract “attach rate” can have significant financial implications:
  • Firms with initial contract “attach rates” greater than 50% enjoy service revenue contribution as much as 9% higher than average
  • and margin contributions up to 2.5% better than average
When customers delay signing maintenance contract renewals it pays – FOR THEM:
  • The probability of receiving a discount with a one month signing delay of 11%
  • A 1 – 2 month signing delay creates a discount probability of 23%
  • A 2 – 3 month signing delay yields a discount probability of 34%
  • And a 3 month or longer signing delay earns the customer a whopping 49% probability of getting a discount on their renewed maintenance contract.
The higher the level of the senior service executive in your company, the greater the financial benefit for the organization:
  • Firms with VP’s or above leading service operations see 3.3% higher service revenues than average, and 1.1% better margins
  • Companies with SVP’s or higher at the helm can see increased revenues in the double digits, and 3% greater margins
Executive compensation based on the financial performance of the service organization will bear fruit:
  • Service revenues can increase by 5% to 6% when the top service exec’s comp is based at least in part on the financial performance of the service organization
  • 6% to 7% boosts in margin can also accompany this practice

You can access and listen to the complete webcast here. A PDF of the slides presented in the webcast can be downloaded here.

Thanks for your interest – IT MATTERS!

MICHAEL ISRAEL