The FT Word
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Welcome to the November 2004 issue of the FT Word. Please forward this issue to your colleagues.
In this month’s issue:
· packaging billable services
· cultural changes for implementing knowledge management
And before we start: if you’d like to learn about selecting and implementing CRM systems, join me on 11/10-12 at San Jose State university for a practical walk through the process. You will leave the workshop with your very own requirements list! To register, call 408 519 1272. For more information, contact us.
Packaging Billable Services
Thank you to Patricia Makielski for proposing this topic.
Packaging standard support offerings is, well pretty standard: tiered offering definitions and even pricing are pretty similar across the industry. Packaging billable services is much less established, and thus more challenging!
Billable services that are delivered through a remote mechanism typically include installation, configuration, coding assistance, and monitoring. Here are ideas for moving from the concept to a successful implementation.
Create a clear distinction between support and services
The last thing you need is a customer revolt based on their perception that you’re trying to charge them extra for something they are already paying for (support). The line between basic support and added-value consulting can be fuzzy, but it does not mean that you should not try to draw it. For instance, you may tell customers that responding to questions about how to install the product is included in their support agreement, but walking them through the install step by step is not. Or you can say that interpreting error logs is part of the support agreement, but running said error logs or making changes based on the error log is not.
Target services to prospects, not deadbeats
It’s tempting to define services to handle customers who “abuse” support, but they are not typically the customers who will actually pay for the services. Target the larger, more solvent customers instead. For deadbeats, tighten the support policies and say “no” more often.
Use fixed-priced packages to define value
Generally speaking, customers distrust a time and materials services approach because they focus on the per-hour cost and cannot associate a benefit with the services. Package services with a set deliverable and a set price so customers can associate a value with the service. If you can associate each service with a package and a set price, you’re doing well. What if you cannot?
Don’t be locked in one-size-fits-all packages
In many cases the scope of the work will be determined by some easily-measured factor, for instance the number of machines to install or to monitor. In that situation you can offer small, medium, and large packages, each with its own fixed price, to perform essentially the same task in different environments. Customers readily understand that 17 machines is more work than 2 so acceptance is not a problem.
You can have a package and an open price
If defining different-sized packages is just not possible because there are too many variables, you can still offer a package, defining the end-result (such as a properly-installed system) but creating custom quotes for each customer. The drawbacks of custom quotes are the extra work on your part and the fact that some customers, put off by not knowing the price in advance, may never inquire. Over time you should be able to develop a system to create quotes very efficiently, perhaps allowing you to define several fixed-priced packages once you understand the variables better.
Use base plus options
If the basic work is well-defined but extras can be time-consuming you can have the best of both worlds by using a combination of a base package and options. For instance, you can package the installation for a fixed price and offer data migration as an option. The option can itself be for a fixed price (perhaps graduated, or custom-quoted) or it can be per hour.
Hang on to time-and-materials pricing
Time-and materials pricing can be just right for certain tasks such as individual tutoring, so there’s no reason to get rid of it entirely. Also, an hourly rate can help customers make the decision to buy a package: if the per-hour charge is $250 and the package is “only” $2,000 for what would take me more than a day to install the product, then the package is worth it.
Use marketing best practices
Support packages are no different from other products: create solid descriptions that focus on benefits rather than deliverables; get customers’ endorsements; train the sales force. A pilot study with your customers would also be a great idea.
A final word: it’s ok to start slowly with billable packages. You don’t need to offer dozens of packages to be successful. Starting with a couple is just fine. Make your mistakes on a small number and expand over time.
Cultural Changes for Implementing Knowledge Management
Many knowledge management efforts run into trouble because they are ignored – or, worse, actively fought – by the support staff. The truth is that many support organizations have a culture in which knowledge sharing is not rewarded. How do you turn it around?
Culture is a downstream issue
The culture of an organization derives from its processes and its reward system. So you don’t set about to change the culture: instead, you set about to change the processes and rewards and they in turn will change the culture.
Start with the heavy hitters
Whenever I visit a support center I take note of the individuals that have a line outside their cubes or offices: they are the “go-to” people. They are able to answer what appears to be every question that comes their way. Interestingly, they are not always the most gracious people, but they know the answers and that’s what matters to their (internal) customers.
Talking to the managers, it’s the same story: a handful of people will “turn any situation around”, “know the product inside out”, ” will be trusted to go to customer sites.”
Do these people spend much time and effort sharing their knowledge? A few do, thankfully. Most do not and they are rewarded for hoarding (by the long line outside their cubes). No wonder it’s hard to move to a knowledge sharing culture. If you want to change the culture of your organization when it comes to knowledge management you first have to convince your go-to people that it will be a good thing for them. Start by pointing out how they hate answering the same basic questions over and over again, that should be a great start.
Make it easy to create knowledge
In most high-complexity support centers the best way to create knowledge is to get each support staffer involved in the process in addition to solving customers’ requests, since the technical skills are right on the front lines. So you need to make sure that knowledge management is not another chore for the support staff, and one that comes after helping customers to boot.
Make it very easy to create knowledge, including creating a document from a case. It’s worth investing in an interface that automatically pulls data from the case-tracking system into the knowledge base system. And don’t be picky. I have seen clients with 20-page style manuals for the knowledge base…. A big deterrent to knowledge creation, don’t you agree?
Make it mandatory
If you’re starting from scratch, it’s not a bad idea to assign quotas of documents to each staff member. Beyond the startup phase, quotas are not a great idea since they foster quantity over quality. Instead, ask each staff member to get X solutions published each month. The publication process will weed out the poor-quality documents.
Reinforce, reinforce, reinforce
Give public awards to the staff members whose documents help the most customers. And constantly be on the lookout for information that’s not (yet!) in the knowledge base. I’ve had good luck posting internal information such as schedules, rollout information, training documents, etc. in the knowledge base. Once people are used to going to one place for information, they will come back.
FT Works in the News
SSPA News published an article I wrote entitled Outsourcing: The View from Inside. SSPA News 10/26/04 http://www.thesspa.com/sspanews/102604/article1.asp [ ask me for a copy if you are not an SSPA member.]
I will be presenting a workshop about selecting and implementing CRM system on 11/10-12 at San Jose State University in San Jose, CA. You will leave the workshop with your very own requirements list! To register, call 408 519 1272. For more information, please contact me.
Curious about something? Send me your suggestions for topics and your name will appear in future newsletters. I’m thinking of doing a compilation of “tips and tricks about support metrics” in the coming months so if you have favorites, horror stories, or questions about metrics, please don’t be shy.
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