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That question is becoming increasingly urgent as the “software as a service” (SaaS) model gains momentum. And on September 22, the First Wednesday Roundtable will take you behind the scenes for a candid look at a company that made this transition–and survived. Our guide will be Renee Bochman, VP of Professional Services and Support at Axeda corporation.

http://events.linkedin.com/Surviving-SaaS-migration/pub/369402

Stay tuned… it is truly perhaps the single best method to turbocharge productivity that I have seen.

Yes, it can be done without turning customer service and support into sales people. They always have to be the customer’s advocate. However, understanding the customer lifecycle, personas and churn risk points and making that part of the support DNA helps. Dramatically.

Embedded in this interesting article from the Economist is something similar that Cablecom (a Swiss cable tv/internet/phone provider) did.

“Like many telecoms providers, Cablecom has grappled with churn.  Using advanced data analytics, Cablecom discovered that although customer defections peaked in the 13th month, the decision to leave was typically around the 9th month (as indicated by things like the number of calls to customer support services).  To reduce defections, Cablecom offered at-risk customers special deals 7 months into their subscription. 

The results were impressive:  customer defections fell from 20% of subscribers a year to under 5%, enabling the firm to save significant marketing acquisition costs while boosting customer satisfaction.”

When it works.

My first hint that my last three week global trip may end up with a huge bill came when from ‘Jennifer’ at Sprint Customer Care called to see if I was aware my *upcoming* bill was going to be unusually high. When I asked how high, and she said well about $1,112.23 more than usual. We walked through the sequence of events, and it was clear Sprint had made a mistake. However, she could not authorize the refund because the bill hadn’t posted yet. 

She promised to call me back after the bill had posted. I was skeptical, and set a reminder to call Sprint back a day after the bill posted. Well wouldn’t you know it — ‘Jennifer’ called back and informed me that I would get a paper  bill for the higher amount, but to just pay the normal monthly charge and ignore the rest as she had taken care of it. Sprint sent me a survey after the call and I noted that while I was very happy with the support, I hadn’t seen the bill yet. Based on the survey answer, I got a call from another group following up, by which time the updated bill had posted. I also got a second courtesy call from someone in the Customer Care team making sure that all was fine.

Well done, Jennifer. Well done, Sprint. You have earned my loyalty.

Lessons for service providers:

1. Scour your customer’s bills and call them (don’t just email) *before* the bill posts if there is anything unusual from the customer’s end. While I was unhappy, I would have been far less happy if the first time I learned of the  bill was when I had saw it and had to call in about it.
2. Take personal responsibility. Jennifer called and said she would personally stay on the case until it was resolved. Even though she made notes in the CRM system, it didn’t replace the rapport we had built when she first called me.
3. Set expectations properly. Jennifer warned me that the paper bill would be high, but not to worry about it and the online bill would reflect the right amount. So it has. 
4. Trust  but verify. The follow up call was gravy from Sprint’s part, but well worth while.

Hats off Jennifer. Hats off to you Sprint. I’ve called to let Jennifer’s supervisor know of the work she did, and this is my public thank you to Sprint.

http://bit.ly/cxSghs

Read all about it, and much more of what Andres has to say in his book.

(From the Dec ’09 issue of my newsletter, The Verghis View. Get your own subscription at my home page  – www.verghisgroup.com )

Many of you have heard me refer to software maintenance fees as “bad” revenue. While it is very lucrative, it’s bad because customers are unhappy paying it – ask any CIO. To give you a sense of how massive these fees are, Oracle made $12 billion last year – no, that’s not a typo – $12 billion from services and maintenance fees, according to Information Week.

I did some research on how other industries demonstrate value for their maintenance fees, and found it in an unlikely source – aircraft engines. (From this article in the Economist.)

All the major players – Rolls Royce, GE, and Pratt & Whitney – reportedly lose money on the sale of the engine. They make up to seven times the revenue from servicing and selling parts.

Interestingly enough, Rolls Royce has embraced two concepts that go beyond what the vast majority of companies provide in the software space.

First, they abandoned the traditional “break fix” model. Instead, they have taken real-time monitoring to a new level. In a world of mind-numbing complexity, they have (thankfully!) assumed that customer-impacting failures are to be minimized.

In their operations center in Derby, England, vast amounts of data is collected in real time from thousands of engines in flight. This flood of data is immediately analyzed and, if a problem is detected, Rolls Royce informs the pilot in flight. Repairs are arranged at the next stop, rather than waiting for it to become a full-blown emergency.

The data analysis continues after each flight is over. This helps Rolls Royce anticipate future problems and reduce the number of emergency repairs – and unhappy customers. As you can imagine, whenever a plane is yanked from service, the ripple effect on an airline’s schedule, revenues and customer satisfaction is non-trivial.

Real-time information monitoring saves Rolls Royce lots of money in terms of better-designed engines, and increases the time between engine rebuilds (now up to 10 years).

The second thing RR does differently is to charge by the hour the engine is run. This makes perfect sense. The aviation industry’s equivalent of “shelfware” is idle planes parked in the desert. The struggling airline industry loves it. After all, why pay for maintenance on expensive engines when your planes are grounded?

The lesson? Don’t settle for break-fix when you can do far better than that. Your service and support team can actually improve your customer’s business, while charging fees that make more sense for the customer.

In this example Rolls Royce gets paid very lucrative services revenue only if the service is being used. So it’s in both Rolls Royce’s and the airline’s interest to keep planes in the air – one of the key drivers to reducing cost per passenger.

Look ahead to 2010. How can you use customer information to improve their business – and your own? ]]> http://www.verghisgroup.com/2009/12/17/zen-and-the-art-of-aircraft-engine-maintenance/feed/ 1 http://www.verghisgroup.com/2009/11/02/voice-of-the-customer-conference-starts-today/ http://www.verghisgroup.com/2009/11/02/voice-of-the-customer-conference-starts-today/#comments Mon, 02 Nov 2009 19:29:34 +0000 Phil Verghis http://www.verghisgroup.com/?p=358 After almost 4 weeks of travel (just crossed the 100,000 mile mark with United Airlines this past weekend), I’m back in Boston for a few weeks.

One of the reasons I’m back is the Third Annual Voice of the Customer conference hosted by the First Wednesday Group. There is a terrific lineup of speakers and participants. If the past two years were any indication, it should be a fun event with a lot of provocative ideas. I’m looking forward to seeing many friends, colleagues and customers there.

 (Disclaimer, I am one of the producers of the First Wednesday Group.)