Amazon does not settle for “good” in the realm of customer service. It is not enough for the customer to simply get what they paid to receive. Amazon wants customers to enjoy the experience in the same manner as a guest might enjoy a good party. Great brands now want to copy Amazon because Jeff Bezos has become the wealthiest guy in the world due to the crazy success of Amazon stock. Smart business owners want the same value for their shareholders, so they are behaving like Amazon and aiming well beyond the idea of simply satisfying the customer. They truly want their customers to “feel good” about the experience of buying from them. This current obsession with the customer experience is certainly a good thing for customers. Because so many companies are now focusing on innovation in customer service, the bar for “feel good” status is climbing higher every day.

The most popular approach today for measuring customer satisfaction is the Net Promoter Score, or NPS. Wikipedia reports that more than two-thirds of the Fortune 1000 are currently using NPS. Here’s how it works.

Customers are asked a single, simple question:

How likely is it that you would recommend our company/product/service to a friend or colleague?

Respondents are then given an option to answer that question with a number rating on a scale between 0 and 10. 0 means that the customer would never recommend the company to a friend or colleague, and 10 means that they would absolutely recommend the company to a friend or colleague.

Next, respondents are categorized into the following groups:
Promoters – those who score the business with a 9 or 10, likely to promote to others
Passives- scored 7-8, not likely to benefit or harm your brand
Detractors- scored 6 or less, a liability for your brand

The final NPS score is calculated by subtracting the percentage of Detractors from the percentage of Promoters, with the Passives not contributing at all to the score. As an example, if you were to survey 100 customers and 35 score as Detractors (0 to 6), 25 score as Passives (7 or 8), and 40 score as Promoters (9 or 10), your NPS score would be:

Promoters – Detractors = NPS 40 – 35 = 5

Your NPS for this survey sample is a 5. Anything above 0 is considered to be positive, and a score approaching 50 is terrific.

Now I think all of this is probably a little too simplistic, and you will find lots of scientific criticism for NPS from survey theory experts if you go looking for it online. My opinion and the opinion of all of the other critics is not what really matters in this case. What is important is that two-thirds of the Fortune 1000 are relying on this information in one form or another to help them improve customer satisfaction. A lot of big brands with big budgets are focusing lots of energy on measuring customer satisfaction. The other important thing to note is that this wildly popular tool skews heavily toward “feel good” as the goal for customer service. Only scores of 9 or 10 are credited positively, and anything less than a 7 is negative. I would say anyone that scores a company with a 9 or a 10 feels really good about their experience with the company. So two-thirds of the Fortune 1000 are scheming for ways to get more scores in the range of 9 to 10 because that is the only way to improve their NPS score. That’s a lot of companies with a lot of focus on making customers feel good about their brand.

What does this emphasis on outstanding customer service mean for you? Your business is going to be compared to all of the customer service innovations of Amazon and two-thirds of the Fortune 1000 because they are all “focused like a laser” on customer experience these days. NPS is hot because customer service innovations are hot because customer loyalty is hot because growth is hot because Amazon is hot. Customers are not going to compare you to your “always go low on price” competitor down the street any longer. They are going to ask “Why can’t you be more like Amazon and give me notifications when I am due for service or when the technician is en route to my location?” The customer service bar is going to be set by the sum of all of the best experiences the customer has ever encountered across all companies in both their personal and professional life.

The good news is that most customer service innovations can be observed and imitated if they fit your idea of great customer service for your company. The case of Amazon is particularly intriguing because up until a few years ago Amazon had absolutely no influence over the products customers were buying from them. They were simply a reseller of other companies’ products. Any innovation they delivered to make a customer feel good was not a product innovation but instead was focused solely on the buying experience. In my next post, I’ll discuss the “feel good” customer service themes direct from Amazon that should probably be among the guideposts you use in establishing your “feel good” customer service strategy.

welcome to Missouri the show-me state highway welcome sign

When your salespeople call on customers, what are they pitching? What do they present when they get that rare opportunity to show a high-profile prospect the benefit of working with your company?  While I have not been in the room often when a commercial service contractor is pitching a customer, I have seen hundreds of websites for these companies, and I have been to lots of trade shows where they are exhibiting.  Generally, I am not impressed by what I have reviewed. Mostly I see some version of one or more of the following themes:

We Work Harder!  It sucks to work harder than the other guy.

We Care More!  Not certain what sucks more – working harder or caring more.

Better Technicians Means Better Service!  This is the Papa John’s pizza pitch.  You’ve seen examples here, here, and here of how that’s not working.

We’re a Family Business!  The mafia is a family business too.

We’ve Been in Business a Long Time!  Really?  Why are you still such a small company?

Sadly, the website content for most commercial service contractors is typically a long and rambling word salad that doesn’t add up to much value for the customer.  Generally, Google is not impressed either as most rank pretty low for relevance in organic search results. I imagine the salespeople are equally unimpressed with the company strategy, so their pitch quickly devolves to price:

How much are you paying now?  We’ll get the work done, and it will be cheaper!  Let’s negotiate labor rates and a markup on parts!  We will be there 24/7 when things go wrong! Call us anytime and we will fix your broken equipment by working around the clock until everything is good again!

Competing on price and some vague promises to work harder and care more and fix broken equipment 24/7 and be more family-oriented sucks.  Why should the customer believe anything the sales rep is saying? How can your sales representative make an impression that moves the conversation to valuable outcomes instead of a mark-up on the cost of the labor and parts?  

Of course the most important thing the salesperson can do is ask questions and understand the goals of the buyer through some discovery conversation.  The other thing that should be offered is a premium program, but do not expect the customer to buy on the promises and platitudes of a sales rep. Tellin’ ain’t sellin!  Your sales people should be able to show the customer the value of your brand by demonstrating how the program works. I am fond of declaring that all customers come from Missouri, which is known as the “show me” state.  If you can’t show them the value, you will not sell them the program.

So what does a premium program look like? And how can you demonstrate it to the customer in a way that is meaningful to them?  Let’s have a look at some examples from other industries to gain insights into components you should consider.

Amazon Prime – Amazon offers a subscription program called Prime, and nearly 70% of US households are Prime members.  Prime members pay $119  per year in exchange for free two-day shipping, access to a library of movies, television shows, and music, and a free Kindle book every month, among other things.  The most important thing Prime does, however, is put Amazon at the top of the heap when a subscriber considers how to buy the next bag of dog food, or supplies for their kitchen pantry, or Christmas gifts for their friends:

I’ve already paid for Prime, I might as well benefit from the free, expedited shipping!

The program helps keep the Amazon brand top of mind for future purchases, and customers pay for this marketing trick through their subscription fees!  It’s brilliant marketing by Amazon. Amazon allows prospective customers to try Prime free for a month to experience its value because Amazon knows that all customers are from Missouri.  The free trial “shows” the customer why Prime is valuable instead of just “telling” the customer that it will be great if they buy.

BMW Ultimate Care – BMW is a premium automotive brand that delivers what they claim is the “Ultimate Driving Machine,” and Ultimate Care is their premium maintenance program.  You pay in advance, typically at time of purchase when financing is also a part of the conversation. Ultimate Care provides unlimited service consistent with the manufacturer’s recommended service plan.  All parts and service required for recommended maintenance are included at a thirty-percent discount. The program is only available at BMW dealership locations, so you will be bringing the car to the dealership and wandering about reviewing all of the latest offerings of BMW as your maintenance plan is delivered.  

Once again, brilliant marketing.  You pay in advance so that you will certainly use the service that requires you to come to the dealership on a regular basis.  No doubt you will get a loaner for the latest model at the upper end of your price range for any extended service requirements.  The dealership is having the customer pay fees in advance of service to help them deliver a hassle-free experience and market their latest offerings to the customer on a regular basis.

Brandt STORM – Brandt Engineering is one of the largest mechanical contractors in Texas, and STORM is their premium program.  STORM stands for Service, Technology, Optimization, Retro-commissioning, and Monitoring. When the customer buys into the STORM program, Brandt does a top-to-bottom review of the equipment while installing monitoring technology to track key performance data on the critical elements where failure results in expensive disruptions.  Once they and the customer agree the equipment condition is worthy of a performance promise, STORM is initiated. The customer receives regular communication and attention from Brandt engineers and technicians while simultaneously benefiting from lower rates on service requirements and ideally lower utility costs.

The customer is paying Brandt the money they are saving on utility bills and breakdowns as subscription fees in order for Brandt to continuously remind them of the value of the Brandt brand! That trade-off is certainly worth the risk to Brandt of a failure where Brandt must pay the premium (expedited parts, overtime labor, etc.) for recovery instead of the customer paying it.  These risks are minimized through information, and the customer is conditioned that any retro-commissioning recommendations (quotes for new equipment) based upon the data are in their best interest to avoid performance disruptions that fall outside the STORM promise. It is brilliant.

So what are the lessons you should take from these examples?  

1 – Brand the Program. What is your version of Amazon Prime? Ideally the name helps the sales rep to tell the story, to get the conversation going with the customer, and then the customer remembers your brand.  A good name demonstrates your company’s thoughtfulness in how you communicate your value.

2 – Show, Don’t Tell.  Your sales people need to be prepared to give a demonstration of the program.  Amazon gives prospective Prime members a month of free Prime membership to try out all of the benefits.  Do your sales people have a way to easily give the customer your branded program experience?

3 – Promote the Features. Can you enumerate the features of the program?  In a list? Spend some time thinking about the names of the features.

4 – Get Paid for Nothing.  If the only time you send a customer an invoice is when you have a labor or parts line item to bill, guess what?  They are going to assume your value is in the labor and parts instead of the program. The fewer invoices you send to the customer, the better.  Ideally, have them pay annually in advance. It’s better for you and cheaper for them.

5 – Offer a Good Contract. Put in place a master service agreement, a rate schedule, and a service level agreement.  Good fences make good neighbors and good contracts make good customers.

None of these elements of a premium program are rocket science, but it is surprising to me how rarely they are implemented by service contractors.  Do not let shoddy practices in your industry nor weak competitors that always sell on price dictate your business model. The executive management of your company should spend at least fifty percent of their time working on program and marketing innovations that set the brand apart from competitors.  Innovation rarely happens by accident, and it is the key to having a differentiated value proposition.

You know those signs on the back of dump trucks that say something like “Stay back 200 feet?” Those things are no joke. I found out the hard way when I was driving home from work on the interstate and heard a loud CRACK in my windshield. I definitely let loose a few four-letter words. There’s almost nothing worse than dealing with cracked glass on a vehicle. Cost aside, you’ve got to play phone-call rodeo with some auto-glass repair shop to get on their schedule, drop off your car, go without a car for a day (or more if they mess up the appointment), and then you’ve got to hitch a ride to pick up your car. What a waste of time. Personally, that inconvenience is just enough to push me to procrastinate getting the repair. That’s about the worst thing you can do with a cracked windshield as the cracks can grow and lead to more costly repairs and more damage to the vehicle if they start to leak.

Facility owners and managers handle their building systems and equipment a lot like most car owners handle their cracked windshields: defer repairs to avoid hassle. Yes, sometimes it’s an issue of cash flow. More often than not, however, I’m willing to wager facility managers are just like me and willing to procrastinate to avoid the phone-call rodeo, the scheduling nightmare, and the overall inconvenience of working with service companies. At least, that’s what I thought before I tried Safelite. Talk about easy.

I scheduled my repair online, received one quick call to confirm insurance details, and my part was done. They showed up at my office, completed the repair, and I just had to give the service tech my credit card. No hassles. Throughout the service cycle, they sent me useful notifications that reminded me about the upcoming appointment, notified me that the technician was on his way, provided my receipt, requested feedback, and requested reviews. Every single one of those MIPS (read about Marketing Impressions Per Service) reinforced what makes Safelite so much different and better than their competition: convenience. In addition to reinforcing the value for me, some of those marketing impressions helped Safelite extract value from me.

For example, when they asked, I left a review. I was happy to! That’s going to drive more customers to Safelite as they outrank their poorly-rated, less-convenient competitors online. On top of that, they managed to upsell me on new windshield wipers. From the moment I started scheduling the repair online until the technician was in the parking lot, they didn’t miss a single chance to try and sell me more products and services. Every single marketing impression I received leading up to the appointment contained all sorts of ancillary offers like new wipers and windshield treatments. I was happy to spend more money with Safelite because they had been so reliable thus far that I trusted their recommendations.

Service contracting should be this convenient for facility owners and managers. They shouldn’t defer repairs in an attempt to avoid the hassle. Instead, they should prioritize the services and repairs you perform because they know it’s going to be easy compared to the mountains of other work they need to get done. Put yourself in their shoes and think about what it’s like to work with your contracting company. What steps might cause frustration? Here are a few common examples:

  • Calling to schedule an appointment and connecting with someone who doesn’t understand your facility which leads to long hold times or callbacks.
  • The “phone-call rodeo” to confirm dates, times, and equipment details because the contractor doesn’t have organized records.
  • Having a technician show up who is not qualified to perform the correct work because a dispatcher didn’t have access to the location details, equipment information, or service history.
  • Forgetting your appointment date or time and being caught unprepared when a tech shows up at an inconvenient time.
  • Being handed a pile of loose, triplicate forms that need to be filed and collect dust as opposed to searchable, digital records that include complete service history with pictures and videos.
  • Receiving a quote as an email attachment that can’t be opened on a smartphone and must be printed off, signed, scanned, and returned as an email.
  • Having questions about past services and needing to go through another phone-call rodeo to get the answers.

The list goes on. These pain points are cracks that can grow into a chasm between you and your customers. With technology, like ServiceTrade, that’s designed to help your entire team collect, organize, understand, and present service information to your customer online, you can eliminate all of these frustrations. Instead of the phone-call rodeo, give them a way to access rich equipment history and request services online. Send them MIPS that remind them about upcoming appointments, notify them when the tech is on the way, summarize completed work, request reviews, and provide online quotes with pictures and videos that can be approved with the click of a button. Give them this level of customer service and they’ll be happy to pay you more for the premium you provide because they will trust you more and appreciate how easy you are to work with. Don’t let the small cracks in your customers’ experience grow beyond the point of repair. Give them the Safelite experience so they can see that you are the most convenient, trustworthy contractor to work with.

This week’s post is a continuation of an introduction to AI, IoT and Big Data with the help of the 1984 movie The Terminator. Re-read that post here.

Let’s rearrange the AI, IoT, and big data alphabet soup of technology jargon to come up with a simple question that helps you cut through the hype and delivers some focus for your technology strategy.  I am going to drop a few words from artificial intelligence, Internet of things, and big data to make my point.  Here we go:

“How can you use the Internet to collect data about customer equipment so that you and your customer can make intelligent decisions about services that will minimize risk, expense, and business disruptions caused by suboptimal equipment performance or equipment failure?”

I really don’t care if the data is “big” or “small.”  I don’t care if the information that comes over the Internet is generated by a “thing” or by a person holding a smartphone taking photos of an impaired piece of equipment (although “things” are often cheaper than people as collection devices). I also don’t care if the “intelligence” is artificial or natural so long as it is smart and not dumb. The overall direction of technology, of course, is toward bigger data, more things connected to the Internet, and more intelligence that is artificial versus natural as computing gets cheaper and people get more expensive.

artificial intelligence-big data-internet of things

Now that we have generated a simple test to cut through the hype and focus our innovation lens on practical and actionable solutions, what are some examples that illustrate the potential value of this strategy? How are you currently and in the future going to collect data over the Internet to make more intelligent decisions regarding equipment services that should be delivered to optimize performance? You don’t have to wait for the day that the terminator is a reality.

Real World Example: AI at Work

The favorite workflow of ServiceTrade customers is the recording of equipment deficiencies by technicians using the mobile app and the subsequent online review of a quote by the customer to approve a related repair. Let’s see if this workflow meets the test of our strategy.  

  • Are we collecting information about equipment via the Internet? Yes.
    In this case it is photo, video, audio, and text captured by the technician that illustrates the problem to the sales person in the office and ultimately to the customer.  
  • Are we using intelligence? Yes.
    The technician knows this situation can lead to a failure, otherwise why record it? The sales person also recognizes the problem because of the detailed data set, and she applies the correct quote template for repair based upon prior experiences – how much time, which tools, which parts, etc.
  • Finally, the customer can trust the information to make a good decision because he sees and hears the problem. Just like the “look through” scenes in The Terminator, we know that intelligence is being applied because we can see it happening.  The customer sees what the technician sees.

Real World Example: How IoT Reduces Chaos

Sensors are getting super cheap and the power requirements are getting so small that battery life is often measured in years. Consider fire sprinkler customers that have risk of pipes bursting due to freezing in certain areas of their facility that are not temperature controlled. Setting up a temperature sensor that generates an alert below freezing temperature could easily trigger a response to turn on some space heaters. If the heaters are connected to some sort of “smart” electrical circuit, perhaps they deploy on the signal without any other intervention. This seems like a small thing, but during cold snaps in normally moderate climates, it is amazing how many sprinkler pipes freeze. OK, does it pass the test?

  • Did we collect data on the Internet? Yes, through an ad hoc temperature sensor.
  • Are we using intelligence? Yes, intelligent people know that water freezes at thirty two degrees, and we know that plugging in a space heater will keep the temperature above that threshold.
  • Did our decision and action avoid disruption and maintain optimal facility performance? Yes.  Great, we are off to a terrific start with our AI, IoT, and big data strategy!

Real World Example: Big Data Brings About Better Decisions

Big data is simply a buzzword for datasets that are generally so large that a simple tool like Excel with a human interface might struggle to parse any intelligence from the data. All of the data in ServiceTrade is automatically ported over to Amazon’s Redshift/QuickSight big data analytics platform. A simple analysis will show customers spending habits related to emergency service versus planned services (preventative maintenance and planned retrofits and repairs). During an annual review with a challenging customer that insists on minimal preventative maintenance, you might be able to demonstrate that a similar customer that opts for maximum preventative maintenance is spending significantly less overall during the course of the past 3 years. No one could parse that amount of data in Excel, but QuickSight handles it easily with just a few clicks.  OK, does it pass the technology strategy test?  

  • Did we collect data on the Internet? Yes, all data in ServiceTrade is collected over the Internet because ServiceTrade is a SaaS application.
  • Did we make an intelligent decision to lower expense, lower risk, and optimize performance? Hopefully the answer is yes because ideally the customer buys into your premium program based upon the analysis that indicates lower total costs.

Let’s quickly contrast these straightforward examples of effective and simple technology deployment for achieving a mission with a “technology solution trying to find a problem.” Google, Snapchat, Intel, and a host of other technology heavyweights have spent years and hundreds of millions of dollars on “smart glasses” that combine cameras, heads up displays, natural language recognition, cellular networking, etc.  Some vendors in the contracting space latched onto this science experiment and began selling it as the productivity solution for all of your problems. It enabled customer collaboration, technician training, remote diagnosis, and a host of other benefits (according to the vendors). It didn’t work.

Taken in pieces, elements of the technology make sense. A small, bluetooth camera clipped to the bill of a ball cap with a similar bluetooth earpiece all tethered to the mobile phone will enable the technician to fire up a FaceTime call with a colleague. The two can then collaborate via shared images and a real time conversation to diagnose a problem. The challenge with jamming everything into a new form factor like glasses is that it is a laboratory exercise instead of a solution to a problem. It is Frankenstein as compared to the terminator.  Frankenstein was great science, but yielded only chaos and misery when deployed beyond the lab. The terminator, by contrast, was built for accomplishing the mission in the field.

Your objective is to assemble the terminator and avoid Frankenstein. The examples above clearly indicate that AI, IoT, and big data are already a part of the arsenal of technology you are using for the benefit of your customer. It really is not rocket science, and you really can embrace new innovations if you are willing to explore and set aside the intimidating jargon in favor of a elegant strategy. Your strategy should simply be a trend of collecting more data via the Internet so that you can intelligently make service decisions that optimize the performance of your customers’ important equipment. Any innovation that meets this simple test is putting you on a good path for adding more value. Stay focused on the mission, and the right solutions will present themselves as obvious candidates for your premium service program.

In 1984 I was seventeen years old and working as an usher in a movie theater when the science fiction thriller The Terminator was released. It was a surprise hit, and I must have seen the movie a couple of dozen times. In case you are not familiar with the movie, Arnold Schwarzenegger plays a human-like cyborg, a Terminator, sent from the future with a mission to kill Sarah Connor, the mother of the future resistance leader that is fighting the Terminator’s artificial intelligence master, Skynet. Aside from the obvious standout qualities of Schwarzenegger’s physique (a former Mr. Universe and Mr. Olympia) and the incredible strength demonstrated by the cyborg, the Terminator looks and even acts somewhat human. To remind the audience that the Terminator is actually a very sophisticated computer, director James Cameron sometimes displays the action from the perspective of the Terminator.

In these “look through” scenes, the audience is presented with a screen that is apparently the field of vision of the Terminator. The film color quality is replaced with mostly red, white and black imagery. Superimposed on the imagery is a bunch of scrolling text gibberish and some highlighted, flashing square boxes to call attention to certain data elements the Terminator may be analyzing – a person’s body size for suitable clothing, weapons in the hands of potential antagonists that must be foiled, etc. Of course, if the Terminator was really a sophisticated computer cyborg, there would not be an internal display barfing computer gibberish onto a screen in a manner that was readable by humans. Computers do not need human-readable text to operate on data the way humans need it. The computer would simply be ingesting external data via the cyborg’s camera eyes and his microphone ears along with any other external sensors for temperature, pressure, odor, and what not. Based on this observed data, the Terminator would be making judgments and taking actions that would have a high probability of creating a path to accomplish the mission – the termination of Sarah Connor. All of this would be happening without a human readable screen display.

Why am I talking about The Terminator? Why is the detail of the Terminator’s view of the world as depicted by the movie director important? I am talking about The Terminator to illustrate the point that artificial intelligence (AI), the Internet of things (IoT), big data, and all of the other alphabet soup puked up on a daily basis by technology media and vendors hyping their products is generally nothing more than the collective, gradual evolution of computers. In 1984, James Cameron could imagine a computer that understands and speaks natural language, sees real-time imagery, reacts to its environment, and takes actions to accomplish the mission. To portray the Terminator as a sophisticated AI being, Cameron showed the audience a visual model that generally represented what computers looked like to the masses in 1984 – a somewhat low-resolution screen with digitized text scrolling on it with an occasional selection option that would become highlighted if you tabbed a cursor to it (remember, the mouse was a new thing in 1984 as the first Apple MacIntosh computers just shipped that year). Cameron could not assume that the audience would make the leap to his futuristic interpretation of an AI-enabled cyborg, so he showed the audience a 1984 computer interface to make certain they got the connection. All this stuff in the media about AI, IoT, machine learning, big data, blah, blah, blah is just the real world catching up to what James Cameron predicted would happen way back in 1984.

Today we are talking to our phone to have it dial our best friend. We are issuing verbal commands to our Alexa assistant to have it order pizza or play our favorite music. Our Nest thermostat is monitoring our habits, such as when we come and go, along with our preferences for ambient temperature in order to take actions regarding raising and lowering the temperature where we live. These common applications of AI would have been totally foreign and inconceivable to a movie audience in 1984. But James Cameron had a vision of what artificial intelligence could potentially accomplish in the future, and he did a really good job presenting that vision to the audience in a way that they could understand it. Let’s do a quick reset on some over-hyped terms – AI, IoT, and big data.

Artificial Intelligence – AI is just the trend toward computers ingesting more diverse data in more formats (i.e. images, audio, natural language, pressure, temperature, humidity, etc.) to enable analysis that leads to judgments and actions related to accomplishing a mission or objective. Because AI is more of a trend than a definitive end-state, AI can simply be classified as Hofstadter, a famous AI scientist, describes it – “AI is whatever hasn’t been done yet.” More accurately, AI is simply the leading edge of new capability for computers to operate more intelligently on a broader diversity of data.

Internet of Things – IoT is simply a trend where more and more things are connected to the Internet to send or receive data or to act upon data received. Historically connections to the Internet were people staring at screens (and increasingly listening to audio speakers) and entering data or responding to data received. “Things,” whether a cyborg like the Terminator or a $10 temperature sensor, don’t need screens (nor keyboards or a mouse or speakers) to send and receive data or to act upon data received.

Big Data – Big Data is simply the collection and analysis of data sets that are too large for humans to effectively parse, analyze, and extract intelligence from using simple programs like Excel. Ever cheaper storage and computing cycles lead to ever-increasing data collection, storage, and analysis. Again, big data is simply a trend and not a definitive end state.

Over time, computers will progress to read a broader spectrum of inputs, make more sophisticated judgments, and take an increasing variety of actions that lead to desired outcomes. No one was talking about AI in 1984 – no one in the mainstream media anyway – because the topic was confined to a small group of computer nerds at top technical institutions like Stanford and MIT. Yet the director of The Terminator could imagine a future where a computer becomes so powerful that it can measure its environment in a humanlike manner, make judgments based upon those measurements, and take intelligent actions to execute a mission – in this case, the termination of Sarah Connor. It is unlikely that anyone who saw The Terminator in 1984 remembers the on-screen effects that Cameron used to connect the audience to the idea that the Terminator was a computer. I bet everyone who saw the movie remembers the Terminator’s mission, however. What was the mission? To terminate Sarah Connor of course.

Whether an innovation can correctly be labeled as AI (or with any other overhyped term of the day) is far less important than whether the innovation helps accomplish the mission. The Terminator’s mission was to terminate Sarah Connor, and the Terminator was extremely well suited for carrying out the mission (although it actually failed in this case). Defining the mission that you would like to accomplish with AI, IoT, big data, etc. is actually much more important, in my humble opinion, than the actual technology you select to achieve the mission. Have you thought about the mission that you want to accomplish using technology?

I believe the mission you are generally attempting to accomplish through technology is to maximize customer equipment performance while eliminating equipment failures so that your customer experiences the least risk, expense, and disruption in their business. The reason that technology is important as an enabler of this mission is because it is generally cheaper and easier to manage (sometimes) than people. If you accomplish this mission, your customer will spend zero dollars recovering from disruptions (lost output, spoiled inventory, damaged property, emergency services) while maximizing the amount of money they spend with you relative to other suppliers.

I will continue this topic next week with real-world examples of how AI, IoT, and big data are being used by service contractors today. I’ll also have some advice to make sure that what you’re building is more like a high-performing Terminator than a cobbled-together Frankenstein monster.

Your reputation has always been important when recruiting talent because the best techs want to work at the best companies. But the mediums job seekers use to search for potential employers has changed. Word of mouth is still around but pales in importance compared to your company’s online reputation. Before a job seeker even applies, your website, social media presence, and online reviews help them through the first two phases of the job hunt: Discovery and research.

1. Be Easy to Discover

When a technician starts their job hunt and isn’t familiar with all the local companies, where do you think they start? Google, of course. They’ll search for companies in their industry and the top results will be the first companies they research. That’s how Google has trained us all. The top search results are the best bet, and searching for local companies is no exception. Fortunately, the fresh, dynamic content created by your Digital Wrap is exactly the kind of indicator Google uses to rank websites. Just by performing the day-to-day tasks associated with the services you offer, your techs will be collecting customer reviews and generating rich content that will help prospective employees (and customers) discover your company.

Millennials, almost exclusively, find and research new job opportunities online. Most of my millennial friends discovered, researched, and applied for their current job completely online without talking to a single person. From discovery on Google or a job board to exhaustive research of prospective companies, they did everything on their laptop or smartphone. They browsed the company website and social media for information about the mission and culture. Where applicable, they researched customer reviews. They paid especially close attention to the reviews from current and past employees.

Indeed and Glassdoor, two of the largest job listing websites, are the dominant players when it comes to company reviews by former and current employees. When you Google a company by name, the employee rating of that company on Indeed or Glassdoor are often in the top results. Very quickly, a potential candidate can see what real employees think about a company. This can work for or against you. From a job seekers perspective, zero company reviews is concerning, a bunch of bad reviews is a death knell, and a mix of mostly good reviews is a great sign. I say a mix because people will be suspicious of your reviews if they are all five stars. Just like with your customers, it’s ok to ask your employees to leave a review of your company, just be sure that the review truly represents what they think, not what you think. Don’t instruct them to leave a good review and be responsive and respectful of any results you receive.

2. Be Easy to Research

If they find your company online, potential employees are going to look at your company website before they apply for a job. Is your website going to help recruit them? Does it have the information they ‘re looking for? Candidates aren’t just searching for a company that has an opening. They want to know about company culture and values. What do you stand for? They want to get a feel for what it’s like to work there. Is it fun? Is it challenging? They want to know what the opportunities for growth are. Will they advance their technical skill set or have an opportunity for advancement? They also want an easy application process. The bigger the barrier to applying, the fewer candidates you’ll receive. For example, a simple, mobile-friendly web form that collects their name and phone number with a call to action like “Are you a skilled technician and want to learn more about working at Aardvark Services?” will receive a lot more candidates than a Byzantine application process that asks candidates every possible question and requires them to upload a resume. You’ll definitely do more work to qualify candidates and get more that aren’t a fit but, in the midst of a skilled labor shortage, that’s an acceptable cost. Chances are, you’ll lose candidates you want before they even have a chance to apply if your application process is too difficult. Keep it simple.

Social media is a powerful tool when recruiting, especially Facebook and LinkedIn. When a candidate is considering a company, most will review the company’s social media profile and posts to learn about the brand. Compared to the corporate website, job seekers expect to find a candid representation of the company’s personality. Posts about company events, employees, and corporate values go a long way to help them get a better feel for the company.

It’d be nice if you could meet all of your hiring demand with a flood of great candidates that found you online, but that’s not going to happen for every company. Most likely, you’re going to have to get your hands dirty and actively recruit new employees. Armed with a reputable brand and a strong presence online, it will be easier. All you have to do is ask.

For entry-level office and field positions, one ServiceTrade customer Guardian Fire Protection has another interesting recruiting approach. Once a month, they host an open door interview day. Anyone who shows up is guaranteed an interview. Now, some interviews are MUCH shorter than others, but everyone gets a shot. They advertise the event through craigslist, social media, and through their website. For a relatively low investment of time and money, they’ve filled multiple open positions. When they ask successful candidates that show up on the interview day why they didn’t just apply online, candidates often say that they didn’t feel like their resume was good enough.

If potential employees don’t already know about your brand, your website and reviews should drive discovery through search engine optimization. Once they discover your brand, your online reputation should drive their research to the conclusion that you are a great company to work for and that they should apply. You can do a lot to help your recruiting efforts by making the discovery and research easier for job seekers. Want a big bonus? Being easy to discover and research will help out your potential customers, too.

My wife and I love hiking and camping with our dogs. It’s our escape. So, last year, we took a trip up to the beautiful Grayson Highlands in western Virginia for a quick weekend trip with a couple friends. Hiking along those exposed ridges at a relatively high altitude provide some of the best views you’ll find in southern Appalachia. The first day was absolutely gorgeous. After a long day of backpacking, we decided to set up camp just off the ridge in a little patch of woods. Not long after we set up camp, we had to turn in early because of a constant drizzle from a small storm. We were all wiped out, so it wasn’t a problem. At least, not for the first couple hours. That small storm turned into a massive thunderstorm and it was blowing right over the ridge we were camping on.

My wife, Jessie, shook me, but I was already awake. Nobody could sleep through that noise. “It sounds like lightning is right on top of us!” she said. It was loud, but I wasn’t concerned. “Count the seconds between the lightning and the thunder. The lightning is a mile away for every 5 seconds.” I recalled from my time in the Boy Scouts. At this point, we were at 15 seconds. 3 miles. No problem. It was loud, but we were safe and that put Jessie at ease. The dogs, not so much.

Unfortunately, that 15 seconds quickly turned into 10, then 5, then 3. “Half a mile? We’ll be fine. At least we’re not out on top of the exposed ridge!” I thought to myself. Jessie, on the other hand, was not feeling great about the situation. She gets sweaty palms when she’s anxious and, at this point, they were sopping wet. That’s when it happened. CRACK! The light was blinding and the sound deafening. Zero seconds. It was right on top of us. Then again. CRACK! This one was different. It was followed by a long, low creaking moan and hard, leafy thud. A tree just fell in the forest and we heard it.

The next day, we were a little shaken up, but everyone was OK, even the dogs. We found the fallen tree about a hundred yards away and decided that we’d never camp on a ridge during a storm again. We hiked back down to our cars and couldn’t wait to get home to sleep with a solid roof over our heads.

This is a true story, mostly. The trip, the storm, and the nervous wife all happened. The falling tree, not so much. It seems like a plausible story, but it’s fiction: The same kind of fiction that your customers receive from other, less-reputable contractors. Your customers have been burned by bad contractors that told them plausible stories about their building assets just to, ultimately, be disappointed by bad outcomes like unexpected equipment failures and exorbitant expenses for unnecessary work. They are wary of touching that hot stove again.

If a tree falls in a forest and no one is around to hear it, does it make a sound? An age-old debate. Sorry, I don’t have an answer for you on this one. I do, however, have another question for you. If you tell your customer a tree falls in a forest, will they believe you? Those other contractors have made it difficult. How about if you show them this?

Absolutely, they’re going to believe you because those disreputable contractors have made your customers skeptical. You can write pages describing the work you perform for them or spend hours on the phone with them, but they’ll still question you regardless of your company’s reputation. Instead, show them. Show them pictures of the leaking system. Show them videos of the failing asset. You should even show them when things aren’t broken just to reassure them that their equipment is in good condition. Show them everything. You’ll stand out from all the other contractors as transparent and trustworthy and they’ll be happy to pay a premium for your reliable services.

Sound like a lot of work ot show pictures and videos from every job to the customer? It’s not. Technology makes it easy. All of your techs are used to taking pictures and videos with their smartphones. Getting that rich media in front of your customers is another challenge altogether. Ad-hoc emails with attachments are not the answer. Instead, let software like ServiceTrade, solve that problem in a scalable way. ServiceTrade logs every picture and every video your techs take and automatically organizes them against jobs and quotes that are effortless to share with your customers. For example, after your tech snaps a couple pictures and a quick video of an equipment issue and collects the customer’s signature, all of that information, the pictures, the video, and the signed work order, will automatically be sent to the customer’s inbox. That’ll show them!

Who has better pizza, Domino’s or Papa John’s? I do a lot of presentations about these companies and when I pose this questions to audiences, usually they’re split right down the middle. Personally, I’m a Domino’s fan. From a value perspective, however, our opinions about who has better pies don’t really matter. Here’s what really matters:

Domino’s is CRUSHING Papa John’s and they have been since 2009. In fact, Domino’s stock has outperformed Amazon, Apple, and Google in the last 9 years. For every dollar you invested in Domino’s in 2009, you’d have $36 as of the writing of this blog post. Compare that to $10, $5.50, and $2.75 for Amazon, Apple, and Google respectively. Papa John’s, on the other hand, would be worth a respectable $3.75, but it’s been on a steady decline for the past two years.

These numbers are surprising considering how ubiquitous Papa John’s marketing is. It’s practically impossible to watch sports without hearing their slogan, “Better ingredients, better pizza.” They’re everywhere. Domino’s spends plenty of money on advertising too, but their marketing strategy went a very different direction starting in 2009. It’s best summed up by their CEO, Patrick Doyle, who said:

“We are as much a tech company as we are a pizza company”

What technology do you think he’s talking about? Their accounting platform? Their point of sales systems? Their pizza ovens? No. He’s talking about their customer-facing technology like their Pizza Tracker and mobile apps. While Papa John’s has been pouring money into billboards, radio ads, and TV spots, Domino’s hired the best web and mobile developers, built an incredible R&D team, and took a massive risk on the future of smartphones. In fact, an interview in 2015 revealed that around 300 of their 700 employees at their corporate headquarters were focused on technology, not pizza (or accounting). Here’s another one of Doyle’s quotes:

“We believe by transaction counts we’re in the top five of e-commerce companies in the world.”

That’s unbelievable for a pizza company. On the other hand, Papa John’s sales are sinking and their stock price is sliding. They’re trying to blame their poor financial performance on the recent drama and viewership decline in the NFL. The reality is that they got left in the dust. Nine years later, they’re trying to catch up to Domino’s with Papa Track, their answer to the Pizza Tracker, but it’s too little too late. They’re sitting at the starting line coughing up dust while Domino’s is off to the races.

Domino’s figured out how to differentiate their offering with something more valuable than close-ups of melty cheese and empty platitudes like “Better ingredients. Better pizza.” Really? Does anyone buy that Papa John’s really has superior ingredients and better pizza? Can they prove it? Sadly, I’ve heard a lot of service contractors use a very similar line. “Better techs. Better service.” Really? Do you think anyone is buying that? Even if they do, it’s impossible to convince the customer that it’s true. So, why bother? Instead, take a page from Domino’s book. Offer customers a better experience with service certainty.

Domino’s thoughtful investments in technology are cutting edge because they focus entirely on the customer as opposed to logistics and accounting. Everything they build is for the customers’ express benefit. In some cases, they even added administrative work for their in-store employees to improve the digital outcome for the customer. Their Pizza Tracker is semi-automated, but Domino’s employees still have to manually update the system a couple of times to alert customers about the progress of their pizza. For example, every time a pizza is ready for the oven or put in the car for delivery, whether or not the customer is actively using the Pizza Tracker, some Domino’s employee has to update the system just in case a customer decides to check in on their order. They sell more than 2 million pizzas a day. If we assume an average of 1.5 pizzas per order, that works out to almost 1 billion manual system updates a year. That’s a lot of Domino’s data entry! And, for what? The customer. It’s that simple.

Obviously, Domino’s has limited the cost of these billion customer updates substantially with a technology-enabled process. They’re not picking up the phone and calling their customers multiple times per order to update them on the progress. That would be ridiculously cost prohibitive and annoying for the customer. Yet, that’s exactly how most service contractors think about solving the same problem! Better call the customer or send them an ad-hoc email to let them know what’s going on with their service. That’s an expensive approach so it’s either reserved for premium clients or doesn’t get done at all. Why not give every customer a great experience and let technology solve that problem by incorporating it into the standard workflow? For example, instead of having techs call, email, or text to alert the office and customer that they are on the way to a service call, incorporate technology (like ServiceTrade) that will, with a few clicks, log the techs drive time, update the office staff, and send an en route notification to the customer with a picture of the tech and estimated time of arrival. Or, instead of signing a paperwork order, waiting for it to get back to the office, scanning it, and emailing it to the customer with an ad-hoc summary and picture attachments, how about incorporating technology (like ServiceTrade) that will automatically send all this information to the customer the moment they sign the digital work order? Even if it adds a few new points of quick data entry, it’ll remove a boatload of calls and emails.

For Domino’s, however, there were no cost savings with their new workflow. They weren’t calling or emailing the customer to update them on their orders in the first place so these billion data entry points were a net new expense. Despite that, they don’t even think twice about the cost because they understand the value of MIPS, or Marketing Impressions Per Service. MIPS is the heart and soul of Domino’s customer experience strategy. For each service (or pizza) delivered, a series of useful notifications are sent to the customer updating them on their purchase. In Domino’s case, customers receive push notifications on their mobile device throughout the process. From prep to bake to delivery, customers are notified about every step and each notification links back to the Pizza Tracker, the visual manifestation of MIPS.

When you order a pizza for an office full of hungry coworkers or a house full of famished kids, you want certainty about your order. Hangry and anxious, they’ll look to you for one answer: When will the pizza arrive? At this point, you can either be a zero or a hero. If you’re in the dark and you leave your compadres in limbo, the anxiety will escalate and you’re going to be a zero. Compare that to the certainty of “it just got boxed up and should be here in 12 minutes.” That’s more like it! You’ll be the hero. Next time you want a pizza, who are you going to call? The company that made you a zero or the one that gave you certainty and made you a hero? When your customers have failing equipment or systems in their building that impact their tenants, customers, or coworkers, do you think they’d rather have the hero or the zero? This doesn’t just apply to emergency service work. For standard maintenance or inspection work, they’d rather be certain about what’s going on so they can keep their colleagues up to date, make arrangements on their end, and have peace of mind about the work being performed.

At the end of the day, all facility owners and managers really want is certainty. Strategically, that means certainty about their facility budget. Tactically, that means certainty about the facility services they receive from day to day. They want certainty about everything from when the tech will arrive to how they should resolve equipment issues. MIPS give your customers tactical certainty by giving them the information they need to make good decisions on a service-by-service basis. Service certainty can distinguish you from the unpredictable, unreliable competition.

Jeff Bezos, the founder of Amazon, is the wealthiest person on the planet. He owns about 17% of Amazon, and that stake is worth about $115 billion. Amazon was founded in 1994, so Jeff has amassed this fortune in just 24 years. Wow. I bring up the example of Jeff Bezos as a wealth-building machine because he has some unique views regarding how to apply technology to build a company that are directly orthogonal to sentiments that I often hear expressed by the management of service contracting companies.

I have had countless executives and managers in service contracting companies tell me over and over again that the most critical feature for a customer service technology platform is how seamlessly that platform integrates with their accounting system. My sarcastic reply is that the most important feature of a customer service technology platform should be how well it enables amazing customer service. Sarcasm aside, the prevailing wisdom in most service contracting companies is that accounting is the function to be optimized using technology, and, therefore, accounting is the most important function in the business. Poppycock.

The most important department in the business is customer service, and the most important person in the business is the customer. They are the people with the money that you want. Customer service is everyone’s job, so there really should not be a department that is solely responsible for customer service. However, some departments in the business are closer to customers than others, and I believe that accounting is not one of the ones that is especially close to the customer.

For a service contracting business, the employees that are closest to the customer are the technicians. Second in line are probably the sales team, or perhaps the service managers and administrators. Executive management is probably next closest, with accounting bringing up the rear. Jeff Bezos would likely say that a company should focus technology investments first on the customer, then the technicians, then the sales and service administrators, and on down the line. Last and least is accounting. Here are a couple of quotes from Jeff to illustrate my point:

“If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience”

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”

“The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.”

“We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.”

And my favorite Jeff Bezos quote of all time is:

“Amazon has become an amazing company because our accounting processes are far superior than those of our competitors, and great accounting is what our customers really care about above all else.”1

More sarcasm. Seriously though, I bring all of this wisdom from Jeff Bezos to you because I see so many service contractors who are paralyzed in their technology decision making because they are afraid to rock the boat in accounting. Why is accounting relevant at all? Accounting practices have not changed for decades, and if great customer service leads your customers to spend ever larger sums of money with you, I assure you that the accountants will figure out a way to stuff all that dough into the ledger in a GAAP-compliant manner.

My advice is to focus on the customer. If the accountants get thrown overboard with all of the waves generated by a customer-focused strategy, then I sincerely hope that they can swim. The good ones will hold their seat on the ship, and then help you set a course that safely navigates the waves and yields a customer-centric organization. All the rest that believed accounting was more important than the customer needed to be replaced anyway.

 

1 In case it isn’t obvious, I made up this quote for comedic effect.

Read part 1: Fraud Doesn’t Pay, But Consistent Results are Worth Billions

One day you will want to have some outsider set a value for your business as part of an exit strategy or for the purpose of passing the business to a new generation. What management metrics will you use to guide your efforts during the many years leading up to that valuation day? How can you deliver steady, market-beating results that are not affected by the various dips and swings that you inevitably experience while serving your customers? The key is to find a strategy that minimizes volatility and maximizes consistency over a long period. You need to deliver for real what Bernie Madoff falsely projected in order to impress the investors that will ultimately value your business.

Revenue and gross margin are not perfect measurements for management success, so what are the measurements that matter? How can the owners of the business look back at the past month or quarter and make a judgment regarding success or failure? If the business is an investment, it should be measured like an investment, and the investments that people value most highly are those that deliver predictable returns over and over again. Bernie Madoff famously played on this investor bias by cooking the books to show steady and consistent returns, no matter what the market conditions, in order to lure more investors to his Ponzi scheme. Investors will always pay a premium for an investment with steady and consistent returns. So what are you going to measure to be certain you are optimizing for consistent and predictable returns?

Your service contracting business, just like an investment firm, faces uncertain market conditions. Instead of swings in the Dow Jones Industrial Average, the S&P 500, and the NASDAQ, you are dealing with cold weather, hot weather, fuel price fluctuations, tight labor markets, and swings in customer buying sentiment brought about by the same economic indicators that affect Wall Street. In the face of all of these potential distractions, you need a simple and effective formula to focus your team on the long-term measurements that matter so that they can more effectively navigate a path through the potential chaos. I have a simple, easy to remember measuring stick to help you focus your management team on the outcomes that maximize shareholder value, but before I reveal it, see how you do in answering these questions:

  • How many customers do you have under an annual or longer maintenance contract?
  • What is the monthly recurring revenue (MRR) or annual recurring revenue (ARR) for these contract customers? This is the predictable maintenance, monitoring, and inspection revenue that always shows up on the income statement regardless of market conditions.
  • What is the total contract value (TCV) of future committed revenue for maintenance, monitoring, and inspections for all customers under contract? Are your customers signing two-, three-, and four-year commitments to you?
  • How many customers pay you in advance for your maintenance program? What is the amount of deferred revenue on the balance sheet? A higher amount of deferred revenue means that customers are paying you in advance for your services. Paying in advance means they are more committed to your services and your contract. It also means you can use that cash to fund sales to new customers.
  • What is the ratio of planned service revenue (maintenance, inspections, quoted repairs) to unplanned service revenue (emergency service calls where something broke)? Higher ratios mean better customer service, and better customer service means customers will stick with your company for a longer term. Customers do not like unplanned expenses nor the disruptions they represent.
  • What is the net revenue churn in the customer base? How much revenue did you earn this year from customers that have been with you for over a year relative to the revenue from those same customers for the prior year? Ideally, this ratio is 90% or even higher. Minimal account churn means your digital wrap is sticky.
  • What is your contract renewal rate? What percentage of customers do not renew their maintenance plan when it comes due? How much annual contract revenue on average do these non-renewing customers represent? These numbers represent your gross churn, and ideally, gross churn should be less than 10%.

All of these questions are directly correlated with the value of a service contracting business (or any subscription or maintenance oriented business for that matter), and not one of them deals directly with the question of gross margin for service calls. Service call gross margin is important, but gross margin on contract maintenance, monitoring, inspections, and planned repairs is actually much more important. Predictable growth is even more important. No investor will complain about an occasional expense hiccup for unplanned services in the context of a highly predictable, growing stream of high margin, contract service fees. The very nature of unplanned repair work (it is unplanned!) makes it volatile and not particularly valuable to an investor, so optimizing gross margin on this work is the least of your concerns. Try to eliminate these disruptive emergency service calls altogether if you can.

I recognize that many of the questions above are kind of technical and difficult to absorb until you get into the swing of these measurements. It comes down to three simple questions to ask over and over again:

How Many? How Much? How Long?

How many customers you have? How much you earn from them? And how long you keep them?

These three questions that we’ve been talking about underpin the basic value-building fundamentals for almost any business. Read more about How Many? How Much? How Long? value calculations here.