Magazine Article | April 27, 2012

How To Stop Service Revenue Leakage

Source: Field Technologies Magazine

By Jerry Edinger, president and CEO, CSDP Corporation,

Aligning business process, a unified view of customer and service operations, and best-in-class contract-management automation are critical.

Revenue leakage. The phrase is echoing in most businesses today, and I’ve heard desperation in the voices saying it. Your service organization is probably leaking revenue, and before you can start driving new revenues, you have to stop the bleeding. There are a variety of causes and effects of revenue leakage, which generally
reside in organizational, process, and/or technology issues. But the first step in fixing the revenue leakage is understanding how and why it happens.

Why Does Revenue Leakage Occur In Service Organizations?
The biggest cause I’ve seen for revenue leakage in service organizations is the lack of SLA (service level agreement) clarity and automation. Many companies lack comprehensive, easily accessible data about contracts, warranties, and entitlements. Many times the data is there; it’s just difficult to access. If, for example, the contact center is not connected to all the contract and entitlement data, center staff may send out field technicians for support that is not actually covered under the contract. With the proper contract information readily available, service staff can recognize out-of-contract circumstances and sell the client the needed services. Another example of revenue leakage is a field engineer who is out in the field fixing a product. While on-site, a problem with another product is uncovered. To maintain a high level of customer satisfaction, the field engineer fixes the product, but they cannot access the customer’s contract and cannot know if the work is covered under the warranty. If it’s not and the customer refuses to pay for the service, revenue is lost, customer satisfaction is impacted, and everyone loses.

Cross-selling and upselling is also hindered when field engineers don't have access to critical customer data in the field because the engineer may not know the full breadth of products installed or that the contract is up for renewal soon. With easy, comprehensive access to data in the field, engineers can be armed with all the data they need to not only service existing problems but also generate new revenue opportunities.

Service Lifecycle Management Is Key
So how does a company stop revenue leakage? First, you need to develop clear SLM (service lifecycle management) processes to ensure the information is communicated accurately between sales, service, and support staff. Many companies use business process mapping to document and improve upon existing processes. Mapping your business processes can help you identify best practices within your organization, allow you to respond more quickly to changes, identify areas to simplify and improve processes, and much more.

One area often identified by business process mapping is the need for a single view of customer and service operations. All your relevant customer data needs to be viewed from a single aggregated signon. This ensures nothing falls through the cracks. Another area is the need for best-in-class warranty and contract-management automation. An ideal software solution will put the terms and conditions of the contract at the heart of the system. By using the contract terms and conditions as the foundation and then attaching those entitlement levels to service orders, RMAs (return materials authorizations), depot repair, product sales orders, training classes, and virtually any other type of service transaction, your business will have the flexibility to sell and properly deliver any type of service contract. The system will ensure that customers get what they pay for and that the service business does not underdeliver or overdeliver what their client paid for.

Effectively aligning business processes, providing a unified view of customer and service operations, and best-in-class contract-management automation are all key factors to not only help stop revenue leakage but also to drop service delivery costs, improve customer satisfaction levels, and increase customer loyalty by systematically putting the right information at the fingertips of the people who operate on the SLM system.