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New Aberdeen Report Explores Transformation of Service into a Profit Center

In a new report, Service Excellence and the Path to Business Transformation, leading analyst firm Aberdeen Group traces the business imperative and steps necessary to transform product service organizations from cost centers into profit centers.

Competitive and global economic pressures have reduced product-driven margins, so organizations are turning to higher-margin-yielding services. One widespread challenge is the need to improve existing levels of customer satisfaction. The Aberdeen study shows that high customer satisfaction leads to strong service revenue growth, service margins, customer retention, and customer lifetime value.

The new report investigates organizations that are successfully transforming their service organizations from cost centers to profit centers. Key steps include changing the organizational performance metrics to include revenue generation, opening new revenue streams via new service offerings, and supporting paid services with strong infrastructure and highly engaged teams.

Steps to Service Transformation
"The path of service transformation, and ultimately to best-in-class service performance, can't be traversed in a single step with the flick of a switch," the report authors write. "It requires a review of service business processes, investment in key support capabilities, improved knowledge sharing, and increased service business performance management."

Based on Aberdeen's study of best-in-class service organizations, the report finds eight key steps to service transformation.
  • Build an independent service unit. This is vital in the development of profit-centric strategy, the development of new services, and the integration of disparate service functions.

  • Focus on mobility to improve reactive service performance. Mobile tools with pertinent work, customer, and resolution information improve first-time fix rates, response times, and workforce utilization rates.

  • Continue to transition to preventive and predictive service models. Organizations that adopt these models experience significantly higher uptime and service-level agreement compliance.

  • Engage customers across all channels. Cross-channel strategies enable effective and consistent service experiences that increase customer satisfaction and repeat business.

  • Build a customer feedback program and share information with other business units. Sharing customer feedback throughout an organization, from marketing to design, improves the final experience delivered to the customer.

  • Focus on service contracts. Service contracts account for 50 percent of service revenues, making this a vital area of focus.

  • Build the support structures for new services. It is important to create a complete infrastructure to support new services, including pricing, sales, marketing, support, and IT.

  • Construct an engaged service team. Leading organizations make employee engagement to increase customer satisfaction a high priority, and take action accordingly.
Read the full Aberdeen report now.
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