2020-12-21

Aftersales & Service – do you have transparency?🧐

As you articulate your Aftersales & Service processes, there is one component that will determine if you are successful or not in their execution. That is your ability to measure KPIs tied to your Aftersales & Service.

Basically, you have two types of KPIs that you could measure: financial and operational KPIs.
Most of the time only a fraction of those KPIs are readily available, and you’d also need to start defining and measuring new ones according to your strategy.

The amount of KPIs - especially the operational ones - can grow substantially if you really want to. The question is if this will make you better in what you do. Many of us think that the more you measure, the more you have the ability to manage/correct/influence your success. My experience is that identifying just a few important ones will allow you to be fast enough in an appropriate response and at the same time avoid a ‘paralysis through analysis’ gap.

From a customer satisfaction side, it is mostly sufficient enough to look at two types of operational KPIs: speed & quality. Depending on the technology you support and the market expectations you’re confronted with, you can identify the best three KPIs for your operational and the best three for your financials in Aftersales & Service business. You could say that if you need more, you open yourself up to the risk of your dashboard becoming too complex.

Typical KPIs you would measure for the speed of your operations would be the ‘Response Time’, ‘Average Resolution Time’ & ‘Delivery Time’. Almost all of your operational processes will allow you to measure how long certain process steps take, especially when you use a ticketing system. 
For quality KPIs, you could look at the ‘Mean Time Between Failure’(MTBF), ‘Uptime’, and ‘First Time Fix Rate’(FTFR). Also, this important quality data of your operational process will be captured in the mentioned ticketing system or at least derived from it.

I’d throw in a seventh one - since this would help you the most in assessing how your customer has acted, acts, and will act. This would be ‘Net Promotor Score’(NPS). There are even companies that deliberately want to keep the NPS-value on average and when this goes ‘too’ high, they use that as a trigger to increase their spare parts pricing for instance.

Since it could and should also be your target to make a business out of Aftersales & Service, as part of your standard KPIs it makes sense to have financial KPIs for Aftersales & Service too. The typical three KPIs are very similar to what you look for with your product business, ’Revenue’, ‘Gross Margin’, and ‘Profit’(EBIT). For Aftersales & Service, it is normal to have relatively high ‘Margins’, especially when your service technicians have good productivity. That’s why Aftersales & Service business is attractive for a lot of companies to focus on.

Identifying financial KPIs dedicated for Aftersales & Service can however lead to internal competition since your dedicated business leaders have different goals on, for instance, profit - one just for the product, the other one just for Aftersales & Service. These sometimes conflict and you’d need to find ways to avoid these competing goals within your company and basically take the ‘what is best for the company-approach’. A thoughtful incentive system needs to be set-up to avoid such situations and at the same time maximize company results.

From a customer point of view, you could argue that the best way to boost your NPS value is to do everything for free. The reality is that customers are willing to pay - substantially - for Aftersales & Service as long as they perceive value in that what you provide them. How to do the latter best, will be a topic for one of the next blogs.

Stay Safe,

Peter van Altena