How Do You Measure Quality for a Service Company?

Whether a company is a product or a service firm, maintaining high levels of product quality and service to customers are critical to operations and long-term success. Service companies often struggle to quantify quality success because they don’t produce a “substantial” product. What measures, metrics and practices are most important for differentiating a service company’s offering and maintaining high service levels?

In order to operate a successful business model, a service company must develop a set of metrics to assure that resources are being deployed efficiently, that quality service is being delivered – from the standpoint of the customer, and that employees are being recognized for producing and delivering a high quality product.

Operational metrics will vary depending upon the way that projects are bid and invoiced. For fixed-fee services, one metric is a cost of production ratio expressed as cost in hours per customer divided by income per customer.

For billable services some companies use a utilization percent defined as hours available for service delivery divided by billable hours.

Include in the utilization percent denominator are both billable hours and customer good-will or preventative maintenance hours. While the latter is not producing current income it represents an investment in future income.

For fixed budget projects, measure budgeted vs. actual expenditures by project.

Exit audits and surveys present an opportunity to get detailed feedback from clients on your delivery of service and areas where you could augment or improve service. Alternatives used by companies include:

* An exit “pizza party” with client representations. This may produce tainted results, so while this builds customer good-will it should be supplemented by more objective measures.

* Mailed survey – from “blind” 3rd party with a prize for responding. Third party administered surveys produce consistently more objective responses from clients than surveys sent out by the client. In the latter case, responses tend to bifurcate into two groups: those who love the company who bias toward positive feedback, and those with a bone to pick who use the survey as an opportunity to vent their frustrations.

* Email follow-up from blind 3rd party that directs you to a 3rd party site to complete the survey. This may produce higher responses because it should require less time and effort to complete. To boost response, the survey should take less than 3-5 minutes to complete. Longer surveys may not be completed by busy client employees.

In addition, when talking or working with customers take the opportunity to set up audits for service needs, especially future needs. This will help you to stay abreast of service needs and to plan accordingly.

An important but frequently underutilized resource is a visit by the CEO to the top target contact in key customer accounts. Ambassadorial visits present opportunity to learn about the customer’s present and future needs, staffing plans, business and strategic direction. This provides the opportunity to anticipate the customer’s future needs with your service offering and may provide unique insights into how to build additional differentiation into the service offering. The more your nangs delivery business relies on recurring revenue, the more important these ambassadorial visits become. It is important that these visits not be conducted or perceived as sales calls, but to gather frank input from the client on service being delivered by the company, and

When Karl Bays was CEO of American Hospital Supply Corporation (AHSC), he would visit hospital customers when he traveled. This was set up in advance, usually when the local AHSC rep was on vacation, but the hospital representative was only told that a “substitute sales rep” would be visiting. Rather than sell anything, Karl would ask how the hospital was doing, what concerns and opportunities they saw in day-to-day operations, and in what ways AHSC could improve its services. The next time the local rep visited, the conversation with Karl would come up and only then would the individual learn that he was CEO of AHSC. AHSC was able to gather valuable information about the environment in which hospitals operated and could then develop unique solutions to address challenges that their clients faced.