Does your company have a “service failure point”?
I usually hear the phrase “failure point” (or some variation) in the context of equipment (e.g. government communications); but recently I came across a company that applied it [conceptually] to their business. Like most companies in the private sector, they were hoping for growth – and they were succeeding in strong double-digits, with service leading the way. So what was keeping their executives awake at night? It was their service operation’s single failure point…the field resources.
I’ll try to define the “service failure point” within this context.The time at which a company’s service operation is unable to consistently respond to their customers’ satisfaction for the typical volume of work.
At this time, the backlog starts to grow, which further exacerbates the problem, resulting in even more unsatisfactory response to customers. If this trend continues over time (how much time depends on your customers), then customers will start to leave. Not surprisingly, they may leave in sufficient numbers to bring the workload to levels below the capacity of the workforce – which then results in idle time. And with the lost revenues, now we have to cut back the workforce – again impacting response for even those customers that remain.
And so goes the “spiral of death” for the service organization, and maybe the company. Is it possible to recover? I’m sure, but I imagine it must be difficult and set a company’s strategic growth plan back by years. It makes me wonder if we might find service companies that were once growth leaders, and now are struggling after following this pattern. If so, learning from these examples may enable us to find the right balance and best way to ensure that our company’s growth doesn’t exceed our service organization’s ability to deliver – at least by too much. By the way, a search on Google for “service failure point” brings up interesting articles describing “service failure” in another different, but very interesting context.