Service Ownership of the Converged Home
Let’s define this first. Many appliances in our homes, from “new” appliances like audio, video, copier/printers, and computers, to “traditional” appliances like dishwashers, refrigerators and laundry machines, have greater complexity. Complexity leads to failure. Given the diminishing ability that any of us has to fix these “smart” devices, the failure of wired, large, or “mounted” devices requires in home service. But given the unknown root cause of a plasma screen failure at the time of a service request, there is operational pressure on the service provider to send a technician schooled in simple cable TV testing and low-level wiring repair for example, given that the issue may not be with the plasma screen at all. (For the moment we will put aside the obvious market driver for greater machine-to-machine reporting upon the vendors).
Instead let’s take this requirement for a multi-skilled technician to its logical next step. Can the technician be trained in a way that would allow ad hoc repair and/or testing of other devices while on site, which would yield a higher bill-per-visit, and thus transform service from a 100% cost model to a partial revenue capability? Furthermore, given a wide variety of training options, couldn’t a proactive service provider begin to see every complex device in the home as a service opportunity? Pretty soon we’re talking real money.
And indeed some have already begun to move in that direction.
AT&T Inc. announces the launch of AT&T ConnecTech
“The home services industry represents a billion dollar marketplace,” says Carmen Nava, senior vice president, Consumer Marketing Operations for AT&T. “We’re using our strength in TV and broadband services to integrate both the product and care needs of today’s digital consumer.”
Obviously that billion was B.B. (before bail-out). But I digress.
The market potential is huge. The listing below is just a sample of the companies getting into the fray.
Geek Squad – Best Buy – http://www.geeksquad.com/?PSRCH
Firedog – Circuit City – http://firedog.com/
ConnecTech – AT&T – http://connectech.att.com/html/135/category/0/0/1/
ExpertCare – Verizon –http://surround.verizon.net/Shop/ExpertCare/Default.aspx
Solution Station – Dell for Wal-Mart – http://www.gizmodo.com.au/2008/07/almart_getting_its_own_geek_squad_courtesy_of_dell-2.html
Zip Express – Target – http://www.zipinstallation.com/default.asp
But to be profitable, some key business implications (outlined below) must be addressed.
Implications of servicing the converged home
One of the thorniest implications concerns data privacy. Are my accounts, usages, histories, and linked services carefully protected? What are the limits of demographic data from the vendor’s point of view? Can the demographic data be re-sold? Or used by “sister” business units of the servicer? We’ll explore these further in another blog post.
Also to be examined in a future post are the operational implications from the dispatchers’ point of view. When does it make sense to endanger the remaining schedule for the day, in order to cross sell additional services on-site? How can the on-site technician avoid creating a “snake” perception in the client’s mind, when acting upon being in the right place at the right time?
Is it cost effective to have such a high degree of training per technician? Or would a tech-team approach, (by geography), render a similar level of positive customer experience, yet allow more efficient technician assignments when failure causes are suspected in advance? We’ll look at these later also. For the remainder of this post however let’s confine our consideration to the question of which are the most desirable service bundles, and which are less desirable?
No one is suggesting that I ask the visiting phlebotomist to also diagnose why the wireless network isn’t working any more. But it stands to reason that some service bundling can be derived from a reasonably (read: cost effective) trained skill set package. Basic wiring and key electrical knowledge is applicable for plasma mounting, cable signal delivery, DVD – DVR and internet activation. “White goods” technicians have long had a cross appliance capability (dishwasher – washing machine –dryer). I see that capability now extending to the refrigerator, the wine bar cooler and the Jenn-Air to name a few. But I note that the training will soon have to include the diagnosing and replacing of on-board chip based systems within these devices, and that will require training beyond pressure hoses and compressors. At a simplistic level then, there are three very basic service bundles (PC & Internet, Entertainment Devices, White Goods), with two (PC & Internet and Entertainment Devices) of them overlapping now in ways they did not just 10 years ago:
The price sensitivity for servicing White Goods is lower than that of the other two bundles. Anyone who has experienced a loss of internet based phone service has indeed been extremely inconvenienced, yet substitutions abound, (cell phones, work phones, e-mail). In the case of a broken refrigerator, losses are more tangible. I would not however place the service value of the PC based, and entertainment devices dramatically far behind White Goods. Anyone with a senior parent, who relies on a working television in a distant city, would place a relatively high value on the avoidance of travel and time costs just to replace a fuse or tighten a loose connection, notwithstanding the opportunity to spend a few moments with dear old mum or dad.
No doubt smart marketers have surveyed, and test-marketed the value of their service bundles. Service training costs have also been considered and thus, we are not likely to find a service with unacceptable costs to the provider. If you have some experience or thoughts relative to the bundling models, feel free to expand on these points.