Improving your bottom line
“A business absolutely devoted to service will have only one worry about profits.
They will be embarrassingly large.”
- Henry Ford
“Bottom line” is slang for the net profit that a company makes: the income it gets from its customers, minus its operating costs. For most businesses, the key to improving the bottom line is to:
- Maximise Revenue
- Minimise Costs
- Accelerate Growth
DevicePilot has now helped companies to implement Service Monitoring over many years. This experience has allowed us to develop a process to help any potential customer to quantify the direct and dramatic improvement that Service Monitoring can bring to each of the above key business metrics - and therefore to their bottom line.
In this series we will first explain how Service Monitoring delivers each of these benefits, then we’ll walk through a worked example to calculate those benefits to the bottom line, in hard currency.
We’re happy to conduct this same analysis for your company, for free - please just reach out to us.
The 4 parts of this whitepaper is also available as a brochure to share with your colleagues.
Connected products exist to deliver a service to the end customer. So usually it’s not the device that the customer is paying for, it’s the service that the device delivers. If the device doesn’t deliver the service, it has no value to the customer, and they’ll stop paying.
1. Revenue increased by reducing downtime
“With DevicePilot we’ve driven our service availability up from a poor 75% to an excellent 98%”
Companies may either charge a monthly fee per device, or a fee proportional to the service that a device delivers, for example "kWh of energy delivered" by a charging station. In either case, this revenue only arrives if the device is available and delivering the service. If overall device availability across the estate is only 92%, then 8% of potential revenue is lost. Granted that 100% is probably unattainable, but in the region of around 98% often is achievable, and so even 6% of potential revenue lost makes a real difference to the bottom-line.
There are many factors which negatively affect device availability, including a host of technical problems, and business process problems. DevicePilot Service Monitoring can identify, quantify and address them all, through a combination of delivering the right information to the right people, live, and by enabling business process automation so that the inevitable problems are spotted and fixed quicker.
2. Revenue increased by offering a premium-quality service
“I’m happy to pay a premium because I can rely on your service”
As well as looking at reducing lost revenue, you can also look for opportunities to increase your pricing, or introduce new chargeable service tiers. Your customers are far more-likely to pay for something if it’s of high quality. So by driving-up your service quality, it is generally the case that your customers will come to depend upon your service more, and to be more willing to pay you more money for it.
3. Revenue increased by reducing customer churn and winning future customers
“We lose around 30 devices a month due to poor customer service - and of course that loss compounds, so by month 2 we’ve lost 60, and so on”
“Without DevicePilot, we would have lost perhaps two large customers per year”
Failure to serve customers well - by offering devices that are flaky or often unavailable - will eventually have serious business consequences: Existing customers can decide they’ve had enough and “churn” away, and a poor reputation will stop new customers from signing-up. If we have a 10% chance of losing a customer who is providing 20% of our revenue (or a losing a future customer who would do so), then we can multiply these two numbers together to say that we have a 2% revenue risk. Multiply that number by our revenue to get the money we’ll likely lose from our bottom line.
Another risk is service penalties: Once a business establishes itself and starts to win large, consolidated customers who each take on many devices, those customers will start to learn what “good” looks like, form some idea of an acceptable SLA (Service Level Agreement) that they might expect to receive, and use their buying-power to enforce contractual terms. So poor performance leads to at least revenue loss, but possibly also to swingeing service penalties.
DevicePilot provides a way to actively manage customer experience, in order to hit SLAs and consistently delight customers.
Now read part 2 of this series where we'll explore cost-reduction as another way that Service Monitoring can improve your bottom line.