(Part 3). Bill Pollock is president of Strategies For Growth, a research analyst and consulting organization for service businesses, and chief research officer for The Service Council, a virtual trade organization for service executives. In a previous Q&A with The SmartVan, Pollock described why service businesses must consider new technologies, such as iPads and cloud software, to keep pace with rivals . Here Pollock discusses the advantages SMBs have over larger organizations mired in legacy software systems.
What advantages do smaller service firms businesses have against more established, larger rivals?
One of the things that companies like Yahoo! believe is they’ve been fortunate in that they don’t carry with them 100 years of baggage of some of the more mature services organizations. They don’t know that some of the things they’re doing today, that the market calls “innovative,” are anything other than what they should be doing anyway. Whereas there are many companies that have been around, if not for 100 years, for 25 years or so. They’ve got old, antiquated systems. They’ve got multiple systems that don’t talk or communicate to each other. Many of them find themselves burdened to compete on a conceptual basis with some of the startups out there.
Whether you’re a 10-year-old startup or a 10-day-old startup, you’re not saddled with a lot of the baggage that some of the traditional service organizations have. There’s a split out there that you get from a traditional B2B services provider from what you get from some of the newer B2C services providers.
Part of the backbone of the traditional services industry is the old bullion-based system where if you pay for platinum service, you get better service than someone who’s paying for bronze service, and certainly better service that someone who’s acquiring service on a T&M basis, where it’s often a crapshoot for them. On the B2C side, you can order something from Amazon.com, and you can get it literally within days. If you’re not going to get it within days, they’ll send you an email advice. On the B2B side, this is not always the case.
There are many people in management positions today, using the services of B2B providers, who don’t understand why everything takes so long. And then they go home, and with everything they do on the Web, they get emails or alerts telling them at any given moment where they stand. We end up with a B2B customer who’s conflicted because it can’t get information as quickly as he or she wants from the traditional service vendors in too many cases — not every case, but too many — and yet anything that they want they can get from organizations like Yahoo! or Amazon, or QVC virtually instantly.
So how does that trend help the newer, smaller players in the sector?
What’s happening now is many of the SMBs are finding themselves in positions where they haven’t been around for a long time or they’re brand new, so they don’t know they’re supposed to wait 45 days to return a part or transact a credit. They do it quicker. They’re used to providing B2C-level service to their customers because they don’t have the baggage of having been a B2B provider for 50 years. There’s going to be, I believe, increased pressure on the traditional services organizations, the more they hear people saying, “What do you mean I’m not going to get my part for three weeks, and then I’m not going to get my credit for 10 business days thereafter? I can do much better with my B2C vendors.” Some of them get it already and they’re trying to make inroads to ramp up the level of service, but it takes a while to retrofit a behemoth that’s been around for a while.
My advice to SMBs is take advantage of the fact that many of you are relatively new, that many of you are automating for the first time and by doing so you can position yourselves to provide a little bit closer to the B2C-level service than the B2B-level service that many of your customers have gotten used to, against their will, over the years. You do have some competitive advantages. The good news is that you’re going to tighten the gap between yourself and the big guys. The bad news is the gap is always going to exist; but you can still tighten it up, you can close it up a little bit more, and you can now position yourself with the new technologies and devices to be a stronger competitor in the marketplace. Establish your own niche, go after those niches, and remember the first names of your clients and you should be in a position to make yourselves stronger and stronger over time.
Will any advancement in technology be a huge opportunity for businesses that use no system or that rely on spreadsheets or pens and pads of paper?
I think it would be easier to start a service business today, powered by the cloud and some iPads, just to get started, than it would be to retrofit a SMB that has been around for 10 or 15 years but that had bought the wrong automated system five or six years ago. The technology and tools are there; but you have to use them to make an impact.