Four behaviors that define leaders in the Services Economy
- Are you a leader or a follower? Scott Brown of FinancialForce points to four characteristics being shown by leaders in the services sector - and what makes them stand out.
Today’s economy is increasingly dominated by the services sector, which now constitutes nearly two thirds of global commerce, according to the World Bank. Moreover, the Brookings Institution reports that in the US alone, four of five private-sector employees now work in services.
The services economy has grown so rapidly in recent years that many executives are still figuring out how to compete effectively, let alone how to lead. Some, though, have figured it out. Here are the four behaviors that separate leaders from followers in the services economy.
1. Leaders have moved on from the basics
A defining characteristic of leaders in the services sector is their ability to quickly tackle fundamental challenges to organizational instability so they can move on to more advanced opportunities for improvement.
One such challenge: information. Disorganization and loose ownership of vital information cause errors and wasted resources in any business. And this lack of data discipline is especially damaging to professional services firms, where complexity tends to be much higher than in product-led businesses.
The area with the greatest variance between leaders and followers? According to an MGI Research study (sponsored by FinancialForce), it’s staffing and scheduling. Leaders are good at it; followers are not. The study found that followers dedicate more attention to fundamental staffing/scheduling, while leaders have already automated it and other basic functions — project quoting, talent management, skills tracking, etc — and moved on to higher-value priorities.
2. Leaders consider automation tools a given
Services sector leaders and followers all agree that automation is a way to innovate and differentiate themselves. For followers, this is a goal. But for leaders, automation is a given. They know their customer success tools should be able to track and analyze metrics, adjust in real time based on market conditions, identify gaps, recommend solutions and have broad applications beyond special projects.
While nearly two-thirds of leaders believe they have the right automation tools in place, roughly the same percentage of followers say they don’t. Professional services businesses that lack automation tools for ongoing visibility into business performance, customer service, forecasts and strategic scenarios are at a large competitive disadvantage.
3. Leaders invest in dedicated customer success teams
Leaders in the services economy are much closer to achieving their expectations for customer success, according to MGI, with a gap of only 18% between expectations and reality. Most of them provide customers with a high-quality experience by maintaining a dedicated customer success team.
Followers, on the other hand, are much further from meeting expectations and, not surprisingly, most lack dedicated customer success teams. Over half of followers say they need those teams, yet only 12% have them. Instead, they jerry-rig sales and support teams to manage customer experience to a positive outcome — with predictably suboptimal results in customer retention and renewals.
4. Leaders entrust customer success to a dedicated executive
Over 35% percent of services economy leaders say they have a dedicated leader to handle customer success; just 13% of followers say the same. In the MGI study, followers were more than 10 times likelier to expect the CEO or president/COO to own customer success.
This is not an effective strategy. Adding customer success to the already extensive to-do list of a CEO or COO almost guarantees that customer success will be under-prioritized. Not to mention that an executive who takes on the customer experience owns it end to end, including escalations from customers — certainly not the most effective use of time for a C-level professional. Even in a small startup, top executives have numerous urgent responsibilities on their agenda, and cannot and should not have to devote the time and resources to be effective at customer success.
What can followers do to improve? Invest in a dedicated customer success team, with an experienced division head who’s properly incentivized and committed to building, executing and constantly improving the strategies and plans to create durable competitive advantage.
The services sector will continue to grow in importance in the years ahead, as consumers and businesses demand more services and advances in technology streamline the process of providing them. Now is the time for services organizations to understand what’s required to be a leader — and take the steps necessary to get there. Step one is to recognize the importance of customer success and to give it the time and resources it needs to thrive.