Most respected brands in Finland - success of service brands

It is the time of the year when the Finnish marketing and advertising magazine, Markkinointi & Mainonta (M&M) has published a list of most respected brands in Finland.

Looking into how service brands succeed and have developed over the years on this list, the clear winner of service brands is grocery store Stockmannin Herkku. According to M&M, Stockmannin Herkku rose to position 51, having no presence on the list earlier. The result is phenomenal and hopefully showcasing the positive direction and appreciation to quality development of the whole parent company Stockmann.

I have during earlier years been looking into how service brands perform on this ranking. In 2011, Google was the only service brand on the top 10. Since then, Google last year ranked 12th and this year 14th and is in the downward trend. Four years ago, the first Finnish service brand on the list was S-etukortti, ranking 14th.  S-etukortti has dropped dramatically and is now on position 71.

The top Finnish service brand therefore seems to be Yliopiston Apteekki. To me, surprisingly even Finnair does not perform that well though is is often seen as one of the Finnish icons. One of the top Finnish runner-ups is Veikkaus that has improved much from last year.

Looking at other service brands, Hilton hotel has similarly improved its position.

One interesting case is the national broadcasting company YLE. Yle has several brands on the list, such as YLE TV1, YLE, YLE Teema, YLE TV2 and YLE Radio Suomi. One could say that looking into how these brands are presented in total, YLE can be proud of its success, though YLE TV2 has one of the biggest drops on the list.

What I miss still on this list are the brands that may be ones close to Finns within their daily life. Where are brands such as Kela, Kirjasto or Vero? The (online) services for these Finnish governmental brands have developed a great deal during the past years and are even free of charge. I might also position Alko higher based on the fantastic service culture they have developed. Is it still that governmental brands are not seen as high quality? Maybe the current economic trends increase our appreciation to different service brands in the future. According to M&M, this year the success factor seemed to be high quality, combined with value.

The future of customer service (Forrester trends 2015): "...valuing their time is the most important thing a company can do..."

In Forrester Research "Trends 2015: The Future of Customer Service", 10 key customer service trends were listed based on a lifecycle technographics survey of North American consumers.

One of the key takeaways was "Customer service requires a focus beyond operational efficiencies". In my perspective, this focus on outside-in preference and loyalty building requires more in-depth customer understanding and its utilization across the organization to differentiate sales, offering, delivery, marketing etc, based on identified customer parameters such as need, value, industry, location etc.

The report also discussed "customer service must be increasingly pain-free". Selection of service and communications channel is of utmost relevancy to a customer. A customer may want to self-serve over service. I believe in the future more people don´t want to "talk", rather chat or simply do things themselves because they already know what they want.

In addition to the key takeaways, some of the most interesting findings in my view was that, according to the report, for the first time web self-service was the most widely used communications channel for customer service, surpassing use of voice. Thus new communications channels are being explored. In my own company for example, sales is already used to communicating with customers over phone conferences or video conference. Even customers appreciate the savings in regards to time and money, and the effortless way of communicating once all parties are already familiar to each other.

From the respondents, three quarters stated that valuing their time is the most important thing a company can do to provide them with good service. Service excellence does not only include superb products and the service experience itself, but making things easy for the customer to buy.

Finnish industrial companies´ services business development

Looking at 2014 reports of nine Finnish “big companies focusing on industrial products and services”, as listed in the Helsinki stock exchange, ie Cargotec, Huhtamäki, Kone, Konecranes, Metso, Outotec, Valmet, Wärtsilä and YIT, there is a positive and interesting development of what services business bring to the companies´ overall strategy and future outlook.

Services business is not systematically reported by all companies in their financial statements, yet clear development and focus of services business is found. For example, Konecranes splits its business clearly in two areas: equipment and services, and reports 2014 services as maintenance and modernizations business, with a 0,7% improvement from previous year. Metso reports services as part of their annual net sales and gives a share of 55% of last year total turnover, increase from previous year though down from record results in 2012. Outotec reports a 9% increase in its service business of net sales in 2014 (including comparable currency fluctuations) and continues to have higher share of services of its net sales.

Based on the financial information, it seems that services business may account for approximately 23-55% of these companies´ total net sales, yet in some cases the profitability of the services business may be better than that of equipment sales. I do not see any of the companies taking steps to fully servicizing the business, à la former IBM, ie equipment still seems to be a strong foothold of any industrial company today, though services is clearly giving a buffer to possibly weaker equipment sales.

Where is the future focus of these companies in regards to their services? According to financial reports and CEO overviews, it looks like there is a lot of expectation on growth. And how do the companies plan to grow their services business? Several companies are heavily focusing on future trends like industrial internet and mobility (Wärtsilä, Cargotec, Valmet). Almost all companies have mentions or a full strategy focusing on improved customer understanding. Huhtamäki talks about “increased sharing of customer know-how and knowledge”, and “…focus on higher consistency in managing customer interfaces”. Kone discusses “understanding customer needs, refining promise and offering…”, “…better use of data (eg remote monitoring) …optimizing maintenance schedules, routes, tasks…” and in general focusing on increased share of planned maintenance and repairs ie looking into better productivity. Konecranes, too, talks about improved focus on customer understanding and even a member of a senior management team is responsible for “Customer experience and service offering”. Some companies are linking the customer performance targets to sustainability, like Valmet, who is clearly listing “customer sustainability needs”.

The market continues being challenging for all companies. This puts additional pressure in sharpening the strategies and considering key values to customers. Metso strategy summarizes well targets of more or less any industrial company in Finland today: “…we are focusing on being close to customers, listening to their needs, renewing our offering to meet their changing needs…”

And my learning of the quick analysis? Finnish industrial companies have built their foundation on products, but services business is there to stay, and helps companies grow. Finnish companies are learning how to better understand customer needs and serve them, improving their services offering, and providing efficiency or even business improvements. This requires learning, customer focus and new commercial competences, complementing technical and engineering skills. There is a new demand also in company management, looking holistically across trends, even on the consumer side, to learn about how digitalization and data changes our way of working and provides more predictability and opportunities.

Take care with “customer code of conduct”

Helsingin Sanomat recently wrote about the newest cat-café, opened in Helsinki, Kamppi, to attract people to have a cup of coffee while watching and playing with live kittens. As such, cat cafés in Finland are a miracle due to the strict health policies, but the café in Helsinki is not even the first one in Finland.

Having humorously suggested cat-cafés to Finland 5 years ago, I now have to come back to the service approach this trend is paving way for.

While some cafés may be barely surviving due to big capital investments or hobbies or side-businesses of their owners, cat-cafés have raised a lot of interest and ended in even recommendation to book a time slot beforehand.

What attracts people to these cafés? Apparently something that Starbucks invented already years ago, the cafés can be much more than a place to have a cup of coffee. They are a place to experience, socialize, share, even tell your secrets to a little kitten.

What is important in a service setting is the concept of who else is included in your service experience. Regardless of if you really interact or socialize with somebody, the profile or behaviour of others may influence what services you end up paying for. In a cat-café, it may not even be people´s general love for animals, but possibility to show care or be cared for.

In “Responses to other similar customers in a serviced setting – analyzing the moderating role of perceived performance risk” (Journal of Services Marketing volume 28 issue 2, 2014), the concept of “other customers” is a useful thing to know as it appears that individuals are not only more attracted to others who share similar attitudes, but are also more influenced by them. Previous researchers have suggested that service firms should not be afraid to establish, communicate and enforce codes of conduct for customers (Journal of Services Marketing volume 28 issue 2, 2014).

In the newest cat-café, according to Helsingin Sanomat, “the kittens are not to be lifted nor patted if the kitten is sleeping”. Customers who enter are given rules to obey, which they even pay for since they feel they are getting a return.

The code of conduct is an interesting service concept, which may sound limiting, yet on the other hand it may provide a feeling of security: you know the rules, and you may be happy once they are clearly spelled out, leaving no possibility of guessing nor feeling insecure.

Apparently the cats, reported by Helsingin Sanomat, as well as summer holiday (?), have made me to re-launch the blog on service management.

Mission accomplished

After two years, my studies on service excellence are completed. During the two years I spent numerous hours working on the modules, resulting in various reports, case studies, exams, and finally the final thesis. This blog has been one outcome of my studies and I wanted to elaborate on selected topics related to service business as part of my learning experience.

The objective of my studies was to learn and update my knowledge about the business environment, including strategy, management and leadership since my MSc studies about 20 years ago. I chose focusing on service organizations and service excellence since I consider it a clear direction for several industrial companies as well as the future of developing the experience economy. Combined with my marketing background, I`m happy of what I´ve learnt and what I´ve focused on. The key learnings for me have been the need on internal communications and involvement of the organization throughout service development and differentiation of services based on customers needs. These studies have helped me in my current job, working on a customer focused strategy for a service organization.

It´s strange not having a business book or articles to read or a case report to write during a weekend or during summer holiday but I´m finally looking forward to spending a "real" holiday since a long time, just enjoying the spare time and having a break.

This blog will officially end though I may occasionally be inspired to share some further experiences related to services. I can warmly recommend similar learning experience for anybody who might consider taking a new challenge.