Memorandum from Henley Centre for Customer
Management
1 INTRODUCTION
This response is submitted by the Henley Centre
for Customer Management. This Centre is one of a number of successful
Centres of Excellence run by Henley Management College and is
directed by Professor Moira Clark (Professor of Strategic Marketing).
The team involved in this submission also includes Professor Stephen
Lee (Professor of Non-profit and Public Sector Management) and
Tony Harrington (Assistant Director of the Henley Centre for Customer
Management).
The primary objective of the Henley Centre for
Customer Management is to promote Customer Focus and Service Excellence
best practice. It does this by observing practice in leading companies
and synthesising this into useful knowledge that helps members
to improve their own Customer Management and Customer Service
plans and implementations to deliver high quality contributions
to thought leadership, through research into the management of
organisations.
At the centre, we are distinctive because we
look at all aspects of the complex relationship between customers
and providers that is made up of many interactions, at policy
level and at point of delivery.
When analysing these interactions, we apply
proper academic rigour in drawing out, for example, evidence of
correlations between behaviour and measures. This approach leads
to an understanding of the way that we can help organisations
to focus their efforts on process and behavioural change that
will achieve their goals of improved customer centricity.
Through study of exemplar organisations and
focused research projects, the centre has developed a number of
models and tools to assist organisations who are intent on improving
their service to customers. They include:
— Assessing the status of pre-conditions
for successful implementation of Customer Management (CM)—The
CM Space.
— A model for functional CM—Four
Sub-processes within the CM space.
— Assessing organisational climate.
— Assessing your position in the CM
Eco-System.
The "Customer Management" Space
When examining successful CM organisations we
have concluded that implementing CM is only effective in a "space"
bounded by three sets of conditions. It is the difficulty of simultaneously
meeting all three sets of conditions is what makes effective CM
difficult to implement and difficult for competitors to copy.
The conditions are best summarised as follows:
Marketing strategy conditions
CM does not make up for weak strategy. If the
marketing strategy does not define real segments and distinct
value propositions, or if that strategy does not leverage real
strengths and minimise relative weaknesses, then it is the marketing
planning process that needs investment, not the CM system. CM
will only work in situations where the target markets place some
real value on closely tailored propositions.
IT conditions
It is essential that the provision of IT systems
should follow strategy. The IT system should be designed around
the requirements of the marketing strategy, then managed to that
goal, not the technical specification. Further, the IT project
must be given adequate tangible resources and, critically, the
support of the top management team.
Organisational culture and climate
The importance of organisational culture in
delivering excellent customer service cannot be over-emphasised.
In effective CM organisations, culture and climate
are as important to CM as they are to any other management process.
More specifically, the values of organisational culture must be
aligned to the market, be commonly held and yet still remain flexible.
Without those three attributes, organisational culture hinders
rather than helps CM.
Equally, the best CM system will fail if the
employee attitudes and perceptions of organisational climate are
negative.
A model for functional Customer Management
Truly successful organisations take a holistic
view of a relationship and a complete CM system contains four
distinct sub processes that feed into each other in a loop. By
continual re-iteration of this process, successful CM companies
gradually hone their targeting and propositions, creating competitive
superiority over less focused rivals.
Assessing Organisational Climate
The climate in an organisation is an expression
of employee perceptions of the atmosphere created by the organisation
through policies, practices, and rewards. It is the "feeling
in the air" when you enter an office or department or building
and is a current expression of the organisation's culture.
The Customer Management Eco System
Another important finding from our research
was the differences between companies, both in their market environments
and in what they offered the market. Two key dimensions emerged:
Market granularity. Some markets were very homogeneous,
with only one or two segments. Others were very complex, with
dozens of segments and very individual customers. Market granularity
is a function of the market, not the company.
Proposition flexibility. Some companies had
propositions that could be infinitely tailored to the customer
whilst others were much more standardised. Proposition flexibility
is a function of both industry and company.
2 ANSWERS TO
QUESTIONS
2.1 Can public services learn from the way
that either non public sector organisations or overseas governments
make use of user experience in service delivery and design?
Yes.
Observing best practice in other organisations
is a fundamental part of developing a strategy for customer service.
In our experience, it is clear that the size of an organisation,
whether it is publicly or privately owned, not-for-profit or delivering
value to shareholders does not affect the value of this approach.
We have seen examples where best practice in a school
for disadvantaged children has been `copied' and successfully
used in a large multi-national organisation. A best practice approach
to visualising customer segments in a call centre was first seen
in a clothing manufacturer and has now also been adopted in a
contact lens supplier, an insurance company and a roadside assistance
organisation.
Many organisations take input from customers
for service delivery and design. An example of best practice here
is in a large building society that has developed a useability
centre. A range of customers are invited to attend the centre
and participate in trials of new software and services so that
designers can see how their processes are used in a "real-life"
situation and can tailor the service as a result of customer feedback.
However, the implementation of best practice
ideas alone does not guarantee success in service improvement.
Indeed, our experience is that companies who's strategy was only
to try to copy the best practice of other firms in different contexts
tended to fail. We recommend that organisations should treat the
idea of a single "best practice" with caution and, instead,
look for the type of Customer Management that is a "best
fit" with the particular context of the organisations market
and internal situation.
Through our own observations of exemplar best
practice organisations, we at the Henley Centre for Customer Management
have developed a number of models, methodologies and tools to
help organisations to assess their readiness and approach to the
implementation of customer management. These Assessment Models
help organisations to decide:
— Do you have the right pre-conditions
for success?
— Is investment in systems to improve
customer management appropriate at this time?
— Is the internal culture and climate
supportive of the necessary change?
2.2 Is it possible to set minimum standards
for public services? If so, how is this best done?
Yes.
An excellent method of setting minimum standards
is to benchmark against other service providers in both related
and dissimilar industries.
Awards schemes often give good opportunities
for benchmarking. The Unisys/Management Today Service Excellence
Awards scheme provides each entrant with a benchmark report that
shows performance against both all entranta and against entrants
from the same business sector (including the public sector). Some
organisations enter every year, even though a reasonable amount
of effort is involved, primarily to get the feedback and to use
it to drive further improvement.
When benchmarking, we recommend a methodology
that first establishes from customer surveys the main elements
of your service and their relative importance. Plotting your own
organisations performance against these elements and comparing
to a competitor produces a service profile (example below).
Customer service profile
Having collected this data, it may also be useful
to look at it in another way. If the importance of the service
element is plotted against the perceived performance of that element,
the resulting service performance matrix can lead to insights
about the way the organisation is delivering its service.
If the result for an element falls in the over-kill
area, this might indicate an opportunity to reduce investment.
Conversely, additional investment is likely to be appropriate
when the result for an element falls into the underperformance
area.
However, standards need to be set in the context
of what is important to customer. They must be effective measures
rather than purely measures of efficiency. For example, considering
the call centre environment, most average call centres have measurements
(metrics) aligned to efficiency so that the managers can track
how fast each operator is getting through the calls. Many call
centres have "allowed" times for each call eg 2 minutes
40 seconds. The operator may earn less if they exceed these times
on average. However, in the best call centres, the focus is on
how effective each call is—did we resolve the customer's
issue first time or have to "hand off" to another department
or team for resolution? Has the strategy for this customer been
successfully executed, has the information framework been added
to and did new customer needs get uncovered?
One of the companies that we have studied came
up with an illuminating acronym addressing this point. They said
that:
"We measure what we love, we achieve what
we measure."
| M | Measure
|
| E | everything |
| T | that |
| R | results |
| I | in |
| C | customer |
| S | satisfaction |
| |
2.3 What role do measures of customer satisfaction have
in assessing the standards of public services? How should user
views be monitored? How can the cost effectiveness of user surveys
and feedback mechanisms be assessed?
Citizens simply want services that meet their needs and given
the wide range of people that make up the "customers"
of government in all its guises, how well these needs are met
will vary widely. Customer satisfaction is one way of not only
assessing the effectiveness of service delivery but of helping
the delivery units to focus improvements in areas where the gap
between satisfaction and importance of the different attributes
of service delivery is greatest. Measurement is a means to improvement.
Good organisations use satisfaction data alongside other measurements
such as productivity and cost to provide a richer picture of performance.
Building an effective view of how users perceive the delivery
of public services requires a variety of monitoring techniques:
— Face to face discussions can help in shaping the
design of services.
— On-line citizen panels provide a means of involving
a wider community of people in the decisions around service design.
— Surveys are highly effective in monitoring the
quality of service delivery and in identifying areas for improvement.
The main purpose for gathering feedback lies in the improvements
in the design and delivery of services.
— Focusing scarce resources on those areas of greatest
importance to citizens.
— Involvement (eg through on-line panels) heads
off resistance to changes to service design.
— Widespread feedback can be used in the calculation
of ROI on service improvements.
Ultimately of course, the quality of service delivery will
reflect in the election of representatives. It would be informative
to examine any relationship between public perception of service
delivery as generated by continuing surveys and the election of
representatives.
2.4 What constitutes best practice in responding to complaints
about public services?
Complaints are an excellent source of material for service
improvement programmes so they must be collected, collated and
actioned in the most effective and appropriate way.
It has been clearly established that a customer whose complaint
has been resolved in a timely and effective way is much more likely
to be a loyal advocate of serving organisation than a customer
who has never had to complain or one who perceives that his complaint
has not been handled satisfactorily.
It is, therefore, in the best interests of an organisation
to actively search out complaints and put in place processes to
both respond to the customer in a timely fashion and to consider
what underlying process changes might be implemented to remove
the cause for complaint.
Unfortunately, complaints are seen by many companies as a
source of irritation to be handled at the front line and the insight
that could be generated from them has a tendency to get missed.
Many techniques for encouraging feedback can be used by organisations.
One of the companies that we have studied has changed the
name of the responsible team from the "Complaints Management"
team to the "Service Recovery" team to clearly identify
what they see as the role of the team. To solicit feedback, this
team uses a "Customer Dissatisfaction Survey" to ask
customers questions like:
— Did you have any problems?
— What types of problems?
— Which was most serious?
— How well was it handled?
— How many times did you contact us?
In the wider context, complaints are one source of data about
customer needs, views and behaviours. Similar data can also be
derived, for example, from employees through suggestion schemes
or similar approaches. At the centre, we have recently completed
a research project looking at how customer insight is generated
from a wide range of data sources including complaints and suggestions
and then subsequently actioned in a number of the most successful
companies. The resulting framework for actioning customer insight
is illustrated below.
The purpose of this exploratory research was to investigate
how a number of large companies from a variety of industries are
using customer insight to drive customer acquisition, retention
and development. Specifically, this report addressed four key
questions:
— What types of data (inputs) are companies feeding
into the customer insight generation process?
— What types of customer insight (outputs) are companies
generating?
— What actioning of customer insight takes place
and for what purposes?
— What is it about the organisational context that
helps or hinders in the process of generating and actioning customer
insight?
The study provided enough answers to the first three questions
to populate a proposed theoretical framework for actioning customer
insight and answers to the fourth question have enhanced knowledge
in this area.
2.5 Is information about complaining easy to find and accessible?
The answer to this question depends on a range of factors
that are both internal and external to the service organisation.
From an external perspective it is important to recognise
a number of hard facts. The following statistics were published
by the USA White House Office of Consumer Affairs and illustrate
the difficulty of collecting complaint information.
— 96% of dissatisfied customers never complain.
90% of them will not return in the future.
— ONE unhappy customer will tell at least NINE others.
— 13% of unhappy customers will tell at least 20
others.
— It takes FIVE times as much effort, time and money
to attract a new customer than it does to keep an existing customer.
So, even if all complaint data is collected and collated,
a vast amount is never seen because the customer does not make
an official complaint. This is another reason why the approach
of one of our studied companies, the Customer Dissatisfaction
Survey discussed in the answer to question 4, is a very interesting
piece of best practice.
An emerging source of customer data (including complaint
data) that cannot any longer be ignored is the internet. The number
of company or community based websites and blogs is mushrooming
and can be seen as a real threat to a companies image if appropriate
action is not taken.
A recent example from the USA that we are aware of was a
blog -including video footage—posted on a community site
about a service call from a company engineer that went wrong.
Within a couple of days, the video had been downloaded by 200,000
people and had even been aired on network TV channels. The company
responded positively and has hopefully learned a number of lessons
from the experience.
One of the key research projects we will undertake this year
will address this area and help our members to understand the
implications of this major development.
From an internal perspective, when the complaint is made,
many organisations do not collect the information in a way that
allows it to be consolidated across the entire organisation and
subsequently analysed to derive systems and process improvement
opportunities.
The collection of customer feedback through complaints, suggestions
and compliments provides a means of increasing customer satisfaction.
It's an excellent opportunity to explore the hearts and minds
of customers. In general, a customer who complains is not only
showing that there are problems that they expect their service
provider to correct but, more significantly, they are showing
that they would like to continue their relationship with the organisation.
To ensure long-term success, service providers need to develop
effective strategies for service recovery so that they can maintain
customer goodwill. They also need to develop service improvements
to eliminate problems where possible. A key element of service
improvement is the creation of a culture in which employees take
proactive steps to ensure that customers will be satisfied.
2.6 Should users be more directly involved in service delivery?
If so, how can this be achieved?
Wherever possible, users do need to be involved directly
in service delivery. This can be achieved both in terms of designing
the way that services are delivered and in actual delivery of
the service through co-creation or self-service initiatives.
For design, users can be involved through, for example, focus
groups, suggestion schemes, surveys or through appropriate questioning
at service delivery points. There is room for innovative approaches
here and an example from one of the public bodies that we have
assessed illustrates this. They recognised the challenge in finding
new ways of giving customers, especially those in greatest need,
a "voice". Some of the innovative ideas that they have
successfully pursued are:
Giving customers a "voice"
...through community conferences...
...through local voluntary radio...
In common with many of the award winners that we have seen,
this organisation has a strategic vision that incorporates ideals
for both customers and employees:
— Where customers can access services by a variety
of means at a convenient time
— Where simple service requests are dealt with immediately
— Where customers are really understood (history,
needs etc.) and
— Where our people look forward to coming to work
in the morning!
The availability of services on the Internet has opened up
the possibility of self-service initiatives that both improve
customer satisfaction and reduce the cost of service. We have
seen a number of initiatives to allow customers to self-serve
coming into being recently but there is still considerable scope
for expansion. Ideas for services that could be accessed in this
way might be suggested through focus groups, suggestion schemes
or complaints analysis and an approach as outlined in the answer
to question 1, the useability centre, would be an excellent way
to test out the effectiveness of these ideas.
2.7 Are there certain types of decision which are more
suited to consultation than others?
For consultation to work well, it is clearly best if the
decision to be made has a direct effect on service, cost or lifestyle
in relation to the people consulted. In our experience, where
a consultation is about a subject which has a direct bearing on
the lives of a group of customers, it is easier to engage with
the customers and to solicit feedback from them.
Where the subject is complex and esoteric, it is much more
difficult to engage in a successful consultation. Effective consultation
practice requires rigorous sampling; appropriate account of minority
customer group; transparent analysis & reporting and, at least
the possibility at the outset that behavioural change may result
from the process.
Overall, the use of consultation can be looked at as a means
of mitigating risk in the context of policy implementation and
many of the techniques of Risk Management well known to businesses
can also be applied here.
2.8 Do official consultations typically manage to capture
the views of the right people? What kinds of consultation are
most effective in engaging with the appropriate people?
Although we have not been involved directly with official
consultations, some of the lessons of customer consultation will
certainly be appropriate.
Where consultation is with representative customer groups,
it is essential that efforts be made to make the group as diverse
as possible to properly represent the customer base. It is likely
that the same people or, at least, the same class of customer,
will be the most enthusiastic about being consulted and wish to
be involved. Innovation, as illustrated in the answer to question
6, is needed to widen that available choice of customer for consultation
purposes.
Where consultation is through feedback solicitation—mail
shot, phone call, website—then it is essential to make data
capture as easy as possible. We will be researching the use of
web blogs and communities this year and believe that this will
be a fruitful avenue to be explored.
2.9 How valuable are advisory panels in the design and
delivery of public services?
In our experience again, advisory panels can be very valuable
provided that they have the appropriate members. To get the right
group together, a stakeholder scoping exercise would be appropriate
to ensure that the widest possible community is engaged.
In addition, if the subject to be discussed with the advisory
panel is contentious, consideration should be given to the inclusion
of third party experts. Approbation by such experts can provide
both credibility and political support in such circumstances.
2.10 How does user influence relate to wider issues of
democratic accountability?
In our view, taking account of user views when developing/delivering
services will ensure that spend is focused where it delivers most
value. However, to ensure democratic fairness, it is essential
that a rigorous approach to sampling methods is adopted to ensure
that all parties have an equal voice.
Democratic accountability will also mean that some difficult
decisions have to be made. Assistance in assessing the impact
of such decisions and minimising any negative aspects can be extremely
valuable and users, in the right environment, would be able to
play a significant part in such efforts.
2.11 How should measures of public satisfaction take account
of complaints about policy rather than administration?
We believe that it is important to understand customer views
about both policy and administration and therefore complaints
in both contexts are important. However, resolution will require
different approaches. For complaints about administration, the
methods that we discussed under questions 4 and five will apply.
However, for policy issue, a more political approach might be
required. Consequently, it will be important to establish clear
guidelines and criteria associated with the determination of policy
complaints together with an appropriate "routing" process
associated with same, so as to ensure their effective resolution.
2.12 Are there situations where the views and experiences
of service users are irrelevant?
In our experience, views are always relevant because they
provide illumination from a different perspective. However, not
all views demand that action be taken.
Organisations need to be clear about the scope of any promises
that they make to customers and should set clear expectations
that can be met! This will ensure that service user views and
experiences when expressed will be relevant and worthy of review.
This analysis should form part of the rigorous strategic planning
processes adopted within the organisation. These same processes
should establish and determine appropriate boundaries/thresholds
for action and response to customer satisfaction based upon risk
assessment and value creation.
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