7 lessons in service design

Category practice and company policies matter yet they are not enough

More than once I have advocated that companies must change category practices and company policies so that these take into account the needs/wants of customers.  Put differently, each category practice and company policies should be listed and then examined in terms of impact on the customer.  Does this practice / policy create benefits or costs for the customer?  How can we increase the benefit and reduce costs?  By ‘costs’ I mean costs in terms of effort, convenience, price, cost of ownership etc.  However that is not enough: you have to purposefully design processes that support these practices and policies by delivering the right customer experience

Right policy, poor process, customer experience

Is it possible to put in place a policy that is designed to protect your customers and yet have a process that ends up irritating your customers?  Yes, it is common – allow me to share my story with you.

Recently I wrote about how hard it was for me to move money from one account to another.  If you read that post then you will know that by thumbing through my file I was able to find my e-banking ID and thus transfer a large sum of money (around £50k) from a savings account to my current account.  Once this money ended up in my current account I needed to move it to its end destination: my sister’s account.  So I logged into my e-banking account and attempted the transfer.  I was not expecting any problem yet I met one.  The system would not let me: I simply got a message on the screen telling me that I had exceeded the withdrawal limit.  No other information was provided e.g. what the withdrawal limit is or who exactly to call and which number to call.

So I called Customer Services number and ended up talking to a customer services agent.  He took me through all the usual security checks.  When I told him of my issue he started asking me all kinds of questions – questions that only someone who is the account holder and has access to the bank statements can answer.  Once he was confident that I was the person who I was claiming, he told me that he could not help me.  He was powerless: he had to get  hold of the specialist team and get them to authorise the transfer.  So he took the details of my sister’s account and verified those with me, patiently, to make sure that he had the correct details.  Then he got on the line to the specialist team.  After waiting some 10+ minutes he told me that he could not help me because this specialist team had clocked off at 9pm and were not available.  He apologised and told me that he had entered all my details into the system and asked me to ring in the next day. On hanging up I noticed that I had been on the phone for 30+ minutes.

The next day I rang Customer Services and went through exactly the same drill.  I had to replay almost word for word the conversation that I had the previous day – this CSA claimed that the previous CSA had not left any record of the previous conversation.  Finally, he hit the phone to speak to the specialist team.  After about 5 – 10 minutes he came back and told me that the specialist team had declined to do the transfer and that  should go to the local branch.  When I asked why he simply told me that the specialist team had told him that it looked suspicious.  I was not at all happy yet the rational part of me understood that the bank was indirectly acting in my interest.  Looking at my watch I noticed that I had been on the phone for 20+ minutes.

Then I headed to the local branch and made my request for the fourth time. The cashier was polite and helpful.  She took copies of various personal documents and told me that it was going to take some time. In total I had spent another 30+minutes in the branch.  And when I left I resolved to move to another bank which I fully intend to do.

So whilst I totally get that Santander’s policy of being prudent and preventing fraud is commendable I cannot help but think and feel that their process is a poor one. I’d go further and say that Santander does not have a process for the kind of scenario that I faced:  I cannot believe that any sane person would have designed the process to be this wasteful.

7 lessons in service design

Communicate the need for / benefits of the policy to the customer.  At no time did anyone at Santander explain why I was not able to withdraw money via e-banking or via telephone.  No-one told me that they were doing this to ensure that a fraud was not taking place.  Or that this policy was necessary to comply with money laundering legislation.   If Santander had done this then I would have been more understanding: most of us are reasonable human beings and allow organisations leeway when we know they are acting in our interest or having to comply with the law.

Take ownership of the customer problem.  No-one at Santander took ownership of my problem: the e-banking folks did not; the Customer Service folks did not; the ‘specialist team’ did not – they did not even speak to me.  The cashier had to take ownership of my problem because I was there right in front of her and the rest of the Santander system had ‘let me down’.    All the way through the process I felt that I was ‘battling my way through Santander’ to get something done that mattered to me and Santander were simply indifferent to my plight.

Take the opportunity to educate the customer.  When I headed to the local branch I assumed that I would need several identity papers, bank statements etc.  No-one at Santander took the time to tell me what exactly I would need.  Nor did anyone educate me for the next time e.g. “Next time you decide to move a large sum of money then it is best to do …….. and avoid ………”

Strive to solve the problem where it starts.  At the e-banking stage (when my transfer was declined) Santander could have provided me with a chat facility and directed to the specialist team.  Or Santander could have simply told me to go the branch.  Either of these approached would have cut out wasted time and effort on the phone to Customer Services who simply are not in a position to help.

Put the right people in touch with the customer.  What value did the Customer Services agents add?  None.  When it comes to complex processes that require specialists these agents are simply non-value added relays.  Furthermore they are likely to make mistakes.   The implication is that once you have identified that the case is complex then the call should be routed directly to the specialist team to take care of.  First line, second line and third line thinking is deeply flawed especially as customers are taking care of the easy stuff themselves via self-service and so the demand that falls on contact centres tends to be the more complex stuff which requires specialists.

Design your process to minimise cycle-time.  If you want to compete on the customer experience then you should design your processes to minimise the customer’s cycle time – from need to resolution.  A focus on cycle time will force you to deal with activities and hand-offs that eat the customer’s time.

In complex organisation x-functional co-ordination is required.  When you let various teams within the organisation do their stuff then they will do what is in their best interests.  The result is that the end to end process is likely to be wasteful for the organisation and for the customer.  Furthermore, the waste will typically end up downstream usually in Customer Services or the retail branches.  The only way to get around this issue is to look at processes from end to end (customer perspective) and that means cross functional co-ordination.  If no-one else is playing that role then the Customer Experience team should take on that role.

And finally

CRM systems constituting the ‘organisational memory’ sound excellent.  In practice they are pretty much useless as organisational memory. Why?  Because of the way the real world works. What do I mean?

First, the CSA’s have only so much time to handle and wrap up calls.  That means they end up inputting the bare minimum into the systems.  And usually that bare minimum is not that useful.  If you don’t believe me then go and work in call centres for a little while and see with your own eyes how things work.  Second, the more complex the call the more useless the CRM system is.  Why?  Because it simply takes too long for a CSA to read through the history.  In that situation it is much quicker for both parties if the customer spells out the situation.  So that is another bit of the ‘sales story’ around CRM systems that does not hold up in the real world.

What you are failing to do is much more important than what you are doing?

There are two kinds of errors that you can make: errors of commission and errors of omission.  An error of commission involves doing something that you should not have done.  A good example of this is the money that large companies invested in implementing complex CRM systems on the assumption that these would engender customer loyalty and drive revenues and profitability.  Closing down Napster and thus allowing the likes of BitTorrent to rise was an error of commission made by the music labels.  If you take a look at mergers & acquisitions you find that the research shows that these almost always destroy value and are not a good idea: the AOL and Time Warner merger is the one that sticks out for me.  If you look at this at a global level then the deregulation of the financial services industry was the big mistake that has brought the western economies to their knees.  Errors of commission are easy to spot in hindsight.

Errors of omission are the more important ones.  These errors occur when you fail to do something that you should have done.  Did Nokia indulge in an error of omission in sitting on smartphone technology (insiders tell me Nokia had this technology) and not introducing it and thus letting Apple steal the show?  Did the music industry make an error of omission in not setting up online music stores allowing customers to download individual songs? Did the offline book stores make an error of omission in not embracing the internet aggressively and thus allowing Amazon the premier seat at the table?

So where is this leading?  In the Customer field there is a whole bunch of stuff that companies should be doing right now and yet they are not doing it.  As such these companies are making errors of omission.  Allow me to give you some examples.

The words have changed yet the mindset is the same.  The mindset continues to be about finding clever ways of getting customers to do what we want and reducing costs.  The mindset has not shifted to a relentless focus on creating superior value for customers and figuring out how we get a fair reward for doing; time after time I hear something to the effect “How do we make more money out of our customer base or reduce the cost of servicing our customers?”  I rarely hear “How do we create more value for your customers?”.  Yes, it really does matter which comes first because what comes first determines the whole context for what happens.  It requires one kind of mind, one kind of organisation, to ‘extract’ value and grow this years financials.  It requires a fundamentally different mind and organisation to create value for customers, cultivate relationships and secure a lifetime income stream.

Effectiveness is doing the right things.  Efficiency is doing things right.  To cultivate long term relationships organisations have to focus on effectiveness: doing the right things as viewed from the customer perspective.  Yet the organisational focus continues to be on efficiency.  The relentless focus on efficiency means that I had to spend ten minutes or so hunting around for a telephone number to contact Sky.  It is also the reason that after four phone calls to BMI I was not able to pay my bill because my call was important to them yet they could not answer it even after five minutes.  It also means that human-human encounters are being replaced by human-technology interactions and so the opportunity to build emotional bonds is being sacrificed.  As a famous systems practitioner pointed out “The righter you do the wrong things the wronger you become!”

The organisational design is the same.  The functional organisational design and the associated management system was and is designed for a manufacturing centred organisation operating within a command and control operating system.  To be a customer centred organisation requires a fundamental change to the way that the organisation is designed.  It requires recognising that the front line people (those interacting with customers) are the most important actors in the organisation and the role of managers is to support these ‘actors’ in putting on the best performance they possibly can.  If you take segmentation seriously then it requires operational changes and not just sending some communications via email, others through SMS and the rest via direct mail.

I could go on and on and I am sure that if you put your thinking hats on then you can complete the list yourself.

Is your organisational focus on errors of commission?  Then who is looking out for errors of omission?  Please remember that the errors of commission rarely kill you.  Yet, errors of omission do exactly that even if it takes a little while for the results to show up.

Ultimately all the customer-centric talk comes down to this ONE question

When it comes to customer-centricity there is only ONE question

If you grapple with the Customer stuff for long enough you get past all the surface issues – data, CRM systems, processes, metrics, people etc- and see that it all comes down to one question:

“Are you ready to sacrifice short-term gains from your customers (‘bad profits’) for the sake of long-term relationships which some believe cannot be achieved?”

Yes, sacrifice is required and there are no guarantees.

How would you answer this question if you were the CEO?

If you look deeper at this question you will find that as the CEO (or Board of Directors) you are being asked to:

  • Give up marketing and sales practices where you mislead-manipulate-overpromise and ultimately disappoint customers. And instead be straight with your customers – set clear expectations that you can fulfill.  This is almost certainly going to cut your revenues and  your market share because your competitors are going to continue ‘fleecing’ customers – at least in the short-term;
  • Spend money to fix what is broken or is simply missing and thus gets in the way of you delivering a good/great customer experience.  This is likely to need capital investment and almost certainly going to increase your operating costs and further cut your short-term profit;
  • Embrace that you do not know if this investment will pay for itself, when it will pay for itself and how much the payback will be;
  • Be willing to instigate-face-deal with plenty of turmoil as you make major structural changes to your house (‘organisation) whilst you and your family (your people) live in it; and
  • If you are the ‘average’ CEO of publicly listed company then the ‘short term’ is likely to be most, if not the entire length, of your tenure as CEO of this organisation.

If you were the CEO how would you react when faced with that proposal?  Now you know why there are so few ‘Bold’ organisations in Shaun Smith’s latest book.

Looking at customer loyalty through the lens of ‘attachment theory’

If you take a look at attachment theory (John Bowlby, Harry Harlow) you find that the child’s attachment drive to the mother needs to be reciprocated by the mother’s care giving system.  What does that mean?

Put bluntly I, the customer, am likely to attach to you (‘customer loyalty’) if and only if I am confident that you will take care of me and not exploit me.  That is to say that you are a ‘secure base’ for me:  I can count on you when I need you.  And that is exactly what most customers cannot do with most companies.  Why?  Because the Tops within these companies are not ready to sacrifice short-term gains  for the sake of long-term relationships which some believe cannot be attained. And that is the underlying reason behind the failure of the bulk of Customer projects to deliver loyal customers.