I wanted to comment further on the ‘customer service system' of which we spoke in the previous blog.  And to support that I found a quote that really said very effectively the point I was trying to make.  But before I get to this I just wanted to discuss the importance of the perceptions that customers form of our business.

The perception that the customer forms of your business's ability to satisfy their expectations will determine their response to the actual goods and services they receive from you.  Unless your customer's needs and preferences are satisfied the image of your business, in the mind of your customer, may be quite different from the identity you believe your business has.  This is sometimes referred to as a "Moment of Truth".  Every time a person comes in contact with a business they form a perception of it.

And now to the quote:

"It is commonly accepted today that meeting customer expectations on quality and service is merely a ticket to play the game.  The long-term winners are those organisations which consistently exceed expectations or delight their customers with cheaper, better products and services that are delivered faster.  Too often however organisations, particularly in service industries, striving to provide better service than their competition, focus their attention exclusively on the people and practices at the interface with their customers.

This attention is usually in the form of customer service training supported by a number of customer service measures.  The training, at worst, takes the form of so-called "smile training".  At best it equips frontline staff with the knowledge and skills to deal quickly and pleasantly with customer queries, problems or complaints.

Neglecting the processes and support functions behind customer service staff is often the cause of many service improvement initiatives stalling.  Frequent delays, errors or inefficiencies in the processes that deliver the end product or service to customer service staff, eventually lead to frustration, demotivation, and a reluctance to take the initiative. 

Even the best customer service training soon begins to lose its impact and as customers complain, managers lament the wasted investment."

'Achieving Service Quality'   Rod Smart, General Manager, Zenger-Miller Australia.

I couldn't have said it better myself. 

Note the comment on "managers lament the wasted investment".  I don't have to tell you what a wasted investment is; another profit leak.

AdamG

A little while ago I wrote of the role of management in customer service.  Today I thought I'd touch on the overall customer service system. 

What do I mean by "system" ?  Think of how you actually deliver customer service.

There are two aspects of customer service.  The first is what the customer experiences when they come through your door, or contact you by telephone, facsimile, e-mail or what ever.  How were they treated?  How quickly did you respond?  Were they happy with the service or product they purchased?  Will they come back?

Your front line team provides this point of contact and it is critical.  Friendly, smiling staff who genuinely want to help your customers, answer the telephone quickly and go out of their way to meet the customer's needs are invaluable. 

We recently did a customer survey for a client.  One item which stood out in all the customer's responses was the attitude of the staff.  We identified other opportunities for improvement but it was the strongly customer-focussed attitude of the staff which kept the clients loyal.

However there is another aspect of customer service, and that is - "How do you enable our staff to provide good service?"  You can recruit nice staff, provide frontline training and set the right example.  However if the systems and processes behind the scenes which enable your staff to identify the customer's service requirements and to provide that service aren't working, then that smile might have the be stitched in place, because they certainly won't be able to hold it there.

Customers have needs and expectations (quality, timeliness, price etc.) which must be determined.  To a certain extent you react to these when they walk through the door, but how much better is it if you have done the work to determine what they are likely to be before they arrive, thus considerably improving our chances of satisfying them.

The company's system makes claims and promises regarding its ability to deliver its products and services.  But can you actually find the product when it is required?  Does the system say you have Item X in stock but it cannot be found?  Can you fill 100% of an order, or only part of it?  Can you provide the support they need when they need it?  These are the "business processes" which underpin your business.  Can they work better, faster, with fewer mistakes and errors? 

It is these business processes you need to work on if you are to improve customer service - to enable your staff to provide the service level which will ensure loyal customers.

Finally, no matter how well the system believes it has performed it is the customer's ‘perceptions' of quality which determines whether they are satisfied.  Staff have key roles in shaping those expectations through their advice, service and the nature of their relationship with clients but in the end, the customer walks out an unhappy customer, you have failed. 

And you need to know.  Measure, measure, measure!  An unhappy customer represents another profit leak.

AdamG

Ice?  We're worried about leaks are we not?  Well, yes, we are, and I suppose if I stretched a point I could say we are worried about running into an iceberg and creating a leak.

Actually, the metaphor is not bad.  We are talking about the impact on profits of something we usually don't see.  You know how it is said that you only see the one third of the iceberg that is above water.  Two thirds is under water so you don't see it, and that is where the danger lies.  That was what happened to the Titanic, and you don't want the kind of leak it got to happen to your business!

In this case the iceberg is waste.  The bits you see you can do something about, and usually do.  Things like scrap and rework if you are in the manufacturing business, customer returns or servicing complaints.  I'm sure you not just fix a specific issue but also look at the trends to see if there is an underlying problem.  You do, don't you?

It is the two thirds you don't see that is the problem.  If you are not using your equipment properly and not getting the best out of it, that's a waste.  If you are having to pay premium freight costs because some parts or supplies were not ordered on time, that's a waste.  If you are making sales calls on people who are never going to buy, or at best buy very little, that's a waste.  If you lose a customer for whatever reason, that's a waste.  It costs more to get a new customer than to service an existing customer.  If you are not concentrating on those things that are most critical to your business, that's w waste. 

You get the picture I'm sure.  Just as a test, for today.  Why don't you do a check every hour or two and look at what you are doing, and how long you have been doing it.  The ask yourself the question "Is this adding real value to the business?"  If not, is that the best use of your time?

The proportion of waste that is hidden will vary from business to business.  In manufacturing businesses the waste tends to be more visible.  It's above the water.  However for service businesses it tends to be much higher, and can be as high as 10 times that which can be seen.

Whatever the form of the waste, you are not recovering a dollar from it.  So it is a profit leak.

AdamG

We all have competition for our business, one way or the other.  Sometimes it's direct competition, sometimes its from substitutes.  You know what I mean by that - am I going to spend my precious dollars on a latte or a wine?  Sometimes the competition is fierce, they're all out there, determined to get your share of the business and preferably get you out of the business.  Sometimes it's relaxed, and you are all happy with your share of the customer's dollar.

But how much time do you spend worrying about the competition, now that's the question.  Now I'm not saying you shouldn't keep an eye on the competition.  All the good businessmen I(and women) I know have a very good idea of what their competition is up to.  They will have a file on each competitor and drop in anything they come across that demonstrates their strategies or their results.  And that is good practice.

No, what I'm talking about is having an obsession about the competition, an obsession that occupies an unhealthy proportion of your precious management thinking time.  Face it, probably the only commodity that is shorter than cash in business is management time.  Not just managing time, but time to think about you business, where it is going, and how it can be improved.

If you are obsessed about your competition I can guarantee you will have profit leaks.

What else could you be doing with that time, what else might you be doing that will have a more positive impact on your profits?  Think about your business, not the competition.  The returns are greater, and you will sleep better at night.

AdamG

Last night I attended a briefing an how to submit an entry into our regional tourism awards.  My wife runs a conference and event management company.  Regional tourism awards might sound a little ho hum but if you win your category the ‘rewards' are significant, and you get to compete in the national (Australian) Tourism Awards against the winners from the other states.  Given that Australia has only 7 states, despite having the same land mass as continental USA, if you can make the nationals, you are in with a real chance.

Of course, winning the nationals is even more rewarding.  There's not only the direct financial prizes but the publicity that follows is, well, almost priceless.  Great for building your business.

But it is not those rewards that I wanted to talk about.  To put together a reasonable submission requires you to step back and have a good look at your business.  And it is this that gives you the real reward. 

In an earlier blog I commented on being involved in the regional judging for the Telstra Small Business Awards.  Over the years, if there has been one constant refrain from people who have submitted, it has been on the benefits they found from being forced to step back and look at their business.  The same refrain was being expressed from people who had previously submitted for the tourism awards.

Last night we were  being asked to look at what sets us apart from our competitors, what innovatory changes to benefit clients had been made, our business vision and key features of our business plan, who and why were our target markets, our communications strategies, customer service strategies, staff training, risk management and contribution to tourism in our area.

Now that might sound like a pretty standard list but most of us are so busy being busy that we don't take that step back and evaluate what we are doing.  What's more, the awards process asks us not only to say what we were doing, but demonstrate the actual outcomes of these strategies or steps.  That makes it much harder to be a little ‘generous' with the truth!

So I would urge you to consider entering awards is your area.  It makes "every one is a winner a truism."   Oh, and Good Luck!

AdamG

Yes, I know it's an old joke.

And the answer is of course "one bite at a time".  But seriously, there's a reason for the lead.  It is the same situation when you see a long flight of stairs ahead of you, and you have to go through the doorway at the top.  That is where the money is.

You not going to get to the landing at the top in a single bound (unless you're Superman of course).  If you tried you'd probably fail.  Which is why so many attempts at solving problems in business fail.  People rush at them, try and fix them "in a single bound", find it's too hard, and give up.  Like eating the elephant, you're going to take those steps a step at a time, and find getting to the top is no problem at all.

So you've found the profit leak and you want to fix it.  It may well be fixable in "a single bound' but it may be, like the elephant, more than a meal in itself.  And I know I'm mixing metaphors, but you get the message. 

To plug the leak may take time.  Time is often something we don't have.  There are enough distractions in the day without adding to them.

So whether it's the size of the problem, or chaos during the day, if you just take a step at a time you will plug the leak.  You'll overcome the problem without hitting a brick wall.

In ‘consultspeak' this is called "incremental improvement" and graphically it's usually shown as a flight of stairs.

Say you have identified a product or service that is just not giving you the returns it should.  By working on it a step at a time, you may be able to improve profitability by, for example, 2% a week.  At the end of the month that is 8%, and at the end of 2 months that is 16%, plus the cumulative improvement as well.  So if your Gross Profit was 20% to start with, now it's 36%.  That is starting to make a real difference.

So that's it - incremental improvement.  Take your profit leak a step at a time, and you'll plug it it.

AdamG