Perfecting Service Management

Issue #17 Tuesday, April 29, 2003


topical index

Welcome to this edition of the Customer Centricity newsletter, where we explore ways you can improve the performance of your service organization.

In this issue:

Avoiding the Death Spiral While Reducing Operating Costs - Part 2

In our last newsletter we introduced the series on “Avoiding the Death Spiral While Reducing Operating Costs.” This series includes a review of the following approaches that can be taken to reduce operating costs while maintaining customer confidence and increasing customer satisfaction:

  • Cease activities that provide no value-add
  • Implement efficient and repeatable processes
  • Focus on existing product quality instead of new features and functions
  • Enable customers to self-serve
  • Perform elements of the work with lower cost labor
  • Segment the customer base and provide “appropriate” levels of support for each
  • Make informed, not random, cuts
  • Cease big, expensive projects with long-term ROI
  • Renegotiate vendor contracts

In this edition we will cover: Ceasing activities that provide no value-add

In the course of growing a business, each person on your team undertakes various activities which, at the time, make perfect sense to effectively deliver service to your customers. This could include policies, procedures, one-off databases, agreements with third-parties, etc. Over time, however, these can become outdated or no longer effective in the current business environment. When looking for ways to reduce operating costs while minimizing the impact to the customer, you are encouraged to “look here first.” While you won’t necessarily find a silver-bullet, each step you take to improve operational efficiencies contributes to the cause.

Let me provide you 2 examples from personal experience. A business that I was involved with had to take some serious actions to reduce costs and become more efficient, while at the same time making sure that our customers' confidence and satisfaction remained high.

Example 1 - Outdated policy:
I had, quite serendipitously, come across a fax document that was developed as part of a customer authentication policy. I asked the dumb question: “What is this for?” To my amazement, I learned that “years ago” a policy was instituted where each new customer was required to complete a paper-based form with contact and related information, and fax it to our customer service team. I then asked: “What do we do with this document?” The answer (not so much to my amazement) was: “Oh, we file that away.” You know my next question: “Do we ever need to go back to that file to retrieve the document?” The answer: “No”. No further questions, I suspended that activity IMMEDIATELY. This saved us quite a bit of time. We no longer had to fax the document to each new customer, follow-up with the customer (time and cost of the long-distance phone call), receive the fax and file it. Not to mention, we made it easier for the customer to do business with us.

Example 2 - Subsidizing the work of a third-party:
We had negotiated a contract with a third-party provider to perform elements of our overall service offering. Over time, this particular third-party was increasingly NOT pulling their weight, and the work was instead being performed (subsidized) by my customer service team. This initially went unnoticed, as the customer service staff just “sucked it up.” However, when the pressure was on to reduce costs this item bubbled-up, in a haphazard way, as a ripe opportunity to reduce work-load. What this required was our reviewing the original contract that we had established with the provider, quantifying the work that was being performed by our organization, when it should have remained with the third-party provider, and then working with the management team of the third party to hold them accountable to the original contract. Finally, we had to lock-in accountability on our own team for who would manage this third-party on a go-forward basis, because we had obviously not been paying attention to their performance and instead simply “doing the right thing” by servicing every customer that called in to our service organization.

The lesson from both of the above examples is that you are encouraged to consistently ask your team-members (on the front-line) the following questions:

  • What is in your way of delivering excellent customer service?
  • If you were running this operation, what policies or procedures would you eliminate to save time and money?

Finally, the approach of “management by walking around” can be highly effective in this regard as you make your own observations about the working environment and the various interactions your team has with the customer. Guaranteed, if you haven’t done this in the last 3 to 6 months you will find “low-hanging-fruit” that is ripe for the picking.

Upcoming newsletter editions will cover additional items on the topic of “Avoiding the Death Spiral While Reducing Operating Costs”.

Previous articles in this series:

Part 1


ACTIVE - Part 6

By Ida Zecco

This is the final article in the series, covering the six-step self-assessment process, ACTIVE, to help you to hang-on to and grow your single source of revenue, the customer.

A - Account Management
C - Customer Lifecycle vs. Sales Cycle
T - Account Team
I - Internal Infrastructure
V - Value Proposition
E - Enable Customer Involvement in Product/Service Development

E - Enablement: Enabling your customers to become involved with and actively participate in the development of your products and services is a value-add proposition. Enabling and authorizing your employees to make decisions at every “touch point” (anytime one is engaged with a customer) is both a sound investment and a revenue opportunity. But, where do you begin?

You can start this process by creating a Board of Advisors consisting of CEOs/Senior Executives from your most valuable, highest revenue generating customers. Because the participants are senior executives, you should match them with senior management of your company to show your commitment to them – the customer. You should also leverage this audience to understand the BUSINESS issues that they face every day and how your products and services affect them (hopefully solving some of the issues). Depending on the types of products and services you offer, you may also want to add an End-User’s group. This program may have some similarities to the Board of Advisors, but can be as simple or as sophisticated as you want. Some End-Users’ groups have self-governing leaders from your client base, who will hold meetings and seminars based upon your products and services, and make recommendations to you. Others may consist of an information/idea sharing organization that needs only a website, call in-number, etc. Customers appreciate and VALUE being involved in creating and developing products and services that meet their needs. One caution is that customers want to be heard. This means that if you ask for their feedback and input, they want to know what you are doing with it. It comes down to communication. If you decide that a suggested change is not in keeping with the direction that most of your customers want, be sure to explain that to the customers that felt strongly about it and explore other ways of addressing their concerns. When considering the ROI in programs like this, there is no price-tag that can be attached. Now your value-add has become INVALUABLE to you and to your customer.

Training, developing and trusting employees is another investment that, when implemented to its fullest, can result in a crop of industry experts and an extended sales force that is enviable among peer corporations. There are countless examples that we have all read about relating to employees making a decision on behalf of the customer, usually acting far beyond the boundaries of their own job function and task statement. There is no better example of this than L.L. Bean. The publicity that is created from the satisfied customer of L.L. Bean is worth its weight in revenue. Why does this happen and so often? Because the company has a single focus, and every employee knows what that focus is: “The customer need before the company need.” And each employee acts on that goal; every day, with every customer, in every situation. Quality is not even an issue, it is a standard, and it is backed by their 100% guarantee for as long as you own the item. There is no wonder why L.L Bean is #1 in service for their industry. Why is it that technical, highly complex products and services, do not fall under the same guarantee and product/service standards?

When considering changes to handling customers, you need to place your emphasis in the right places at the right time: people, processes and systems—in that order. Is every employee ready to meet the challenge? Are all processes working effectively and efficiently? When these are addressed, the question may not be “Should you automate?” The question may be: “Are you prepared to automate?”

So, there it is! ACTIVE: Account Management, Customer Life Cycle, Team-Orientation, Value, and Enablement. Implementing just one of these shifts in strategy and actions can help convert merely satisfied customers to loyal customers who advocate your products and services to others! This is something to think about in an environment of high competition and tough economic conditions.

Previous articles in this series:

Part 1  Part 2  Part 3  Part 4  Part 5


New White Papers Available

Customer Centricity is pleased to announce the availability of two new whitepapers:


More About Customer Centricity, Inc.

Customer Centricity is a business consulting firm that partners with companies to improve the performance of their service organizations. We leverage our real-world experience to help our clients manage their customer relationships in more effective and satisfying ways.

Customer Centricity delivers on this promise by optimizing the interaction between people, process and technology to achieve higher levels of customer satisfaction and increased operational efficiencies. We provide:

  1. Comprehensive assessments to identify the actions that will yield the greatest return;
  2. Skills Training to enable customer-facing personnel to deliver exceptional levels of customer service;
  3. Design and Implementation of business process techniques to serve the customer in efficient, effective and consistent manners; and
  4. Identification of the appropriate business processes to automate, enabling companies to get the most from their investments in technology.

In addition to our core practices, we also maintain a network of strategic partnerships to provide end-to-end consulting across your organization with a commitment to seamless execution.

Click on the following link to see what our customers have to say.

To learn more about Customer Centricity:

call: 603.491.7948

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or visit our web-site:

In Closing

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