Perfecting Service Management

Issue #24 Tuesday, August 4, 2003

Welcome!

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 9
(Cease big, expensive projects with long-term ROI)

By Lauren Weiss

This is the 9th article in the series "Avoiding the Death Spiral While Reducing Operating Costs" covering approaches to reduce operating costs while maintaining customer confidence and increasing customer satisfaction. Topics in this series include:

  • Cease activities that provide no value-add
  • Implement efficient and repeatable processes
  • Focus on existing product quality instead of new features and functions
  • Enabling 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: Cease big, expensive projects with long-term ROI

For many years, companies were struggling to keep up with the fast pace of evolving technology. With pressures like quicker time to market, it was often easier to make quick system and process enhancements rather than invest in large system and process overhauls. However, good companies knew they had to start thinking about the long-term as well. To use an analogy: an old jeep can only be fixed so many times; eventually you need to invest in a new jeep.

Just when many companies felt caught-up enough to think about a longer time horizon, the bubble burst and the economy turned. The long-term picture is not as clear now, in many cases. The current pressure is to cut costs while maintaining customer satisfaction levels. Every dollar spent today needs to return more dollars sooner rather than later, which means short-term ROI. Multi-million dollar projects with delayed payback need to be deferred. The old jeep needs to last a little longer before being replaced.

A common theme throughout this newsletter series on cost cutting is identifying a company’s priorities. While long-term priorities are important and should not be overlooked, the immediate concern is the short-term. Companies should make short-term investments that are in line with their priorities and will enable them to "hit the ground running" with larger investments for the long-term when the economy stabilizes. Often this means continuing to use existing systems, while perhaps enhancing processes or providing additional training to personnel.

The long-term is important and should always be a consideration in decision-making. However, in this economy, it is important to make the right investment decisions in the near term to make sure the company will survive for the long run.

If you would like to discuss further how your company could implement processes or training to make the most of existing systems, feel free to give us a call.

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   Part 2   Part 3
Part 4   Part 5   Part 6
Part 7   Part 8

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Customer Behavior Metrics - Part 2
(Identify Changing Customer Attitudes)

By Bill Riquier, Business Metrics Specialist

This is the 2nd article in the series on using customer metrics to prevent customer problems. The first article highlighted the importance of using customer metrics to prevent customer problems and described several metrics that companies use that are actually lagging indicators of perceived customer value. This article discusses the first business area that supplies leading indicators of change in perceived value: Customer Behavior.

Hopefully, your company logs all customer complaints. While complaints are outcomes of specific transactions, they do not necessarily signal damage to the relationship. Classifying and then tallying complaints will allow you to develop a Pareto Chart. This tool presents each classification in descending order of frequency. By calculating the cumulative percent of total complaints, starting with the most frequent, you will often see that 80-90% of complaints fall into the top 3 or 4 classifications. Moreover, a rigorous cause-and-effect analysis of the top complaint groupings will often reveal common causes. This method can help you take a confusing mess of hundreds of customer complaints and comments from the previous period and narrow them down to 2 or 3 important causes. Typically, managers are well aware of these problems, but now know that they are threatening to impact the customer relationship and can use this proof to mobilize staff, access resources, and garner support from stakeholders.

Your sales staff can be an excellent source of customer attitude data if they effectively log their sales activity. Measures of pipeline activity can be very effective leading indicators of coming changes in the customer relationship. For instance, an upturn in the average time proposals to existing customers are spending in the Negotiations Phase could signal the beginning of a change in your customers’ feelings about a number of issues, from price to trust. And a drill down may reveal that the shift is concentrated in a specific customer type and/or for a certain service offering. The time to act is now, before this attitude shift turns into a relationship problem.

Other customer-facing staff, such as Customer Service, Billing, and Legal, should keep logs of activity that managers could use to identify changing customer attitudes.

In the next two installments, I will discuss three more areas of the business that supply leading indicators of perceived value. These are: Company Performance, Industry, and Growth and Learning.

Previous articles in this series:

1. Don't Solve Your Customer Problems: Prevent Them!

Bill Riquier can be contacted at w.riquier@comcast.net

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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

send e-mail to: info@customercentricity.biz 

or visit our web-site: www.customercentricity.biz

In Closing

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