Improving Processes in the Service Sector - Going Beyond Efficiency and Quality UpliftDocument Transcript
Improving Processes in theService Sector – Going Beyond Efficiency and Quality Uplift October |2010
Improving Processes in the Service Sector – Going BeyondEfficiency and Quality UpliftTraditionally, efforts around improving processes in the service sector have had attheir core the end goal of reducing operational expenses while maintaining orimproving service quality, focused on driving efficiency in certain day to daybusiness activities. Such redesign efforts, however, must take several other factorsinto account, factors which are quite often ignored at the ultimate expense of thecustomer.Google the term “process improvement,” and you’ll get over 2.5 million results.No wonder, as this concept, which has taken on variations in the form of TQM, SixSigma, BPI, and BPR, among others, is one of the most commonly known andpracticed in business. Originating primarily in the manufacturing era, processimprovement has become a staple in the service industry as well, particularly overthe past two decades.At its core, process improvement efforts have traditionally focused on identifyingopportunities within the business for improving efficiency and driving up quality,with both objectives often pursued hand-in-hand. In the more monopolisticenvironment of the past, companies in the service sector did little to address theirbroken processes – the reason being there was little reason to do so. If acustomer was irate because his telecom operator took two weeks to get his hometelephone line repaired, there weren’t alternative operators he could switch hisbusiness to. With no risk of losing customers, few companies were striving forhaving lean and mean operations in place.Thankfully, with the proliferation of competition in most sectors and countriesover the past several decades, service-oriented companies have been forced tomake significant strides in their processes. Competition has played the single mostimportant role in ensuring consumers receive a better overall level of servicetoday.That said, we believe companies still come up short in certain ways when it comesto process improvement efforts. As it stands, the focus around such efforts isalmost completely on efficiency and quality. Not to say that these factors shouldnot be at the core of process improvement projects, but there are others that canalso provide bottom line impact to those companies bothering to address them.We recommend service sector companies undertaking process improvementefforts address the following five factors during the project:1. Channel Alignment: As the number of channels that customers can interactthrough has significantly increased (i.e. applying for a line of credit via SMS,lodging a complaint through Twitter, etc.), so too has the variation in the overall
level of service provided. Whatever the level of quality and service providedthrough one channel is in a given company, so too should the rest be (or at theleast, expectations set).This means ensuring that the processes in place around alternative channels (andtheir relevant measures, KPIs, and targets) are airtight, monitored, and audited, soas not to drive high variations across channels in terms of overall level of service.If, for example, a customer’s application for a loan submitted in a branch iscompleted in four hours with the customer receiving a call back in regards toapproval / rejection within six hours, then so too should the customer be treatedthe same if he or she applies through the company’s website.Moreover, customer expectations should be clearly set at a minimum, so as not todisappoint them when their own expectations are not met when using onechannel vs. another. If, as another example, a customer is used to having theirphone reactivated immediately when they pay an outstanding bill in a dealer, sotoo will he or she expect the same to happen if he or she makes the payment viaan EFT bank transfer. If the process does not support the same level of servicebeing provided, and thus, having an expectation met, then it should be made clearupfront to the customer.This variation across channels also rears its ugly head around the quality of workconducted by employees. Applications received through one channel, forexample, result in the application fields being filled 90% completely, whereasthose through another channel result in 50%, let’s say. Such a problem is directlythe result of processes not being adapted to meet the difference naturallyinherent in channels, requiring each and every process to be examined for flawsthat need to be addressed.2. High-Net Worth Customer Process Alterations: In one engagement, wefound that a customer in the top 1% tier of the company we worked with wasworth 16 times that of a customer in the bottom 50% tier, on an annualized basis.This begs the question – shouldn’t then marketing / customer care budgets beallocated accordingly?Almost all companies are aware of the strategic and financial importance of suchcustomers, but only some actually go out of their way to ensure their retention.We believe the alteration of processes to better serve high-net worth customersis one such way this all-important segment can be pampered.How? First, in terms of addressing / processing requests, such customers shouldbe serviced first and foremost. This means getting them to the front of the bankqueues with a lobby management system, routing them to the top of the waitqueue when they call the contact center based on recognizing their number,providing them a separate teller or checkout line, and handling all theirapplications and paperwork in a prioritized manner in the back office based on
their customer ID and relevant value segment, regardless of the channel oforigination (web application, in person application, SMS application, etc.).Second, the quality of service provided to such customers must also be higher, soprocesses must be put in place to ensure only the most experienced and qualifiedemployees touch them, so to speak. Again, this goes for all channels, and requiresaddressing non-standard methods of providing segmented customer service (i.e.dedicated call center agent or branch account manager). So if a company offers achat pop-up window on their website, then the most qualified employees shouldbe on one end when a high value customer chooses to use such a service. If anextremely valuable and loyal customer’s car is brought in for service, it should begiven to the top mechanic. If an outbound sales pitch is to be made, it should bedone by the very best agents. Every opportunity to offer a differentiated level ofservice should be examined via diving into all customer-related processes, as thevalue of high-net worth customers cannot be overstated.3. Sporadic Activity / Event Process Gaps Identification: A bank we recentlyworked for launched a new branch in a very strategic part of the city, within 1kilometer of another branch that practically had queues out the door fromopening to closing. For several months the new branch failed to pick up newclientele or experience much traffic, while the problematic branch’s linescontinued unabated. The key reason? Customers were not made aware of thenew alternative – no SMS, no email, no phone call – nothing that would makethem realize such a wonderful queue free alternative was available just 1kilometer away. Rather, the bank relied on simply posting the new branch’saddress on its website, and on hoping customers would just walk on by.So while the bank does a great job sending SMS’ regarding new campaigns to itsclient base, it failed to do the same in this case to alert customers living orworking near the new branch of the opening. The reason behind this is theconcept of a process gap, whereby non-traditional activities, occurrences, andevents fail to have documented processes in place for them, and rather, aremanaged on an ad-hoc basis.Two other examples of sporadic yet significant / disruptive events or occurrencesthat affect customers include channel continuity / availability issues (i.e. shop orbranch relocation, or temporary closure for redesign reasons, so as to avoidhaving the customer find out only once they get there), and service delays (i.e.how many airlines send a friendly SMS to tell passengers to hold off coming to theairport?).We believe all such types of sporadic activities and events must be reviewed bycompanies to ensure that processes are defined for them, and address all aspectsof the activity. In the case of our client and their branch launch, there clearlyexisted a process gap around communicating with the customer base. As such, asignificant opportunity to shift traffic and satisfy thousands of customers forseveral months was lost.
4. Exceptional Processes: Similar in concept to sporadic occurrences anddisruptions, exceptional processes are meant to address small segments ofcustomers that can often go overlooked; moreover, they are meant to addressexceptional events in such customers’ lives. Companies can quite often fail toaddress such events, leading to significant client dissatisfaction (as theseexceptional events often are when customers may most be in need of service).These events may be different sector-by-sector, but the following examples cangive an idea as to their types – every company would need to consider their ownset of exceptional events, and accordingly, design exceptional processes: A customer losing his or her cell phone when abroad, in urgent need of a replacement, contacting their operator to be told there is no process in place to address the issue. An elderly bed-ridden client being told to come to a branch to sign a given document when clearly they can’t, with no process again available to address this situation. A hotel kicking out guests whose tour agency has gone bust during their stay, with no procedures in place for addressing such an exceptional issue, no alternate arrangements on standby with another hotel.Each and every one of the situations listed above can easily result in losing thecustomer permanently, and can even generate significant bad PR (aside from thegiven negative word-of-mouth). Companies need to consider all the possibleexceptional events that can occur in their customer bases’ lifecycle and designprocesses to address them effectively. Failure to do so not only leaves acompany’s employees in a confusing and difficult situation when they face suchan exceptional event, but also means significant dissatisfaction for affectedcustomers as well.One final note – any process change effort must be done in phases in terms ofrollout. Process improvements bring a shock to the system in terms of change foran employee. Resistance to major changes will be significant, and thus, processchange efforts can fail under the weight of it. Gradual modifications to processesover time can help alleviate this common problem, as employees will be able toaccept them in doses rather than all at once.
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