Chapter 5 - Integrating Quality, Customer Service, and Marketing
In this chapter, the authors intend to address the need for firms to align market intelligence to internal processes as a means to ensure that the firm is effectively responding to the market's demand for quality of product and service.
Specifically, traditional marketing practices sought to match customer needs to the company's capabilities, rather than adjust the capabilities of the firm to match with customer needs. Given the competition in the marketplace, this is no longer a viable practice. There are no unclaimed market segments that have been overlooked by other suppliers, but merely market segments that are not being served very well - and need to be served better by a firm that intends to retain them, or attract them away from suppliers who are not as attentive.
It is perhaps ironic that many companies are losing the sense that quality is in the eyes of the consumer - and instead are turning to industry standards to set goals for their products, with industry groups and standards organizations arising to establish benchmarks that are independent of the customer's perception of value.
Marketing's Neglect of Quality and Customer Service
For decades, the primary focus of marketing has been on acquiring new customers and culminated at the moment a purchase is made. But strategies to get repeat business, to keep customers coming back for more, have been neglected. Before the Internet gave customers the ability to tell more than a few people about their bad experiences, marketers could count on the ignorance of prospects. Now, they no longer can.
There have been notions of aligning customer service and quality to the marketing effort, but they can no longer be regarded as optional or frivolous. The long-term success of a brand relies on repeat business, and upon customers spreading the word to others.
Customer Service
Customer service is often seen as something entirely separated from marketing - a branch of the operations department to solve problems customers had with a product, and to field complaints so that the executives are not disturbed by them.
In many instances customer service is a band-aid for poor product quality. For reasons of cost or expediency, a bad product was rushed to market, and it was cheaper to provide support after the sale than to fix the problems with the product. Many programs that were instituted to improve customer service failed to achieve results because they merely mollified disgruntled customers: a customer who has been heard out and dismissed is not a satisfied customer, and in many cases is only all the more dissatisfied.
Moreover, customer support was often provided by technical experts - though given the lack of training provided to call center employees, few had any actual expertise to solve problems. Management focus was given to closing calls faster to decrease the expense of operating a call center, not to ensuring customers were satisfied at the end of the call to retain their business.
Quality
Quality is closer to the heart of the problem. While there will always be a need to help customers who have difficulty with a quality product, the number will be significantly smaller if the product is, indeed, efficient and effective at accomplishing the desired function for which it was purchased.
Unfortunately, the traditional concept of "quality" is linked to conformance to specifications. This "internal quality' holds the final product to be good if it is as it was designed, within tight tolerances. Waste should be reduced, including both materials and time, and production should be as fast and accurate as possible.
A perfectly manufactured product does not necessarily succeed at satisfying the customer. Quality in the eyes of the customer means suitability to needs - it must be effective, efficient, and easy to use. To satisfy the customer's requirement of quality, you must be attentive to the customer - which is the demesne of marketing - but also, the information received from customers should have a company-wide impact.
It's not enough to attach a disclaimer to the advertising - instead, the problem should be fixed. Doing so may require changes to its design, which will require changes in manufacturing, Or it may require changes to distribution. Or it may require a change in the information salesmen provide to instruct clients as to its proper use.
But in modern organizations, information collected from customers about what they want is seldom communicated outside the marketing department (who instead attempt to change the customers perceptions about what is wanted, or lower their expectations) and the feedback that comes into the call center is never communicated to the rest of the organization.
But until the needs of the customers are met, they will not be satisfied. Eliminating waste and making efficiency improvements are still important, but the satisfaction of customers is not to be sacrificed in the pursuit of these goals.
Bringing Marketing, Customer Service and Quality Together
The functions of marketing, customer service, and quality are currently addressed in a disintegrated manner - but the customer's experience is the result of all of them. As such, the company must integrate these functions, ensuring that they work together to pursue common goals, resulting in a seamless experience aligned to the interest of the customers.
This does not mean that there must be a "marketing takeover" of the organization, merely getting enterprise-wide collaboration and dialog. The quality of customer experience cannot effectively be improved by disparate and conflicting efforts in silos.
Even before this can be done, the firm must shift its focus: the "sale" is not the end-all-be-all, but merely a significant event in the customer relationship, which also includes pre-sale and post-sale interactions. Businesses that shift their emphasis to relationships rather than transactions may also find that there are ample opportunities to work directly with customers to discover and co-create value and involve a broader range of internal personnel.
Delivering Customer Value
The concept of interaction is essential in relationship marketing. The traditional approach of taking action and hoping that customers respond in a positive manner is clearly haphazard and has little chance of success. Instead, firms must interact with their customers - to extract value from their present interactions and seek to initiate additional interactions.
One of the reasons customers are far more satisfied by services than products is that receiving a service is an interactive process, in which the service provider can react and customize the service to the needs and interests of the customer during the course of their visit. Most of the work of manufacturing a product is done in isolation, and there are a limited number of "moments of truth" when the customer is finally able to see the results of the effort, and there are few opportunities to make adjustments. The less input from the customer, or the less that input is considered, the greater the likelihood that the result will be unsatisfactory.
Every firm should consider it to be a service firm: even product manufacturers should consider the physical artifact to an element of their offering, as the pre-sale and post-sale interactions with the firm are not only important to the customer, but may be the only means of gaining competitive advantage in the market for commoditized products.
The author also considers that "service" has traditionally been regarded as a human factor - it is something that a person does for the customer. However, there are an increasing number of instances in which machines are servicing customers: when you buy from a vending machine, make an ATM deposit, or purchase from a Web site you are still receiving a service.
(EN: the author makes a good point, but I think he makes a common error in considering the "thing" to be providing a service. The machine is a proxy through which a people serves a customer - just as when you call a company, the telephone is not providing service, but is merely a channel by which you communicate with the person on the other end of the line. In the same way, any machine interface is designed by a person who is providing service to customers indirectly. Until we have machines that truly think for themselves and require no design or programming, it is still a person-to-person experience.)
The Customer Value Chain and the Customer Activity Cycle
The customer value chain is a model for visualizing what the customer actually does with a product or service - the expectations he has and the degree to which the company satisfies those expectations. The customer activity cycle tracks specific customer behaviors through acquisition, ownership, and repurchase. Of importance is that "activity" is observable, whereas motivation can only be deduced from the observable evidence.
Considering the interests of the customer enables a firm to discover the expectations they are required by the customer to meet, and tailor its offering accordingly. Traditionally, little consideration is given to this - the benefits of the product were considered, in hope that they met the needs of the customer, and where there was a mismatch, firms sought to "educate" the customer and set their expectations according to the product.
In a competitive marketplace, customers are less inclined to compromise to accommodate the desires of a service provider, and more inclined to give their business to providers that serve their needs such as they are. Therefore, firms must recognize the significance of examining behavior throughout the cycle (before the purchase, purchasing, and after the purchase) if they wish to win the ongoing business of a customer.
Customer activity cycles can be done in aggregate (market segment) or an individual, and are appropriate to both B2B and B2C markets.
As a final note, the focus of customer value chain analysis is identifying opportunities to provide greater value to the customer, rather than to reduce the operating expenses of the firm. The two are very often in conflict, and customers will refuse to consider a firm that refuses to consider them when there are other alternatives to meet their needs more effectively.
(EN: In essence, this is the old "price versus quality" argument, rephrased to "efficiency versus effectiveness" - such that no generalizations can be made. Some customers will pay a premium price for a more effective product, others will accept an inferior product to get a lower price, and I don't expect that will change. But I will conceded that it is more difficult to compete on price, as that's a game that has only one winner, whereas competing on quality enables firms to sell some segments and abandon others to the competition.)
Cross-functional Work Flows
Organizations tend to evolve into silos, and while it is recognized that this evolution creates inefficiencies due to conflicting agendas, it is also true that lack of cross-functional coordination creates dissonance in the customer experience.
Politics aside, the functional rationale for the evolution of silos is the pursuit of internal efficiency with regard to internal factors, and disregard to external ones. An organization that consists of silos suffers from internal conflicts where work is handed off from one silo to another, and ends up spending a great deal of resources on duct tape and fire extinguishers as well as losing not only efficiency, but also effectiveness at the enterprise level.
It's also noted that once the structure has been established, the silos become defensive - it is difficult to approach the task of reengineering internal processes and collaborating, or even getting the competitors to consider the bigger picture.
The authors mention the task of reengineering processes (EN: books have been written on that topic alone, so what follows is likely to be superficial). As a prerequisite, a company must understand the way its current practices and processes are mapped out within the organization as a basis for discussion. Then, the cause and solution to any problem (such as a customer complaint) can be tracked through this map to identify areas in which bureaucracy is to blame for creating or exacerbating the issues. It's also necessary to refocus personnel on the ultimate goal of any activity, to understand how they contribute to (or work against) it, in order to gain support for any proposed changes.
Organizations whose service support systems are poorly designed and executed are likely to experience a high level of service failures and low levels of customer satisfaction. When no single person is responsible for overall performance, but each is concerned only with efficiency in is playing his own part, there is no-one minding the overall output.
This is also true of service metrics: if there are ten departments involved and each aims for 99% effectiveness, the entire output will at most be 90% effective - and then only if there are no flaws introduced in the handoff between departments. As a result, there may be serious problems while each unit demonstrates that its performance is near-perfect.
The authors suggest the use of flowcharts that indicate the steps in a process, attributes each to a department, and illustrates the handoffs between them. Once the process sequence is diagrammed, set standards that pertain to the achievement of the entire outcome, not the performance of individual steps. Then, consider the degree to which each of the steps contribute to failures. And finally, identify the potential problems with hand-offs (which is where many failures are generated). This map provides a blueprint of the entire process and serves as a basis for identifying and solving problems.
They also suggest using a "fishbone diagram" to do a more detailed consideration of the service quality, from the perspective of the customer. This diagram involves creating branches that identify qualities of service, sub-branches to indicate what is necessary to achieve it, and sub-sub-branches to indicate where failure can occur.
The authors stress the importance of "shifting the emphasis from analyzing problems to generalizing solutions." Ultimately, solving a problem is far more important than finding someone to blame for it. Debate over what caused a problem is often speculative and politically charged, creating a contentions atmosphere, whereas inventing solutions is more collaborative.
Service Quality Management
Quality management in service is a difficult issue, in that service is consumed and produced simultaneously - unlike products, service cannot be made in advance and there is no quality control to prevent defects from going out: when a service provider makes a mistake, the effect is immediate. Service is also harder to manage because it is intangible, and does not yield to the specifications that can readily be observed in a physical object. Finally, service is subjective: the measurement of success is the satisfaction of the individual customer, not only does it fail to conform to standards, it must eschew standards to be successful.
A repeated bit: there are many encounters between customers and vendors, and some of them are more significant than others. They are variously termed critical incidents, moments of truth, fail points, and other terms - but each represents a instance in which the customer's perception of the brand can be considerably swayed for better and for worse.
The attempt to standardize services, having employees act and speak according to a script, has been a resounding failure because it seems disingenuous and mechanized to clients, and more often prevents employees from doing what is necessary. A better approach, and one used by companies that are recognized for excellent service, is in providing the front-line personnel with guidance, with special attention to the critical encounters, and otherwise providing them a great deal of latitude.
The customer value chain should provide a blueprint for the various encounters a customer has with a brand, so that you may identify the most critical ones and analyze them in greater detail. Also repeated: the emphasis is on meeting the customer's expectations rather than attempting to set them to be in line with the brand's interests or strengths.
Customer satisfaction is a popular measure of service quality, but there are some controversies:
- It is too vague to be meaningful, and is seen as a report card rather than a planning tool
- It is often based on criteria that the company chooses (and is already good at meeting)
- It calls attention to things customers didn't really consider at the time
- It is based on memories of past experiences (which are inaccurate)
- It is skewed positive, as customers report being satisfied to avoid admitting a bad decision
- It is based on past behavior, not future intention
- There is no consistent proof that addressing CS issues solves service problems
Even so, there has yet to be a proposed metric that would provide a meaningful indicator. What firms are attempting to do is make CS more accurate (asking open-ended questions, catching customers promptly rather than weeks later, surveying during the pre- and post-purchase phases, surveying those who decided to buy a different brand, etc.) but remains essentially imperfect.
Identifying the critical service issues
Too often, firms identify critical issues internally - the things that they feel are important to the customer, without having asked the customer whether they are important. Clearly, research is necessary, and it should be done by segment.
A small-scale qualitative research program should be undertaken to identify factors, as well as to validate that they correlate to satisfaction in a meaningful way. The brand can then use this information to consider how its processes and practices support the critical service issues, and put plans in place to provide or bolster support.
Taking action to address a service issue is complicated. In many instances, one person or one department within the organization cannot effectively "fix" the problem, and the people closest to the front line are often being whipped or made to compensate for errors that occur deeper within the organization.
Finally, this is not a once-and-done exercise, but should be repeated over time because customers preferences and priorities will change over time.
Measuring Quality
The authors consider some of the various attempts to monitor service quality:
- Market Research - Firms gather information from customers about the attributes of service they feel to be the most important. This requires qualitative research, and an interactive process because customers may now what they like but have difficulty expressing it. Then, quantitative measures can be used on a broader audience to verify the results.
- Tracking Studies - A CS survey maps a moment in time for a random sample of individuals. Tracking studies enable the firm to see how the perception of the same group of customers differs over time. This is not as simple as periodic surveys, because customers are in different phases of the purchasing cycle, and measuring how their perception changes over time (before buying, after buying, after using, before repurchase) is significant.
- Quality maintenance index - Commonly used in franchising models, the QMI is a checklist of simple factors that are believed to be closely linked to customers' perception of service quality (clean restrooms, staff properly uniformed, adequate parking, etc.) this tends to ensure minimum standards are met and focuses on avoiding negatives.
- Secret Shoppers - Another common technique is to hire a firm to hire researchers to present themselves as a customer, and report on their experience. Sometimes, actual customers are used, whose reports are less focused but more authentic. This constitutes a spot-check that is valuable, but not particularly comprehensive.
- Staff climate monitor - The front-line staff, who work most closely with customers, can report on common concerns that are expressed, and their frustrations with their jobs often point to areas in which they wish they were supported and empowered to satisfy customers
- Risk Point Analysis - Some firms place additional emphasis on specific interactions that are significant risks: closing an account, handling a complaint, flight risks, and the like. Some firms monitor customers after a complaint has been resolved to ensure their loyalty has been restored.
- Service Standards - Some firms set specific measurable standards, and even go so far as to publicize them: next-day delivery, the cashier must thank the customer, and the like. The authors are not sanguine about this practice because it assumes that customer service can be distilled to simplistic things, often without asking the customer if they matter.
Service quality gaps
Any mismatch between the customer's expectations and the firm's perceived performance is a "quality gap" - noting that all of this is subjective. If it seems like the equivalent of "quality is whatever the customer says it is, that's entirely intentional.
First, there are the customer's expectations - which means their desired level of service, not what they expect will happen. Some companies seek to define themselves as quality by lowering expectations - this may result in a level of service that is legally defensible (it will stand up in court if the customer claims to have been short-changed), but it does not result in a level of service that results in customer satisfaction.
The author mentions the concept of a "zone of tolerance" that leads customers to accept, and even provide repeat business to, a firm that does not meet their desired level of service. This zone of tolerance provides a buffer zone when a firm that has delivered good service misses a step, such that customers don't leave immediately. However, it also enables firms to get by with providing unsatisfactory service for a long period of time, and be caught by surprise when there is an exodus of customers who were assumed to be satisfied and loyal.
Five kinds of service gaps are identified:
- The brand does not know what customers expect
- The brand chooses the wrong criteria for service
- The brand has the right criteria, but is not delivering
- The brand is not matching performance to promises
- The customer does not perceive that the performance met their expectations
Benchmarking
The authors suggest benchmarking perceptions of performance "against some appropriate industry benchmark." There are drawbacks to doing this, as it may lead to misdirection (your goal is to satisfy your customers' desires, not meet industry standards) and complacency (being no worse than anyone else is not a valid goal).
Even so, it stands to note that being in a competitive environment means that customers will choose between your brand and others on the market, and given that flawless service may be priced out of the reach of most customers, it may be worthwhile to set a more reasonable goal by aiming to exceed the industry standard, or even the industry leader, rather than an unattainable level.
The process of developing benchmarks is also helpful as an exercise in considering which qualities customers genuinely value. Another secondary benefit is that it may be easier to overcome reluctance by pointing to a reasonable goal, which is already being achieved, rather than promoting a vision that has no concrete example.
Managing Service Variability
Critical issues in product quality tend to be interrelated - such that modifying one section of the service has the potential to unknowingly create problems elsewhere. The authors describe four areas that should be considered.
Environmental setting
The environment in which the customer meets the service provider is critical to the perceived quality of the service. The elements of the environment that relate to core actions are generally considered, but a number of peripheral qualities (such as the emotional and psychological impacts) are very often neglected, leading to variances that arise because the experience is not orchestrated carefully, but allowed to unfold in a happenstance and random manner.
The authors use the phrase "service interaction zone" to call attention to the environment as an element that impacts the customer's perception. It's also noted that this does not exist merely in brick and mortar channels but in any instance in which a customer interacts with a brand (a vending machine, and ATM, a Web site, etc.) nor is it merely in the context of a sales transaction (when the customer visits the service department, it is a brand encounter).
Ideally, these settings should be carefully staged to create a positive impression on the customer, and consideration given to the "peripheral" elements that are neglected.
Job design
It should be obvious that the employees with whom a customer interacts have a significant impact on the perception of the brand, and it's noted that job descriptions develop haphazardly over time, sometimes with too much focus on the tasks and little consideration of the purpose to which the tasks are performed (to provide service to the customer).
The problem is compounded by managers who do not design jobs, but merely assign tasks, "and assume that poor performance in the job must be the worker's fault" in spite of the fact that the worker has been given poor and conflicting direction and very little leadership.
It is further worsened by modifying the job design in an ad-hoc manner, assigning to front-line personnel the responsibility of correcting defects that have been passed along from the back of the house, without the authority or the resources to be effective in solving the problem.
Most employees have a strong desire to be competent in their jobs, and it is not lack of motivation or energy on their part that prevents them from delivering a high level of service - but instead it is lack of resources and support that prevents them from providing the level of quality they wish to provide, but are prevented from providing.
All of this is to say that improvements and customer service are not effectively made by motivating and punishing the employees, but by supporting and empowering them, and removing organizational obstacles to the successful performance of their roles.
Processes
Presently, the favored method for ensuring quality is to implement processes that can be followed by all employees, such that any improvement in the process will result in improvements across the enterprise.
Of importance: all processes are intended to accomplish specific objectives - and a process without an objective is a ritual behavior that accomplishes nothing.
A poorly conceived process does not accomplish its objectives even if it is flawlessly executed. However, this is generally not an issue as it is easily recognized that the process is ill-conceived and it is not put into execution. Problems tend to arise when the process designer fails to consider the full range of its outcomes - the "side effects" of a process represent things that the designer failed to consider, or failed to recognize as important.
Even if a process is well conceived, it may not be executable. The design of a process is based on assumptions - that a situation will be exactly as expected, that the people executing the process will have the time, resources, and authority they need to accomplish the tasks as described. This, too, is the fault of the process designer.
In fact, the only instance in which process failure is not the fault of the designer is when employees do not follow the process in a situation to which the process is appropriate and they have the time, resources, and authority the need to do so. Per the comment earlier, this is very seldom the case.
The authors describe a methodology for developing and improving processes:
- Identify a situation that needs attention
- Indentify the external and internal process that may impact the situation
- Diagram the stems in these processes, identifying the participants
- Consider which steps contribute to customer value, which are detrimental to it, and which have no impact whatsoever
- Modify any step in the process that has potential to create value but does not
- Eliminate any step in the process that has no potential to create value
(EN: I find this a bit simplistic, and to my way of thinking, it misses some critical steps. There is no mention at all of considering objectives, side effects, and the ability of parties to fulfill their roles. There is no mention at all of ensuring the definition of the situation is accurate. Likely another source should be consulted for effective process management.)
One final point on process, which should likely be the first consideration, is whether process is necessary. There are many instances in which variations in performance do not have an appreciable impact of the customer's perception of service quality, nor an appreciable impact on the expenses of the firm. It is not only pointless to define processes in such situations, but counterproductive - as processes of lower importance may sometimes conflict with those of greater.
Training
Process must be executed in order to deliver value, which is to say that people must take action to effect the process.
In order to do this successfully, people need training in two regards. First, they must have a thorough understanding of the process - what they are expected to do, why they are expected to do it, and how following the process will achieve the desired outcome. Second, they may need to be taught the skills they will need to be successful in their role.
Training is far more important in services than in products: a product can be inspected before it leaves the factory to prevent an unsatisfactory customer experience, whereas a service is experienced as soon as it is provided with no chance for intervention.
It's also noted that service workers are required to think on their feet - simply knowing the process is not enough, as merely following documented procedures will leave them paralyzed in conditions that the process designer did not expect. They must understand the objectives of the process, and have the knowledge and authority to deviate from process when it is necessary to accomplish the desired outcome.
The authors return again to the notion of having too much process: a worker can only be expected to memorize and follow so many processes, and can become overwhelmed when there are too many processes to remember and too many potential conflicts. When it comes to training and managing employees, it's important to focus on a reasonable number of significant processes.
Empowerment and Collaboration
The employees who deliver service to customers are the agents and representatives of the brand. Because customers are idiosyncratic individuals, these front-line employees must be able to adjust the service they provide to the particular needs of each customer.
(EN: I think that what the authors overlook is that service processes are often motivated by the desire to control employees rather than empower them, often in a penny-wise-pound-foolish manner, on the belief that left to their own devices, employees would give away the store to please customers. And so, the policies are put in place that cause front-line employees to be miserly, and encourage the delivery of a standard experience regardless of the needs of the customer.)
Strict insistence on rigid and granular procedure prevents employees from providing quality service to customers. Moreover, it saps the motivation of the staff, decreases their respect for their employer, and makes them less willing to innovate.
The same can be said for internal processes that dictate the way that employees interact with one another: an organization ruled by process will find it has a sterile culture that fosters interdepartmental hostilities, with each employee being attentive to the rules and unconcerned with effective performance This does not lead to collaboration, innovation, and high performance..
The same can be said of the method of interacting with partners and vendors who assist the firm. Being punctilious about the letter of the contract leads a supplier to seek to do as little as they can to satisfy documented requirements, rather than as much as they can to deliver a quality service and assist the firm in serving its own customers.