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Improving Customer Service: Focus on Operations Design

The foundation of good customer service is good operations design. The contention of this article is that to improve customer service one should start with understanding what constitutes the elements of good design. This perspective is part of the U.S. approach to good customer service

The U.S. has become the service standard for the rest of the world by providing services that really work. How this is accomplished is in part related to the American culture but to a larger measure to how human resources management, operations management, and marketing carry out their service roles. In this article, I will comment on the U.S. culture and the roles these three functions play in delivery. My main focus will be on the characteristics of good service design. This reflects my strong belief that service quality and efforts to improve that quality are fundamentally dependent upon the design of the service and how operations manages that service. Thus I will offer eight characteristics of good service design which I have developed from many years of studying service operations. I will also discuss how service guarantees can be used to focus service improvement efforts and briefly comment on the nature of Lean Six Sigma programs now being employed by numerous U.S. service companies.

Culture

The U.S. culture has facilitated its strength in service for several reasons. First, the U.S. is an egalitarian society – one which is not burdened with the history of most European societies where service was traditionally equated to servitude. While the U.S. most definitely had some up-stairs, down-stairs elements to its service jobs, it is not close to that exhibited in countries that have had an ingrained aristocracy. As a result, U.S. service workers were not destined to be forever in menial jobs; indeed, if they could get the training and/or had the capabilities they could pursue more rewarding work.

Second, is the fact that American managers are systems oriented; they look for how all parts fit together and seek to manage the whole in such a way as to avoid suboptimization. In a service operation, this perspective is important since good design requires a clear understanding of how the technology of the process, the service worker, and often the customer must work in concert for the service to succeed.

Finally, related to the systems approach, is a heavy emphasis on measurement. U.S. managers like to measure everything. We find this characteristic in quality improvement programs in small local companies as well as giant firms. For example, my local cable company always makes follow-up phone calls seeking 1-5 scoring on well its repair technician and its customer service staff performed in listening to my service problem as well as performing needed repairs. Even city taxis display signs on their roofs asking “How’s my driving?” with a number to call to give feedback.

Marketing

The role of marketing in service improvement is one of market research to determine what areas of service are important to various customer segments, translating this information into actionable goals for operations, evaluating the results of the service improvements through sales analysis and customer retention, and including realized service improvements in marketing campaigns.

Human Resources

One of the major breakthroughs in human resource strategy for service firms is the Service Profit Chain. Developed at the Harvard Business School in the 1980s, this approach holds that the type of service the customer receives is often a function of the kind of treatment or “service” that the service worker receives from his boss and his organization. Conceptually, the links in the profit chain are as follows: A motivated skilled employee provides excellent service which leads to a highly satisfied customer who then becomes a repeat customer which provides referrals to other customers. The end effect is revenue growth and profitability for the service organization.

Operations Management

While employee motivation and training are critical, it is the role of operations management to design a service delivery system that enables workers to perform their jobs effectively. To this end, I would like to propose the following eight characteristics of a well designed service system.

1. Each element of the service system is consistent with the operating focus of the firm. For example, when the focus is on speed of delivery, each step in the process should help foster speed. Southwest Airlines is a classic example of where speed of flight turnaround is central to its low cost strategy. Ways they achieve this goal is by not using interline transfers of luggage, no food service, no assigned seating, and use of point to point as opposed to hub and spoke terminal systems.
2. It is designed to provide consistent service. Perhaps America’s leading contribution to service has been the development of consistent service delivery systems. The classic exemplar of this characteristic is McDonald’s restaurants. The story of how McDonald’s achieves such consistency from branch to branch is well documented: Ray Kroc, the founder of the organization, examined and carefully analyzed each step in the hamburger production to create a production line approach to food preparation. (Predating McDonald’s is the original Holiday Inn chain of hotels, created in 1952 by Kemmons Wilson. Wilson initially came up with the Holiday Inn model after a cross country family road trip during which he was disappointed by the quality and consistency provided by the roadside motels of that era and decided to set standards of performance to be adhered to by each hotel in the chain.)
3. It is user friendly. This means that the customer can interact with it easily – that is, it has good signage, logical steps in the process, and service workers available to answer questions. User friendliness obviously should extend to phone contacts and Internet contacts as well as face to face interactions. Regarding phone contact, many companies are finally getting the message that customers want to talk to people not machines especially when there are service problems. A lack of user friendliness on the Internet was observed in a study of a large mail-order computer company which provided too many options which called for too much sophistication to enable easy selection by its large market of novice users.
4. It is robust. That is, it can cope effectively with variations in demand and resource availability. For examples, if a computer goes down, effective back-up systems are in place to permit service to continue; or if there is a mechanical problem with one of its planes an airline is able to bring in a replacement plane in a moment’s notice.
5. It is worker friendly–it is structured so that consistent performance by its people is easily maintained. An important feature of the service profit chain is having job designs which are doable over the long run. This means that there are systems that make the job easier. There is also an understanding that just because there is theoretical capacity to work harder and faster, doesn’t mean that workers always should be working at top speed. There is an optimal rhythm of work that should be followed that allows breathing room for the worker.
6. It provides effective links between the back office and the front office so that nothing falls between the cracks. In American football parlance, there should be “no fumbled handoffs.” Information exchanges between people serving the customer and those performing support work – creating files, billing, etc. – should be conducted without error. An industry with major problems in this area is health care where information mistakes arise when a patient or a medical task is transferred or handed off across different departments. One successful approach to managing this problem is the SBAR (Situation-Background-Assessment-Recommendation) checklist technique for communication between members of the health care team about a patient's condition. Adapted from a program used to provide quick briefings of nuclear submariners during a change in command, SBAR is an easy-to-remember tool for framing any conversation requiring a clinician’s immediate attention and action.
7. It manages the evidence of service quality in such a way that customers see the value of the service provided. Many services do a great job behind the scenes but fail to make this visible to the customer. This is particularly true where a service improvement is made. Unless customers are made aware of the improvement through explicit communication about it, the improved performance is unlikely to gain maximum impact.
8. It has a game plan for recovery from a service failure. A service failure can be turned into a service delight by empowering front line employees to make things right. For example, when an airplane full of anxious passengers is delayed for some minor mechanical problem, it is time to break out complimentary drinks. Expenses incurred to accomplish a recovery are generally minor compared with possible negative word of mouth from not recovering.

Two Approaches to Achieving Service Improvement

Service Guarantees

Many U.S. companies use service guarantees as a marketing tool designed to provide peace of mind for customers unsure about trying their service. However, there is also much to be gained by using service guarantees to drive service improvement efforts since a guarantee focuses the firm’s delivery system squarely on the things it must do well to satisfy customer. For example, since on-time delivery is critical to its customers, Federal Express (FedEx) offers a money-back guarantee if they miss their published (or quoted) delivery time “by even 60 seconds.” To meet this promise, every part of the FedEx organization must therefore perform its function in a timely fashion. Service guarantees are also employed by companies who professional services. For example, Rath and Strong Consulting has a service guarantee which allows the client to choose from a menu of payouts if they do not cut the client’s delivery lead time by x percent. (Menu options also include refunds and no charge for overtime work to get the job done.)

The elements of a good service guarantee are that it is unconditional (no small print); meaningful to the customers (the payoff fully covers the customer’s dissatisfaction); easy to understand and communicate (for employees as well as customers); and painless to invoke (given proactively). Recent research on service guarantee has provided the following conclusions about them:

1. Any guarantee is better than no guarantee. The most effective guarantee are big deals. They put the company at risks in the eyes of customer.
2. Involve the customer as well as employee in the design
3. Avoid complexity or legalistic language. Use big print, not small print.
4. Do not quibble or wriggle when a customer invokes the guarantee.
5.  Make it clear that you are happy for customers to invoke the guarantee.

As a final comment about guarantees, even if a company doesn’t choose to use one, there is much to be gained by running tests to see if the organization is able to perform at the level that is specified by a guarantee. If not, then the organization can examine where it is falling short and make improvements.

Lean Six Sigma

Certainly the hottest topic in U.S. firms service improvement efforts is Lean Six Sigma. LSS combines tools from both Lean Manufacturing and Six Sigma. Lean Manufacturing focuses on speed and traditional Six Sigma focuses on quality. By combining the two, the result is better quality faster. Applications of the approach are found in financial services, hospitals, telecom companies, as well as manufacturing and distribution companies.

Concluding Comment

Consistent with the theme of this issue, the key to successful marketing of a service is good service. Even the best marketing strategy can be undone if the service design is flawed or if operations doesn’t deliver on the marketing promise.

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