| The message was
unmistakable. A senior executive of a large department store chain calls a senior
executive of the computer company that sells the store an average of $8M worth of
equipment every year. The message is not what a vendor executive ever wants to hear: the
store is experiencing too many failures, the computer company's latest products are junk,
and the executive is personally sick of the fruitless and time-consuming efforts to fix
the problem. A certain amount of profanity was used. This true story demonstrates some important concepts in
creating effective customer services. Let's analyze what was behind the phone call and
what the computer company did to solve the problem.
The store executive knows that he is unable to
provide service to his customers, and according to his staff, the reason is computer
failure. There have been repeated efforts to fix the problem, but nothing has worked. He
also knows the holiday shopping season is coming. Angry and frustrated, he finally makes
the angry phone call described above.
Meanwhile, the service engineer is also
increasingly frustrated by his inability to fix the problem. He has done everything he or
the corporate experts can think of. Morale is sinking. Since the engineer is aware that he
is repeatedly replacing the same parts, he feels that his own company is undermining him
by providing what appear to be unreliable spares.
This situation exhibits a common tendency of
customers and vendors alike: blame the product. Product defects often are the root
cause of problems, but it can be dangerous to assume that. Especially in complex
environments such as the store's data center, there are so many potential causes that
making this kind of assumption is likely to result in solutions to the wrong
problem—thus customer problems that keep coming back.
In this example, if the computer company had
continued to assume the problem was defective product, more resources from both the
company and its customer would have been wasted, the customer would have continued to
experience failures, losing revenue and becoming increasingly dissatisfied. The customer
would certainly have delayed additional purchases, and ultimately might have moved to
another platform.
The solution lies in using metrics effectively
and building a relationship with customers based on trust and shared responsibility.
Choosing and
Using Metrics
Companies today routinely rely on metrics in two
key areas: to track financial results and to measure manufacturing processes. However,
using metrics effectively in the field to provide customer service has been more elusive.
The first question was what metric to use. The
decision is not trivial, and must indicate success and failure to both the customer and
the vendor. In this example, the obvious choice appeared to be system crashes. However, by
the time a system crash occurs, it is too late to predict and avoid the problem. The
customer and computer company wanted a leading indicator, so decided to use unscheduled
service call rate to measure overall system and service performance. The choice was driven
by the following characteristics of the metric:
- Easy to understand as an indicator of trouble. If
the customer has to place a service call, that's bad.
- Easy to collect. Service calls were already being
logged. Using them for this purpose required new analytical tools, but the base data
existed and was routinely collected.
- Effective driver of improvement for both customer
and vendor. Service calls are expensive for both parties, so reducing the rate is to
everyone's advantage.
The top level metric, overall service call rate,
acts like a thermometer, indicating the general health of the account but not providing a
diagnosis. If the overall rate is too high as compared to other accounts, then additional
data is collected to help pinpoint the cause of failure.
The call rate graph for the store's system is
shown in the following graph. It shows that for a period of time, the call rate was quite
stable. Then something changed causing the call rate to skyrocket and lose stability.
This type of graph enabled the computer company
to verify that, indeed the store was experiencing an unwarranted number of hardware
failures, but also to highlight several other key pieces of evidence:
- The failure rate was much higher than experienced
by other customers,
- Only certain systems owned by the store were
failing,
- The failing systems were located in the same
building,
- The same components were replaced multiple times
at that location, with new components failing rapidly after installation.
The data told the computer company that something
unusual was happening at the site, and suggested a probable cause in the environment or
customer/field processes rather than in the product itself. It would be impossible,
however, to use this information effectively unless the company's relationship with its
customers would allow these possibilities to be explored.
Indeed, at this point the computer company
executive presented these results at a progress meeting to senior store executives. After
the meeting, one of the store officials commented, "That was the best presentation
we've ever seen that says we have no clue as to what the source of the problem is."
The reason everyone was pleased with progress, despite not yet having a solution, was
because possibilities were being systematically eliminated based on facts rather than
guesses—and the logic of the investigation was open to everyone. The process was
systematic, clear and repeatable.
Building
Dynamic Partnerships
An effective partnership is a dynamic working
relationship. It is based on trust and mutual regard, which are earned with demonstrated
honesty, integrity, and commitment to shared success. This is a very different model than
the traditional approach where the customer presents a list of demands and the vendor
responds.
In a successful dynamic partnership, both the
customer and vendor accept responsibility for the things in their purview. In a
partnership, "the customer is always right" is an ineffective model because it
closes communication and prohibits the partnership from fully investigating a problem and
learning the truth.
If the computer company in our example had
already had this type of relationship with its customer, the angry phone call probably
would never have occurred. However, although belated, the company was able to change the
relationship—initially through intervention by an executive from the company who
personally had a sound relationship with the store, and later by the account team using
clearly defined methods to sustain the relationship.
Results
The computer company invited the store to
participate in a joint team to analyze the data, identify possible root causes and verify
them, and develop and implement a mutually agreed upon action plan to eliminate verified
root causes. As the team began working, the relationship started to change from
adversarial to one of true partnership. The focus became the problem to be solved rather
than assigning blame.
Working from the data, the customer/vendor team
was able to isolate the symptoms and to identify possible causes. Key information supplied
by different team members led to calling in an independent grounding specialist. Together,
the team and the specialist were able to determine that the cause was not the product.
Rather, it was current circulating through the systems from the local telephone company's
T1 installation. The problem was further exacerbated by the janitor's using polyester
dusters—when the janitors dusted, systems failed. Each team member had different bits
of information that had to be put together to solve the problem. Neither the customer nor
the vendor could have successfully solved the problem alone.
Because the store had participated in the entire
analysis process that identified the cause, the store quickly fixed the
problem—without wasting additional time arguing, and without embarrassment or anger.
The call rate graph demonstrates what happened when the problem was solved: the call rate
dropped and stabilized immediately.
The customer is now entirely satisfied, not only
with the system performance, but with the entire way the relationship works. The computer
company has also seen an improvement in morale, with account team members happy to
participate in a productive relationship rather than feeling abused by both the customer
and the home office.
From this one customer, the computer company has
seen at least $20M in revenue that otherwise would have been delayed and possibly lost
altogether. In addition, productivity savings are estimated at several hundred thousand
dollars resulting from eliminating the destruction of parts, eliminating service calls and
reducing the amount executive attention required.
Conclusion
Since then, the computer company has standardized
the process and has demonstrated similar success with over 100 customers worldwide. The
standard method includes specified steps for profiling system performance (using
unscheduled service calls), analyzing the performance and identifying risks, analyzing
root causes, and developing and implementing an action plan that eliminates the root
causes.
Every company has a relationship with its
customers, either by default or by design. Both a company and its customers can achieve
significant financial advantages by:
- Explicitly designing their relationship,
- Basing it on mutually beneficial, measurable
service objectives,
- Creating and using defined procedures for working
with customers.
A company's service relationship with its
customers is too important to leave to chance.
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