Deciding To Improve Service Performance – Sensible Service Management Part 9
Another insightful blog post from Rob England @theitskeptic
There’s a common assumption that everyone wants to improve service. Infinitely. But that is not always the case. So, don’t automatically leap to the assumption that you need to improve. That is a business decision like any other.
The first consideration is whether you really need to improve. Some questions:
- Are you in an industry where there’s no expectation of high levels of service, where service is not a competitive factor?
- Do you have captive customers, where you don’t need to keep them happy? (Warning! Validate these first two assumptions regularly: things change, competitors enter the market, new options open up.)
- Can you choose to compete on something other than service, e.g. price?
- Are you battling to survive and can’t afford higher levels of service right now?
- Are you already as good as you need to be? (More danger! Keep measuring to ensure that stays true.)
In other words, improving service – and which services to improve – is a strategic decision. You decide to make improvements because it fits your business strategy.
Once you have decided you need improvement, you must consider what constitutes “better.” (We’ll talk about measuring service performance next time.) For now, when assessing how good your service is, you should measure it from the “outside inwards.” Measure how your service looks from the outside.
There are two main perspectives to this: (1) how you look to your customers, measured by things your customers care about such as quality and user satisfaction; and (2) how you look relative to your competitors – if you are ahead of the pack then you may be able to put resources to more effective use than in getting even better at service.
If you define what better looks like, then you define the business outcomes you want from improvements. From those outcomes, you then decide a shortlist of improvements you could make in order to deliver those outcomes. These can range from introducing a whole new service (or killing one off) to a major upgrade to minor tweeks. You can make improvements to the design of your services, the infrastructure that delivers them, the way you execute them or the way you run and support them.
We’ll talk another time about how to decide what you are going to work on. Usually if you haven’t improved for a while or there is lots of room for improvement, then the first things to work on will be pretty obvious. Ask your users, customers and staff – they’ll be sure to tell you.
The next consideration is to determine or estimate the benefits of those improvements. What is it worth to you if your service is better? The benefits might be higher levels of customer retention, more new customers, more repeat sales, more follow-on up-selling or reduced cost of support. Those are value benefits.
The other side of the benefits coin is reduction of risk. It can be a lot harder to put a number on what a reduced risk is worth to you. Sometimes you can find a dollar value for a reduced or removed risk, other times it is an unquantified benefit, and sometimes it is non-negotiable, e.g., your auditors say you absolutely have to remove the risk.
Another consideration is what it will cost to improve. This may have to be a “wet finger” estimate for each proposed improvement. There are many things we need to improve in any organization; if you try to plan and estimate each one in detail you will not be able to afford to get them done. The hard reality of most enterprises is that a lot of improvement has to be done informally, loosely managed as part of daily business, or it will never get done at all. If the improvement is large scale, complex or high risk, then you should of course plan and manage it more formally using project management methods, and you will get a more accurate estimate of the costs involved.
Finally, you need to look at the business case for making improvements: weighing the benefits against the costs. There are improvements that your customers might be crying out for, or that look like a great idea, or that your staff are saying “How can we not…?” but the improvements just don’t pay – they are a bad business decision. And there comes a point of diminishing returns where you have made all the high-value improvements.
Don’t look at the technology costs alone. These are only one part of any improvement. Far more important (as we will see in a future post) is that any improvement is always trying to change the way people behave: staff, customers, and/or users. Behavioral change involves changing people and processes. This makes changing the technology look simple and cheap, but if you scrimp on behavioral change then any technology investment will end up wasted because you won’t achieve your ultimate aim.
Costs to consider:
- Communicating and consulting on new goals and systems
- Designing, testing and documenting new procedures
- Training in new systems (procedures and tools)
- On-going support for new systems
- On-going maintenance, repair and improvement of new systems
A good rule of thumb is to work out the technology spend then estimate as much again for each of process and people costs, i.e. triple it. Anything less than doubling the technology costs is deluding yourself.
Weighed against these costs are the benefits, tangible and intangible: money saved, potential new revenues opened up, risks reduced, compliance assured, strategy delivered.
Then recall what we said right back in the first post of this series:
What many organizations forget to do is the last step: an improvement may be a good use of funds with a positive ROI, but we should consider whether it is the best use of those funds right now. This means looking at all your proposed investments as a portfolio and balancing your decisions to come up with the optimum use of your resources.
If you are a small business, then you likely won’t go through all this analysis. You’ll make a gut call that you need better service. The best way to inform that type of decision is to talk to your customers as widely and as often as possible. Don’t stick to the customers who are happy to talk to you, that you are comfortable with. Reach out to others, especially ones that are hard to get to: this may mean they have a problem with your service that you need to know about.
- Decide if your organization needs to make improvements to your services. This is a strategic decision taken at an appropriately senior level.
- Decide what better looks like in business terms, what the desired outcomes are, while looking at your service from the outside.
- Choose a shortlist of improvements.
- Work out the benefits (value, savings, reduced risk) of each.
- Weigh that up against the costs of each to decide which ones make business sense.
In future blogs, we will look at
- how to measure your services, so that you know how well you are doing and so you know if your improvements made a difference.
- how to decide what you should work on.
- how to manage and do improvements.