From ‘push’ to ‘pull’ – changing the paradigm for CRM

A new article on CRM – customer relationship management has been up-loaded to:

CRM is just one example of how organisations sometimes try to use computers to do things that people are good at (and computers are not).

Why is service costing more?

UK recipients of this newsletter may have listened to a recent In Business programme (radio 4) on customer service. The question posed by the programme was: ‘What is going wrong with customer service?’ As companies spend more on service, service is getting worse. The exemplar of the new customer service organisation – the call centre – was questioned as to its value; interactive ‘computer’ service – dial 1 for this, 2 for that, was parodied as an example of what really frustrates customers.

So what did we learn about the pundits views of the service problem? A customer service consultant told us we must invest in people and training for the long term. A strategy consultant told us we must choose the right people for service roles and we should design the service we aim to provide. In comparing British Airways and Easyjet, he argued that the two are dissimilar in as much as they aim for ‘different market segments’. This amazes me. As a customer of both, I cannot understand this; surely they have both gone for the same market – people who want to get somewhere.

The service matters whichever airline I fly with, and that centres around the convenience and cost of flying with them; whether we fly and arrive on time; how people treat me in general and how the organisation behaves when something has gone wrong. And I have to say I have experience of both organisations when things have gone wrong.

When the programme turned to a local authority, an amazing thing occurred. The local authority had hit upon this remarkable idea: they would answer customers’ questions at the point of transaction. If someone called up with a question, it would get answered or it would get sorted and the person who took the issue from the customer would call the customer back. Wow!

So how did the commentators respond to this? By suggesting this is dangerous! After all, ran the argument; this may raise customers’ expectations. They missed the point. The point is very simple – the costs of service are all associated with getting it wrong. The high costs being experienced by call centres are to do with the fact that they handle a high number of calls that I would call ‘failure demand’ – calls caused by not doing something (or not doing something right) for the customer. Alarmingly, many companies that have out-sourced call centre work pay for their suppliers to handle ‘failure demand’. To use a Japanese term, their suppliers are eating their waste, and they are paying for the privilege.

The real costs associated with interactive ‘computer’ service are the customers who drop out because they cannot find the thing they want and the customers who mis-route themselves (‘silly people’), because they don’t articulate their problem the way the company does.

My bet is that the local authority could teach these consultants a thing or two. The cost of service reduces only as you get it right. You cut out the major cost – waste. Simple, but beyond the grasp of most managers. For managers treat their service organisations as factories and they believe that ‘the people are the problem’. This is wrong. It is the way work is designed and managed that is the problem and that is the responsibility of management. Service costs are rising because of the way managers think and work.

Six Sigma – an insider’s view

I have listened to two presentations by Six Sigma consultants and my impression of Six Sigma is that it is ‘Quality training on steroids’ I should point out this is an interventionists view. To explain this briefly: The intervention is rational – assess the scope for change, train your people, do projects. The difference between a traditional quality programme and Six Sigma is only a matter of degree – Six Sigma training is more extensive, there is a stronger infrastructure and there is closer project management.

Six Sigma plays to the current management paradigm, it suits a ‘command and control’ mentality. Because of this it is doomed, for world class performance begins with world class thinking and that requires a fundamental shift in thinking. Such a shift will not be achieved through training interventions.

So it came as no surprise when I was sent the following e-mail from a friend:

I was talking to a lady engineer yesterday who used to work for XX (an organisation well known for promoting Six Sigma) and still has friends there. She told me that many XX employees HATE Six-Sigma because:
1. It targets cost reduction exclusively and more and more cost reduction, year on year, is being demanded from all departments. If you sack a member of your staff this year the saving goes into your pot and you must therefore further increase your cost reduction next year.
2. It is elitist. Only ‘specialists’ (e.g. Black and Green Belts can do it).
3. These specialists run around saying ‘Look at all this training that I have received’. Other staff respond with, ‘How much of it have you actually used?’


Alison Abbey joins Vanguard

Alison Abbey has joined Vanguard. She was previously with Microsoft UK and gained a reputation for innovation in pre-sales and sales service design. Alison first began using Vanguard’s methods six years ago. She has extensive expertise in designing service, beginning from the principle of designing against demand. In the last few years Alison extended this work in to changing the way relationships were managed with customers. Alison is a great advocate of ‘pull’ not ‘push’ in service and relationship design. We are delighted that Alison has joined us.