4The voice of the
customer

Let's go back to the debate we were overhearing in Chapter 1. You will remember that it involved representations of finance, marketing, personnel and operations. We'll start with the marketing manager this time.

‘Customers?’ said the marketing manager. ‘That's easy for me. They're the punters out There in the street. The ones who pay their hard-earned money for the products we make. Lovely people, all of them. Fickle, unreliable, always ready to complain – but lovely, all the same. After all they ’re the ones who pay our wages. Of course, I agree that it's the customers who make our lives difficult. Unreasonable demands. Always looking for a better or cheaper product somewhere else. But, let's face facts. Without customers, we go bust. Love them or hate them, we can't survive without customers. How about you, Mr Numbers?’

‘We don't have customers’, answered the accountant. ‘Our job is quite different. We have a policing role. Sure, sometimes we have to bring in the money. But mainly our job is to make sure that you lot make good use of the resources you have. And, believe me, most of the time you don't! Sales below budget, overspends, underproduction. Where would you be if we didn't screw things down tight?’

‘That's not the way I see things’, asserted the personnel officer. ‘Our job is to look after the people. We owe it to our staff to make sure they ’re treated fairly – not discriminated against, rewarded properly for the work they do, offered opportunities to develop, that sort of thing. The staff – they are our customers.’

The production supervisor was in a quandary. Like the marketing manager, he saw the buying public as his customers. But how could two functions in the same organization have the same customers? And, if the buying public weren't his customers, who were?

EXTERNAL AND INTERNAL CUSTOMERS

Focus on the external customer

You have no doubt already recognized the false assumptions and misapprehensions in this debate. But they are fundamental enough to be worth emphasizing.

The marketing manager takes a rather disparaging view of external customers. Essential they may be, but also fickle, unreliable and always ready to complain. He seems to accept the truth of the old joke often heard in retailing, that: ‘This would be a wonderful place to work if it weren't for the customers’.

Of course, it is difficult to argue with the reality of the marketing manager's position. Evidence is widely available across all sectors of industry:

The manufacturing customer who brings the date forward, then complains when the product is late.

The retail customer who complains that the shop was shut at 5.31, when closing time is 5.30.

The local government customer who refuses to pay council tax, but then protests at the state of the roads.

The hospital patient who expects to be cured, but refuses to follow their course of treatment.

The parent whose child always plays truant, but still expects him to pass his exams and blames the school when he or she fails.

So what should be the attitude of an organization towards its external customers? The answer to this question is a matter of perception.

Increasingly, organizations are coming to recognize that customers have rights and that the organization has duties towards them. This recognition can often be seen in the development and publication of a ‘customer charter’. Here is an example, drawn from a business making home entertainment equipment:

This charter contains few surprises. It contains references to:

product quality

customer satisfaction

customer service

continuous improvement.

All of these references should be familiar as central themes of operations management.

On the other hand, if you are as cynical as most about local or national government, you may be surprised at the number of government departments which are now publishing their own customer charters. For example, you may have come across:

patient's charter

elector's rights

taxpayer's charter.

In view of the traditional tension between taxpayers and the Inland Revenue, you may well not have expected the last, but here it is:

Both the charters we have quoted are impressive, at least on the surface. They give guarantees and make promises. They offer benefits which should be attractive to most, if not all, of both organizations’ customers. But, if you look critically at them, they ought to raise doubts in your mind.

When considering a customer charter and the promises it makes about customer satisfaction and service, it is advisable to ask:

How many people in the organization know what the document says?

Do they understand its implications for the actions and decisions they should take?

Has the organization worked out what it means by such promises as ‘all our products are guaranteed unconditionally’ or ‘settling your tax affairs promptly and accurately’?

Are effective systems in place to, for example, ‘respond to complaints within 24 hours’ or to ‘give information and assistance at our enquiry office’?

Does the charter genuinely reflect the values of the organization and the way people behave?

Or is it no more than a paper exercise?

Despite the need to ask such questions on a regular basis, it is apparent that the proliferation of customer charters reflects a change in the relationship between supplier and customer – from one of conflict and confrontation to one of mutual dependence. The following extract is taken from an internal training publication by the Ministry of Defence, written for staff who manage contractors:

We shall return to this theme of the customer-supplier relationship as a partnership later in this chapter.

Focus on the internal customer

A further misapprehension from our earlier debate, which all four speakers are guilty of, is that of concentrating exclusively on external customers. This is a theme we introduced in Chapter 1. But it is worth developing further.

Figure 4.1The quality chain

It is convenient and helpful to picture an organization's customer-supplier relationship as a long chain, each link supplying the next one along the chain. You will find diagrams similar to the one in Figure 4.1 in most textbooks dealing with total quality management, which is where the concept of internal customers comes from.

Although the simple diagram in Figure 4.1 helps to get across a principle which is strange to many people, its simplicity leads to a distortion of the internal customer concept.

As John S. Oakland points out in his book Total Quality Management (Butterworth-Heinemann, 1989):

At this stage, the important point to be drawn from the quote is not the one related to customer requirements: this is so significant that we shall need to return to it in much more detail later in this chapter. Rather, it is the initially perplexing idea that one person can be both customer and supplier at the same time. We can identify some other examples, beyond Oakland's, of boss and secretary:

In a project or job operation, every product and service is unique: a one-off. So the salesman needs to supply production with a clear and accurate statement of the external customer's requirements. But the salesman is also responsible for maintaining good relations with the external customer. So he is also the internal customer for the quality and effectiveness of the product or service, because these will have a major impact on customer relations.

Every manager has a duty to supply subordinates with clear instructions and effective supervision, to be responsive to their needs and aspirations. At the same time, the manager is the customer for high-quality work, subordinates’ productivity and routine but essential things like good time-keeping and attention to detail.

In our debate, the accountant emphasized the policing function of the finance department. But that is also a two-way street. The finance department supplies financial and budgeting information to other departments. But, to do this, finance is dependent on them for the provision of raw data.

Further thought about this confused question of who are customers and who are suppliers goes a long way to dealing with the issue raised in the production supervisor's mind during our debate – about whether he or the marketing department supplied external customers.

The reality is that every department and individual in an organization is both supplier and customer to a host of other departments and individuals. The following case study makes this clear.

OPERATIONS AS A HORIZONTAL PROCESS

Customer-supplier relationships

As the previous case study demonstrates, customer-supplier relationships are difficult to formalize, often operate across functions, take little or no account of hierarchical reporting structures and – at the same time – are essential to quality in operations management!

The messiness of this picture stems from two factors:

our attempt to apply management theory to organizational reality

the fact that we have been considering operations at a micro level.

Both factors are worth considering in more detail. Management theory sets out to explore:

what does happen in organizations

what should happen in organizations

what might happen in organizations.

It is derived from:

research

direct experience

the author's interpretation

the author's prejudices.

It is also based in one moment of time – a snapshot of current events, if you like.

Consequently, in 1776 Adam Smith, writing in The Wealth of Nations (Penguin, 1986), asserted: ‘ The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour.’

Whereas in 1976, Charles Handy, in his book, Understanding Organizations (Penguin, 1987), wrote: ‘Organizations would, therefore, be well-advised to take the monotony out of jobs, for monotony is costly. To reduce men to extensions of machines cannot ultimately be right or profitable.’

The implication of this is obvious – and totally consistent with the role of the manager. It is that operational improvements must be in line with the reality of the organization, its maturity, its people, its profitability and its technology. And, by extension: be careful to assess the fit of management theory with your organization before trying to implement it.

Our second factor is no more important, but it will take longer to develop. At a micro level, the analysis of who supplies whom – and with what, and to what standard – is an essential process, because of its impact on the efficiency of customer departments and on the quality of relations between departments.

At the same time, the analysis results in a web of customer-supplier transactions which, as an overall picture, may become so complex that it is almost impossible to unravel.

That is why it is important to keep clearly in mind the definition of operations at a macro level which we gave earlier in this book:

This transformation may involve:

a change in form

a change in content

a change in location

a change in size

a change in presentation

a change in reliability

a change in efficiency.

The extent to which such transformations add value depends on how far they deliver to customers the benefits those customers are expecting. While this point may seem obvious, There are several significant obstacles to the successful achievement of added value:

failure to recognize who are customers

ignorance of their needs and expectations

geographical separation

bureaucratic or hierarchical separation.

It is for this reason that we have called operations a ‘horizontal process’.

Organization structure and culture

Despite recent efforts by organizations to achieve looser, flatter structures based on co-operation rather than formality, most organizations continue to show evidence of functional separation, reinforced by hierarchies.

Charles Handy explained this phenomenon, and the problems arising from it, in his book The Gods of Management (Penguin, 1979). The book identifies four organizational structures or cultures, each named rather whimsically after a Greek god.

Handy's ‘power culture’ is named for Zeus, the god of thunderbolts and showers of gold. It describes an organization where all decisions are taken by the boss or a very small group of senior managers. The organization is quick to respond, tightly controlled, but only suited to small businesses.

The task culture is job or project orientated. Teams communicate and work together informally. They often split up and re-form as the needs of the task or project change. Respect is based on individual expertise.

The person culture is made up of a group of individuals sharing common facilities like an office, equipment or a switchboard. A barristers’ chambers or an architectural partnership are good examples.

Handy's final organizational form is the role culture. He names it after Apollo, the god of reason, and represents it as a Greek temple (see Figure 4.2).

Figure 4.2

Each pillar of the temple consists of a different function. Work in a role culture is controlled by rules and procedures, with each function working independently and co-ordination between them only taking place at the top of the structure, carried out by senior managers.

So how does this relate to the topic of adding value to the benefit of customers, both internal and external? Closely managed and with rapid and responsive decision-making, an effective power culture will focus sharply on the needs of the final or external customer. The language of internal customers is unlikely to be familiar, but the boss will be very aware when quality standards are not being met – and will not be slow to crack the whip in order to bring about improvement.

The task culture is heavily dependent on internal customer relations. Its success depends on team members recognizing and responding to the requirements of other members. The risk is that the task culture will be responsive to the needs of internal customers to the point where the final customer is forgotten.

Members of a person culture, working largely independently, have little need for the techniques of internal customer service, except in so far as they share support staff such as secretaries or administrators.

It is the role culture which runs the greatest risk of a breakdown in customer focus. Controlled, as we have said, through rules and procedures, it is easy to reach a point where ‘following the book’ becomes more important than satisfying the customer. The means take over from the ends. And, even if the role culture recognizes changes in customer requirements, these can only be addressed by the lengthy process of rewriting the rule book.

Nevertheless, each of these four cultures is relevant to a particular type of organization:

the power culture to a new, small business, where dynamism and speed of response are critical

the task culture to an environment of creativity and innovation, where expertise and informality are central to the operation

the person culture to individuals who work independently, but would benefit from access to common facilities

the role culture to bureaucratic organizations where it is important to maintain consistency.

The essential operational process must be to ensure that, regardless of the culture of the organization, the voice of the customer is still heard. That is the subject of our next section.

CUSTOMER REQUIREMENTS AND FEEDBACK

Oakland (Total Quality Management, Butterworth-Heinemann, 1989) sets out the following questions to be answered in the pursuit of quality:

Customers

Who are my immediate customers?

What are their true requirements?

How do I or can I find out what the requirements are?

Do I have the necessary capability to meet the requirements? (If not, then what must change to improve the capability?)

Do I continually meet the requirements? (If not, then what prevents this from happening, when the capability exists?)

How do I monitor changes in the requirements?

Suppliers

Who are my immediate suppliers?

What are my true requirements?

How do I communicate my requirements?

Do my suppliers have the capability to measure and meet the requirements?

How do I inform them of changes in the requirements?

These questions remain relevant, whether customers and suppliers are internal or external.

Researching customer requirements

The use of customer research techniques to identify external customer requirements has been a central part of marketing since the marketing function was first established and formalized. There is a huge variety of techniques, which can be divided into sources of primary and secondary data.

Primary data are facts, figures and opinions collected specifically for a particular purpose. In other words, the data are being collected for the first time. Examples of techniques used to uncover primary data are:

telephone interviews

postal surveys

face-to-face interviews

focus groups.

Telephone interviews

Telephone interviews are quick. Large numbers of interviews can be conducted in a short space of time. Data can be gathered and processed quickly. They are also cost-effective; costs are considerably less than for face-to-face interviews. Telephone interviews are non-intrusive; a customer may not be willing to spare the time for a face-to-face interview but will spend the time answering questions over the phone.

Telephone interviews do have drawbacks, though. They are sometimes seen as a disguised sales call. People are not usually prepared to spend a long time on a phone interview. Questions need to be kept short and simple. Deep issues – like emotional or psychological responses to products or services – are difficult to extract over the phone. By definition, the sample will be limited to people with a phone! If you want data from business customers, all of whom will have a phone, this does not matter. But if you are researching newspapers, for example, or petfood or window cleaning services, not all your customers will have a phone.

Postal surveys

Postal surveys are sent directly to respondents through the postal system. They offer a quick and relatively inexpensive means of obtaining data. However, the rate of response is often low. (How often have you opened a postal questionnaire and thrown it straight in the bin?) The preparation of the questions is even more critical than with a telephone interview, because There is no one to explain if the meaning of a question is unclear. And, in a world where people read less and watch television more, respondents often lack the patience to complete the survey. As a result, postal surveys often include the offer of an incentive, like entry to a prize draw, if the questionnaire is returned.

Face-to-face interviews

Again involving answers to a set series of questions, face-to-face interviews take place between an individual customer and an interviewer. You may well have been stopped in the street by an interviewer with a clipboard. This will have been part of a quota sampling process, where by the interviewer is required to interview for example:

three males under the age of 25

five women between 30 and 35 with young children

four businessmen between 35 and 40.

This sample has been constructed to reflect the target population which the product or service being researched is intended to reach.

Alternative approaches to face-to-face interviews involve prebooking the interview, holding it in the respondent's home or office. Face-to-face interviews are costly and time-consuming. However, they allow a more in-depth exploration of issues and give scope for the interviewer to use visual prompts (known as ‘flash cards’) and to show physical products.

Focus groups

Unlike the other types of survey we have considered, focus groups are reasonably unstructured in the way topics are examined, and the answers are less predictable. These groups depend for their success on a highly skilled and experienced researcher and often take up a whole evening, with drinks and refreshments provided.

Predictably, focus groups are expensive and time-consuming. Because the discussions may go down an almost infinite variety of routes, the analysis of results is difficult. It is also possible for one strong-minded or opinionated individual to hijack a discussion, unless controlled by the researcher. Never-theless, focus groups are valuable ways of exploring complex issues, where there is no existing evidence on which to base judgement about what the outcomes may be.

Secondary data is the phrase used to describe information or statistics already collected for a different purpose. Sometimes this will be available in published form. At other times, it may simply be lying around in the organization! Sources of secondary data include:

Internal records

past sales records

lost order records

customer complaints or letters of praise.

Industry data

trade magazines

trade association reports

business school analyses.

Government sources

Central Statistical Office

Department of Trade

Driver and Vehicle Licensing Centre

Department for Education and Employment

Customs and Excise

Inland Revenue

Office of Population Census and Surveys.

The techniques described so far all provide data and information related to external customers. However, increasingly, organizations are applying similar techniques to assess the quality of their internal customer service.

Of the techniques described, the following are easily transferable to identify internal customer requirements:

telephone interviews

postal interviews

focus groups

complaints analysis.

Two further techniques apply equally to both customer groups.

Benchmarking

Benchmarking is a way of comparing an organization's performance with other organizations that are regarded as demonstrating best practice. This normally involves subscribing to a benchmarking service which regularly publishes comparative information related to such factors as:

quality of customer service

speed of order response

customer satisfaction.

Whilst benchmarking does not give access to the specific requirements of your specific customers, it does provide guidance on those issues which are important to customer satisfaction and the standards which you should be seeking to achieve.

A simple alternative approach to benchmarking involves an in-house monitoring system which allows different departments or functions to compare performance with others in the organization.

Customer-supplier partnerships

In her book When Giants Learn to Dance (Simon and Schuster, 1989) Rosabeth Moss Kanter points out the benefits of closer customer-supplier relationships:

Customer-supplier alliances or partnerships, as advocated here, bring a number of advantages:

They eliminate the traditional adversarial nature of customer-supplier relationships.

They offer scope for joint product or service development.

They improve quality.

They provide suppliers with a deeper understanding of customer requirements.

Kanter's comments concentrate on relations with external suppliers. But her references to employers also raise the question of relations with internal suppliers.

Without a doubt, Marks and Spencer have a clear specification for their product requirements. But it is surprising how often a supplier's failure to meet the customer's requirements is because customers don't know exactly what they want – or if they do, fail to make it clear. This is sometimes true of external suppliers – particularly in the context of job or project operations, where the output is unique and the customer has no experience on which to base the specification – but even more so in the case of internal customer-supplier relations. Often this is because the customer takes the internal supplier for granted. The service has always been There and the customer never stops to ask whether it genuinely meets his or her requirements.

REASONABLE AND UNREASONABLE EXPECTATIONS

The customer-supplier relationship is based on a contract. One party provides something, the other receives it and in some way pays for it.

In the case of external relationships, the contract is formal. It is (or should be) based on a formal and detailed specification of requirements, against which the resulting product or service can be assessed for conformance.

There is a powerful logic to this process. Unfortunately, it is rarely applied to internal customer-supplier relationships, which are based on a much more informal and often unspecified contract.

As a result, There is likely to be a wide gulf between customer expectations and supplier delivery. Indeed, if external customer-supplier contracts are not specified with this kind of rigour, a similar gulf may develop.

However, even when customer requirements and expectations are clearly specified and communicated, and performance monitored, it remains fair to ask whether those expectations are reasonable.

Typically, customer requirements will relate to:

quality

cost

speed of delivery

volume

management of the relationship.

But it is important to recognize that:

the higher the quality, the greater the cost

the faster the delivery, the more resources are needed

the greater the volume, the more it costs and the more resources are needed

the better the relationship, the more time, effort and expertise are required.

The management literature is currently full of references to quality, excellence, customer service, added value and continuous improvement. All of these have become key objectives for organizations, departments, teams and individuals.

In many cases, their achievement has depended on no more than the elimination of inefficient procedures, wasteful practices, staff incompetence and poor communication. In several organizations, There is still scope to improve in all these areas.

However, we have also pointed out that the process of benchmarking performance sets standards against criteria of best practice. Consequently, all organizations strive to match and outdo the standards achieved by their competitors.

In a world where innovation, excellence, quality, service, customer focus, added value and continuous improvement have become the norms or the targets for organizations, the argument based on competitive advantage ceases to apply. In addition, There is a growing recognition that all these attributes cost money.

It is relevant here to quote Charles Dickens's Mr Micawber, who said: ’Income: 20 shillings. Expenditure 20 shillings and 1 penny. Result: Misery.’ In other words, it is essential for both customers and suppliers to recognize the costs involved in improving customer satisfaction, adding value and improving quality. It is reasonable for customers and suppliers to expect these benefits, but not at the expense of the long-term survival of the organization. The processes of improving customer communication and the development of customer supplier liaisons or partnerships which we described in this chapter offer the opportunity to ensure that customers can make an informed choice about the standards they are prepared to pay for.