Customer Focused Continuous Improvement – Beyond Words: Part 1

Customer Focus – probably the most over-used, misunderstood phrase in business today.  We hear it everywhere… every company is customer focused, every company prides itself on having the highest ratings in customer satisfaction.  More than ever before, companies are spending millions on achieving higher customer ratings.  And yet, Customers are ‘churning’ from one type of TV, phone, kitchen appliance, entertainment system, and even bank to another, and then another. 

Clearly, most companies today believe they are ‘customer focused’.  Yet, pursuit of continuous improvement ventures today seem more to focus on revenue growth, market share, profits, cost control & reduction, and stock price.  Manufacturers work to reduce operational and logistical costs, and reduce failures and replacements.  Telecoms work to reduce calls into customer service, and unnecessary dispatches and replacements.  Healthcare providers and hospitals work to reduce return patients and improve billing efficiencies.  Hotels work to reduce complaints, while improving fill rates and thereby profitability levels.  Restaurants work to achieve greater efficiencies, fill rates and to reduce returns and complaints.  Everywhere we see evidence of operational improvement initiatives, while we see precious few indicators actually focused on delighted, fulfilled, happy customers.

To close this seeming dichotomy between a company’s focus on customers and their desire to continuously improve performance, we will look specifically at ‘customer behavior’ and how a company can align itself strategically and operationally to this behavior in order to enable the best possible experience, from the time the customer realizes they have a need, until it has been fulfilled way beyond their expectations.

We start by asking:  “why do customers do what they do?”  We explore and segment customer behavior patterns that are motivated first by need, and then through the purchasing process to receipt and application, and compare the processes on the business side that enable and service these behaviors.  Our goal is to identify potential improvement opportunities in the business processes that influence the customer experience.

The customer behaviors associated with selecting, purchasing and applying a product or service can be broken out into 8 basic components.  These are listed at figure 1, and form the basis for understanding customer behavior ‘end to end’ (‘end to end’ refers to starting when a customer realizes a need, to when that need is fulfilled and sustained).  For each component, we start by asking:  ‘…How does the customer ____________________?’, and then assess the company’s capability to best service and support this behavior.

Figure 1

When we look at the customer experience from this perspective, we can ask where in each component opportunities might present themselves toward improving the customer experience, and in alignment with that, where do we have opportunities to improve our business services and processes to enable the best possible customer experience.  It is our goal to bring to light these possible aspects toward continuous improvement that we will now direct our attention, as we look at each step in the customer experience.

 1. ‘Need’

The ‘Need’ component is when a customer realizes they have a need for a product or service of a particular type, either for their personal or business use.  For a company that provides a specific product or service, the challenge is to anticipate customer need, even where a gap may not have existed before, and to design, prototype and produce those products and/or services that can satisfy this need now and in the future.

But that in itself is not enough; there must be a capability to sustain, and continue to provide such products and/or services beyond market entry.

For ‘Need’, it is in these areas that continuous improvement can be applied:

–  Regarding the design, prototype and production, incorporating many of the principles of ‘Design for Six Sigma (DFSS)’, Quality Functional Deployment (QFD), and TRIZ will ensure that every decision and action will be derived from providing for a significant customer benefit.

–  Designing, Ramping up and sustaining supporting operations can benefit from continuous improvement through understanding prior launches, establishing a ‘lessons learned’ mantra, and following a detailed plan that includes realistic FMEA (Failure Modes Effects Analysis) based risk identification and mitigation actions.

Examples of best practices are Apple, in creating their ‘i’ product series, and Singapore Airlines, who managed to include many items we hadn’t even thought of for our trips.

2. ‘Understand’ and 

3.  ‘Select’  

Looking at how a customer ‘understands’ and ‘selects’ your products and services gives us insight into the customer’s behavior in this respect, and helps to focus on those things that will not only inform and educate, but also convince the customer to include your brand in setting up their selection and decision to buy.  We therefore want to know how the customer goes about researching and gathering options and the methods they use to compare and contrast to help in the selection process.  These insights will help the company structure highly effective customer information and education methods.

Continuous improvement opportunities abound in this arena, to always be looking to further improve knowledge and understanding of our products and services, and how they are the right selection for the customer.  We can determine how effective this is through surveys and focus groups, and improve those appropriate elements in this regard, by comparing customer perspective and knowledge with real facts, and work to close key gaps that prevent or inhibit positive understanding and selection.  Some of the same tools we talked about in ‘Need’ can apply here as well, such as QFD and FMEA.  Ultimately, the measure for success here is to see increases in customer final selection toward purchasing your product or service.

Examples of excellence are Amazon, and Ford Motor Co., who both excel in educating and persuading the customer to their product and service advantages.

4. ‘Decide and Purchase’  

How a customer ‘decides to buy, and purchases’ your products / services involves key criteria coupled with a decision making process by which to compare and contrast pros and cons.  This is where the customer decides from the final selections which to purchase.  It becomes critical for an organization to understand that criteria and present credible, clear, understandable information directly related to what the customer is looking for, and how their product/ service can provide exactly what the customer needs.

Continuous Improvement opportunities suggest themselves in 2 areas:

–  Support decision-making through anticipating questions and other information necessary to making the decision, and also through review and mitigation for possible missing or erroneous information that the customer deems important for comparison and decision purposes.

–  For the purchasing / ordering aspect, work to make the sales and ordering process seamless, simple and effective in the customer’s eyes.

Good examples of seamless purchasing processes can be found online and in some stores such as L.L. Bean, Amazon again, iTunes and others that have drastically simplified the purchasing process.

5. ‘Receive’

Customers can receive products and services through many different media, related to what those products and services are.  For example, software programs or games can be sent via download (from website, advertisement, or on-line) and/or on media (CD, DVD, or USB device).  Devices or physical products can be shipped (USPS, UPS, FedEx, or courier) or purchased at stores (retail sales, pick up previously purchased items) or some mix as appropriate and desired by the customer.  The key will be to understand what the customer values in the method desired to receive products and services provided by your company.

Continuous improvement opportunities would focus primarily on successfully delivering when desired, by the method desired, to be assessed primarily through customer input, and correlated with delivery data.  Again, it is critical to understand customer expectations here, in order to provide the best customer experience.  The best opportunity is when customer expectation aligns with business process performance.  If this is not directly achievable, establishing a real-time feedback to better understand and drive to close the ‘receive’ gap (expectations/desires vs. reality).

Examples here would be FedEx and UPS, who have pioneered real-time receipt confirmation and acknowledgement.

6. ‘Install/Use/Apply’        

As we have seen, customer behavior (and expectations) can be very different than what is expected regarding how a product or service is used or applied.  This includes sustained use as well.  Many companies make the mistake of separating maintenance and repair from initial sales and use, resulting in multiple pathways that often contradict regarding initial and sustained customer use.

Continuous improvement opportunities present themselves through feedback, returns, and other communications coming back regarding product and/or service performance.  Proactive solicitation is an excellent way to obtain customer perspective regarding how they want to use or apply the product vs. how they have to do it.  It is here that we see full capability to use the lean and six sigma tools, and some organizational methods as well.  We look at 3 different customer experience perspectives:  Installed systems, customer use, and maintenance and support services:

–  Installed systems – Evaluate customer experience success levels, where the failure in first-pass yield has occurred, and any opportunities for lean applications to make this process simpler, cleaner, and more effective.

–  Customer use – look at communication from customers (calls to care, complaints, feedback and warrantee returns, for a start), see how they are using the product or service, and work to improve those related support processes

–  Sustained use – look at maintenance and repair levels, and sustaining activities to support customer product and/or service use.

Examples of excellence vary greatly regarding this area.  The good ones focus beyond warrantee work to all customer maintenance needs, and live by the mantra of: ‘fix it right the first time’.

7. ‘Evaluate’

This component often happens in parallel to ‘Use / Apply’; from the moment the customer first uses the product or service, through sustained use and/or application.  It is critical to understand how the customer is evaluating their success with the product or service (again, do not confuse this with what you think is working well…. You need to get information directly from customers on this, as objectively as possible, so as to detect early any anomalies between what you are measuring and what the customer values.  This assessment will also determine whether the customer will want to keep your product or service, or churn out as a customer and try something else…  Note that this links very closely with the 2^nd and 3^rd components, ‘understanding’ and ‘selecting’, in that a customer will reflect on what is obtained, and compare to what was desired, in order to determine viability of sustained loyalty.

Continuous improvement offers multiple opportunities regarding the customer evaluation of the product and/or service.  Certainly, customer feedback is essential to any improvement program, so understanding and diagnosing issues from such feedback is critical to expose and eliminate waste and other Lean ‘bad practices’, such as multiple inspections, circuitous routes that take too long and go much farther than planned), rework, long set-up, or other aspects related to cost reduction, quality and speed to the customer, for both the product and customer service.

Examples would be J.D. Powers, several of the automotive assessment proponents, and others that set the standards for their industry.

8. ‘Keep or Try something else’

Customers will ‘keep’ a product or service based on their need, how well it is being currently fulfilled, and if such success will continue in the future, given possible changes that are coming soon.  This is another area where organizations often drop the ball, in their belief that once a customer signs up, they will stay for life.  In fact, customer trends in this area change frequently, due to job changes, family changes, and other life-critical aspects.

Continuous improvement opportunities here should focus on what is really important to the customer first.  Certainly, as a second, the performance of the company is key, in terms of potential KPIs on the fundamental customer metrics.  However, it will be important to understand what drives this decision to keep or not, and may not be directly related our ‘operational’ metrics, yet will drive customer to keep us.

Examples of the best practitioners show continued capability to receive input from their customers, and are working to constantly improve and change their designs and delivery processes to keep up with demand, and stay ahead of technology.

In this brief discussion, we attempted to better understand the alignment between the customer experience and the related continuous improvement opportunities that present themselves.  The important thing to remember is to always ensure a connection between your continuous improvement strategies, projects and initiatives to something that would be important to the customer, not just to profitability or reduced operational costs.  In this way, you assure that your program will always be focused appropriately, to the best opportunities for your customers and your business.

By Frederick S. Buchman

Working in Operational Excellence over 25 years, Frederick S. Buchman is the President and CEO of Hayward Enterprises, Inc., and is a recognized international author, speaker, coach and consultant on Operational and Process Excellence programs, co-authoring multi-language books on systems for management such as balanced scorecards and dashboards.  His organization has helped many Fortune 100 companies worldwide in successfully designing, executing and integrating their continuous improvement programs, and also often assists with senior leader qualification, executive team development, and working with companies big and small to achieve and sustain their performance goals.