Are You Delivering Value to Your Customers?

This article was first published on 15 May 2013 in the BT Let's Talk GTM Blog

There can’t be many businesses in the world that produce year-on-year profits on the one hand but on the other can’t demonstrate what value they offer customers. Well, there are a few, one being the business of funeral direction.

Yes, those somberly dressed folks with well-rehearsed sympathetic gestures, driving gothic black hearses, which wouldn’t be out of place in Gotham city. They might cut macabre figures undertaking their grim business, but let’s face it; thanks to the steady supply of stock their annual statement of accounts always looks healthy. But how do funeral directors know they’re delivering value to the customer? I mean for the poor fellow in the casket it’s a little too late to fill out the all-important customer feedback form.

Fortunately for the rest of us working in more conventional industries, defining customer value should be an easier equation to solve – but isn’t always.

Value, the conventional wisdom informs us, is all about results, what the customer ‘got out of it’. For example, take car insurance. No one wants to pay for something they never use. But knowing, that should you wreck your car, the nice people in the insurance company will be there to help you, offers peace of mind, and has value.

Companies generally understand this notion of value. But value has two parts. The first being what the customer ‘got out of it’, or the results produced for the customer. If you like, this is the first half of the value equation. The second half, where most companies struggle, is process quality. That is the way in which the service is delivered, which is often as important as the results themselves. It is said that 80 per cent of medical malpractice legal suits involved no negligence. One explanation is that patients or loved ones are often angered at the bedside manner of the medical professionals. So process quality or how the service was delivered may have eroded the value in this example.

Five questions which may help us to dimension process quality are: Did the seller do what was promised (dependability)? Was the service provided in a timely manner (responsiveness)? Did the seller elicit a feeling of confidence during the service delivery process (authority)? Was the seller able to take the customer’s point of view (empathy)? Was evidence left that the service was indeed performed (tangible evidence)?

If we take a look at the annual Customer Service Hall of Shame, as published by MSN Money, we’ll find it’s made up of banks, telecom operators and utility providers. Does that surprise you? No, I hear you say.

And that’s the crux of it. These firms are often great at the first half of the value equation – results produced for the customer. In the case of a telecoms operator, it could be the function provided to a user by a high-speed reliable broadband connection, enabling the customer to access a number of triple or quad-play services. By the way, that’s techno-speak for being able to watch movies, download content, speak to people, hog down on a social network site and do a host of other things all at the same time on a single broadband line. All this is good stuff. But often the second half of the value equation – process quality – suffers and these service providers fail miserably with it.

Sticking with our fictitious telecoms operator, process quality in this context might mean how the broadband line was actually delivered. How much pain did the customer go through trying to order the line – at the call centre, in the service centre? Was the order processed right the first time? Did the engineer turn up when they said he would? Did he install the line successfully the first time? Were there problems with the installation and service within the first month? When the customer received the bill, was it correct?  Was it even comprehensible or did an accountant have to translate it?

So how can firms focus more on process quality so they can excel at both halves of the value equation?

BT, as a telecoms operator, does it by aligning its entire organization around a couple of company-wide processes. These focus everyone on improving customer experience and doing it right first time, so much so that interconnected dashboards measure process quality from the executive board down to individual teams.

One such process is called Lead2Cash. It aims to make it easy for customers to do business with BT from first contact to final payment. The company offers multiple channels (e.g. web, contact centre, mail) to make it simple for customers to make contact and uses the right systems to capture the order correctly. Where an installation is required, engineers arrive on site when promised and deliver the order on time following the correct processes. Once the order is complete, the customer is billed accurately and on time.  Following successful fulfilment there are no issues raised within 28 days, because usually if there is a fault it occurs within the first month. This would be an ideal scenario. BT constantly measures how it performs against this using Lead2Cash as a process.

By adopting this approach to improving process quality BT has been able to see tangible benefits from the roll-out of its Superfast Broadband portfolio. These include reductions in order breakage and improvements in equipment utilization, to name a few. Concurrently, customer experience has improved, as the entire organization has focused on doing things right first time.

Companies need to excel at both halves of the value equation – results produced for the customer plus process quality – to deliver sustained value to their customers. For those who can’t, well, they could always diversify into funeral direction, where measuring customer value is, well, you know what it is.