Monday, June 29, 2009

Defining a Service Quality Strategy - Closing Gap 1

To understand customer expectations you have to talk to your past, present and future customers. If your company can afford it, this means doing a market survey or hiring a market research team, but if you’re a startup or a small business, this may be cost prohibitive. So what can you do on your own to try to get a realistic picture of what your customers want? There are a number of online tools and sites that can help get an accurate picture so you can build a service quality strategy. Here's what you should try to determine:
  1. How do your customers want to communicate?
  2. Where do they want to communicate?
  3. How do you capture what they are saying?
  4. What do you do with the results?
How do your customers want to communicate
Depending on the kind of service you provide you'll need to understand how your customers use technology in order to determine how to reach them.

Charlene Li and Josh Bernoff, in the book Groundswell, outline a process for identifying the technology preferences for your customers. Technographics LadderThe context for the book is to help you develop the right web content and tools to satisfy your customers technology use to keep them on your site however you can use this profile to help determinee how and where to communicate with your customers. The methodology focuses on technology behaviors; it represents the range of technology uses on a ladder, which they call a Social Technnographics Ladder.

Customers range from Inactives, which do not participate in most online technologies (Geoffrey Moore's Laggards) to Creators, which are highly active, creating web content, publishing blogs and multimedia content for general consumption (think Moore's Technology Enthusiasts). Understanding where your customer base fits within the ladder will help you determine how to reach them. General technographic data for different demographics is provided on their site. You'll want to refine this generic profile to your specific market.


It should be noted that there is overlap within the categories so the totals will exceed 100%.

Where do they want to communicate and how do you capture what they are saying?
Once you have defined the technology profile of your customer base, you can then create a targeted communication plan. Here are some ideas for the different profiles.

Spectators
The vast majority of your customers will likely be Spectators who are readers of information. This group views blogs and web sites, but is less likely to leave comments or start discussions. So how can you communicate with them? You could try to do surveys and ratings. Surveying via a questionnaire may be an effective channel. iPerceptions 4Q is a set of 4 basic questions you can ask your readers: Why are you here? Was the visit successful? If not then why not? Did you have a good site experience at least? These 4 questions answer the basic questions like what was the customer's primary purpose for coming to your site, what was their task completion rate, if they didn't find what they wanted, you've given them the chance to explain why not, and finally you have a customer satisfaction score for the overall web experience. Other tools and other companies with similar offerings provide more in-depth and targeted questioning. Here is a non-exhaustive list of sites to consider:Another interesting site is GetSatisfaction. This is more of a comprehensive customer support site, connecting your customers and employees together to answer questions and comments. This site also supports a feedback mechanism. The beauty of this site is that it is a SaaS so you can integrate the customer interaction right into your own site.

Joiners
Communicating with Joiners is a lot harder than any other group. The reason for this is that most communities that Joiners join are private and search does not reach into these communities. To connect with joiners on social networking sites you'll have to create accounts on sites like My Space, Facebook, and LinkedIn. Joining these sites is easy; getting enough brand awareness to have a conversation with your customers is a bit harder.

Alternatively you can create a private community to connect with joiners, but again, this can take time to build up a following. Ning is an interesting site that allows you to create an online social website. Other sites include:There are some emerging search capabilities within the social networking sites. Microsoft has an agreement with Facebook but I haven't seen this yet. You can also hire third parties to manually search social sites for you. Again, it is useful to know what your customers are saying, but it is much harder to engage them in this space in conversation.

Collectors
Communication with collectors tends to be one way; you can see what they have marked for sharing or what they have tagged or subscribed to.

Social news services like Reddit, Buzzup and Digg are sites where users post links to sites, news, blogs, etc, that they like. A post acts like a vote and the more votes an article gets, the more importance is assigned to it. These sites have search capabilities and often, as in the case of Digg, you can create an RSS feed from the search results. This allows you to create a feed on your keywords or your company name. Articles on Digg can be commented on and users can even rate the comments. Digg has a reply capability so you can also reply directly to your customers.Social tagging sites like delicious allow you to create bookmarks to sites. The more bookmarks, the more popular the site is thought to be. Bookmarked have tags and the tags give you an indication of how people categorize the bookmark. Bookmarks can also have descriptions which again may reveal what customers are thinking. You can create feeds from search results in delicious so you can also track updates by tag or company name.

Critics
Critics like to react to online material through comments and discussions. To better support comments on your site, you could use a commenting service like Disqus. The focus of this tool is to better support discussions. It provides a better commenting mechanism than most blog or websites via nested comments and user profiles, and it provides consolidation for commentors, allowing them to see all their comments, across many sites, in one consolidated place. Enhancing the user experience will allow you to capture more comments and ultimately get more feedback. An emerging technology that looks promising is Wave. Wave allows you to create web base discussions that supports multiple discussion forums. A conversation that begins on a blog can also have discussion entries from LinkedIn or Facebook. Wave supports a single version of the discussion thread so no matter where the comments are added, you'll see one continuous thread of discussion.

Not all customers will leave comments. Another technique is to employ a rating system. Something as simple as Thumbs Up or Down to a question will give you basic feedback. As an example, I've connected my blog to Outbrain to allow my readers to provide content rating on each article. Though I'd prefer they left comments, I'd still like to get feedback to see if I'm connecting with the content, so I've formed the question around a rating for the content itself. You could easily provide a rating system for specific questions to gain insights and feedback on customer satisfaction. Similar sites include:Creators
Creators like to create their own content on blogs or websites. Some creators are also influencers and can wield immense online power. Getting noticed by an influencer can mean being written up or interviewed on popular online blogs or featured on web sites. Creators typically drive traffic to or away from your site, so identifying and interacting with creators can be tricky.

There are a number of sites that allow you to search blogs. Many of these tools will show you trending information for blog posts so you can see what is popular and what is not. These sites include:There are also a number of online tools that rank and stack creators. PostRank looks at a blog post and ranks it based on different engagement sources. The more sources of engagement an article has, the higher the ranking. PostRank looks at tracebacks, views, comments, diggs, reddits, bookmarks, tweets, blips and other engagement content. To get an idea for traffic flow or popularity at a site level, you can look at Technorati, BlogPulse and TNS Cymfony.
What do you do with the results
So, armed with a technology profile for your customer base, you've created a communication plan that focuses on where and how to communicate and where and how to monitor your customer's online behaviors and discussions. You've gotten different forms of input, from customer surveys and feedback forms, online comments, tags and blog articles to get an accurate picture of customer expectation and potentially customer perception of your company. So what? What do you do next? You need to define your service quality strategy so that your organization can create the service standards needed to exceed customer expectations.

The service quality strategy is really a balancing act between what you can afford to do, what you can do, what you competition is doing, and what your customers wants you to do. Using the input you've gleaned from your customer interactions, you'll need to determine what are the most important service attributes your customers are looking for. Fishbone diagrams and MECE analysis are good tools to get to route causes, or in this case core desires. You should also gather what information you can about your competition's service successes and failures to see if they have vulnerabilities in service delivery. Your service quality strategy should address your customer expectations and align them with your strengths and weaknesses. It should look for and attack competitor vulnerabilities for service differentiation and it should fit within your organizational capabilities.

Understanding customer expectations is the first step in delivering true quality service. The next step is converting your service quality strategy to quality standards that the organization can execute.

Posted by Brian S Courtney at 6/29/2009 View Comments
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Wednesday, June 17, 2009

Delivering Quality Service - Managing Gap 1

In my previous post, I talked about Delivering Quality Service. There are four areas where a service provider can make mistakes that increase the gap between customer expectations and perceptions. The first area, or gap, is when the management's perception of customer expectation is wrong. This gap is created when the executive team misjudges customer expectation. Typically, this occurs under the following circumstances:
  • There is a lack of market research
  • The management team ignores the market research results.
  • There is poor communication between field level resources and the senior team
  • There are too many layers between the senior management team and the customer.
Many senior executive's work solely on intuition. This can be dangerous. Intuition is often based on anecdotal evidence that risks looking at too small a population to be accurate. One executive told me that he wasn't worried about quality because they hadn't received many complaints. I emailed him a study that showed that only 6% of unsatisfied customers actually complain directly to an organization; 94% simply leave frustrated. This was before social networking sites and online opinion sites became prevalent however the study highlighted that market research was needed to get a complete picture of customer expectations. Market research, as simple as customer surveys or as complex as customer focus groups, ensures you are listening to your customers and that they have a say in defining your quality standards.

Even with market research, management can still be off if they chose to ignore it, or to disbelieve it. I've seen this happen under different circumstances. The first was when an executive was hired away from a larger firm with a similar service offering. He believed he knew enough from working in the space for 20 years to indicate our research was wrong. He missed the fact that customers have different service expectations from a large firm than they do for a startup. Though the expectations were similar, they differed enough that he widened the gap.


Management may also ignore the data altogether if it contradicts their personal beliefs. I once presented a senior exec with some analysis on poor customer satisfaction ratings and the root cause analysis pointed at our value proposition. Customers felt that our price was too high for the quality of the services we provided. The executive believed that our projects were less expensive than others and assumed that the customers were pressuring us for price reductions. Because our services was offered on a Time & Materials basis, when he put more resources on the projects to improve the quality, he also increased the cost to the customer. The affect was ugly and we lost a few customers before we revisited this.

Sometimes management simply doesn't have all the input they need to set the right quality goals for the organization. Poor internal communication can widen the gap between expectation and perception. I was consulting to a firm where the messenger was always shot. Guess what, messages soon stopped flowing. It was hard to believe but the executive team became more and more insulated and over time the organization suffered. Customers were giving their sales reps and field reps input on quality concerns but these never made it back to the senior team.

This can also be caused when the organization has too many layers between the customer and the senior management team. I once had a problem with a desktop application. After using the product for years, I started getting an unrecoverable application exception on startup so I called customer support to log the problem. In order to talk to a live person, I had to pay a fee ($20 or so) but the fee was refundable if the problem was determined to be a product defect, so I paid the fee and talked to a rep. He told me to open the application without any data. When it started, he said that the application was fine but that my data was bad so I would have to pay the fee. After arguing for quite some time that an application crash is a defect, independent of data, he passed me off to a call supervisor, who passed me to the shift supervisor. The next day I called back and talked with their manager, who passed me off to his, who passed me off to the office of the CTO who passed me off to the Quality Lead who then told me that she hated dealing with "software types' because we thought we knew it all, and hung up on me. Incredulous, I searched the web for the name of every executive that I could find at the company. I then tried every permutation of email addresses I could think of and sent them all a blistering complaint. Only one exec ever replied, the VP of Marketing. He told me that management had cracked down on the organization for not charging customers enough for support, and he could now see that the organization had taken this to an unhealthy extreme. With all the layers in management, he had never gotten the feedback that they had gone too far and was not able to guide his company in the right direction. To his credit, he actually sent me a personal check for $20 because he thought it would be too hard to get a reimbursement. Clearly this guy got it, but he had too many layers between himself and his customer to see the problem firsthand.

To avoid pointing the organization in the wrong direction, the senior management team has to do its homework and talk with customers about their quality expectations. Through the use of market research and direct communications, the senior team has to remain close enough to the customer to minimize the gap between what they think the customer wants and what the customer thinks they want.

Posted by Brian S Courtney at 6/17/2009 0 comments
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Friday, June 12, 2009

Delivering Quality Service

At MIT we had a course called Management of Supply Networks that had a couple of lectures on Service Quality. At the time, I can remember thinking that the material was rather esoteric. I was expecting the course to talk about logistics, measurement and analytics and instead we got into concepts and mental models. There were a couple of optional text books which I bought but given the class, I never really read. I'm a book junkie so the books have lived in my library ever since.

Balancing Customer Perceptins and ExpectationsRecently, I had a customer hire my firm to help improve their customer satisfaction rating. They were ranked last in a JDPower's poll and felt they had to improve their customer satisfaction rating even though they were technically a regional monopoly and customers could not change providers. I got out my notes from class and I skimmed some of the books I had on the shelf to prepare for the engagement. That's when I started to get what the professor was teaching in class. One of the lectures was a summary of the book, Delivering Quality Service: Balancing Customer Perceptions and Expectations by Valarie A. Zeithaml, A. Parasuraman and Leonard L. Berry. As I skimmed the book, I realized that it had a useful framework. The framework helped outline that service quality is not just about delivering quality service; it's about exceeding customer expectations. Since that engagement, I've relied on this book many times. If you are interested in improving your service quality, I'd highly recommend reading it.

Customer satisfaction is the difference between a customer's expectations of a service and their perceptions of what was delivered. Having high customer satisfaction ratings simply means you've exceed your customer's expectations, it does not mean that you've delivered great service.

Let me give you an example. If you look at the American Customer Satisfaction Index for Southwest Airlines and United Airlines, you'll see that they score an 81 and a 56 out of 100 respectively. Southwest got the highest score of any US Airline in 2009 and United had the lowest. Yet if you look at Skytrax, which measures the quality of airline service, you'll see that Southwest and United are both given 3 stars ratings (equivalent of Fair). They have the same quality ranking and yet have vastly different customer satisfaction scores because their customers have different expectations.

A customer enters an engagement with an expectation of service quality. They form their expectations by personal experiences with other vendors, things they hear about word-of-mouth (like your reputation), performing online research, and their own personal take on service quality. When Southwest started to offer service 38 years ago, they decided to compete strictly on price. United has a much longer history, being founded back in the early days of aviation. They were there when flying on a plane was a life changing experience. Customers grew to expect higher quality service. So though both airlines have the same quality ranking, they differ in customer satisfaction because one exceeds its customer's expectations and one does not. The starting point to improving customer satisfaction then is to look at customer expectations.

Understanding customer expectation allows you to focus on cost affective delivery that exceeds expectation. There are four categories where a provider can make mistakes that increase the gap between customer expectations and perceptions:
  1. Management's perception of customer expectation is wrong
  2. The translation of management's perceptions into service quality specifications is flawed
  3. The way in which the organization is executing to the specifications is off
  4. Or external communications with the customer are wrong
I'll look more at these next.

Posted by Brian S Courtney at 6/12/2009 0 comments
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Thursday, June 4, 2009

An American working in an Indian company - Part 1

I've been in software now for 20 years. Over that time my views on outsourcing have really evolved. For the first few years, I was ambivalent; the issue was largely theoretical; I didn't know anyone using an outsource provider and I didn't know anyone whose job went offshore. Then in 1995, while at HP, I saw my first use of outsourcing. My initial reaction, like many, went from casual curiosity to visceral rejection; I did not like the idea that my profession could be commoditized. Little changed for me until in 2004, when I went back to school for an MBA at MIT. At MIT, they tell you that the experience will change you in ways you do not expect, and this was certainly one that I could not have predicted. While at school, I met more people from more countries than I had previously known in my entire life. The experience, the classes, and the one-on-one discussions made me question my views on globalization to the point that I chose to join an outsourcing company after graduation.

When I started, the CEO walked me through a presentation he had that talked about the cultural differences between Indians and Americans. The presentation was developed from the Indian perspective for Indians to understand Americans and I remember thinking how novel that was. It was like looking through someone else's eyes. I had to open my mind a bit to take it in and it has stuck with me ever since. Over the last 4 years, I've used his presentation as a reference to help better understanding the people I work with.

It turns out that the presentation was a summary of the work done by Geert Hofstede. The presentation I saw talked about four categories of cultural differences but I'll extend this to the five categories that Hofstede now uses. These include Power Distance, Individualism, Masculinity, Uncertainty Avoidance and Long Term Orientation. There is a lot to this, so I'll break it into a few posts and start with Power Distance.

Power Distance refers to the unequal distribution of power in society and how people feel about the inequality that it creates. The index is measured on a scale from 1 to 100 and India scored a 77 while the US scored a 40 highlighting a significant difference between the two societies. The caste system, strong paternalism, and the autocratic nature of the Indian society creates massive swings between the haves and the have-nots and it has for thousands of years.

My take on this is that the caste system provides a level playing field within a caste, and creates a natural division of labor between castes. Indian's perceive people of a different caste as inherently different and therefore support the notion that the inequality that the hierarchy creates is a good thing. When visiting India for the first time, I was surprised by the number of poor 'untouchables' living in squalor throughout the city. What amazed me more was when I learned that many of these people were servants, janitors, grounds crew and peons within companies like mine. By day they work in the office as unseen helpers and at night, they live in squalor. Most everyone in the office has a cook, a maid and potentially a driver, and these people are from the lowest (or below the lowest) caste. I can remember giving my left over Rupees to an old woman in front of the office who was sweeping the sidewalk. It couldn't have been more than $10. I was with a friend from the office and he looked bewildered and asked if I was trying to get her killed? I was surprised by how caring this guy could be in the office, and yet how little he could feel for this woman, but of course, he's lived there his whole life and this is the social norm. I was the one looking at it from a different view point.

Being raised in a hierarchical society also means that personal rank within the organization is very important. Seniority within the company and years of experience in your field really matter (think paternal). There is a natural assumption that you'll get more money and more recognition from tenure than contribution. The staff constantly compares their title and salary to their peers. They know where they rank on tenure and experience and they expect their salary and title to reflect this. To compensate for this you need to have a lot of titles. We had13 positions between a Fresher and a Vice President of Technology. Rewarding personal achievement in this kind of environment can be a real challenge. In the US you might give a raise to an employee for personal achievement. In India, when you do this, everyone finds out and you have to readjust all the salaries or face a mutiny for you've violated their cultural norm.

India is also very paternalistic; children are raised to be very obedient and to revere their parents. Talk to anyone from India and you can easily sense this when talking about their parents; they hold them in such high regard they can’t help but brag. Similarly, teachers are thought of very highly. Rather than focus on independent thought, they teach conformity; adherence to collective wisdom. These two factors really influence management within an Indian company. Managers act both autocratically and paternalistically. They feel it is their job to be the benevolent decision makers. They are responsible for the staff and therefore they will make the decisions for them. The staff, on the other hand, is very reluctant to disagree or challenge their supervisors. This creates real challenges. For example, I can remember seeing obvious mistakes in an important spreadsheet that was put together by a senior executive. Though the mistakes were innocent, they changed the results by an order of magnitude and the finance team never questioned them. They assumed the exec had more knowledge about the matter and therefore didn't think that they should question the numbers. The important takeaway here is that you really have to encourage the staff to think independently and to question and challenge leadership if they feel they could be wrong. You have to go out of your way to make sure people speak up for their natural tendency will be to remain quite.

Another side affect of the high esteem for teachers is that in India, being micromanagement is thought of in a positive way, rather than the negative way it is seen in the US. The one-on-one time is seen as a reward, like when a teacher spends extra time with the best students. The flip side of this is that without a strong sense of independent thought, and with a preference toward micromanagement, projects management and customer collaboration from the US have to rely on frequent communication and oversight; never worry about over communicating.

So the takeaways here should be that we are very different as a society in our tolerance for inequality. In the US we feel people are relatively equal and India they feel people are vastly different. In the US, managers look for support from their reports, and expect pushback from the staff when they are wrong. In India, managers are the decision makers and the staff is very reluctant to question them. Micromanagement in the US is seen as a negative and in India it is seen as a positive. To be successful, you can't assume your American viewpoint is correct, you have to assume it is simply different and accept the India culture. If you assume they will eventually conform to your ways, you'll be in for long, failed experience. If you try to understand that there are fundamental difference in our history and our upbringing, and you use this knowledge to collaborate, you'll find success.

I've seen a good reference to Geert Hofstede's work is at Clearly Cultural.

Posted by Brian S Courtney at 6/04/2009 7 comments
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