Friday, October 29, 2010

Repost: Just Trying to Keep My Customers Satisfied

Originally published Jan 18, 2007:

I feel like a total monkey when I walk into Starbucks; that is, since I read Breaking the Trade-Off Between Efficiency and Service by Francis X. Frei in the November 2006 edition of The Harvard Business Review. The article is about how service businesses struggle with the impact customers have on their daily operations: the fact that customers interfere with the smooth running of their operations. Who hasn’t heard someone in the service business lament "…if it wasn’t for the customers this business would work perfectly."

Service business by definition rely on customer interaction. The problem is that this interaction is often unmanaged and unmanageable by the service provider. The impact of this is often seen in inconsistent service and the not insignificant task of service providers is to be able to deliver a consistent level of service despite the level of interruption by the customer.

Frei goes on to discuss five types of customer variability;

  • Arrival - you can’t always anticipate when customers will show up
  • Request - sometimes they want it their way
  • Capability - perhaps the customer knows a lot and sometimes they are clueless which is especially relevant if they play an active role in the process
  • Effort – the customer may be more or less willing to participate in the process
  • Subjective Preference – Is the customer happy with hand-holding or embarrassed by it?

In managing the variability, the manager faces a choice of accommodating the variability or attempting to reduce it. This is a trade off that could bankrupt the organization if it goes to extremes in either direction. Offer no flexibility and customers leave; offer too much and it costs too much. The actual solution is more nuanced and Frei discusses a number of options and companies which have been able to maintain expected service levels without going broke.

Which is where the Starbucks reference is relevant.

I sometimes get a ‘bar’ drink at Starbucks rather than a regular coffee. As I stand in line I find myself reciting the proper syntax so that when I get to the counter I don’t embarrass myself by getting the order wrong. (The Economist recently recited a Starbucks bar drink order in an article, got it wrong and it was corrected in a letter to the editor – which they dutifully printed). Mine is a Grande, 2% Extra Hot, Whip, Hot Chocolate. Starbucks do this by design. If you notice the Starbucks employees call out the drinks each time, and this is to teach you the customer to remember it so you can get it right next time and reduce the variability, speed up the line and not embarrass yourself.

This article was given to me in relation to some consulting work I was doing, but it is interesting reading for anyone involved in the service business who needs to ensure a consistent cost effective customer experience.

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