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June 1999 Volume 1.01
The Internal External
Mismatch
When internal service metrics
don't line up with customer view
When Managers first receive the results from Customer Value Added
research they often get quite a surprise. They learn for the first
time that customers consider a service process to be fair, while
their internal service metrics have been telling them it is working
at 95% of the delivery target. While the first reaction is often
to question the validity of the customer research, further investigation
usually shows that what the customer is saying is correct. How could
this be?
Computer company case study.
Consider the case of a company that manufactures and sells computers
directly off a web site. A person considering purchase of a computer
from this company would want to know how long it would take to receive
it from the time the order is placed. In the web page for the company's
online store it provide information about what it calls "lead
times":
* Lead-time is dependent on the availability of parts.
* When parts are available lead times are 1-2 weeks.
* No lead-time can be guaranteed.
* When your order is confirmed the sales rep will communicate an
estimated lead-time.
* Lead times do not include the time your order is in transit
after it has been shipped for delivery.
Note that the statements are all phrased from the
company's viewpoint. The customer is not buying a computer; instead
they are ordering a computer. There is no guarantee given of being
able to deliver a computer in a specific time period. Lead-time,
a supply chain term, is used to describe the time a customer waits
for the computer to be manufactured. And lead-time is measured from
when an order is confirmed until the time it is available for shipping.
So after this company has checked to see if it has all the parts
to build your computer it gives an indication, not a promise, of
how long it will take to screw the parts together, test the computer,
then pack it for shipping. As it knows the answer in advance the
company should be able to easily achieve this 95% of the time.
But how does this line up with what the customer wants?
Most customers are not interested in how long the internal processes
of a company take to process their order. What they are interested
in is how long it takes from when they place first their order until
when the computer arrives at their door as shown on the following
diagram:
Customers want to know what the Total Cycle Time is, rather than
the lead-time. The questions to ask are:
When the process starts for the customer?
When does the process end for the customer?
Rodger Gallagher
Notre Dame Marketing Research Conference
13-18 June 1999
The 19th Annual American Marketing Association School of Marketing
Research Conference in Notre Dame hosted by the AMA with a Customer
Value Management workshop by Ray Kordupleski.
Focuses on helping senior executives define measure and improve
key business processes to create a sustainable competitive advantage
in their markets through the creation of customer value.
For further information contact:
Carl Mela and Joe Urbany or Clara Nelson
Faculty of Marketing American Marketing Association
University of Notre Dame E-mail cnelson@ama.org
Co-Directors, School of Marketing Research
Fax +1(312) 542 9001
"We are not competing
with supermarkets"
It was a meeting of the Continental Wine Club. Using the party plan
type of selling, the club sells wines by inviting people to wine
tastings held in up-market hotels.
We had just tasted a selection of some very interesting German wines.
These were not top quality German wines with a mit pradikat classification
but experimental wines of fair to good quality. Some were made from
the experimental European grape varieties that the Germans have
been developing and growing for some time, while others were new
styles. One of these was a light slightly sweet red from the Rheinhessen.
Just the thing to chill and quaff on a hot sunny afternoon.
At the end of the tasting the time came to learn the
prices of the wines and to see which ones we were interested in.
I pointed out to our host that the prices seemed excessive. It was
then that I was told, "We are not competing with supermarkets".
Certainly these wines were not the type you would find in most supermarkets,
but this does not mean that they are not competing with them.
Customers make their decision on buying based on the
value of the wine to them. A desire for new or unusual types of
wines, and the fun of a wine tasting are only two of the criteria
people weigh up when they decide on buying a bottle of wine. A supermarket
can compete on other criteria. In any business it is important to
always acknowledge the full set of competitors, not just the direct
ones.
Regards,
Rodger Gallagher
The Mission for Your Customers
Continues...
6.0 Publish Results------->
To cover this step, two articles are required. This article focuses
on the first of two parts; designing standard formats and managing
the distribution list.
"Sorry, but I have not had a chance to review the report. Can
you give me an idea of what is in it?" This feedback speaks
volumes when key managers do not make the time to study the customer
results. Just as questionnaires are designed to make it easy for
the respondent to participate, the format of the report should be
straightforward for the key managers to review. It must communicate
the results well and focus on the decisions that need to be made.
Create a standard design for your reports. A variety of formats
is recommended as while some people relate best to data in spreadsheets,
other find graphs or text more understandable. Within the report,
a standard legend and consistent terms assist the reader to quickly
find and digest the information. The reported data should be formatted
so a reader can link the numbers to the data obtained from the survey
process by printing the question numbers and a summary of the question
next to the data. When the research is repeated over a number of
waves, the reports should also show trends over time.
Who will review the results? When developing this list, you should
include all of the company executives and managers who make decisions
which influence how the customer perceives the company's quality
and price offerings. The key decision makers of the company's advertising
and sponsorship also need to be briefed on the results.
In designing the reports, consider two types of reports because
of the amount of information and detail. The first is an in-depth
document and the second is a summary of top line results that could
be shared with various departments and levels within your company.
The CVA reports should focus on the appropriate levels of information
for each audience. Emphasis on the overall company scores or on
a division or business unit in a specific report should be decided
according to the target audience for the report.
Establish a schedule that can be followed to publish the information,
and update the distribution list regularly. If people are reading
the report and using the information for their decisions, the report
must be timely.
As recommended in an earlier article, consider releasing the information
at the same time and with a similar format as the key financial
information. If the CVA results have a wider target audience, then
consider the different ways you can make selected customer information
available:
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The company's intranet
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A newsy e-mail
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The internal company newsletter
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A CVA report card accompanied by a covering letter from the
Chief Executive
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A section in a standard weekly or monthly report
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A one page customer report included in the employee pay notices
or advice slips
Publishing the results effectively means that more is required
than a short distribution list and a 'simple click' to send via
e-mail. A comprehensive communication plan is needed to ensure that
the information gets to the people who need it and is understood
by them.
The second step will cover how to get executive involvement and
a thorough review when publishing the results.
Watch the next CVM Update for information on the second part of
Step 6 on How to Publish Results.
Susan Moore
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Next Step -
Step 6.0
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