As organizations seek to improve the quality of their service, they need to set standards for performance. When I worked for Citicorp, our mortgage company increased market share and customer satisfaction by guaranteeing to make credit decisions on loans in three weeks. At the time, a typical home mortgage took six to eight weeks to be approved. In order to successfully compete on the speed of their process, Citicorp had to establish and consistently meet a clearly defined standard.
Your own business may need to set formal standards to ensure that you consistently deliver a desired level of service. Examples of performance indicators, for which standards might be set, include: waiting time, time placed on hold, number of rings to answer the phone, and the number of iterations to solve a problem. Whatever standards you set, they must be based on what customers need. Surveys are a good way to gauge customer need.
One approach I recommend consists of asking customers three questions, each pertinent to a particular goal your organization might want to achieve. The questions are as follows:
- What level of performance do you, the customer, consider to be “excellent,” or best of class? (This is answered in an appropriate unit, such as seconds, hours, # iterations, frequency, etc.)
- What level do you consider to be “satisfactory,” so that it just meets your expectations?
- What level do you consider to be the “maximum acceptable,” so that you would consider using a different company if your current provider does worse?
The figure above illustrates the output of an analysis based on this kind of customer feedback. It produces a series of curves showing the impact of any given standard on customer perception. Depending on your current position and strategy, your firm may decide to minimize intolerable service, satisfy the majority of customers, or strive to be “best of class.”
This analysis typically reveals thresholds for which major changes in customer perception occur. Customers may not notice when your performance passes a threshold (e.g., the difference between waiting 59 seconds and 1 minute,) but knowing time thresholds can be critical in communicating performance. For example, guaranteeing a pizza delivery in 25 minutes could mean a lot more than 30 minutes.
In addition to asking these three questions, other survey based information can be useful to assist in setting standards, including:
- What do customers perceive as the level of performance of your firm and competitors? Some information may be captured by internal process (e.g., usage reports provided by the phone system.) Yet, it is useful to ask about “perceived” performance in a survey to account for “gauging issues.” As a simple example, the number of rings the customer hears when calling is different from the number that are heard by employees.
- How important is the standard to the customer? Often, companies focus too much on standards that are useless or even counter to customer needs. A classic example is to attempt to speed up the time spent with a customer. Not everyone wants a rushed meal, a fast hair cut, or an incomplete credit application.
- What other standards would you, the customer, recommend? For example, a company may be concerned with speeding up a process, while the customer may be equally concerned with meeting promised deadlines.
- Is the standard being measured in a relevant manner? For example, you may be measuring performance in days, but a customer may feel it should be tracked in hours (this type of response will emerge when customers feel that company is not taking advantage of technology.)
The approach described here focuses primarily on measures that can be quantified. You may discover that much of what customers desire can be defined only in terms of “soft standards,” which are attitudinal in nature. In one study, it was found that customers cared about helpful, responsive employees as well as the speed of processes. One reason customers cared about this was that the front-line employees were counted on to take charge when carefully planned processes failed.
A final suggestion is to measure customer expectations again, and again, and again, because you will always be pursuing a moving target. A case in point is the mortgage example presented earlier. When first introduced, “three week” turnaround was unusual and impressive. In today’s market, “fast track” mortgages are more readily available. This forces Citicorp and its competitors to become increasingly faster, and to concentrate on different processes to stay competitive.