Improving Processes in the Service Sector – Going Beyond Efficiency and Quality Uplift

Traditionally, efforts around improving processes in the service sector have had at their core the end goal of reducing operational expenses while maintaining or improving service quality, focused on driving efficiency in certain day to day business activities. Such redesign efforts, however, must take several other factors into account, factors which are quite often ignored at the ultimate expense of the customer.

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Google the term “process improvement,” and you’ll get over 2.5 million results. No wonder, as this concept, which has taken on variations in the form of TQM, Six Sigma, BPI, and BPR, among others, is one of the most commonly known and practiced in business. Originating primarily in the manufacturing era, process improvement has become a staple in the service industry as well, particularly over the past two decades.

At its core, process improvement efforts have traditionally focused on identifying opportunities within the business for improving efficiency and driving up quality, with both objectives often pursued hand-in-hand. In the more monopolistic environment of the past, companies in the service sector did little to address their broken processes – the reason being there was little reason to do so. If a customer was irate because his telecom operator took two weeks to get his home telephone line repaired, there weren’t alternative operators he could switch his business to. With no risk of losing customers, few companies were striving for having lean and mean operations in place.

Thankfully, with the proliferation of competition in most sectors and countries over the past several decades, service-oriented companies have been forced to make significant strides in their processes. Competition has played the single most important role in ensuring consumers receive a better overall level of service today.

That said, we believe companies still come up short in certain ways when it comes to process improvement efforts. As it stands, the focus around such efforts is almost completely on efficiency and quality. Not to say that these factors should not be at the core of process improvement projects, but there are others that can also provide bottom line impact to those companies bothering to address them.

We recommend service sector companies undertaking process improvement efforts address the following five factors during the project:

1. Channel Alignment – As the number of channels that customers can interact through has significantly increased (i.e. applying for a line of credit via SMS, lodging a complaint through Twitter, etc.), so too has the variation in the overall level of service provided. Whatever the level of quality and service provided through one channel is in a given company, so too should the rest be (or at the least, expectations set).

This means ensuring that the processes in place around alternative channels (and their relevant measures, KPIs, and targets) are airtight, monitored, and audited, so as not to drive high variations across channels in terms of overall level of service. If, for example, a customer’s application for a loan submitted in a branch is completed in four hours with the customer receiving a call back in regards to approval / rejection within six hours, then so too should the customer be treated the same if he or she applies through the company’s website.

Moreover, customer expectations should be clearly set at a minimum, so as not to disappoint them when their own expectations are not met when using one channel vs. another. If, as another example, a customer is used to having their phone reactivated immediately when they pay an outstanding bill in a dealer, so too will he or she expect the same to happen if he or she makes the payment via an EFT bank transfer. If the process does not support the same level of service being provided, and thus, having an expectation met, then it should be made clear upfront to the customer.

This variation across channels also rears its ugly head around the quality of work conducted by employees. Applications received through one channel, for example, result in the application fields being filled 90% completely, whereas those through another channel result in 50%, let’s say. Such a problem is directly the result of processes not being adapted to meet the difference naturally inherent in channels, requiring each and every process to be examined for flaws that need to be addressed.

2. High-Net Worth Customer Process Alterations – In one engagement, we found that a customer in the top 1% tier of the company we worked with was worth 16 times that of a customer in the bottom 50% tier, on an annualized basis. This begs the question – shouldn’t then marketing / customer care budgets be allocated accordingly?

Almost all companies are aware of the strategic and financial importance of such customers, but only some actually go out of their way to ensure their retention. We believe the alteration of processes to better serve high-net worth customers is one such way this all-important segment can be pampered.

How? First, in terms of addressing / processing requests, such customers should be serviced first and foremost. This means getting them to the front of the bank queues with a lobby management system, routing them to the top of the wait queue when they call the contact center based on recognizing their number, providing them a separate teller or checkout line, and handling all their applications and paperwork in a prioritized manner in the back office based on their customer ID and relevant value segment, regardless of the channel of origination (web application, in person application, SMS application, etc.).

Second, the quality of service provided to such customers must also be higher, so processes must be put in place to ensure only the most experienced and qualified employees touch them, so to speak. Again, this goes for all channels, and requires addressing non-standard methods of providing segmented customer service (i.e. dedicated call center agent or branch account manager). So if a company offers a chat pop-up window on their website, then the most qualified employees should be on one end when a high value customer chooses to use such a service. If an extremely valuable and loyal customer’s car is brought in for service, it should be given to the top mechanic. If an outbound sales pitch is to be made, it should be done by the very best agents. Every opportunity to offer a differentiated level of service should be examined via diving into all customer-related processes, as the value of high-net worth customers cannot be overstated.

3. Sporadic Activity / Event Process Gaps Identification – A bank we recently worked for launched a new branch in a very strategic part of the city, within 1 kilometer of another branch that practically had queues out the door from opening to closing. For several months the new branch failed to pick up new clientele or experience much traffic, while the problematic branch’s lines continued unabated. The key reason? Customers were not made aware of the new alternative – no SMS, no email, no phone call – nothing that would make them realize such a wonderful queue free alternative was available just 1 kilometer away. Rather, the bank relied on simply posting the new branch’s address on its website, and on hoping customers would just walk on by.

So while the bank does a great job sending SMS’ regarding new campaigns to its client base, it failed to do the same in this case to alert customers living or working near the new branch of the opening. The reason behind this is the concept of a process gap, whereby non-traditional activities, occurrences, and events fail to have documented processes in place for them, and rather, are managed on an ad-hoc basis.

Two other examples of sporadic yet significant / disruptive events or occurrences that affect customers include channel continuity / availability issues (i.e. shop or branch relocation, or temporary closure for redesign reasons, so as to avoid having the customer find out only once they get there), and service delays (i.e. how many airlines send a friendly SMS to tell passengers to hold off coming to the airport?).

We believe all such types of sporadic activities and events must be reviewed by companies to ensure that processes are defined for them, and address all aspects of the activity. In the case of our client and their branch launch, there clearly existed a process gap around communicating with the customer base. As such, a significant opportunity to shift traffic and satisfy thousands of customers for several months was lost.

4. Exceptional Processes – Similar in concept to sporadic occurrences and disruptions, exceptional processes are meant to address small segments of customers that can often go overlooked; moreover, they are meant to address exceptional events in such customers’ lives. Companies can quite often fail to address such events, leading to significant client dissatisfaction (as these exceptional events often are when customers may most be in need of service).

These events may be different sector-by-sector, but the following examples can give an idea as to their types – every company would need to consider their own set of exceptional events, and accordingly, design exceptional processes:

  • A customer losing his or her cell phone when abroad, in urgent need of a replacement, contacting their operator to be told there is no process in place to address the issue.
  • An elderly bed-ridden client being told to come to a branch to sign a given document when clearly they can’t, with no process again available to address this situation.
  • A hotel kicking out guests whose tour agency has gone bust during their stay, with no procedures in place for addressing such an exceptional issue, no alternate arrangements on standby with another hotel.

Each and every one of the situations listed above can easily result in losing the customer permanently, and can even generate significant bad PR (aside from the given negative word-of-mouth). Companies need to consider all the possible exceptional events that can occur in their customer bases’ lifecycle and design processes to address them effectively. Failure to do so not only leaves a company’s employees in a confusing and difficult situation when they face such an exceptional event, but also means significant dissatisfaction for affected customers as well.

One final note – any process change effort must be done in phases in terms of rollout. Process improvements bring a shock to the system in terms of change for an employee. Resistance to major changes will be significant, and thus, process change efforts can fail under the weight of it. Gradual modifications to processes over time can help alleviate this common problem, as employees will be able to accept them in doses rather than all at once.

To learn more about redesigning processes, please contact


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