Given that there is a recession going on, I know because the news never lets us forget, the question I’d like to address today is how to continue to prosper during hard times? 

A few weeks ago I covered the issue of cutting costs, so there are only three other alternatives, get existing clients to buy more, get existing clients to spend more, or find new clients. 

I’m also making the assumption that operationally you are making sure that everyone that asks to buy is allowed to and that you have done the maths and you know which clients are most and least profitable. So what’s next?

The next stage is to enhance and/or design new products and services, but how? The exercise is called ‘finding out’, named so because it’s about finding out what matters to your customers and then designing your products, services and operations such that you can gain a competitive advantage in the market. And also, this is not restricted to the private sector it can be used by the public sector too. 

The whole process is shown in figure 1. below.

Figure 1. An overview of the finding out process.

The idea is to study all the point of transactions with you customer and find out what they what that you don’t offer or hate that you do. 

Let’s define points of transaction; this refers to any time a customer interacts with any part of your product or service. Let me give you an example. When I go to the gym there are quite a few different transaction points from the time that I enter the car park to the time I leave. On entering the car park the barrier has to raise (1), I have to park (2), I have to go through the doors (3), go through the turnstile at reception (4), open my locker (5), go to the loo (6), get on and use a CV machine (7), use weights (8), return to the dressing room and use the shower (9), buy a coffee (10), and use the internet (11). Note depending on the demand I place on the system, e.g., if I’m playing tennis or taking Matthew, my youngest, to the soft play, the points of transaction change. 

To understand all your points of transaction take a value demand and simply list all the different bits of the product and service that a client touches.

The next part in the system is to find out what is important to your customers when transacting with the system. So phone a few clients and go and see them. Simply ask the question when you have to do X, for example enter the car park, open your locker, what is important to you. Asking this question will give you a list of important factors, e.g. when I get to the barrier I want it to open first time, I want the turnstiles to work, I want all the machines in the gym to work.

Now go to the top of the list and ask “on a scale of 1-7, how important is this”, and having done that go back to the top of the list again and ask “on a scale of 1-7, how well are we doing?” See figure 2 below.

Figure 2, sample questionnaire design.

Three things will happen, 1. There will inevitably areas where you fall short, 2. There will be areas into which you are putting lots of effort that no-one cares about 3. You will get some amazing ideas to improve or create new stuff for clients.

But the secret of a well performing organisation is a system that is designed to align performance with what is important to the customer. 
If you plot your answers on a graph, it will probably look something like this:

Figure 3. This chart shows the relative importance vs. performance on a range of hypothetical items that might appear on a questionnaire.

Having identified the difference between what matters to customers and your performance the job of the leader is to bridge the gap

I first did this exercise with a client 10 years ago. I have to be honest in that the client’s service was already good so I wasn’t sure what we would find, but this method is also used as part of a wider analysis when designing a company strategy, which I was doing. But the results were astonishing.

The company in was a fireplace manufacturer. Their clients said that what was important to them was quick delivery in small batches, correct invoices, boxes that were easy to open, staples put into the box in certain way so that they weren’t sharp. They commented on how they wanted the designs to look, how and when to discount. In short the told the manufacturer how to re-invent their business, and they did just that. By doing so they turned around the company from a loss making situation into profit within 12 months.

So why don’t you give it a go? 

I can guarantee you one thing, if you do it, you will get more business and perceived service improvement, even if it’s just because you are out talking to customers about their favourite subject, them!

As usual let me know your thoughts, and if you want a full case study on how to do strategy let me know and I will write it. 

Regards

Stuart

This entry was posted on Monday, April 20th, 2009 at 2:40 pm and is filed under Public Sector, Measures, leadership, Creating Value, Uncategorized . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.