A few years ago, a motor insurer invested heavily in making improvements for its customers by reducing the time it took to send customers their insurance cover notes. Executives were highly pleased when the time was reduced from 15 to fewer than 7 days.
Imagine their dismay when this improvement did not lead to the business results they wanted; in fact, exactly the opposite. Customers suddenly become hugely dissatisfied, complaints shot up and the call centre was swamped with calls from angry customers. What had gone wrong?
It transpired that the secondary effect of their focus on speed was a massive increase in cover note inaccuracies. Executives had effectively invested in driving something that customers did not care about very much (speed) at the expense of something which customers did care about (accuracy).
Their blind spot was driven by their internal perceptions of what was most important to the customer, because they simply hadn’t asked the customer themselves.
Before you can decide what you need to improve, you must first ask your customer
At about the same time, the CEO of a chain of 70 four-star hotels across Europe knew that he had to improve his static business performance.
The traditional guest satisfaction feedback method that they had used for years had never provided much useful insight, so he brought in expert help. They started by identifying guests’ expectations and then measured the guests’ actual hotel experience against those expectations.
The biggest gaps between perceived performance and expectations were in the effectiveness of twelve key processes such as the check-in process and the room service process. The data showed how each hotel performed. That captured the 70 General Managers’ full attention as the CEO compared the research results with each property’s business performance.
Using the data, he gained agreement from the 70 general managers to focus on reducing errors, rework and waste in the twelve processes and for dedicated training for selected people in every hotel. He set up a task force to educate 3000 staff in techniques for service process improvement. The training, initially rolled out by an external provider, focused on one key process in each of twelve hotels and then transferred to the managers of the remaining fifty-eight hotels who delivered the training to their own people.
It was a large undertaking, but the approach and the focus was practical and done in the sure knowledge that it addressed the exact areas that were pinpointed by the customer as needing improvement.
The results: Total savings were estimated at $58 million in one year. Total cost for the initiative was less than $5 million. Of course, the savings were repeated year after year and prompted the CEO to reinvest the money saved into other improvements in the facilities, the product and the people skills at every hotel.
Guest feedback and hotel results showed that he had affected a remarkable turnaround.
At the end of the two years the delighted CEO said: “If I had known what this project would do for our teamwork I would’ve done it for that reason alone.”
And all because their customers were asked what to improve first.