Bringing the Customer Back to Business Process Improvement: Interview with Steve Towers, CEO and Founder of the BP Group
Does your business create moments of magic or moments of misery for its customers? Do you even know whether it does or not? Process improvement has a crucial role to play in ensuring that your customers have a positive experience when interacting with your business, says Steve Towers, CEO and Founder of the BP Group.
In this PEX Network interview, a transcription of an interview done earlier this year, Towers elaborates on that role explaining the difference between a customer process and the customer experience, relates why focusing on the customer experience leads to competitive advantage and gives practical examples of companies that are achieving customer-focused innovation.
This interview has been edited for readability. To watch the original interview, please see "The Customer is the Process": Bringing the Customer Back to the Business".
PEX Network: Is there a difference between a "customer process" and a "customer experience"?
Steve Towers: A "customer process" tends to fit within a department within the boundaries of an organisation. A customer process is really looked at from the point of view of what is the aim of the department? For instance, in some organizations the focus of customer accounts or customer service are things such as how quickly can they clear down the accounts, how rapidly can they answer the telephone, what are their abandon rates? That means they’re not always focussed on creating successful outcomes for the end customer. When we’re thinking about the customer experience, we’re extending the scope of our thinking and our processes and aimed at delivering a Successful Customer Outcome.
PEX Network: How do we define the boundaries of where those processes start and end for a customer?
At a theoretical level the customer experience is everything you cause the customer to have to do. Clearly for most of us that’s beyond our brief because we live within departments or within divisions. For an individual inside an organization the customer experience starts at the boundaries of their department or their divisions. However, by looking at the customer experience as a process across divisions, we begin to redefine those boundaries. It comes back to that old idea that we had of knocking down the silo walls because as we extend ourselves out through the customer experience, we begin to see that there is more of the process that we need to control.
If you were an airline, for instance, you might actually start thinking well, where does the process start? Does it start when somebody buys a ticket and then does it end when they get their bags off the carousel? An outside-in organisation would say no, the customer experience actually starts when you’re thinking about the need for a trip and it only ends when you’re back at home having a cup of coffee - that’s the extent of the customer experience. Now, of course within that there’s a whole gambit of things for an airline in terms of getting to and from the airport such as getting the bags checked in - all the standard stuff – and then at the other end of the trip there’s getting back home again. That involves a number of logistics including making arrangements to actually travel from A to B. The outside-in organisations will look specifically at those processes and seek to get control of them, not in an autocratic way, but in a way that adds benefit to the customer and to the organisation.
PEX Network: Can you give us an example of a company that does this well?
I mentioned airlines and a terrific example is the sort of thing that Southwest Airlines are doing. Traditionally we would have thought of them as being in the business of flying aeroplanes. But that would be the classic inside-out way of thinking. In other words, it’s the "industrial age" thinking of a normal airline. However, Southwest decided that actually they were really in the business of moving people. Their processes start when people need to move and they only end when people are getting back home.
Let’s just take one component of that, for instance what a lot of us do is travel a lot, so we stay in hotels and typically one of the moments of truth we experience is when we’re checking out of the hotel. You might think what’s that got to do with an airline? Well, in Southwest’s thinking that has everything to do with the airline because as you check out, the usual questions – did you have anything from the minibar? Yes, just a couple of things, that sort of thing. As you check out and then the clerk says to you thanks very much, have a nice day, bye bye, what do you do with your bags for the day? Do you leave them with the concierge; do you take them with you to your place of business and then collect them in the evening for the airport? Either way it’s inconvenient.
Southwest decided to fix that "moment of truth". In collaboration with a hotel chain – in this instance Marriott – as a customer checks out from the hotel they’ll actually let them check in for their evening flight. From a customer’s point of view it’s fantastic because they can now arrive at the airport, ticket in pocket with no need to join the longest queue in the airport - which is now always the fast bag drop queue. Instead they can go straight through security.
It’s even better for Southwest because it significantly reduces the cost and improves the service. How does it do this? Well, a big component of cost in the airline industry is processing bags. Also, we all know as customers of airlines, that airlines often lose bags. Southwest have got the best record for non-bag loss in the US. How do they do that? Quite simply, if you’ve checked in for your flight as you’re checking out of the hotel, they come and collect the bags from the hotel, get them into the airport service way earlier than anybody else, so that the bags are all ready for loading on the aeroplane way before anybody else so they don’t get lost on the carousel, they don’t get lost on the conveyor belts, they’re actually ready for boarding the aeroplane. In doing that Southwest have reduced the cost of baggage handling because they can negotiate a rate with the airports to pay a lower cost because they get the bags at a quiet time. Costs come down and service improves, and, ultimately, if you and I are making a choice on whether to fly Southwest and which hotel to stay in, we are likely to choose an option where know we can check our bags in.
All this produces revenue and wins that fabled triple crown – reducing costs, growing revenues and enhancing service simultaneously.
PEX Network: How do you get started?
The point of thinking about the customer experience is that you might feel that it’s got massive scope and it’s too far for us to go too quickly. But if you start with the area for which you’re responsible, the projects you’re working on, the departments, the divisions that are managed, you can actually define very clearly who is your customer. So, in the first instance, it’s more than likely going to be an internal customer. Have you clearly identified who that is? And most of us say, oh yes, of course we have, we know we deliver… but have you actually figured out what the measures of success around a successful customer outcome look like?
For example, frequently we’ll go and ask our internal customers what they you want. If we’re in IT, for instance, we’ll then go and build a system, we’ve signed off the business requirements, having signed it then we deliver it. The customer then says it’s okay, but it’s not really what I needed. The point there is that if you start thinking of the customer experience and you start thinking of it in that context, if you clearly define what the successful customer outcome looks like, you can attach metrics to it. The discovery there - and it goes back to the observation that Henry Ford once made, which is if we go and ask customers what they wanted, they would have said faster horses. We have a responsibility in terms of owning the customer experience to actually define the customer need, even when the customer doesn’t know that themselves. So you would start within your department, within your division, within your organisation, who is the customer and what is their successful customer outcome?
PEX Network: How do you make sure you're focusing on the "right" customer?
The question about whether you’re focussing on the right customer or not is a very important one. Sometimes companies will say that it’s obvious, that they just have to process the customers they’ve got and that’s not always the case. Even if you’re in a public sector organisation – say you’re the IRS or some such service - you have a choice about how you process customers and it’s not the same for everybody. That’s the first thing to notice about categorisation, and I draw a distinction though when I say categorising customers as opposed to segmenting them. Segmenting them is an inside-out view of a marketing way that we go out to our market.
Categorisation is really asking what are the categories of customer that we want to do business with? For organisations that can make that choice, you can very deliberately target certain categories of customer - you don’t have to treat everybody in the same way. There are good examples of organisations that have done precisely that such as Apple and Google. There are some, for instance, who would say that they don’t like Apple because it locks you into iTunes, and so on. Those people don’t fall within the category of customer that Apple is pitching to. By definition your experience isn’t going to be one that is as satisfactory as somebody who actually fits in within their target profile. Again, going back to the departmental level, who is the customer, what is their Successful Customer Outcome (SCO), and is everything we’re doing within our department, within our division, contributing to that success? If it isn’t, it is potentially something you can stop doing it.
PEX Network: How do you make sure that everyone understands the importance of the customer?
The challenge of getting everybody to think about the customer experience and the process is an interesting one because if you come from a dynamic of inside-out where we’ve rewarded people for effectively turning up and acquiring skills and competencies, that’s not necessarily aligned with the successful customer outcome. For Outside-In companies that have taken that step, they’ve reached a level of maturity that says how do we truly reward people for achieving the SCO and how do we link the success of what they’re doing at a day-to-day level with that success? That will, by definition, potentially change the reward structures.
The development of an SCO map, for instance, includes the development of some key performance indicators, which are measures of process success. I don’t mean traditional measures of process success such as lapsed time, touch time, and things like that. What I’m talking about is whether we are truly delivering what the customer needs. In the interactions you have with your customer, are they moments of magic or are they moments of misery? We want to eradicate the moments of misery. In doing that, the process itself becomes much leaner, becomes much tighter and becomes much more focussed. The reward structure must change to represent that mechanism.
Steve Tower's e-book Outside-In: The Secret of the 21st Century Leading Companies is now available for FREE download on PEXNetwork.com.