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Saturday, January 30, 2010

To improve service, don’t play the percentages.

Many B2B and B2C companies market their service delivery rate – fulfillment, up-time or on-time percentages – as an indicator of how reliably they perform.

These external claims usually reflect internal service quality metrics, independent of whether they are important to consumers or not. But while helpful for internal comparisons that lead to incremental improvement, these metrics provide a false sense of security about service quality and may actually impede true improvement.

Consider the following:

99.5% up time sounds great. Even at 95% fulfillment success on your core promise, you feel pretty good about things, right? But if your business had 100,000 customer interactions, service encounters or “moments of truth” yesterday and your delivery rate was that “A” letter grade of 95% - you’ve failed to deliver on your promise to 5,000 people.

5,000 times some level of disappointment yesterday. And, if your service is consistent, you know today that you’ll fail for 5,000 more people tomorrow.

Take that pure failure number in your core operation and add the performance in the interactions you have with customers in your customer service channel and at the point of sale. Take that number and apply it over the week. The month. The year. How many customers, as a percentage, had a defect-free year in dealing with your services? And that’s just basics – your satisfaction core. It doesn't consider any effort or need to provide customer delight.

To create a sense of urgency around improvement, report the failures in real numbers at the time you report your service performance.

Would that focus managers on finding root causes of defects in the core offering? Focus the service operation on fundamental change rather than incremental improvement? Focus marketing on finding the right customers and promoting them while finding the wrong customers and managing them out of your business?

The false sense of security that the percentages provide is the reason a vast majority of companies feel they provide outstanding service, while an equivalent number of consumers feel that service performance is low.

Percentages are important, but appreciate the personalized perspective, that measuring your success and failure in pure numbers provides you business, and the subsequent urgency it creates.


Barry Dalton said...

Here's a real stat in support of your dead-on point. FedEx averages 99% delivery success rate. At their daily volume, that 1% failure equals 65,000 packages that did not get delivered as promised. To Fred Smith, the company's rock star CEO, that is entirely unacceptable. He certainly doesn't report that number with pride.

Chris Reaburn said...

Great example - FedEx is one of the few companies I've seen that reports their service failures in real numbers.

When your brand is built on "absolutely, positively has to get there..." 65,000 failures / day is a number that drives action.