5 Things the Harvard Business School doesn't understand about quality, but you should

Friday, September 1, 2017

AME Author, Founder, Profit and the 5-Step P.R.O.F.I+T Plan

You already know how powerful a tool lean can be but if your customer service team is still busy solving problems all day long, you’ll love these five less-common insights for improving quality, with actionable ideas and complimentary resources that will create more value for your customers and put more profit on your bottom line by eliminating the costs that simply shouldn’t even be there.

How would your market react if they simply found every aspect of doing business with your company so easy and so enjoyable, in ways that they can’t quite put their finger on, that you became the gold standard against which all others are measured? What impact would it have on your culture if all the time your customer service group currently spends fixing things that have gone wrong was instead redirected to value-add activities? What would be possible for your business if you eliminated all the costs of fixing self-inflicted wounds by getting it right the first time? This three-part video training series shows how.

How to maximize the complete quality equation

Harvard Business School grads are taught to maximize short term shareholder value, rather than to focus on creating the customer value that drives longer-term, sustainable shareholder value. As a result, most companies focus narrowly on the functional quality of their product, instead of taking a comprehensive approach to quality by leveraging the hidden factor in the quality equation: experiential quality (EQ).

Perceived quality = functional quality + experiential quality

Research shows that the five categories of service issues below are responsible for 80 percent of the quality issues that drive unnecessary costs-to-serve. When you improve these five areas you’ll strengthen you reputation for quality and see impact in every area of your business:

  1.     Reliability
  2.     Assurance
  3.     Tangibles
  4.     Empathy
  5.     Responsiveness

Create your own learn-by-doing case study

In your next management meeting, ask each person to “briefly” share a recent and unpleasant business or personal service issue they’ve experienced as a customer. When you’ve completed the round robin, use the 5-point list above to find out which of the experiential aspects were handled well or missing. Raising awareness is the first step in tackling experiential value that may be missing in your firm’s customer service interactions. Ask yourself which of these experiential quality problems were layered on top of the original functional quality issue:

  •     Long wait times on hold.
  •     Needing to repeat the issue over and over again as it’s escalated.
  •     Too much elapsed time before a solution is found.
  •     The need to constantly follow up.
  •     A resolution that’s incomplete or simply doesn’t feel right.

Next, explore a recently-escalated issue in your own firm – what missing elements would have enabled that issue to have been resolved for the customer on first contact? This is part of the work that we do in ProfitU™, where we explore every touchpoint experienced by your customers, and ensure that they’re as friction-free as possible using the checklist above. That’s what makes you the gold standard in your industry, beyond just the quality of your product.

Why should you care

It’s estimated that executives spend up to 20 percent of their time dealing with escalated service issues. And that embeds a ton of hidden cost into your system that just shouldn’t be there:

  1.     Executive time is one of the scarcest commodities – should it really be spent on solving escalated issues? Or should it be spent solving the kinds of business problems your customers are wrestling with that creates  opportunities to introduce new products and services and gain competitive advantage. What is lost opportunity costing you?
  2.     Customer service staff time is also a scarce commodity – and the more time they’re spending resolving issues, the more staff you need to hire, and the less time they’re creating customer value that keeps customers coming back for more. What is excess staffing costing you?
  3.     Customers will always seek out the path of least resistance. If you’re not it, they’ll go shopping elsewhere. What is lost loyalty and customer turnover costing you?
  •     Every time a customer has a functional quality problem, it triggers the logical left brain to start looking for alternatives and drives needless cost into your business to make it right.
  •     Every time a customer has an experiential quality problem, you damage your brand and trigger their emotional and intuitive decision making triggers in their right brain to start looking at alternatives.

The good news is that each of the five factors that put cost into your business are self-inflicted wounds — areas where a failure by the company has caused the problem – and that means it’s within your control to take action! 

Your takeaway

People know that things go wrong. But when you get the customer experience right, they’ll overlook almost any product or service issue, and shut down the “looking for alternatives” brain triggers. You’ll enhance your reputation for quality, become the gold standard, and reduce costs to serve which frees up more time and improves profits.

Taking action to dramatically improve your overall perceived quality might seem like a “nice to do someday,” but who’s got time for that? You do, if you have time for e-mail every day. The typical business person spends a minimum of 90 minutes every day in email. Spend just 90 minutes once a week to improve quality issues, and you’ll see impact.  ProfitU™ provides all the step-by-step “hows” if you know you don’t have the discipline and knowledge to implement this on your own.

Meet me in Boston?  I’m speaking at the Association for Manufacturing Excellence Conference in October…an amazing conference full of how-to’s for anyone who wants their manufacturing operation to thrive.