Customer Experience Comes From Focus--Here Is One Company That Is Headed For Problems

Here is a customer service effort that is doomed to fail. Here is the project's obituary.
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I was performing a competitive analysis recently on a large mutual insurance company, and came across these paragraphs in its 2009 annual report:

CREATING AN EVEN MORE CUSTOMER-FOCUSED ENTERPRISE

For many of our customers, “service” and “ease of doing business” have become key differentiators and qualities they’ve come to expect in a business relationship. During the past year, we conducted a frank assessment of how (the Company) stacked up in delivering these qualities and concluded that we can do better.

As a result, we implemented a company-wide Operational Excellence Program aimed at assuring that we achieve continuous improvement across the enterprise to enhance service and ease of doing business, while also empowering employees and eliminating wasteful activities.

Our goal is to provide the best possible experience for our customers and to operate as efficiently as possible so that we can provide the highest quality product at the lowest possible price and pass the efficiencies to our policyholders in the form of dividends.

The initial paragraph, written by the company's chairman, speaks about how the firm must strengthen its customer focus in order to maintain competitiveness. It appears that analysis shows it has fallen behind.

The problem begins in the second paragraph when the company's customer service focus begins to smell a bit like a productivity mission. I have observed many "Operational Excellence Programs" and none of them have been centered around improving the customer experience. By the end of the sentence we are introduced to the dual nature of the program--improve service and eliminate waste.

The last paragraph completely muddles the mission by stating that the goal is to provide the "highest quality product for the lowest possible price." And then to pass the financial rewards of all of this new-found efficiency onto policyholders in the form of dividends. Sigh.....

What began as a focused mission to improve customer service instead became an unfocused mess of enhancing products, eliminating waste, and, oh yes, improving service. Since the savings from this program will be passed onto policyholders, there is no question that victory will be declared as costs are slashed, and that customer satisfaction will remain at competitive disadvantage.

My View

This effort will undoubtedly fail. It is doomed from the start. The reason: a lack of focused commitment.

I have written before about a company's need to decide how it will compete, and then fully commit to that course. It is about a "full-body" effort to be the best at some aspect of its competitive landscape, and then to take advantage of that leadership to grow and profit.

It is clear that this Insurance Company is concerned that it is falling behind in its Customer Service standing. Is this bad? Only if the company is competing against other insurance companies on the basis of Service Excellence.

But what is also implied is that the company has cost concerns. Is this bad? It is, again, if the Insurance Company competes based on price and cost. Given the price wars going on in the insurance marketplace, this could be a big concern.

I am the first to believe that improving Customer Service should lead to lower overall costs over time. But to a company to want to be a competitive leader in service, cost leadership should not be the focus.

Even calling your Service Improvement Project an "Operational Excellence Program" is so internally focused that it is laughable. The project should be named "The Customer-Is-The-Center-Of-Our-Life Way of Doing Business."

Instead, the strategy should be to delight your customers so they stay at higher premiums and bring in more customers through unsolicited referenceability. It is not a short-term project that will yield efficiencies that will be available to pay out as dividends. It should be a revamping of the way of doing business. If there are any wasteful practices discovered, the funds should be reinvested in enhancing the service infrastructure to develop differentiable and lasting service leadership. Only when the business effort is successful should policyholders be paid.

That is, if the company really even cares to improve its service. My suspicion is that this is a cost cutting effort in the guise of customer service. I will be watching this company now from a different perspective.