Bad process costs companies big money. But until recently, business as a whole paid little heed to process improvement outside manufacturing. And the business community might still be ignoring front office process had CRM not arrived on the scene, with needs for front office process redesign that couldn’t be ignored (okay, sometimes they were ignored, but some companies aren’t too bright). But let’s not celebrate yet. Business may not be ignoring front office process these days, but it’s not paying all that much attention, either.
So, I thought reeling off a few common front office process gaffes we encounter and their costs might help create more focus out front—particularly on the B2B side where we do lots of our work.
1. Three-level customer service systems: Microsoft, Intuit and a host of other high profile customer-service operations take the three-tier approach. Too bad, because while it sure alienates customers, it also costs more.
Here’s the three-tier drill. Customers call for service, let’s say tech support. Partially-trained, poorly paid first line agents take the call. But these agents can’t resolve a high percentage of problems. So callers either hang up disgruntled, or if they really need an answer, they demand to speak to someone more qualified.
If the level-one agent is willing to escalate, and some aren’t, callers are put through to “supervisors.” These blokes make callers repeat all the same information they already gave to first-line agents. And then (and I love this part), they just patch through the caller to a higher tech tech. Value-adding process, or what? Any time you see a traffic cop in the middle of a process, the red flag should run up the pole. Regardless, now callers who manage to get this far get to repeat everything for a third time—after which they learn that “higher tech” is only relative, and they still may not get a solution.
Ugly from the caller’s standpoint. But also ugly from the company’s standpoint because these efforts to save money by chintzing on service only increase labor costs, rather than reducing them. .
Contrast this scenario with Amazon, which very smartly emphasizes first call resolution. And the Qwest DSL folks, who may need to escalate, but handle a much higher percentage of calls without kicking them up. And when they are escalated, there’s no “supervisor” middleman, and all the caller input data is forwarded. Or Verizon wireless, where the only time I’ve ever needed an escalation turned out to be a Palm PDA problem, and the Verizon rep set up a three way conference with Palm and actually stayed on the line—a powerful reason why Verizon doesn’t need to spend $500 or so in marketing money to replace me..
This stuff is hardly rocket science. But to save money and make customers much happier, companies have to invest more in training plus empower their first level agents. Most do neither.
2. Mismanaging sales lead campaigns: Most sales lead campaigns generate more optimism than revenue. And when they do produce substantial revenue, most companies don’t know how much. No surprise, because lead campaign “management” normally consists of: marketing generating sales inquiries in one process; marketing dumping raw inquiries out to sales, a non-process; followed by sales following up (supposedly) in a disconnected process (although throwing inquiries in the can is hardly a process, either) . What an unfortunate place to use simplistic process approaches, because successful B2B sales lead campaigns succeed because of intricate, highly controlled and measured process approaches.
Recently, our long time client, lead management company Performark, shared with us the outcomes of over 100,000 sales inquiries followed up using a variety process approaches—ranging from the “three half-steps and a prayer” described above to campaigns that follow inquiry generation with inquiry qualification; then divide “qualified” inquiries into two pools, immediate need and future potential; send the immediate leads out to sales; hold the future potential leads for nurture marketing; with sales following up leads only when they’re ripe and ready to close; plus sales “closing the loop” by feeding back to marketing all sales call outcomes; and then (we’re not through yet) marketing or sales management constantly but gently monitoring sales activity to maintain accountability for following up leads as well as feeding back data. All this last little activity accomplishes is doubling the ROI on some camaigns.
Guess what? The “wing and a prayer” process produces but a tiny fraction of the sales and profits the more sophisticated process produces. And as it turns out, all the cost “saved” by skipping so many process steps is a pimple on an elephant compared to the wasted sales cost incurred by sales reps following up raw inquiries—and to the opportunity cost of reps throwing sales potential into the round file.
3. Order-entry: If I could have a free cup of coffee every time a data entry clerk has to reenter data that someone else could more readily enter somewhere else; or has to enter data that someone else could have readily entered upstream; or has to calculate data that could have been machine-calculated at the original data entry point—Starbucks would go under in two or three minutes. Same applies for pricing clerks entering or price-checking orders.
You’d think this issue is last millennium stuff. At least you’d hope it would be. Unfortunately it’s not. Well over half the time we assess order-entry and pricing processes, workflow maps are dotted with “red keyboards” (our visual symbol for redundant data entry). Too costly to fix? How about calculating the cost created by data entry errors?
4. Credit approval: Using online data and readily-available automation tools can turn credit approval into a virtually hands-free (for the company), customer self-service process. Instead, many companies have redundant redundancies piled on top of redundancies. They’re called “checks and balances.” But as often as not, they’re job protection.
One of these situations inspired me to include in a client management presentation a slide saying, “You guys are spending millions to save pennies.” The next day the COO posted enlarged copies all over the executive suite. It became the process team rallying cry. Risk aversion is good policy. But risk avoidance almost always costs way more than it saves.
5. Sales proposal generation: Most sales proposal processes make me want to cry, they’re so manual. Wonderful automation tools are readily available. And today, they’re cheap. But many companies haven’t even developed Word templates for frequently used text. Hey, it’s cheaper to have sales people recreate stuff from scratch, right?
We recently worked with a client with the most convoluted proposal process we’ve ever seen. Unfortunately, for regulatory reasons their initial proposals often grow to 600 to 700 pages. And then clients require multiple revisions—even before awarding the job. When you start changing items and item prices in complex proposals, changes in one place have to cascade all the way down line, at least they’d better cascade. Want to risk doing this manually?
During our engagement an RFP issuer called to ask which proposal figure to use—the final number or the sum of all the components, which was $250,000 higher. And that wasn’t all that unusual. They could have automated their proposal generation processes for 1% of that.
6. The “all hands on deck” approach to key customer service: This is a hard to resist temptation, in addition to sheer absence of process. When a key customer suffers a significant service problem, regardless of industry, customer-friendly companies are frequently tempted to throw all available resources at the problem. This makes the company feel like it’s “doing all it can;” plus it provides customers with immediate gratification from seeing sellers jump. However, when problems don’t get solved quickly, immediate gratification turns into long-term disenchantment, or even worse.
Hey, do you believe in solving urgent problems by committee? Great way to make a mess.
Companies that solve service problems quickly and efficiently usually do so because they carefully design service response processes. They carefully assess how best to solve emergency problems—and design response processes to resolve issues as quickly as possible, not to throw as many bodies as possible into the breach. Having everyone and their brother or sister, including C-level execs, crawling all over issues leads to mayhem and compounding original problems—not quick resolution.
I could go on forever identifying common, front-office process issues. But this is a blog, not a book, and jumping on whichever of these six issues apply is a good start.
But one final caveat. Unlike in manufacturing, front office process is highly cross-functional and inter-dependent. Using the manufacturing process approach of isolating specific process problems to fix them is disastrous in the front office. Whenever you change a front office process, you have to consider the entire context, including affected activities outside of functional boundaries.