Managing the Chaos of Customers

In other words, variability is a fact of life with customer-operators. Here are the different forms it can take:

• Arrival: Your customers don't all want service at the same time or at times that are necessarily convenient for you. Grocery stores find themselves swamped during the evening rush hour, while the lines at Dunkin' Donuts can extend for half a block at

8:00 a.m.

• Request: Not everybody orders the same thing. Each client of an advertising agency is executing a unique marketing strategy, and vacationers at a resort want different amenities. Even customers of a single-service business like Jiffy Lube show up in different makes and models of cars.

• Capability: Customers have different knowledge, skill, physical abilities, and resources, which means that some customers perform tasks easily while others need hand-holding. In a medical setting, the ability of a patient to describe symptoms can greatly affect the quality of care. But so can the person's ability to negotiate the medical bureaucracy.

• Effort: Customer-operators decide for themselves how much effort to invest in production tasks. Company controllers don't always hand over well organized files to independent auditors, and shoppers don't always return their shopping carts to the store.

• Preference: Even customers who want the same service may have very different definitions of quality. One diner appreciates the servers' introducing themselves by name; another resents the presumption of intimacy. Some clients of a law firm might construe a top partner's attention to detail as reflecting the importance of their case; others might complain that those expensive billable hours could be doled out more Judiciously to less costly associates. Subjective preference adds a multiplier effect to all other forms of customer variability.

UNCOMMON TAKEAWAYS

• Service customers don't just purchase a service; they also participate in creating it. Among other things, they make the service faster or slower, better or worse, cheaper or more expensive to deliver — for themselves and for other customers. They are active producers (and detractors) of the value they end up consuming.

• For example, a customer at a salad bar affects the quality of his or her meal, whereas patients who skip dental appointments drive up the costs of running the entire practice. When customers are influencing the service experience in ways like these, we call them customer-operators.

• Customers can be more or less involved operationally, depending on your industry and on your specific design choices — for example, how much self-service you build into your model and whether you involve your customers in your improvement efforts.

• The more dependent your service business is on the behavior of customer-operators, the more important it is to manage them successfully. Similar to employee management, the four components of a successful customer management system are customer selection, training, job design, and performance management.

• Not all customer-operators are alike. When compared with each other, they are faster, slower, smarter, pickier, later, earlier, or more or less prepared to perform their operational roles. This diversity increases the cost and complexity of running a service business.

• Assume that you don't know exactly how your customers are affecting your operations or how well your efforts to manage them are really going. Reframe any certainties as hypotheses that need confirmation. Test them. Fortunately, the data you need is usually right at your fingertips.

Managing the Chaos of Customers

In other words, variability is a fact of life with customer-operators. Here are the different forms it can take:

• Arrival: Your customers don't all want service at the same time or at times that are necessarily convenient for you. Grocery stores find themselves swamped during the evening rush hour, while the lines at Dunkin' Donuts can extend for half a block at

8:00 a.m.

• Request: Not everybody orders the same thing. Each client of an advertising agency is executing a unique marketing strategy, and vacationers at a resort want different amenities. Even customers of a single-service business like Jiffy Lube show up in different makes and models of cars.

• Capability: Customers have different knowledge, skill, physical abilities, and resources, which means that some customers perform tasks easily while others need hand-holding. In a medical setting, the ability of a patient to describe symptoms can greatly affect the quality of care. But so can the person's ability to negotiate the medical bureaucracy.

• Effort: Customer-operators decide for themselves how much effort to invest in production tasks. Company controllers don't always hand over well organized files to independent auditors, and shoppers don't always return their shopping carts to the store.

• Preference: Even customers who want the same service may have very different definitions of quality. One diner appreciates the servers' introducing themselves by name; another resents the presumption of intimacy. Some clients of a law firm might construe a top partner's attention to detail as reflecting the importance of their case; others might complain that those expensive billable hours could be doled out more Judiciously to less costly associates. Subjective preference adds a multiplier effect to all other forms of customer variability.

Putting It into Practice

We tend to think of managing customers in phases. First, you need to get control. Find out how your customers are influencing the cost and quality of your service today, and then nudge them in a better direction. In our experience, almost all service organizations can benefit from some version of this exercise, if only to bring sunlight and confidence to your assumptions. Even the most basic of assumptions can turn out to be startlingly wrong when it comes to customer operating behavior. The next phase involves actively deploying customer-operators, but in a targeted way. Get them to help you improve your current processes, for example, or add customers to the design team as you start mapping out a new service offering. This is the walk-but-not-run phase, the first tentative steps toward tapping the operating value of your customer base. Start to blur the boundaries between employees and customers. The final phase is what we call going all the way, embracing your customers as very central producers of the services you provide. Think of it as the eBay way. This phase carries tremendous potential upside. And a meaningful amount of risk.

Let's look at these three phases in more detail.

UNCOMMON TAKEAWAYS

• Service customers don't just purchase a service; they also participate in creating it. Among other things, they make the service faster or slower, better or worse, cheaper or more expensive to deliver — for themselves and for other customers. They are active producers (and detractors) of the value they end up consuming.

• For example, a customer at a salad bar affects the quality of his or her meal, whereas patients who skip dental appointments drive up the costs of running the entire practice. When customers are influencing the service experience in ways like these, we call them customer-operators.

• Customers can be more or less involved operationally, depending on your industry and on your specific design choices — for example, how much self-service you build into your model and whether you involve your customers in your improvement efforts.

• The more dependent your service business is on the behavior of customer-operators, the more important it is to manage them successfully. Similar to employee management, the four components of a successful customer management system are customer selection, training, job design, and performance management.

• Not all customer-operators are alike. When compared with each other, they are faster, slower, smarter, pickier, later, earlier, or more or less prepared to perform their operational roles. This diversity increases the cost and complexity of running a service business.

• Assume that you don't know exactly how your customers are affecting your operations or how well your efforts to manage them are really going. Reframe any certainties as hypotheses that need confirmation. Test them. Fortunately, the data you need is usually right at your fingertips.