194 – Essay No. 4 – Local government and customer service.

Posted by Lancing Farrell                                                                              4500 words

basil fawlty

Customer service is, and should be, a major concern for local government. After all, councils are service organisations. Sometimes there is confusion about exactly what customer service means, how it relates to public service delivery, and what aspects of service are most important to get right in local government.

This essay focuses on three hypotheses:

  1. That ‘customers’ in local government are different to the customers described in most customer service literature and encountered by most service organisations.
  2. There are six main opportunities for local government to improve service to customers.
  3. There are simple tools available that can assist councils in getting service delivery and customer service right.

Hypothesis One: Customers in local government are unique. They have seven characteristics, which taken together, make them different from customers of other public services or commercial service organisations.

By service organisations I mean organisations whose ‘product’ is intangible and created with the involvement of end users who play a voluntary and (virtually) uncontrollable role in producing the service. They are not consuming something made earlier.

The defining set of characteristics of the local government customer is:

  1. They are captive for most services offered in the sense that they have no other choice of provider or they have to pay whether they use the service or not.

This is difficult for many people to comprehend, especially when they have been conditioned to expect that when they pay for something they will get exactly what they want and not have to wait. In an open market people can choose to segment themselves according to the value they seek and what they can afford to pay.

2. Most customers are resident in a geographic area and must be provided with an equal share of the inputs or whatever is required to achieve equality of outcomes.

As Christopher Stone says, ‘public services are those where distributional outcomes are particularly important, where services should follow need rather than capacity to pay, where minimum service levels are required – even if the costs are high, and where collective goods are to be produced’. Commercial businesses wouldn’t attempt to provide services under these conditions.

“Public services often involve … overwhelming commitment to the public rather than private interest. Such services are not best provided in a framework where the primary motivation is profit”.

3. Customers are diverse in every demographic characteristic, particularly age, ethnicity, and ability.

Local government is required to deliver services to everyone. Waste services are delivered to the elderly who cannot put their rubbish bins in the street for collection. Libraries hold books in many languages. Facilities must be accessible for all. Differences in customers must be accommodated and it is difficult to decide that someone isn’t a customer.

4. Payment is made in advance for services. There are few services paid for at the point of consumption.

Therefore, price is not a ‘gate keeper’ on demand. People can consume as much as they want at no additional charge. It is like an ‘eat all you can’ smorgasbord. If the service doesn’t fulfil their purpose the first time, they will keep coming back.

5. Customers have direct access to members of the ‘board’ of the organisation (i.e. the councillors) and relatively easy access to the CEO and senior management.

A disaffected customer can easily have their concern taken up by a ‘board’ member or meet or correspond directly with the CEO. Some councillors actively seek to become involved in basic customer service requests to help build their constituency. The council meetings are held monthly and are open to the public who can ask questions at the meeting in writing, or, at some councils, ask to address the council. Other levels of government are not this accessible.

6. Customers have legislated protections in addition to consumer laws through the provisions of the Local Government Act, which, in Victoria, requires councils to provide ‘best value’ services.

The Local Government (Best Value Principles) Act 1999 requires that:

(a) all services provided by a Council must meet quality and cost standards;

(b) all services provided by a Council must be responsive to the needs of its community;

(c) each service provided by a Council must be accessible to those members of the community for whom the service is intended;

(d) a Council must achieve continuous improvement in the provision of services for its community;

(e) a Council must develop a program of regular consultation with its community in relation to the services it provides;

(f) a Council must report regularly to its community on its achievements.

The requirements ensure that Councils seek the best value in providing services. At least once every year a Council must report to its community on what it has done to ensure that it has given effect to the Best Value Principles.

7. Customers have a range of rights in the various ‘capacities’ that they may present to the organisation – citizen, voter, resident, ratepayer, service recipient, client, or simple customer.

These last three characteristics are unique. Imagine for a minute that you are a manager in an organisation where there are special rights conferred on your customers through legislation, they can ask for services in several capacities, and they have immediate recourse to your board of directors if they are dissatisfied.

Hypothesis Two: There are six main opportunities for local government to improve service to customers.

The first opportunity is to clarify organisational strategy in delivering services. While councils are not clear on strategy it will not be possible to say who are or are not customers, what services they will or will not be offered, or how those services will be delivered efficiently.

Answering these questions is at the heart of strategy and organisational decision making. Imagine working for an organisation that cannot tell you who its customers are? I don’t mean something as general as customers being ‘the community’ or the ‘general public’. These descriptions are not useful in helping to ensure that services meet the expectations of their recipients. A commercial service organisation has to know exactly who buys their services from amongst the general public.

In local government the process to establish the relationship between customers and services is iterative. Customers are coarsely defined geographically and potentially include every person in ‘the community’ captured within the municipal boundary. However, the need or expectation of every person in that community cannot be met and decisions need to be made about what services will be offered and who will receive them.

The identification of services in response to community needs is a start in defining the customers of each service. If you make a list of services offered it will start to define the customers receiving them. However, few councils have a detailed list (i.e. a service catalogue) that describes what each service is and what customers will receive it. To be useful, such a list should link back to the way resources are allocated within budgets to determine who and what is involved in delivering the service.

Governments provide public services to create public value. Mark H. Moore defines public value as the collective view of the public (or community) about what they regard as valuable, especially with regard to the use of public money and authority. He says that public managers (i.e. elected representatives and bureaucrats) need to try and understand what constitutes public value for their community so that they can set out to deliver it through their operations and be held accountable for their performance.

Moore sets out four key requirements of public managers in creating public value. They must:

  1. Articulate a clear, complete and compelling idea of the public value to be produced.
  2. Develop a set of measures to record performance in producing that value.
  3. Invite and embrace external accountability for defining and creating value.
  4. Create management systems that distribute internal accountability for value creation across managers and employees so that they feel motivated to perform in the short-term and to innovate and learn over the long-term.

A process is required to determine what constitutes public value for each community, which includes ways to ‘check in’ periodically to stay in touch with demands and be responsive to changes in needs and expectations. The diagram below illustrates the relationship between services and different types of value. This can be a difficult concept to understand.

value diagram shaded

The largest ‘box’ represents the sum of all services that every person in the community could want. This includes every idiosyncratic need, want or expectation. It is the total private value that people in a community might expect.

The next ‘box’ represents the services that, in the collective view of the public, should be provided. This is the agreed public value as described by Mark H. Moore. It should be reflected in the organisational mission statement, Council Plan and policies and strategies.

The third ‘box’ represents the public value possible with the resources made available in budgets. There is always a gap between the intent of policy and what can be achieved with the resources provided. There are a lot of unfunded good intentions in public services.

The smallest ‘box’ in the middle represents the actual value (private and public) created using the available resources. There will always be inefficiency and waste in systems and the full potential of resources is seldom realised. This is the focus for organisational management.

This way of thinking is useful to focus discussion on whether customer service problems are related to private value expectations, the public value proposition, funding, or management performance. If customers are operating in the first box and the organisation is operating in the second box there are bound to be problems.

The second opportunity is to plan the customer experience. The diagram below illustrates the ‘customer’s domain’ and the connection with the ‘operation’s domain’ in which customer requirements are taken into service delivery processes. It captures the entire experience of the customer from the creation of service expectations to delivery of the actual service and highlights a number of potential gaps where problems can occur.

customer service gaps

Image adapted from Slack, Chambers, Harland, Harrison, and Johnston 1998, Operations Management, 2nd Edition.

Each gap is discussed in detail in an earlier post.  The ‘perception’ of the service can also be described as the service ‘experience’ – it is what the customer thinks and feels after having received the service.   Meyer and Schwager describe the customer experience as encompassing

“… every aspect of a company’s offering the quality of customer care, of course, but also advertising, packaging, product and service features, ease of use, and reliability.’

They describe the customer experience as formed from the ‘internal and subjective’ response they have to all direct and indirect contact with the organisation. An organisation with a successful brand shapes the customer experience by ‘embedding the fundamental value proposition’ in every feature of their service offerings. This helps influence expectations of service.

Mostly, councils don’t do this. In fact they often do the opposite with variable experiences depending on the service and who is delivering it. Influencing service expectations is important in providing customer satisfaction. If the experience of service is not equal or greater than the expectation there is likely to be dissatisfaction. It is a simple formula:

“Customer satisfaction = expectations +/- experience”

In commercial service organisations there is a ‘marketing and sales’ team developing and supporting the brand and value proposition in the marketplace. Customers know what to expect and every effort is made to meet those expectations through service delivery operations.

In local government, few resources are put into influencing customer expectations. Marketing is seen as a wasteful use of public money that may even have political overtones. However, if customer expectations are left to be influenced by the negative and sensationalised views expressed in the media, councils will always be struggling to satisfy customers.

The third opportunity is separating customer request management systems from service delivery systems. Councils have linked the management of the customer interaction into the systems to schedule and record service delivery. Doing this significantly increases the likelihood of service failure for very little value for the customer. By service failure, I mean the service not meeting the customer or the organisation’s specification of service quality, or the customer’s expectations of customer service.

Typically this systems integration happens when the customer charter commits the organisation to tell a customer requesting a service when that service has been delivered or that delivery has been delayed. A timeframe will be specified in the charter for that contact to be made. Rather than tell the customer ‘thank you that service will be delivered by (date)’, the organisation commits to investigate and/or deliver a service and get back to the customer within a set timeframe, typically 10 working days. Why?

The assumption is that every service is unique and cannot be completed in a predetermined timeframe. There is also an assumption that the customer wants to know when the service has been delivered or when it will be delivered. It is as though they don’t trust the council to do it (and we feel the need to announce when we have done it) or they are so vitally interested in the matter that they have to be included in its resolution.

This doesn’t happen for most commercial services. If you request a washing machine service they tell you when the repairer will come. If you order soil for your garden they tell you when it will arrive. If you buy a car they tell you when it will be delivered. You are not asked whether you would like to know when the engine is installed.

A further assumption built in to council customer request management systems is that the council will fail. The service won’t be delivered on time or delivered at all. Therefore the customer needs to be ‘kept in the loop’ to manage their request. Wouldn’t you rather just be told when a requested service will be delivered and be confident that it will happen? And if it doesn’t, and it matters, you will be told.

Involving the customer in the delivery process for reported repairs required to council infrastructure assumes some proprietary interest on the part of the customer – it is their street, their road, their footpath, their park, etc. This acknowledgement of requestor proprietorship is in conflict with what happens next when they are then told that they will receive a standard service. Councils are not capable or able to afford to customise the service delivery to meet the specific requirements of every customer.

It is a classic case of private value expectations colliding with public value and councils are not very good at understanding, articulating or managing it.

Most systems used by councils for recording service requests are not fully integrated with the service delivery planning, scheduling, control and reporting system (usually an asset management and maintenance system). Sometimes they are not integrated at all. Committing to involve the customer in service delivery is an unnecessary, low value and resource intensive recipe for failure.

The fourth opportunity is to reduce the emphasis currently placed on customer satisfaction as a measure of customer service effectiveness. Unless customers have a very clear expectation of service their experience risks being dissatisfying. Sometimes it is the opposite and there are some services that are ‘delighters’ when they unexpectedly and positively surprise people. In public services ‘delighting’ customers can the raise expected value and increase costs without adding commensurate value. Delighting customers is fine but do it when it matters.

Meyer and Schwager see customer satisfaction as result of good experiences less the bad ones. It occurs when the gap between the customer expectations and their experience has been closed. Their main point is that knowing what the customer satisfaction is doesn’t help you to achieve it.

“To understand how to achieve satisfaction, a company must deconstruct it into its component experiences.”

This can be done and there are people working in councils who have insights into what satisfies customers. Often they are the supervisors of frontline customer service staff and the managers who deal with service escalations after service failure. Often these people are not included in processes to improve customer satisfaction or, if they are, councils don’t have the confidence to trust their own customer knowledge.

Anyone who has seriously tried to use customer satisfaction data to improve service performance will know that it is a random exercise. Often the most useful part of the survey data is the verbatim comments. The connection between actions you can take and the satisfaction of customers is invisible and unknowable without detailed thinking and investigation. That is essentially what Meyer and Schwager recommend:

“The customers themselves – that is the full range and unvarnished reality of their prior experiences, and then the expectations, warm or harsh, those have conjured up – must be monitored and probed.”

The fifth opportunity is to reduce the need for anyone to contact the council. Most customer contacts are for one of three reasons;

  1. Service failure – this is a complaint about services requested and not delivered (i.e. a repeat request) or poor customer service (i.e. an interaction with a council employee or contractor).
  2. Services ‘designed’ to have residents reporting matters for a service to be provided (e.g. damaged road sign).
  3. Services that are only delivered when requested (e.g. hard waste collection).

Customer service improvement is essentially about the first reason. The second and third reasons relate to service design and service delivery. Frontline customer service staff can only contribute so much towards a customer receiving a service. Answering the telephone is not a service. The purpose in people contacting the organisation needs to be fulfilled through delivery of a service after they have called on the telephone.

An integrated approach to improving customer service and service delivery would involve looking at all dimensions of service delivery from a public value viewpoint. The ‘strategic triangle’ concept developed by Mark H. Moore can be used to improve service delivery and reduce customer requests.   It is shown below.

PVA 1

In a real case study, the number of service requests for street tree maintenance services was reduced from 3500 per annum to 600 requests over a five year period following a four-step process.

Step 1

Review the categories of requests being recorded to make sure that they provided useful information to understand the purpose of the resident making the request.  What did the requester want to have done?

Step 2

This data provided a focus for service improvements:

  • New scripts were written for customer service officers and posted on the internet.  This was made them available to the community to help set/manage expectations of services.  The scripts covered who would respond to the request, how long it would take and how the requestor would be kept informed.
  • Policies were reviewed and adopted by the Council to set the key parameters for street tree management.  The biggest change was to discontinue managing trees using an ‘operate to failure’ approach and to commence staged replacement of trees.
  • Capital funding was obtained to implement a street tree asset management plan and approximately 5% of the tree population was targeted for removal based on condition assessment, incident reports and customer service requests.
  • Operational reviews were conducted to examine response times promised and delivered; how requests were prioritised and resources allocated; and how customers were kept informed.  Some services were redesigned to achieve required timelines.
  • Service failures were identified and analysed to determine whether service systems, Council staff, or contractors were affecting performance.
  • Contracts for services were reviewed and rewritten to bring the inspecting/work planning role in-house, improve accountability for delivery of each element of the service, and control the use of sub contractors
  • Service levels were changed for some key aspects of services and this was recorded in the advice to Customer Service Officers and in contract specifications.

Step 3

Public meetings were organised and community/opinion leaders were invited to discuss tree services.  Keynote speakers led discussion on tree management issues.  Valuable feedback was received regarding tree services.

Step 4

At the conclusion of the change process service requests were continuously monitored and the changes finetuned.  The service delivery operation was now understood.  Service requests could be anticipated at the key points where service failure was most likely to occur.

This integrated approach to reducing customer requests demonstrates the potential if customer service and service delivery are carefully planned and integrated.

The sixth opportunity is to focus on customer loyalty. In local government this is the dimension of the customer relationship that is really valuable, not customer satisfaction. It is often too removed from anything the council can control. I recall a football club using a council sportsground who complained about the condition of the ground surface every time they lost. When they won nothing was said. Their satisfaction was determined by the result of the match, not the service provided to them.

In commercial service organisations customer loyalty is a common measure of performance. It seeks to measure ‘brand loyalty’ using repeated purchases – i.e. more repeat purchases equals greater customer loyalty. In local government we are assured of repeat purchases because the customer is captive. The dimension of loyalty that is important is a favourable attitude that is high compared to other potential alternatives – i.e. living in your municipality is better than past experience or other potential choices.

Alan S. Dick and Kunal Basu have created a conceptual framework for thinking about customer loyalty, and they call the strength of favourable attitude the ‘relative attitude’, which they pair with ‘repeat patronage’ to define the loyalty relationship. Using this framework, they say that low relative attitude and low repeat patronage indicates no loyalty.

In local government we often experience low relative attitude coupled high levels of repeat patronage because customers are captive. Dick and Basu call this ‘spurious loyalty’. In their framework, however, it is not occurring because customers are captive. Rather it reflects ‘low differentiation between brands in a low involvement category’, in which customers make repeat purchases as a result of ‘situational cues’, such as familiarity.

“Loyalty signifies a favourable correspondence between relative attitude and repeat patronage”.

Loyalty is the goal for local government. Our objective should be to have captive customers obtaining the services they need through visible service delivery and valuing those services, as expressed through a high relative attitude towards the council.

Hypothesis three: There are simple tools available that can assist councils in getting service delivery and customer service right.

Is it private or public value?

The ‘degrees of publicness’ continuum developed by Mark H. Moore provides an easy way to contextualise service requests or services being reviewed or designed. The movement from essentially private value when individuals seek to have their material well-being needs met, through to collective action on matters of social justice, can be evaluated. It is helpful to work out where on the continuum are you when dealing with a customer on a service matter?

Moore degrees of publicness

Similarly, the ‘public value tool’ helps to determine whether you are looking at essentially private value or public value and if the primary influence on that value is agreement or resources. It is particularly useful with groups and can be used to focus a conversation on the actions that will be most effective in improving services.  Just start drawing the boxes and explaining as you go.

value diagram shaded

Value creation and capture.

Peter R. Scholtes says there are two questions to ask when listening to customers if you want to create value for them:

  1. What are you getting that you don’t need?
  2. What do you need that you are not getting?

He provides a matrix for evaluating this feedback and I have modified it to show the priorities for management attention (i.e. the numbers in each quadrant) and suggested actions. This is a simple and effective tool to make operations both effective and efficient in delivering services.

scholtes customer needs gets version 2

If a customer needs a service and they are getting it, keep going and make sure you do it well in terms of quality, reliability and consistency. Alternatively, if they are getting a service and they don’t need it, either stop or reduce service levels and reallocated resources to services they need.  This is an obvious place to start in response to rate capping.

If customers need a service and they are not getting it start to provide that service or improve existing services to meet the need. It is essential to understand the expected value or the effort could be wasted and you just move into quadrant 2.

Capturing value is as important as creating it. This is often overlooked in local government and people working in the sector complain about the community because they ‘don’t appreciate what they are getting’. If they can’t see what they are getting, of course they will complain, and many services are invisible to the recipient. Street sweeping is a good example. Councils frequently receive complaints about streets not being swept because residents are asleep when it happens.

Sayan Chatterjee has a simple matrix to allow analysis of services. The objective is to make sure that services your customers care about are visible them. When this happens there is some hope that they will appreciate the value they get for their tax dollars. It is the foundation for building customer loyalty.

Chatterjee visible invisible

The improvement opportunities are indicated by the arrows – essentially every service that customers care about should be visible to them and the ones they don’t care about (particularly if they dislike it, like parking enforcement) should be made invisible and reengineered to reduce the amount of effort and resources put into it.

Lastly, giving customers what they need and making it visible to them can support the image and brand of the council in the mind of the customer (and shape their expectations) if effort is put into understanding whether a service is capable of delighting a customer.

Kano’s model is a useful way to think about different services and their potential to satisfy customers. There is no point in trying to delight customers about basic needs. For example, if a council wants to make its residents feel satisfied about choosing to live in the municipality and build customer loyalty, don’t put most money and effort into roads.

Kano model and brand

The roads need to be safe and functional and cost-effective over their life but ‘gold plating’ them will not get a return in terms of customer value. In comparison, effort put into parks is highly visible, noticed by residents and often makes them feel good about experiencing it. Rural townships know this and regional cities in Victoria pout a lot of effort into their public horticulture.

The voice of the customer

The last tool is intended to help understand what you can do to improve value. It enables customers to identify the value criteria that are important to them (for example, fast service, low cost, quality or reliability, etc.) and then to say how you have performed in relation to their expectations. This is best done in focus groups or one-on-one interviews.

It also allows customers to rate you compared to their experiences of other similar service providers (i.e. the last council area they lived in) or the best other similar experience they have had. This last comparison can be insightful if customers compare your service to a very different and much more expensive supplier. For example, if the customer service of your council is regularly compared to that of a five-star hotel it shows that work needs to be done on customer expectations.

service performance value criteria

Chatterjee, Sayan 2013. Simple Rules for Designing Business Models, California Management Review, Winter.

Dick, Alan S. and Basu, Kunal 1994. Customer loyalty: Toward an Integrated Conceptual Framework, Journal of the Academy of Marketing Science.

Meyer, Christopher and Schwager, Andre 2007. ‘Understanding Customer Experience, Harvard Business Review, February.

Moore, Mark H. 2013. Recognising Public Value.

Scholtes, Peter R. 1998.‘The Leader’s Handbook.

Sedddon, John and Locality 2014. ‘Saving Money by Doing the Right Thing.

Slack, Nigel, Chambers, Stuart, Harland, Christine, Harrison, Alan, and Johnston, Robert 1998. Operations Management, 2nd Edition.

Stone, Christopher, 2013. False EconomiesDecoding Efficiency’, April.

Advertisements