Over and over again it’s been proved, but apparently the lesson is never learned, good decisions come from understanding. If you don’t understand, you’re gambling. I don’t know if anyone is following this, but you need to think about YOUR customer facing system (CFS) now and what you plan to do to respond to the economic crisis now underway.

During a down economy, one of the first things that gets dropped is the Customer Facing System. In Call Centers, the largest cost in the center is payroll. Cutting people saves money. Even on Web Sites and for automated system support, the people who care for the automated systems tend to get dropped. Is this a good idea? What will this cost your business now and in the future? You need to think about the fact that customers have options and they’ll not forgive those who make service difficult to get.

Whether you like it or not, your customer facing system is critical to the success of your company. How you deal with customers determines how willingly your customers pay your price and how willing they are to switch to someone else. Can you afford to lose customers? You’re already losing them because of the economy, but cutting back your customer facing systems will cause you to lose even more. Cutting back also makes you more vulnerable. Worse, if you cut back in the wrong way, you destroy morale inside the company and impact your customers, even your most loyal ones. If you’ve earned an MBA, you know the case histories. You’ve read about it happening in other companies. You need to translate those case histories to your own customer facing system.

All too often, the decision to down-size is made purely on the basis of cost without any thought to the impact on your success. Unfortunately, you really should have done that when you first created your system so you could make good decisions now. It’s never too late though. Take some time now, get some people together, and think carefully through the impact of your CFS as part of your overall success.

Do you understand the variables that are important to your success? As many people as I’ve interviewed from the front-line to the board room, I haven’t found many who really understood how to determine which variables were actually predictors of eventual success. They mistake numbers for understanding and an ability to quote thumb-rules with an ability to act wisely. In most cases, people making decisions to cut back have never really thought about critical relationships in a way that helps make decisions at critical times.

One interesting question I usually ask when interviewing people in a CFS is “what change could be made RIGHT NOW that would increase their performance bonus at the end of the current bonus period”. Most people with responsibility for a CFS don’t have an answer. In fact, they don’t even know what the important parameters are.

You ought to be thinking about the impact of one variable on another and eventually which of them impact your profit. Could you show how the different variables you can measure now affect your profit, your costs, and your bonus at some point in the future?

This is an overly simplified and incomplete model of just some of the variables that MIGHT be important in your Customer Facing System. If you were modeling your system, you would investigate whether these are even the appropriate variables whether each variable has a positive or negative effect on profit. If you are running a web based CFS, your diagram might start like this:

The diagram itself isn’t important. What’s important is the time you put into working it out. Any plan, any diagram of causes and effects, is not valuable because situations change and none of us has a crystal ball that accurately tells us about the future. The value lies in the thinking you put into the plan or causal diagram.

It’s worth the time right now to think through how things relate to your success, whether you measure it in profit for a company or in some other measure for a non-profit organization. Get some people together and set up a facilitated modeling exercise. Get someone who understands the process and who knows how to guide you through thinking about systemic effects which lead to your objectives.

• What affects profit?
• What affects cost & sales?
• When the number of employees goes down, how does that impact both Sales and Cost?
• How delayed are these effects?
• Are there any loops created by the impact of one thing on another?
• How does morale impact service effectiveness and sales?
• What is the impact on morale of a staff cutback?
• How does the morale of your service staff affect the number of returning customers?
  How does the morale of your sales staff affect new business?

You won’t predict exact numbers. That’s not the point. What you’ll be doing is thinking about how different changes relate to your profit. Just thinking about how things relate creates insight into how things really work.

When you have some idea of the cause-effect relationships, try them out using scenarios. Think about a specific situation and come up with strategies for handling it. Think through how your response to the situation would impact your company and your profit. Thinking through concrete scenarios helps you learn how the situation develops dynamically and how you can or cannot have an impact on the direction of events. You’ll probably change your cause-effect diagram to incorporate new insights. If you have a skilled facilitator with good modeling software, you can even run a simulation showing how things will change over time as a result of different decisions.

Try out different scenarios and different responses to build a set of strategies covering both expected and unexpected events. Real life will go different from any scenario you choose to examine, but the process of examining them will get you ready to handle whatever does occur.

A great example I’ve played through with clients is known as the Beer Game. A very simple setup involves a brewer, a distributor, and customers. This deceptively simple setup involving orders and delivery timing can be remarkably difficult to do well because most of us don’t really understand the system well enough to predict how it will react when changes are made. Does your business have similar delay loops that can cause non-intuitive changes in your operation? Taking the time to work through these effects will help you see them.

Responding to simple situations like the beer game can be remarkably like handling a big ship like an aircraft carrier. When a command is given to turn, there are delays in the reaction of the ship that you need to take into account. If you give the command to stop, it may take miles to come to a stop no matter what you do to try to stop the ship. There are also side effects that must be considered. For example, if you turn too hard, you’ll tilt the flight deck and cause planes to roll off the ship. How does that relate to your knowing what to do? Very simply, any system is complicated by delays and side effects. In some cases, the side effects (airplanes rolling off the ship in a tight turn) can be more important than the reason you took action in the first place.

Each and every business or organization is different and what works for one company will destroy another. Some things can be done within your organization and some things can’t be. For example, you want to cut costs, so you plan to eliminate employees. However, your shop is unionized, so the union will fight it. This can lead to worsening relationships, more fighting, strikes, and even worse times than if you’d done nothing.

If you’re running a consulting firm, you might find that your system generates loops of interactions like this one where delay times in contracting impact when clients become active and marketing and billable effort all have to be dealt with within the total available hours of effort.

This diagram like is an example from the Vensim system modeling software. It’s a starting point, not a complete model of the system, but using the software, you can assign values to the variables and run a simulation to see how the business evolves over time.

No matter what else you have to do, you need to understand how what you can measure relates to what you want to achieve (profit, people helped, whatever) in order to make good decisions. If you don’t understand, than any decision you make is no better than gambling. You ‘pays ur money ‘nd takes ur chances’. You may like the risk, but winning is always better. How do you win? By understanding. We’ll talk more later.

Categories: Customer Service, General