|
Global Trends and Success Factors |
 |
 |
 |
|
Business Process Excellence
From SIX SIGMA & PROCESS EXCELLENCE IQ & MVS
The results are in! SIX SIGMA & PROCESS EXCELLENCE IQ and MVS (Market Value Solutions) have completed their first Global Benchmarking Study of Trends and Success Factors in Business Process Excellence (BPE) in order to find out:
- How companies are measuring the success of their BPE initiatives,
- How businesses are using the VOC (Voice of the Customer) to identify improvement priorities, and
- What types of new approaches are working particularly well.
835 individuals responded to the survey, representing a variety of BPE roles in companies of all sizes and industries from across the globe. Among the key findings:
|
|
Read more... [Global Trends and Success Factors]
|
|
Using VOC to Drive Culture Change |
|
|
|
|
I recently returned from chairing a conference on Process Improvements and the Customer Experience, at which we reviewed preliminary results from a recent Global Business Process Excellence (BPE) survey, sponsored by IQPC. The survey of 800+ companies provided some interesting insights about how those companies are using the Voice of the Customer (VOC) and the Voice of the Business (VOB) to identify and prioritize improvements across the entire customer experience.
The BPE survey also revealed that the evolution of Business Process Excellence appears to parallel the evolution of Six Sigma, described elsewhere. About 10% of the companies responding to the survey are still focused on decreasing defects or cycle times (Generation 1), while 30% report that they are focused on cutting costs (Generation 2). About 40% of all respondents report that they are evolving toward Generation 3, shifting from an internal focus on defects and costs to an external focus on customer satisfaction, value, revenue growth and market share gains.
Primary Purpose of BPE Initiatives
One of the more interesting findings, however, was that nearly 20% of respondents reported that the primary purpose for their BPE initiative was to change the company’s culture. My personal hypothesis was that these companies were trying to make their organizations more data-driven and systematic in their approach to business, and that the tools of Lean, Six Sigma, Balanced Scorecard and others provided the means to get there. But, after conference presentations from Xerox, BlueCross BlueShield of Florida, and Shaw Industries, another hypothesis emerged. Perhaps the culture change being sought by those who were using BPE for that purpose was to break down the functional silos within their organizations, and to shift from an internal to an external perspective on the business.
|
|
Read more... [Using VOC to Drive Culture Change]
|
|
The One Number You Need to Grow |
|
|
|
If It's Worth Measuring, It's Worth Managing
Organizations looking for the latest quick-fix-cure de jour, guaranteed-to-fix-everything that-ails-the-organization need look no further than the Net Promoter Score (NPS) touted by Frederick F. Reichheld and Bain & Company. Making this silver bullet even more palatable is the fact that it is cheap - all you have to do is get your marketing research department or your current consultant to ask your customers one simple question - "How likely would you be to recommend us to a friend?"
In all fairness Reichheld would say it's not quite that easy and he certainly would not advocate this. But many organizations that give lip service to customers will find this solution to their liking. Most of these companies, if they do gather some sort of customer information, use it simply as a report card, unable or unwilling to use the information to drive operational and strategic initiatives.
Getting the answer to this question may prove valuable to many organizations. However, learning how to manage this number would prove even more valuable.
|
The new paradigm: exit customer satisfaction . . . enter customer value.
Are you still placing your faith in "customer satisfaction?" If your answer is yes, you are trapped in an outdated mindset. The new paradigm is customer value - and it's quickly being embraced by forward thinking corporations everywhere.
These days of economic anxiety have spawned a real "back to basics" movement. More and more, customers are demanding value in what they buy. That's why we at Market Value Solutions are committed to helping our clients stop thinking in terms of customer satisfaction and start thinking in terms of customer value.
So what makes the customer satisfaction paradigm so, well, unsatisfying? Here are five solid reasons:
Satisfaction does not equate to market share. Satisfaction is an emotion; another word for it is happiness. If a customer is satisfied, he is happy, if dissatisfied, he is unhappy. The satisfaction paradigm is predicated on the assumed linkage between happiness and loyalty, a linkage that can be deceptively reassuring. For example, several prominent enterprises (AT&T and Cadillac) have found that while their satisfaction scores were increasing, they were in fact losing market share. Customer Satisfaction is not a good predictor of performance and being able to link a strategic measure such as satisfaction or value to performance is paramount.
|
|
Read more... [The End of Satisfaction]
|
If Only You'd Ask! (Are you really listening to the voice of the customer?)
Hey, Mr. Six Sigma Blackbelt. It’s me, your customer. I hear all of you six sigma guys talking about how important it is to understand and listen to the voice of the customer, but if you are listening to us you couldn’t tell it by me. All I see is an overwhelming concern about costs, your costs, not mine. What customers are you talking to that tell you to get your costs down? We don’t even know what your costs are and furthermore, when you cut costs, do we get a price cut? I don’t think so.
If you’re really concerned about the voce of the customer then open your ears and listen up. I want value. Pure and simple, value. Let me make it even more simple. I want outstanding quality at the best price I can get. In fact, if you give me great quality I will even pay more for it.
|
|
Read more... [If Only You'd Ask]
|
|
Marketing, Six Sigma and Customer Value |
|
|
|
Marketers, brand managers, product managers and planners would be well advised to break down the organizational barriers that exist between themselves and those curious folks that populate the continuous improvement corners of the organization. The arcane (probably to most marketers) language and thinking of Six Sigma and Lean Six Sigma have tremendous application to the jobs and missions of the marketing world. For many years marketers have been schooled in the four Ps, product, promotion, price and place. To this list of Ps they need to add processes.
Competing on Value
Competing for customers in today’s marketplace is predicated on value – the organization that can achieve and sustain a value advantage is the organization that will enjoy dominant market share and greater profitability. Look to companies like John Deere, Caterpillar, Mercedes, BMW among some notable value leaders. Look to companies such as CNH, Ford, or GM as value followers. Customers want superior quality at a fair and competitive price. This is the essence of value and the driving force for the competition for a value advantage.
|
|
Read more... [Marketing, Six Sigma and Customer Value]
|
|
When is A Pricing Problem Not A Pricing Problem |
|
|
|
The answer is simple, when it’s a value problem. Value is the relationship between the quality of an organization’s product or service offering and the price that they charge for it. When your customers complain about the price what they may be telling you is that the quality of your product or service is not worth what you are charging for it.
In many organizations it fairly common to hear the sales and marketing people urging price cuts. Cutting prices can be a major mistake for two critical reasons. The first is that price cuts typically do not provide a sustainable advantage to the firm initiating them. They are extremely easy to neutralize and counter. Once counter or neutralized all organizations are left with reduced margins unless the cost can be offset elsewhere. The second is that they can lead to what we call the commodity trap. Reducing price reduces margins that beg cost cutting elsewhere to maintain margins. Among other things, this means reducing budgets for product or service support, reducing call center activity, reducing on-time delivery capabilities, reducing parts availability, and cutting back on labor. In other words, reducing price leads to cost cutting that further deteriorates quality and leads to a sameness across competition. Once an organization’s product or service falls into the commodity trap it is extremely difficult to climb out of it. Gone is the compelling reason to buy an organization’s product or service. From the customer’s point of view, it doesn’t matter which product or service they buy, they are all the same!
Justifying an organization’s pricing policy should focus on the question, “how do we increase the quality that we are providing targeted markets so that our price is justified?” In other words, how do we increase the value of our offering? The first step is understanding how targeted markets define value.
|
|
Read more... [When is A Pricing Problem Not A Pricing Problem]
|
|
The Shift from Satisfaction to Value |
|
|
|
The Shift from Customer Satisfaction to Customer Value
The next significant shift in Six Sigma will come from the jettisoning of the time-worn satisfaction model for the more realistic and information-laden customer value paradigm. The value model is significantly better suited to the information needs of Six Sigma. To many practitioners, consultants, and devotees of Six Sigma parroting the conventional satisfaction wisdom, this will sound like a heresy rivaling that of "the world is not flat, but round".
The focus on customer satisfaction by managers, black belts and champions is predicated on a simple but false proposition: happy customers are loyal and profitable customers. In its incipiency, Six Sigma grabbed hold of what was the conventional wisdom, one based on little empirical or actual evidence, only a belief in the logic of the nexus between satisfaction and performance. Since then, much evidence has come to light regarding the (lack of) linkage between customer satisfaction and such critical outcomes as profitability, market share, top line revenue, and loyalty. Let's examine some of this evidence.
|
|
Read more... [The Shift from Satisfaction to Value]
|
|
|
