I have had the opportunity to work in the continuous improvement field for approximately
15 years. There have been some changes in the field: new theories, different ideas
about how to improve processes, etc. However, one thing that hasn’t changed — the
recognition that the primary goal of any continuous improvement effort should be to
bring value to the customer.
How to Implement a Customer Value Approach
While there are many traditional objectives of continuous improvement, such as reducing
waste, improving quality, improving efficiency and establishing flow, all of these
should ultimately point to one central goal — . Here are four ways you can ensure customer value is the main focus of your process
improvement.
Step 1: Clearly Identify Your Customers
Organizations should start with clearly identifying who their customers are and what is important to those customers. It isn’t enough to know that your customers are, for example, people who buy widgets from us as well as stores we sell those widgets to. You must truly understand where customers are located; are they in certain parts of the country, international, etc.
There are a to collect customer information, including:
- Market research
- Customer surveys
- Customer complaints
- Face-to-face interviews
- Focus groups
- Score cards
After you use these methods of gathering your customer information, you can segment your customers based on different categories, such as geography, demographic, buyer behavior, product space, volume and brand loyalty.
Step 2: Understand Their Needs
Once you clearly identify your customers, the real work begins in understanding what is important to them. Do you have certain customer segments who are focused on speed of delivery while others are concerned mainly with quality? Rarely are all customers focused on the same thing, therefore it is critical to understand what is important to various segments of your customers so that you can ensure you meet their needs.
We use the term “voice of the customer” in the continuous improvement field to represent an ability to truly understand what customers care about. At the start of any continuous improvement event, such as a project or kaizen, the team must have conversations around what the “voice of the customer” is related to the topic the event is focused on improving.
For example, if we are going to do a continuous improvement effort that centers around
improving our on-time delivery of shipments to our customers, we need to understand
what the “voice of the customer” says “on-time” is. An organization saying “on-time”
means a package is delivered within a week of an order being placed doesn’t mean anything
if customers really want the package within three days. The above example applies
to whether we are doing a specific continuous improvement event (such as a kaizen
or project) or just continuously working to improve our delivery times.
Step 3: Establish Customer-Centric KPIs
Once you can successfully gather the voice of the customer, it is important to establish a mechanism by which to track the customer voice on a continuous basis. Understanding what value customers place on your product or service should not be a one-time event but rather something that is done continuously. This involves being able to tie one or more metrics, that can be tracked by the organization, to customer value.
If, for example, we know that our customers want packages delivered on-time, and to
them on-time is within three days of placing an order, then we must create a mechanism
to continuously track how we are doing in delivering all orders within 3 days of being
placed. This is where I see many continuous improvement efforts go array. If, as an
organization, we have a 97% on-time delivery rate, we are saying that 3% of the time
we are disappointing customers. If we have 120,00 customers, that means that we are
consistently disappointing approximately 3,600 customers; that is a lot of people
who pay good money for your products or services that we are disappointing.
Step 4: Gather Feedback and Data
Customers always define what is valuable to them. The only way to truly understand what is valuable to customers is to ask them. Tools such as surveys and NPS feedback are “golden nuggets” of truth that can help you better understand what is valuable to your customers and then act on that information. I have seen too many organizations rely on internal sales professionals or customer service representatives to tell leadership what is valuable to customers. It is too easy for those professionals, though well intended, to be influenced by recent complaints or even their personal opinions.
There is a saying I learned early on in my continuous improvement career that says:
“In God we trust, all others require data.” What that means is that opinions are great
but show me the data. Make sure your organization is relying on data, provided by
customers, to understand what is truly valuable to your customers.
Driving Customer Value Through Process Improvement
If you’re looking to be a champion of customer value in your organization, learning the tools and techniques of process improvement can take your results to the next level. Learn more about how you can implement process improvement tools in your organization with USF’s Lean Six Sigma programs.