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Customers are not your top priority

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TrainsThere is this myth that IT (or any service provider) should be utterly focused on customers; that a customer obsession is the secret sauce to IT success; and that unhappy customers mean we in service have failed.

Railroads don’t bear this out.

Railroads in the USA have fought tooth and nail with their customer base for decades.  After the Second World War, freight customers decided the railroads were screwing them. Government legislation progressively regulated and price-controlled the railroads into the ground, until the whole system was on the verge of collapse.  Only de-regulation with the Staggers Act in 1980 freed the railroads to operate economically again and put them back on track (sorry) to their currently-thriving state.

And now the customers are complaining about freight rates again…

Meeting the needs of the business

If railroads were customer-obsessed – as the modern fad would have it – then they would provide all sorts of specialised rolling stock tailored to their customers needs / wants.

It certainly didn’t start out that way.

Originally a customer could hire a boxcar, reefer (refrigerated boxcar), flatcar, gondola, hopper, or tankcar.  That was pretty much the choice: not tailored to the customer, just a choice of a few basic shapes. Was a hopper car or boxcar shaped that way because the customers wanted it?  No, they were that way because they worked best internally for the functioning of the railroad. All sorts of loads fit uncomfortably in gondolas or boxcars, but that is what the customer got regardless of any complaints. Automobiles were chained on flatcars and car parts struggled in and out of boxcars for decades before the specialised rolling stock came along.

As the 20th Century progressed, railroads built special rolling stock to meet customer needs: automobile carriers, the aircraft body-parts carriers, trailer trains.  But you still couldn’t really say they were customer-focused.

The trailer train is a case in point: the Santa Fe railroad worked closely with the Hunt trucking empire to develop “intermodal” rolling stock to meet a customer need: to transport truck-trailers cross-country on special flatcars.  But the trailer train design was about moving truck-shaped loads on a railroad, not making trucking easy.  They still needed to drive the trailers carefully onto the flatcars and chain them down (and eventually they craned the whole thing on!).

When railroads introduced covers for coal hoppers, it wasn’t about looking after the customer’s coal – it was because coal dust was destroying the rail ballast.  Until then the railroads were perfectly happy to have a percentage of the load blow away and the rest get wet and icy.

In recent years, railroads have realised the best profits are in large volumes of single loads in dedicated unit trains, instead of mixed freight, and as our societies have become bigger and more industrialised warranting those unit trains, specialised rolling stock has become more common: for coal, ethanol, automobiles, logs, and of course containers.

But in general, railroads have always built general-purpose rolling stock that best suited their purposes not the customers.  Customers had to make do, with some highly profitable exceptions.

Finally, the container took the customers challenge away by introducing a standardised unit of shipping and now both parties are (generally) happy, but that didn’t stem from any railroad initiative to please the customer.

Customers are the source of revenue not the masters of the business

Railroads spend billions on infrastructure development every year (most of which is not driven by customer).  A railroad will occasionally run a rail line up to a big customer, but most of the time lines are laid for geography first and being close to economic density second.  Individual customers need to (re)locate close to the railroad or arrange local freight.  If a customer wants a branch built up to their coal mine, power plant, or factory, they usually have to build it at their own expense.

Railways are as quick to cut services as to provide them, depending on their own interests.  Governments have to legislate to force railways to run passenger services, and have done so for half a century in most countries.

The fact is, railroads are focused on moving stuff as efficiently, economically and reliably as they can, with enough surplus to keep up the massive infrastructure investments, for maximum profit.  The customer is only there to pay for it all.

Airlines are the same.  While a few airlines like Emirates differentiate themselves by chasing the customer who wants to be cared for, most airlines today clearly regard economy passengers as “self-loading freight”.  Emirates has long been accused of all sorts of unfair government support; they burn petro-dollars as a PR flagship for a “progressive” Dubai.  Most airlines (and their governments) can’t afford those levels of service anymore and instead simply stay competitive.

Telcos are a third example, with telco customer support being legendarily bad (although New Zealand Telecom have made leaps and bounds to improve).

Customer service level is a business decision

What do all these industries have in common?  They are commodities, in a race to zero on price.

You can rave all you want about Apple or Zappos.  These are companies who have chosen to differentiate themselves on service quality.  That is a conscious decision on their part, and certainly in Apple’s case they charge like a wounded bull to pay for it (and scam on paying taxes in your country too, unless you live in Luxembourg, but that is another article).  I don’t see Google, Amazon, Samsung, Microsoft, or HTC going broke, despite the fact their support sucks.

The level of love and attention you give your customers is a business decision.  It is a dial an organisation sets from “scum” to “master” depending on the strategy and current state of the business.

The governors of your organisation make the decision as to how important customers are, hopefully for good business reasons. The executive managers decide how that translates into levels of customer care, and that translates into service policy.  It is not for any of us to decide otherwise.  If you over-service the customer you are wasting money and putting the future viability of the organisation at risk.  This is true whether you work for a commercial business, a not-for-profit, or public service.

New Zealand Telecom lifted its game because its service had become so utterly awful as a monopoly that the government decided to deregulate and break Telecom up.  They had nowhere else to go: they were universally hated and they were too bloated to compete on price or agility.  Their competitors continue with the staggeringly bad support because they know it doesn’t cost them much business (see my case study about bad customer service).

Railroads are the same.  They know they need to deliver reliably and they know they need to listen to customer’s needs.  Some of the small railroads even specialise in customer service.  But in the main it is all about cutting a hard-nosed deal on price.

Don’t get confused…

Don’t confuse listening to needs with customer love. Any canny organisation follows its market: that is pure self-interest.  Railroads built specialised automotive rolling stock only after decades of complaints about dents and dust.

Don’t confuse good service availability with customer love. The only thing customers want from railroads, airlines, and telcos is that they work reliably.  We bitch about their rudeness and uncaring attitudes but we don’t switch because in the end it all comes down to price (or lack of options).

So don’t be led astray by vendors, analysts, pundits or consultants who tell you to spend more on customer care; and don’t let anyone tell you that you are failing in your job if your customers aren’t inviting you to barbeques at home.

Our job is to meet the goals of our organisation and to protect its ongoing viability.  We do as much for our customers as we need to, as we are instructed to, in order to achieve those goals.

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Rob England

Rob England is an independent IT management consultant and commentator based in Wellington, New Zealand. Rob is an internationally-recognised thought leader in ITSM. He is a published author of several books and many articles. He is best known for his controversial blog and alter-ego, the IT Skeptic. Rob is an acknowledged contributor to ITIL (2011 Service Strategy book). He was awarded the inaugural New Zealand IT Service Management Champion award for 2010 by itSMFnz.

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9 Responses to " Customers are not your top priority "

  1. Jeff Kam says:

    I would agree with the main ideas expressed in the article by Rob England. I think some companies take the ITIL model to the extreme with the expressed goal of making everyone happy. This is understandable because IT has been the whipping boy of any company as a budget hog, non-income producer, and lousy service. The metric most often by Senior management to measure the effectiveness of the service desk is positive customer surveys. I’ve worked and managed service desk and I can tell you senior management wants those positive metrics to show off at their meetings. The metrics most meaningful to me are 1st call resolution, time to resolution, SLA compliance and customer satisfaction. If the first 3 are good then customer satisfaction should take care of itself.

  2. We know of plenty of cases where companies either go by the wayside or are broken up due (at least in part) to poor customer service – do you know of any company that failed to make it due to too much customer service? Has a company treated their customer’s too well as to…go out of business? I can’t think of one off hand – but maybe someone knows of an example.

    Certainly companies are going to try to maximize profits – but that isn’t their only concern – or rather, it shouldn’t be. Companies should also be concerned about long term growth, community impact, employees, and customers. To value any one of these exclusively at the painful expense of the rest is probably going to lead towards ruin. I would say, to completely ignore any of these will also probably lead towards ruin.

    How they are “prioritized” though is as you say:

    “The governors of your organisation make the decision as to how important customers are, hopefully for good business reasons. The executive managers decide how that translates into levels of customer care, and that translates into service policy. It is not for any of us to decide otherwise”

    So, it can be reasonable to assume that in some company, the governors have decided that customers are in fact the top priority and as you say….it is not for us to decide otherwise.

    It is as irresponsible to say to a company emphatically, without knowing the particular needs, strategies, and designs of that company: “Customers are your top priority” (as some literature may suggest) as is to say (as your title does) “Customers are not your top priority.”

    Likely, they are not. But….who are we to decide such things? The headline makes for good copy though.

    • yes true the headline could be “Customers are not ALWAYS your top priority” because sometimes directors might say they are.

      But why have the directors decided that? because they want to share abundant love? if so, logically we should pay customers to take our products until we are broke.

      So customers are never really the top priority. the top priority is to maximise the performance of the organisation against its overall goals (profitability, public service, social change…) whilst still – usually – maintaining the future viability of the organisation. The old tension: to protect (what we have) and serve (the goals). The role of the customer is to give us an object on which to deliver our service to achieve our goals.

      If an organisation decides to be nice to customers it it is because being nice maximises performance against goals. There is a limit to how nice when it starts to diminish our performance or endanger our future viability.

      So I stand by the headline.

      And yes i saw IT companies that are not around and one of the reasons is arguably that they over-serviced the customer: Cullinet, ADR, Sterling, DEC…

      • As I said before, which mirrors what you said here, concentrating on any of these priorities exclusively will (eventually – some faster than others) lead to ruin. Just because “x” becomes the top priority does not mean that it becomes the “only” priority. So, logically, we would not pay customers…but this still wouldn’t mean that “customers” could not be the “top” priority. Top does not equal only…does it?

        Also, priorities can change can they not? You can’t possibly believe that priorities are cast in stone – come hell or high water – you’re sticking with them through time immemorial! Are you saying there will NEVER be a case in which placing the customer as the top priority for some period of time, makes good (long term) business sense? There is a long list of real world examples out there that point to businesses doing exactly that. I think we can often see this after they have done something dumb (such as maybe an oil spill in the gulf) and wish to generate “good will.” It seems more likely that priorities are always shifting about – as tactical and strategic needs dictate…unless of course….they are in fact set for all eternity in a particular order like the 10 commandments.

        I don’t know the business stories of the companies you listed – but I’ll look into them. I wonder if the problem wasn’t more of accounting issues, billing issues, price point, and the like rather than simply trying to be customer centric in their business model…again, concentrating on one priority exclusively or at the painful expense of say..profit…will lead to ruin.

        I believe your headline is the best it could be. It catches the eye. As all good copy should. That doesn’t mean it is (always) true – or even what you really believe/know.

        • Semantics. To me a “top” priority takes precedence over others where they conflict. in that sense customers are never top.

          OK I can imaging rare cases where the executive say “to hell with the damage it does to our company, customers are our top priority until this blows over. We’re going to bet the business on winning them back!!” it’s obvious why that is rare.

  3. James Finister says:

    There is a lot I could pick up on, but there is one major point that is perhaps being missed. The relationship between an internal IT department and customers within the same business is not the same as that between a railway company and external customers.

    Your analogy is much stronger where IT is outsourced and relations are based on transcations in the marketplace,

    • There are customers and Customers. So IT serves their internal customers and the ultimate external Customer of the organisation, and it is often hard to unravel which one we are talking about in Real IT, internal IT, whereas it is clear in an IT service provider company, as you say.

      Nevertheless the message is the same whether we are talking about an internal customer of IT or an external Customer of the organisation: don’t over-service them, you do not exist for them, you exist to serve the goals of the organisation and to protect the viability of the organisation.

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