Q&A with St.George Bank Limited - Customer Service Institute of ...

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Case Study in Bad Service in the building industry. Take a look into the most prevalent of the building industry’s customer service issues, window and door installation, which was witnessed on 23 percent of the 100,000-plus site inspections Criterium Engineers has carried out. Specifically, we’ll look at what happens when your windows and doors are not installed properly. The Later the Detection, the Greater the Cost When windows and doors aren’t installed correctly in your communities, how are the different areas of your business affected How does timing affect the total cost of this quality issue Scenario No. 1 (Best-Case): Your Site Supervisor Identifies the Issue It’s a clear afternoon, and your site supervisor is visiting homes throughout your Shady Pines community to check construction quality before he gives the trades the green light to install siding. He notices the windows and doors on several of your homes have not been installed correctly, leaving gaps for water to enter and damage drywall, flooring, etc. He stops work, gets the trade super to check on the issue and has him realign his team to go back and fix the problems — which could be 20 or more installations per home and on tens of homes just in that community. Scenario No. 2 (Worse): It Becomes a Customer Service Problem Say your site super is having an off day, or the few houses he visits in a community aren’t the ones affected by the window and door issues. Six months down the line when many of your homeowners have moved in, problems are popping up, which could affect up to 23 percent of the Shady Pines community. Homeowners are pressing your customer service team to fix the issues; your representative investigates the root cause, coordinates the repairs, tries to appease the unhappy customers, and so on. Scenario No. 3 (worst-case): Insurance Agents and Lawyers Get Involved Your Customer Service team has done its best, but the situation hasn’t been resolved to your homeowners’ satisfaction. First, your homeowner complaints turn into multiple warranty claims. What’s the cost of this quality issue to your business in the near-term, and longer-term, given residual annual premium price hikes Some homeowner claims turn ugly and end up in lawsuits. What are your resulting legal costs and possibly even litigation/punitive damages Liability costs rise accordingly. The Ripple Effect: Impact on Your People and Reputation No matter when the issue is identified it will affect two other areas you may not already have considered. Marketing And Sales Word gets around the neighbourhood, your reputation gets tarnished, you end up with lower referrals and, potentially, lower home sales. This can have tremendous impact on your brand value. For many mid-size builders, your brand equity is a major component of your company’s financial value — especially in a time when you may want to sell your business. If you’re a giant, stock market-driven public homebuilder, poor public perception or “newspaper liability” can negatively affect your stock price. Human Resources You start to lose your best employees because they’re tired and are losing pride in your company. You now have to find and hire new team members, who by HR experts’ estimations can ultimately cost your business up to three times the salary for each manager lost. CUSTOMER SERVICE EXECELLENCE THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA 9
A Key Tool in CSIA’s Methodology - Activity Based Costing (ABC) Activity based costing is an accounting methodology that assigns costs to activities rather than products or services. This enables resource and overhead costs to be more accurately assigned to the products and the services that consume them. With activity based costing, organisations can identify where to remove waste, improve processes and eliminate re-work, as well as understanding what drives their costs. They can also see the degree of alignment of their cost structure with their organisation’s mission and strategy. CSIA believes that utilising ABC to establish Activity-Based output data serves as enabler for ongoing improvement programs. Key steps in the methodology involve defining the major business processes and key activities of the organisation using Process and Customer Touchpoint Mapping and tracing operating costs and capital charges to key activities. The tables below demonstrate the differences between traditional accounting models (general ledger style) and activity based cost accounting models, for an Insurance Company’s claims department. Both styles of accounting are required, yet that of most immediate value in allowing managers to make decisions is the one on the right – the activity-based view. The general difference between the two is the structure: Traditional Accounting (General Ledger) View Claims Processing Department Actual ($) Plan ($) Favourable / Unfavourable Salaries 621,400 600,00 (21,400) Equipment 161,200 150,000 (11,200) Travel Expenses 58,000 60,000 2,000 Supplies 43,900 40,000 (3,900) Use and occupancy 30,000 30,000 --- TOTAL $914,500 ($34,500) Activity-Based View Claims Processing Department Key / scan claims $31,500 Analyse and re-work claims $121,000 Suspend claims $32,500 Receive provider enquiries $101,500 Resolve member problems $83,400 Attend training $45,000 Determine eligibility $119,000 Make copies $145,500 Write correspondence $77,100 Process batches $158,000 TOTAL $914,500 As we can see from the above tables, the activity-based view allows more transparency of where activities that stem from ‘bad service’ exist and how much they cost. In this view, we can see that “Analyse and re-work claims” along with “Resolve member problems” are high volume areas. In making one or two efficiency changes, the organisation has an opportunity to save money and improve service to customers. CUSTOMER SERVICE EXECELLENCE THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA 10
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Q&A with St.George Bank Limited - Customer Service Institute of ...

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