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When citizens are your customers

Optimization techniques using noncontroversial metrics such as customer satisfaction can help government agencies improve their service levels.

Situation

Any public-sector agency that directly interacts with large numbers of citizens often finds that demand for its services overwhelms the limited resources available to provide them. A government can’t prioritize its citizen “customers” by using metrics like how valuable they are or how costly to serve—common practices in the private sector under similar circumstances. This was the problem facing a US federal agency seeking to make its call centers and paper-processing facilities more efficient. Rising budget pressure and demand for the agency’s services had had the effect of compromising them. In fact, during times of peak demand, agents answered less than three-quarters of phone calls to the agency, which also processed less than half of all paper applications within its target response time.

Complication

Optimizing the resources allocated to the two channels proved difficult. The agency relied on a common pool of employees who switched between fielding calls and processing forms as necessary to meet spikes in demand. Yet the channels operated independently, with separate managers; the agency relied on personal relationships to exchange important information. What’s more, pressure to respond immediately to phone calls often diverted agents from paper applications, unbalancing the two channels’ service levels.

Resolution

The agency designed a labor allocation model around customer satisfaction ratings, creating “satisfaction curves” that revealed service breakpoints—levels at which delays made customer satisfaction drop significantly. In a mathematical model correlating the influence of a range of inputs on these satisfaction benchmarks, the agency set performance targets that reflected the breakpoints. That process helped managers to identify the trade-offs between staffing either channel optimally and satisfying customers in the other channel in real time, and therefore helped to improve the service balance between the two channels while also raising overall customer satisfaction. For the paper channel, the optimal allocation of resources called for a 20 to 30 percent increase in service delivery levels during periods of peak demand. Meanwhile, channel managers shared responsibility for generating and vetting the model’s inputs—for instance, weekly projections of demand and operational assumptions about expected staffing levels.

Implications

With demand for services rising and budgets falling, governments around the world are under pressure to raise their game in service operations. By linking daily work to uncontroversial metrics (such as customer satisfaction ratings), public-sector organizations can improve their service levels and save money while honoring their universal-service obligation to treat all citizens equally.

About the Authors

Sebastien Katch is a consultant in McKinsey’s Chicago office, and Tim Morse is a principal in the New Jersey office.

Recommend (45)
  • 23 AUGUST 2009
    Nachiket Mor
    President
    ICICI Foundation
    India

    ...I wonder if the authors have thought about expectations management as a precursor to customer satisfaction and what would drive the management of expectations?...

    .
    Nachiket Mor
    President
    ICICI Foundation
    India

    Customer satisfaction is endogenous and very much a function of what customers expect and is often based on what was delivered in the past. I wonder if the authors have thought about expectations management as a precursor to customer satisfaction and what would drive the management of expectations? I fear that the only exogenous variable would be some estimation of “importance” or “value” and one would not be able to get around confronting that “beast” given the endogenous nature of customer satisfaction.

    .
  • 22 AUGUST 2009
    Ken Gonzalez
    Vice President
    Service Management Society, Inc.
    Aliso Viejo, CA USA

    ...I think this example demonstrates and helps reinforce our assertions that a customer-centric perspective is applicable and valuable, regardless of organizational type—public, private or not-for-profit.

    .
    Ken Gonzalez
    Vice President
    Service Management Society, Inc.
    Aliso Viejo, CA USA

    I applaud the agency profiled here for taking actions which directly impact the customer. The fact that someone in the organization’s management looked to tie their actions into some metric that would translate into customer-visible results (one expression of value) is something we need more of. Most of the time, similar organizations would look to various types of process improvement initiatives to obtain “benefits,” without a full understanding of how it helps or impacts the customer. I think this example demonstrates and helps reinforce our assertions that a customer-centric perspective is applicable and valuable, regardless of organizational type—public, private or not-for-profit.

    .
  • 22 AUGUST 2009
    Blair Williams
    Adjunct Professor
    NYU - Polytechnic Unviersity
    New York, USA

    The issue is not technical but cultural. Most government offices—federal, state, municipality—are less than efficient, as there is ‘no carrot and no stick’....

    .
    Blair Williams
    Adjunct Professor
    NYU - Polytechnic Unviersity
    New York, USA

    The issue is not technical but cultural. Most government offices—federal, state, municipality—are less than efficient, as there is ‘no carrot and no stick’. Employees have no incentive to do well, and no penalty if they are not efficient. Deal with any government agency, anywhere and you will see the truth of this cultural attitude. Of course since most are monopolies, the ‘citizens’ have to suffer in silence.

    .
  • 21 AUGUST 2009
    Michael Mundorff
    Data Program Manager
    Primary Children's Medical Center
    Salt Lake City, UT USA

    Since this project involves “a US federal agency”, there are no confidentiality issues involved. The agency should be identified....

    .
    Michael Mundorff
    Data Program Manager
    Primary Children's Medical Center
    Salt Lake City, UT USA

    Since this project involves “a US federal agency”, there are no confidentiality issues involved. The agency should be identified. We can then (1) patronize them since they have demonstrated an effort towards process improvement; and (2) judge for ourselves whether our collective individual experience matches the assertions of the authors.

    .
  • 21 AUGUST 2009
    Edward Harkins
    Independent consultant
    Scotland

    I suggest that there is an unresolved tension in this model....

    .
    Edward Harkins
    Independent consultant
    Scotland

    I suggest that there is an unresolved tension in this model. When you are a public sector organisation you are very commonly responsible for rationing goods and services—and the goods or service will be free of charge or priced at a significant discount (courtesy of the taxpayer). The demand, consequently, from the citizen can be unlimited, and if those citizens do not get what they see as their ‘right,’ they become much aggrieved. The paradox for the public sector organisation is that if it does its job well and strictly ‘rations’ the good or service according to the agreed criteria (need, entitlement, etc.), the corollary is often a ‘dissatisfied’ customer who is unlikely to give a highly postive rating to the agency they see as having not delivered what they wanted.

    .
  • 21 AUGUST 2009
    Laurence Lock Lee
    Director
    Optimice Pty Ltd
    Australia

    Impressive results, but I can’t help but think that there will come a day when all the lean manufacturing and TQM efforts will no longer be able to keep citizens happy...

    .
    Laurence Lock Lee
    Director
    Optimice Pty Ltd
    Australia

    Impressive results, but I can’t help but think that there will come a day when all the lean manufacturing and TQM efforts will no longer be able to keep citizens happy through being a centralised information source. This “tragedy of the commons” scenario needs more radical change. Using the science of networks, government agencies should be able to identify reliable information brokers in the community and then follow this up by facilitating diffusion through these network “poles” rather than relying on all citizens coming to the original source (and hence promulgating the problem). Some simple calculations will quickly show that this is a substantially more effective information diffusion model than simply relying on a limited central source.

    .
  • 20 AUGUST 2009
    Tom Russo
    Associate
    Millennial Living
    Arlington, VA US

    Interesting take here on citizen “customers.” I’m assuming that your study excludes customers that rely on an agency such as attorneys, consultants, or companies being regulated, among others?...

    .
    Tom Russo
    Associate
    Millennial Living
    Arlington, VA US

    Interesting take here on citizen “customers.” I’m assuming that your study excludes customers that rely on an agency such as attorneys, consultants, or companies being regulated, among others? In some agencies, these non-citizen customers are often given priority at call centers because bad service works its way back to top management. I was wondering how you actually measured customer satisfaction. Also, some of the calls were resolved in less than a minute so I have wonder whether or not those callers were just referred to the right person in the agency to talk with. I think agency Web sites also play a role in serving citizen customers, however, government Web sites have a reputation for poor usability. Some agencies like FERC actually create a specific channel on the site and go after citizens. I think that as the demographics of citizen customers change, those customers will be looking for more self-serve, Web-based solutions and even forums where they can talk to each other. I’m not certain if government agencies are ready for that but I believe it is just a matter of time.

    .
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