In my last blog post, I talked about how being able to identify customer touchpoints can sometimes be the difference between a business flourishing and floundering.
To summarise, I highlighted the following steps, which are as follows:
Identify customer connections
Carry out research to understand options
Investigate alternative processes.
But just how easy is it to implement these steps in the real-world? It is really possible to operate a process-focused enterprise – where intuitive, simplified, fact-based, customer-connected efficient approaches are the rule, and not the exception?
Well, I have spent my career demonstrating how customer focus, innovation and process are inter-connected and in my latest book ‘Customer Focused Process innovation’, I explain how this can be achieved.
Bur for the purposes of this blog, let me provide with a real-life example from the automobile industry. This is the story of how a customer-focused process innovation approach is helping to ensure used-car buyers have an outstanding experience In the USA.
Over the last two years, I have worked extensively within the automotive industry. The bulk of my work focused on the customer experience when purchasing a vehicle.
Talk to any potential car buyer in the US, and many don’t have a good word to say about their experience– particularly those who interested in pre-owned vehicles. As a result many dealerships have garnered a bad reputation – some of which is richly deserved.
Roughly two years ago, I began working with a major American automotive retailer to see if we could employ a process-focused innovation model to transition the conventional car buying model to something vastly superior.
In my opinion, Sam Walton, the founder of US retail giant Walmart, sums up the value of customer feedback best when he remarked, “The folks on the front lines – the ones who actually talk to the customer – are the only ones who actually know what’s going on out there.”
With Sam’s words ringing my ears, I knew my first task was to find out exactly what it was that was troubling car buyers.
But how do you capture the right, unbiased customer insights that can help you understand the customer frictions?
I find the following sources to be beneficial to my research regardless of the industry:
Internal customer analytics
Feedback loops and direct observation
External customer research
From the research our team pinpointed the greatest customer friction points revolved around the time and risk associated with the purchasing process. Buying a car has never been a simple decision. They say that it’s probably the second most expensive thing you’ll buy after a home. In the olden days, you would simple go into a car showroom and purchase a car outright with cash. But now there are so many different ways of buying a car, that clarity for the customer across many aspects of the process has all but been eroded.
For example, you can choose to pay for your automobile by:
Hire purchase (HP)
Personal contract plan
Common customer anxieties with payment options were as follows:
But what is the cheapest method of payment?
If I choose the finance option, how do I ensure that I get the best deal on financing?
If I sign a leasing contract, how can I be sure that I won’t incur hidden costs that are buried deep in the small-print?
But, what was most revealing was the length of time it took for the paperwork to be completed. Today, in the USA, for example, we know that it takes on average four and a half hours to buy a car once a customer enters a dealer’s showroom. Could the duration of the visit be reduced while still maintaining all the legalities of the process?
With the research complete, it was very evident that there were three key action-points that needed to be implemented to give customers a better experience.
We set ourselves a goal to reduce the time it takes to buy a car from 4.5 hours to just 45 minutes. But why 45 minutes? As you are evaluating your processes and those of the customer, you have to realise that perfection is not your goal. Instead, your aim is to be better than your competition – to deliver a more pleasing, value added experience.
We arrived at 45 minutes because it was doable. But could the process be completed in a quicker time – say 10 -15 minutes? Perhaps, but our feedback might reveal that our customers were being rushed.
On the flipside, it might be that a customer wants to take an hour and a half to complete the transaction? But is that wrong to let them do that? Absolutely not.
The key point is that you have to identify what are the most value added components in the process, deliver them to the best of your capabilities, but also be flexible to allow the customer to use your processes in whatever way adds the greatest value.
Ensuring customers get a fair deal when buying
If you’ve ever bought a car, you’ll know that there can be a lot of haggling and negotiating before a sale is confirmed. And this can feel at best overwhelming and at worst a slimy experience. Our aim was to create a level playing field - one where the customer feels that he or she is in control.
Ensuring a fair price for the customer’s trade-in vehicle
Our final objective was to make sure that the customer could sell his or her current vehicle for a fair price.
What we did
In my last blog post, I talked about the value of process mapping. By understanding the specific wants and needs of the customer, we mapped and then rebuilt processes to achieve the following aims:
After visiting countless car showrooms, it is staggering when you consider how many different people a customer has to deal with before he or she can drive their car home.
A typical sale can be exhausting. It starts with a receptionist who will introduce you to a salesperson. If you decide to purchase the vehicle, you will be handed over to a lead sales person who will conduct the negotiations. Following that, you’ll then be put in front of the finance person. When you’ve signed all the paperwork, a porter will clean, gas, and deliver your car. Only then will you be given the keys to drive your new purchase home.
We decided that the customer facing process needed to be fine-tuned. To make it more Lean, we eliminated the many different hand-offs and consolidated most of the different roles into one, so that customers now deal with a single person from the time they investigate their options till the paperwork is signed and the keys handed over.
The challenge of course has been to do this gradually, making small iterations and validating each process before introducing another. Kata walks have been very useful in ensuring that each process works smoothly and efficiently.
While it is possible to pay the majority of bills online, it is almost unbelievable that customers wanting to buy a user vehicle still have to fill out a contract on paper.
We pushed for a paperless process. The common process today is that when a customer agrees to buy a car, he or she will be presented with a paper contract. The contract will be then be photocopied after the signatures have been applied. The same laborious process is employed for the financing contract, making the whole process grossly inefficient.
We automated the process so that customer can complete the contract on an iPad. But, what really is ground breaking is that signing the contract is really the last step in an exciting new process. By automating the process, we have opened the door for the customer and the salesperson to go on a journey.
The journey starts on the internet as the customer searches for a vehicle. He or she can chat with the salesperson at any time on the internet and reserve a test drive. He or she then visits the showroom, hands over a driving licence and insurance at the lot and walks to the car. The licence is then photographed allowing the customer to proceed directly to a test-drive without delay.
The beauty of this journey is that potentially the whole transaction can be completed in the lot while the customer sits next to their new car.
Ensuring customers get a fair deal when buying
We decided the best way to promote transparency was to share market prices for the vehicle they are interested in. The dealerships we work with publish their prices online, and have shared their pricing with the most popular vehicle buying research organisations. By sharing this detail with the customer, the process effectively transferred the power back into the hands of the customer. They were provided the ability to see exactly how the price was determined – giving them confidence and an assurance they were getting a fair deal.
Ensuring a fair price when selling
Our research revealed that when trading-in an automobile, one of the customer’s greatest anxieties was that often there appeared to be no science behind a valuation. Secondly many described how valuations were often carried out in dingy backrooms out of view of the customer.
Therefore, we devised a defined, standardised process which is conducted in front of the customer. The evaluation involves a trained individual calling out every single component, defects inside and out. This very detailed and forensic method of valuation works because it enables the customer to understand how and why the car dealership has arrived at a particular trade-in value.
By designing a customer friendly process that includes flexibility, transparency, and professionalism; we believe we are introducing industry changing improvements. To date, the response has been overly favourable, but we do not intend to stop. Our goal is to continue to innovate and improve our model for years to come.
Stay tuned for my next post, where I’ll reveal how you can develop and manage a process based innovation portfolio.