I was working with a client today whose Strategy Execution framework I'm helping to build and automate. When we were talking about setting good targets for some key performance measures, I was reminded of an important lesson I had learned years ago about effectively measuring service levels: hitting average service level targets is not enough.
Several years ago, I worked for a CRM company that managed the laptops of very large companies' sales forces. If a sales rep had a problem, he or she simply overnighted the laptop to our company, we fixed it, and overnighted it back. We targeted a 4-day turnaround. In reality, we almost always turned around repairs and shipped the unit back in one -- or at most two -- days. Great, right?
Well, sometimes there were problems. Sometimes an incoming unit was put in the wrong pile. Or the rep didn't put the right RMA number on it. Or it was shipped out without a label. Not to worry, though. These kinds of thing were REALLY rare and we were always within our targeted 4-day average.
Come the end of one year, it was time to negotiate rates for this service for the following year. Naturally, we were looking for a small increase to cover our rising costs. The VP of sales for one of our customers not only didn't want to hear about an increase, he wanted to put the business out for competitive bid.
We couldn't understand it; all of our Service Level Metrics for that client were better than target. In talking to the VP, we discovered that his best sales person sent his laptop in to be repaired and didn't get it back for 23 days -- meaning he didn't have it for their national meeting or in time to submit his quarterly expense reporting. He complained to the VP often and loudly. Ouch. No amount of looking at the data was going to cool him down.
We added some new measures and escalation processes to make sure this situation wouldn't repeat itself. Most importantly, we added a measure for "longest time to close a case," and set a target of seven days.
This story illustrates an important point. On average, your performance might be good, even great. If you are not careful, though, you might have a tiny percentage of customers that gets horrible, embarrassing service. Depending on who those customers are or who they know, you could get killed by an anecdote.
The moral of the story: don't just focus on averages. Focus on reducing outliers as well. It's important to get better, but it is just as important to make sure you aren't lousy in anyone's eyes in the first place.
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