The ins and outs of internal customer service

Citation

(2002), "The ins and outs of internal customer service", Measuring Business Excellence, Vol. 6 No. 1. https://doi.org/10.1108/mbe.2002.26706aab.004

The ins and outs of internal customer service

The hyper-competitive business environment of the new millennium, coupled with an impending recession, has forced organizations to increase their emphasis on service quality. Today, companies need to ensure their customers are entirely satisfied in order to simply stay afloat, let alone flourish. CRM (and consequently quality), always classed as essential, has now become paramount.

The internal initiative

One concept to emerge from this drive for quality is internal customer service; the idea that an organization consists of an independent chain of individuals and functional units, each taking inputs from one another and turning them out into external customer service.

The basic assumption is that if everybody strives to provide their "internal customer" with better service, then the end customer will receive higher quality service.

The idea, in theory, seems a good one, but does it make practical business sense? Are there any drawbacks to seeing people within your own company as a customer as opposed to a colleague? And have there been any notable successes or failures of this model in recent years?

Driving forces

The concept of the "internal customer" evolved, in part, from two perspectives:

1. 1.

   Process management – practices that emphasize the processes of an operation, rather then the actual results.

2. 2.

   Continuous improvement – forcing organizations to recognize that future changes will be needed to ensure future competitiveness, regardless of current success.

In short, internal customer service can serve as a useful framework for implementing a process approach to quality management on a continuous basis.

Internal customer service as it is now

Internal customer service ensures process improvement on a continuous basis. Departments receive work from process work for other departments so need to view themselves as customer and suppliers, thus: departments – receive inputs from another department (supplier) – add value – send output of work to another department (customer). In this way, processes (and therefore, quality) can be improved.

But what if, as a customer, your department is not satisfied with the service you receive? Where can you go? Of course, in a free market situation the external customer would simply find another company, and as such, force organizations to provide top quality service. But you cannot do this – you are the deficient organization.

A simple solution to this dilemma is to introduce the possibility of outsourcing, as the risk of being eliminated consequently forces each sub-unit to provide the best, most efficient service. Alternatively, "internal guarantees" could provide the answer. The idea is that departments incur penalties for not living up to the expectations of other units of the business. This can improve organizational performance in three ways:

1. 1.

   A true spirit of teamwork and partnership develops between different parts of the organization.

2. 2.

   An environment of blameless error takes hold, wherein employees are rewarded, not punished.

3. 3.

   Continuous dialogue and feedback begin with progress, problems, and processes.

So does this all work in practice? For some companies the answer is undoubtedly in the affirmative. Just ask San Diego Gas and Electric Company whose managers' salaries are tied to how the other departments view them, or UPS, who have many internal employee satisfaction evaluations because, according to their CEO, Kent Nelson, "employee satisfaction equals customer satisfaction at UPS".

Should internal customers exist?

But of course, like all such concepts, there are potential drawbacks. Getting departments to work together is not always easy. Many employees have little incentive to co-operate and don't view their function as "serving" others as they have never been in a "customer service" position. It is not easy for an organization to alter these deeply ingrained perceptions.

And even if you overcome these perceptual and intergroup difficulties, are there deeper, more detrimental, reasons for rejecting the internal customer service approach? Four reasons against internal customer service immediately spring to mind:

1. 1.

   It diverts attention away from the real customer who pays the bills. Market forces are changing so quickly today that everybody's focus needs to be on the outside. Internal satisfaction could be irrelevant to the end goals of the organization.

2. 2.

   It can foster a climate of "turfism". Departments that do not deal directly with external customers may feel that as long as they can document service to an internal customer, their service must be legitimate and necessary.

3. 3.

   There will be general organizational deficiencies. Instead of isolated departments and internal groups, why not have cross-functional, multidisciplinary teams?

4. 4.

   It can foster a dominant-subservient relationship in organizations. Think of the consequences of carrying over the statement "the customer is always right" into a traditional, internal organizational structure. We should forget about "serving" colleagues and consider them equal partners with the same goal.

Resolving the conflict?

So, is internal customer service a useful, constructive entity or does it focus too much on the inside, leaving little time for the real, paying customer? UPS and San Diego Gas and Electric have shown that this idea can genuinely produce results, but perhaps it is a little more complex than the simple model of A serving B serving C and so on.

Arguably, by operating as customers to each other, you may shift the focus in an undesirable direction, but the purpose of developing this notion was to bring to life the concepts of process management, continuous improvement and to force individual sub-units to demonstrate the value they add to the process. These time-tested tools are necessary for organizations wishing to improve quality and remain competitive in the global economy. If the internal customer service perspective helps your firm to succeed then it is an important perspective.

Perhaps the answer lies in thinking semantically; internal service is simply good management with new terminology. Consider, for example, that providing high levels of internal customer service could simply be defined as implementing traditional management techniques such as empowerment, training programs, and enhancing communication to provide faster service.

Internal customer service is a popular concept that is neither right nor wrong. Like many other management tools, it is simply another potential method of bringing the best out of employees in order to meet the increasingly demanding needs of the paying customer.

Practical implications

• •

  Internal customer service can serve as a useful framework for implementing a process approach to quality management on a continuous basis.

• •

  By describing itself as "customer service", the human factor is also incorporated into this process.

• •

  Advantages – encourages teamwork, continuous dialogue between departments and process improvement.

• •

  Disadvantages – it potentially diverts attention away from the paying customer, can create "turfism" and increases the chance of general organizational deficiencies.

This is a précis of an article entitled "An empirical assessment of internal customer service" which first appeared in Management Service Quality, Vol. 11 No. 5, 2001. The authors were Steve Farner, Assistant Professor, College of Business, Bellevue University, Omaha, Nebraska, USA, Fred Luthans, Distinguished Professor of Management, and Steven M. Sommer, Associate Professor of Management, at the College of Business Administration, University of Nebraska-Lincoln, Nebraska, USA.