In terms of customers, a stakeholder is an entity that is served by an organization, receives goods or services, and may have the ability to choose between different products and suppliers. The entity may be an end user or external customer outside the organization or an internal customer who holds a position within the organization. “Customers” need not be served directly by an organization. Intermediate customers’ expectations or requirements must be carried forward through a series of requirements definitions and/or service contracts.
- Continually and systematically listening to the “voice of the customer” is probably the most important thing a service organization can do to ensure success. Essentially every successful current methodology for quality and process improvement begins with understanding customers’ needs and expectations. To cite just one example, “[The] theme at the heart of Lean Six Sigma: quality and value can be defined only by the customer.”1)George, Michael, Lean Six Sigma for Service (New York: McGraw-Hill, 2003).
- Any market research firm will confirm that the first thing they must do when given a list of customer contacts is to verify and correct the list. This suggests that many companies do not know who the specific people are that make and influence buying decisions. Identifying key stakeholders is a necessary first step to understanding needs, expectations, and evaluations.
- Identifying the customers and critical stakeholders of a service organization is not a trivial exercise. Sometimes it is difficult even to identify categories of customers. Consider the example of a large property and casualty insurance firm that must decide whether to consider its independent agents and brokers to be “customers.” If the agents and brokers alone make the decision whether to offer the company’s products to clients and choose not to , the end-user customers could not buy from the company. Understanding and meeting the needs and expectations of the agents and brokers could thus turn out to be the single most important step the company can take to to stay in business.
- Expanding the definition of “customer” past the concept of service procurer is therefore useful. A “customer” is anyone whose perception of the value offered can affect whether or how an organization continues to deliver those offerings. This includes the following:
A client is a person or other entity that receives or purchases goods or services from an organization. While the term “client” traditionally is used for customers of professional services (and a few others, such as clients of a hotel), “customer” will often be used to refer to this role.
An end user or end customer directly receives the service or employs the product. End users are not the only customers, as there may be intermediate entities,such as purchasing departments, whose expectations or needs must be carried forward through a series of service contracts or requirement definitions.
Another example of non-end user customers, for example, can be found in educational institutions. The student or person receiving the service (education) is not the only stakeholder whose needs must be taken into consideration. Educational institutions must also consider the needs of parents, grant providers, and future employers, as their needs impact offerings to some extent.
An internal customer is a person that holds a position within the organization and receives goods (such as work-in-process) or services from fellow employees.
An external customer is someone who is not employed by the service-providing organization.
- Every employee is an internal customer. (See Employee Focus in this body of knowledge.) Failure to meet the business-related needs of employees creates employee frustration, one of the key drivers of employee turnover, which, in turn, is one of the factors in external customer dissatisfaction. Frustrated front-line employees also find it difficult to provide the continuing high levels of service their customers expect.2)Rosenbluth, Hal, and Diane McFerrin Peters, The Customer Comes Second: Put Your People First and Watch’em Kick Butt (New York: Harper Business, 2002); and TARP Worldwide, “Treating Employees as Customers,” working paper, 2007.
- A customer may or may not have the ability to choose between different products and suppliers. Examples include in monopoly situations such as local telephone and cable television services, scenarios in which end users do not make the purchasing decision, such as for clients of social service agencies or court-appointed lawyers, or for employees of an organization where the purchasing department makes the choices.
- Distribution channels (brokers, agents, independent shop owners such as in the styling salon business, etc.) are critically important customers who are key figures in direct contact with your end customers. However, it can be a mistake to rely upon them for all end-user understanding. Distributors and end customers usually have different priorities and objectives. While the end-customer knowledge available in distribution channels is a valuable resource, wise organizations also conduct direct voice-of-the-customer research with end users and the influencers of buying decisions.
References [ + ]
|1.||↑||George, Michael, Lean Six Sigma for Service (New York: McGraw-Hill, 2003).|
|2.||↑||Rosenbluth, Hal, and Diane McFerrin Peters, The Customer Comes Second: Put Your People First and Watch’em Kick Butt (New York: Harper Business, 2002); and TARP Worldwide, “Treating Employees as Customers,” working paper, 2007.|