Dimension Three: The Service Process

Knowing and Improving Your Business Process

We normally just do it without being conscious of how it's done.

The reason: You have always done it that way.

There's always a form somewhere that tells you someone is receiving something in some point in time or at some point in the process.

You will most likely know what was not done rather than what was done exactly because something does not arrive at some point in time or at some point in the process.

To pass on this process to someone, you will most likely do a show-and-tell routine. This usually happens when somebody doing this process for you leave.

Your Show-And-Tell routine:

You show the new guy the general way of doing your stuff describe it in broad terms and then show him how it's done.

This is an approach where your new guy will come to you hours after with a bundle of forms (to ask you how he's going to fill it up).

After that, he is going to ask in what part of some procedure (which you also forgot to tell him) he is going to use the forms.

You tell the guy the process and the forms he is going to fill up in some part of the process.

This is an approach where you use a full day telling him about the voluminous forms he is going to fill up in each part of the stuff you do.

I did a study of a merchandising store several years back. The store had 44 different forms just to track inventory from delivery to store display.

After going through half of your forms, you really won't have time to show him anything else.

You tell the guy how you do your stuff in general terms then proceed to give a blow-by-blow description of the step in each part. Because of the gory details and the far-away look of your new guy, you drop the show-the-forms routine altogether.

You're so dedicated to indoctrinating the new guy of your management style, you show him everything.

You describe the stuff you do, you give him all the colorful details, with specific instructions on how to use forms in each step, and actually, watch him do it himself.

This usually takes weeks and months to finish.

Halfway to your indoctrination program, your accountant calls because of a late income tax return, you have upcoming deliveries pending, and a customer complaining about warranties.

All these usually happen when you least expect the taxman to walk through your door.

You get your new guy to ask the questions because he is going to ask it from the point of view of the dumb or the ignorant.

He is going to ask a lot of questions. He will probably be asking the right ones too.

Don't believe about all that crap on security and confidentiality.

If you are not paying your employee more than half of what you are earning, that employee will be your worst threat to security and confidentiality when he leaves.

If he leaves because he hates you, and your competitor gets hold of your guy, your competitor is going to pay him well to beat you at your own game.

If your guy left because he is smarter than you, you can bet your mother's wedding ring that he is being paid more than half what you are earning.

What have we done so far?

• We defined the profile of your customer (Dimension One: The Customer).


• You have identified what bugs your customer and have realized the benefits for your customer when his problem is solved and more.


• You have come up with a way to remove what is bugging your customer by creating a service. You even have a name for this service.


• You have a general idea of how to deliver your service or are at least able to describe it (Dimension Two: The Service Concept).

Now we are going to tie all of these together. We are now going to build a system or structure to make things happen in your business and deliver the product or service you are selling.

We are now going to build your customer service piece by piece.

Building Your Customer Service Process

The critical component that makes a service great is the process. You must have a good picture of how your process works.

In fact, you literally must have some form of picture or diagram of your process.

You must be able to manage the process so you can deliver results. To ensure the integrity and quality of the process, you must be able to have some form of documentation.

Through documentation, you can institutionalize the process and preserve the quality of whatever you deliver.

Make sure you can maintain and protect the integrity of the process and its anticipated results by devising a mechanism for feedback in each stage of the process.

Process Flow

The process flow is the general description of how one part of the service starts and where it terminates.

Usually, it is better represented in a diagram called a process flow chart.

The major parts or chunks of the service are described in boxes connected by a solid line connecting each of the boxes in a logical and sequential flow.

Very easy to state above how it is but putting it on paper is really another thing. When I let the client's staff document their process, they really have no idea what I'm talking about.

You must be able to distinguish between key business processes and procedures.

A process is better represented by boxes and lines while a procedure is really a set of specific steps to get a task done.

What you will see really in a procedure is a title, a short description of what is this procedure (usually includes what is the expected result), and the specific steps for example Steps 1 to 7 on how to start up a machine.

If you have to do this yourself, don't be surprised if your people give you a procedure instead of a process.

9 out of 10 supervisors in departments from different organizations will not be able to diagram their processes clearly.

It's fairly easy to see this.

Simply ask them to diagram the start and the end of the process in their department or team and include the feedback mechanism.

Usually, you don't have to look at the whole process anymore.

Give your most senior operations staff this homework to be submitted the next working day.

Go ahead and try.

When I was doing it for the company I worked for I don't know if I should laugh or cry when I saw their homework, but that was a long time ago.

Management of Process and Results

Most organizations have layers of processes and procedures without really appreciating the purpose or objective of these processes or procedures.

A process must have an objective or purpose. Without any objective or purpose, a process is literally a practice of futility.

It is a formal way of going through the motions.

You must be able to define what the process is supposed to accomplish or to achieve.

Once you know what your process is supposed to accomplish, you must now determine what resources will be needed to make the process work and who should be doing what to complete the different components of the process.

You must synchronize all the tasks and coordinate the people involved to ensure the process works smoothly.

You must be able to establish accountability for the integrity of the process.

Controls must be established to protect the integrity of the process.

You must find a way or institute mechanisms to inform you what is happening at every critical point of the process.

It is also important that you already have the necessary procedure to act when things don't go the way you plan or expect.

Designate someone to be accountable for the integrity of the process and another for the desired results.

If you are frontline staff, you will most definitely be accountable for results.

It is the first-line supervisor, team leader, or immediate superior who will be given the responsibility of ensuring that you follow procedures, keep within standards, and get the resources you need at the right amount and moment to get your job done to achieve the objective.

Documentation of Process

The most significant piece of documentation you should keep is the process flow of your key business processes followed by the process flow chart of your customer service program.

In the process flow chart shall be the key positions responsible for the integrity of the process and key positions or teams responsible for results.

Your documentation of the process flow chart should include where the process begins and where it terminates.

Anyone reading the process flow chart must be able to discern if a document (a report or completed form) is needed to start, complete a key component of the process, or if the component will generate another document.

The duration in man-hours or man-days should also be reflected to provide information regarding the time required to complete each key component of the process.

Documentation of Results

To be able to document results you must know beforehand what results to expect and what exactly to document.

When you are documenting a customer service event, you are confirming two (2) sets of events: the completion of a process; and the delivery of customer benefits (product/service).

The documentation of the completion of a process enables the customer service manager or leader to monitor

• the beginning and termination of an event


• the proper execution of a process

The documentation of the delivery of customer benefits enables:

• the leader to know if delivery has been completed


• the customer service staff to confirm or validate acceptance of delivery by the customer and the customer's level of satisfaction


• the customer to know and validate that a service has been rendered or a product has been delivered and that the customer service personnel has conducted the delivery in a manner acceptable to the customer

In most service providers, the official receipt and delivery receipt are enough documentation.

The best service organization however institutes a separate documentation process after the completion of delivery.

A telemarketer or account manager can have a delivery and satisfaction checklist and call the customer to validate if indeed delivery was conducted in a manner compliant with internal service standards and according to the customer's satisfaction.

The level or degree of detail is really dependent on the commitment of the organization or service unit to customer service standards.

Feedback Loop

The essential part of managing the customer service process is to get feedback. You must know if every component of the process works and if the results are actually achieved.

You must integrate a feedback mechanism into the process.

The feedback mechanism must do a lot of things for you. It must help you:

• Confirm and validate delivery of product or service (achievement of an objective)


• Measure your cost of delivery or management of process


• Gauge the ability and capability of the process and human resource to deliver product or service (delivery of benefits)


• Open a channel of communication with your customer about the content and process of delivery of the product or service


• Collect data to improve the content of the product or service or the process of delivery


• Determine the state of your relationship with your customer


• Assess the conduct of your human resource in the presence of customers

Feedback mechanisms can come in the form of a report, a completed form, a message (an email or fax), a mechanical trigger like a door opening, or an item physically brought in.

It could be anything that will trigger an action or a response from either your customer service team or your customer.

It must be able to capture information about the quality of your service delivery or the end result of such delivery.

The content of your feedback must be actionable or it must have relevance to your ability to respond to the customer or improve your ability to respond.

The bottom line is: What will you do with what you know?

The next post might be something you would want to read through more thoroughly. It touches on specific tools I used to make my work easier in managing Customer Service programs.

Dimension Two: The Service Concept

Nothing can be more frustrating and painful to a product manager than the prospects of seeing one's product or service at the crossroads of its slow down or demise.

In this case, you should have already taken note of indicators that you are approaching this crossroad.

Unfortunately for start-ups, they do not have the tools or the experience to anticipate this.

A Concept in Constant Evolution

A product or service is always in a constant state of evolution simply because the users of these products or services have needs that change constantly.

If you have a product or service concept that was designed with real customers(as against a perceived one) in mind, the evolution of this product or service will be seen.

A good product or service manager will be able to see it evolving from one stage to another or from one life cycle to the next.

If you got your eye fixed on the target, your customer, you will see their needs changing.

Consequently, you respond to these changes by either adding features to your product or service or changing the product or service entirely.

If you started your customer service program around an offering with no clear product or service concept, you will find yourself in a perpetual state of tweaking your customer service programs without really knowing why some features work and why some don't.

You are the proverbial blind man concluding an elephant is hairy because you're holding its tail.

Now, how do you get your product or service concept right the first time?

You go back to knowing your Customer!

If you think you're doing fine with the way you're managing your customer service, you don't really have to do this.

Good luck!

Haven't you noticed it's easier to compete when most of the enterprises in the community are doing their customer service wrong?

You win by just doing nothing.

Get Your Service Concept Right the First Time

Prior to creating the concept, you must have a very clear idea of what you are trying to do to your perceived customer.

Are you solving a really nagging problem?

Are you removing their "pain" so they can go on doing what they must be doing?

Are you helping them gain more profit or cutting down costs?

Do you know exactly how to solve a problem or remove the pain?

Can you see the process or procedure in your head as it happens?

Can you draw a rough diagram or flow chart of how the process is actually happening?

If you take the product or service apart, can you see how each part functions or leads to another procedure or process?

If you can clearly put the answers to these questions and resolve most of these issues, you now have the raw material to create your service concept.

The Dimensions of A Service (or Product) Concept

The service concept can be created by effectively getting the right combination
of the following:

Features

Features are descriptions or words we use to describe the nice things we see about our products or service we perceive are relevant to the customer or provide triggers in the mind of the customer of what is relevant.

A technical description of a product can be its set of features. Completion dates, duration of service, ancillary products delivered with the service can be the service features.

Benefits

"Benefits" is the generic word we use to refer to the solution our service delivers or the things that ease the customer's "pain".

The benefits must specify exactly what pain is removed, how much cost is lessened, or how much profit is gained.

If you are offering computer maintenance, for example, the benefit of maintenance coverage is less downtime, no unexpected service fees, better management of maintenance cost, assurance of spare parts for the machines covered, and full documentation of asset history and status.

All these benefits are not perceived by the same types of customers.

Users benefit from less downtime and assurance of spare parts.

Your customer's finance department will value the more stable service fees and better management of maintenance costs. Top management will be able to monitor computer assets for purposes of planning and deployment.

Deliverables

Deliverables are items related to or part of the product or service that must physically be handed over to the customer.

It is important that deliverable items be used to mark the beginning and end of the delivery of a product or service.

Deliverables may come in the form of an official receipt, delivery receipt, warranty form, a gift, a coupon, or a report.

Your customer must see a tangible item delivered to signify the beginning and end of service whether that service is paid or for free.

Components

Components are functional parts of a product or service. In a product, this could be very easy to see. It will be quite different looking at a service.

In service, your customer must see you actually doing something for them.

For example, when designing a maintenance service you can probably break the
components of the service into diagnostics, preventive, and remedial service under a brand called Premium Service or Platinum Service.

Product or Service Brand

Your product or service brand is the official or formal name under which you will sell or market your product or service.

Today we generally refer to this as your product or service brand.

You must choose a name that will make your customer remember the product or service and tie that product or service name to you.

You can gain good leverage if the brand name you choose creates a picture in the mind of your customer of the benefits gained from your offering.

Your service concept is a creative combination of all of the above.

Your customer must be able to picture the value of the service or product as it is being used.

The key is that there must be a picture or visualization of the features, components, deliverables working together to deliver the perceived benefits from using or consuming the product or service.

Get your service concept in writing. This is the only way to find out if everybody sees the same thing.

If you or your service team can't seem to agree on the service concept, how can you expect a total stranger like your customer to get a hint of what you're offering is all about.

Here's a hint if you got your service concept right.

Building Your Service Concept

Get your service or product people to work with your marketing or sales guys to come up with a product or service flyer or pamphlet.

Your service or product guys can probably define the components and features.


Your marketing or sales guys must be able to understand and visualize these features and components in their heads.

Both of your product (or service) and marketing (or sales) people must agree on what exactly are the deliverables. These deliverables will constitute the company's "contract" with prospective customers.

Deliverables will definitely end up in the terms and conditions of your service agreement (or contract).

The next step will be to come up with the right choice of text and editorial style to convert these features and components into benefits.

Remember the section "The Customer" where the question "What does your customer need?" was raised to get to know your customer?

The benefits should directly meet the customer's needs!

If all your people seem to agree with what they're doing so far, then you have just nailed down your service or product concept.

Once you roll out a service or product, you need to keep track of how the benefits are delivered or which of your products or services are performing well.

You also need to remind your customer what products or services are delivering the benefits they paid for.

You need a name to go with the product or service and tie this name with the benefits enjoyed by the customer.

You need to create a service or product brand.

This name is what you will commonly see prominently printed on brochures, handbills, flyers, streamers, and pamphlets.

This is your brand.

I have helped develop service concepts for training, computer maintenance, climate control systems, retail, security services, and a number of product and service brands.

Unless customer service and marketing people truly appreciate what makes up a service concept, it will be very hard to weave and connect the many elements of customer service down to doable procedures or delivery systems.

The next post will be about your Service Process. Do log on again!

Dimension One: The Customer

Who is Your Customer? Oh, yisshhh here we go again.

Don't give me that oh-yiiiissshhh-here-we-go-again, scratch-your-head, and look-at-the-heaven routine.

You should have been asking this question over and over again until you are convinced you truly know who is paying your salary, your rent, your benefits, and hey, your Christmas bonus.

• What does your customer need?
• What are the current products and services you have that meet this need?
• How are you going to deliver these products and services to the customer?

I can bet you have no clear answer to these questions until now.

I would not even wonder if you are five or ten years in the business.

You would think that the question should no longer be an issue because most business should already know their customer before they should even start selling anything.

Unfortunately, most businesses did not start by asking themselves who is their customer.

They started because they saw or have observed somebody making money doing something and they just ended up really following the other guy.

The issue of who is the customer only comes after they start realizing that money comes in a trickle or none at all.

They don't even ask: Who is the customer?

They simply ask why?

Understanding The Same Thing, Thinking The Same Way

Let the lead technical person in your company write his answer to these basic but relevant questions.

What does your customer need?

What is the current product and service you have that meets this need?

How are you going to deliver these products and services to the customer?

Do the same thing with your lead marketing guy.

Don't let them discuss. Just let them write it on scratch paper.

Don't let them write more than seven points. No paragraphs just short key points.

If keywords match, that is a positive thing.

If your two lead persons are the people who define the function, the process, or work methodologies in their respective department, unit, or team, you can conclude that they are in sync.

You can have a lot of perception and coordination problems if this is otherwise.

Then again this is just perception.

You will still need hard facts to validate if what you perceived is the condition that actually exists.
The hard facts you need lay underneath a lot of your data or databases.

You need to analyze what you have.

If your key people say that more than half of your customers are companies rather than home-based people, then your data should tell you that.

Is your data telling you that?

The data you take for granted can yield a very surprising amount of truths about your business.

Are you ready for the truth?


Or is it easier just winging it?

Oh, you're not winging it! 

So you're doing SWOT - Strengths, Weaknesses, Opportunities, and Threats Analysis.

Hey, that's great!

You can read more about SWOT in the post "The Business Plan" and if you have time, you might get a copy of a workshop tool I used for business planning.

Knowing Your Customer Needs

If somebody asks you if you want your car or air-conditioner maintained, you would most likely say no.

Most of the time, we don't find good justification to pay somebody to take care of our most precious assets.

But, when your car or air-conditioner gives up on you on a bad day, you will surely pay up when the repairman gives you the bill.

Why?

Why do you think it is easier to pay up now?

Simple, you now have a problem.

This problem needs to be solved now not later.

Grudgingly you will pay up.

The lesson here is that if you have a solution to the problem and you are around or at least the person with a problem knows you're around, you get to send the customer the bill for your solution.

You get paid.

You get paid every time.

This lesson is telling you: You should know your customer's pain areas.


What bugs them?


What problems irritate them the most and how frequently?


What issues confront them at home or at work?


How much are they spending to get rid of the problem all the time or how much do they pay to get rid of the pain the problem is giving them?

You don't have to go far to get a feel of your customer. Ask yourself what bugs you? What gives you pain?

You must be able to recognize who is actually making the decision to use or to buy.

Know Who Will Benefit the Most

You must know who will actually benefit from what you are offering. This is the user.

You must anticipate that the person, office, or organization making inquiries about your product or service may not eventually end up using your product or service.

Have you ever observed your customer using the product?


Do they actually use it the way it was designed to be used?


Are there other uses for the service or product that you have not actually seen?


Are there other benefits aside from what you anticipated the product or service should deliver?


Do the benefits actually derived are as perceived?

The thinking process or the decision process that follows is as unique as the ultimate users of your product or service.

Although you cannot change the product or service, you can, however, vary the way the product or service will be perceived.

The customer service program must accommodate these varied perceptions and decision-making processes in its design.

The process therefore that supports your communication may not look at its ultimate customer the same way as your delivery process.

The communication process may be designed primarily to support technical evaluators and decision-makers but your delivery process may be designed to support the ultimate user of your product or service.

When I used to sell computer maintenance services, I have seen how the service is perceived by different users.

Management sees maintenance as protection of assets, the department using the computers sees it as a support and leverage against downtime, and finance sees it as both cost and as a good source of information for determining how computer assets are actually used.

You can see that your perceived customer for the same service may not just be one category.

In my experience, even reports, if you package it well, can be a distinct service the aim of which is to satisfy the need of another set of customers inside an organization.

You can bill customers for more comprehensive reports aside from the usual incident reports that go with the statement of account.

This is assuming you have a good process for documenting the results of a specific service.

Know Where the Customer Is in His State of Need

Customers don't grow the same way and at the same rate.

These alone should tell you that even customers from the same category or industry will not necessarily have identical requirements in their "need" evolution or maturity.

Customer Service programs must appreciate that customers grow.

Your programs must evolve with your customer.

The variation and growth of customer needs must also translate into varied services that specifically serve a customer in a phase or stage of its growth.

When I created a service concept for maintaining personal computers, I already anticipated that we need to support these PCs once they get linked physically through cables.

Not only did we anticipate the physical inter-connectivity but we did see the coming of the nuances of managing this connected hardware resource through different network operating systems.

Why did we anticipate it? Did we suddenly see the future of Microsoft of Novell? Did we see the network operating system coming to the market?

Actually, what we saw was more mundane. We saw the ease by which new users came to adapt desktop PCs into the workplace.

We knew something as good and as easy to use as desktops will become a necessity to ordinary office workers just as calculators were.

We simply saw desktops PCs growing in number in our heads as the business grew.

We see more people getting hired to do more things.

I already saw that we were going to see different needs coming from this growth.

Eventually, I had to study the difference between Microsoft Windows NT and Novell NetWare.

I had to talk to our most experienced service team leaders in the Engineering Division.

We had to change the way we respond to customers contemplating connecting their PCs.

I have to get my Marketing Assistants new sets of reference materials and develop most of them from scratch so they can respond to questions about the different networking technologies even those that were not yet commercially available.

I already drafted a new version of our maintenance agreement specifically tailored for the new networking technologies even though there were no inquiries yet about maintenance services for computer networks.

I firmly believed that we had to be ready for a new phase of growth in our customer's IT needs.

It was a bit funny looking back at it because we were already creating a service concept for a need that even the customers have not anticipated nor signified they would look for.

The process and the forms I had put in place did help tremendously to capture the customer data I can use to anticipate the customer need that evolved.

Knowing Where Is Your Customer

You must be able to know where is your customer at certain times or frequencies.

Do you find him in a mall, in a convention, in his home on a weekend?


Is he in tune with a certain TV or cable channel?


Where does he get his news?


Is it from early morning news (radio or TV) or is he subscribing to some form of periodical?

You must not only know where he is physically but where his mind is at a certain moment.


What is he thinking about on a Monday or midnight Saturday?


What occupies his mind during summer, Christmas or Halloween?


What is the customer most likely going to do or where he is going to be on a holiday?

In the customer's phase of growth (start-up, ongoing or mature), do you offer services that benefit them while they are a start-up?

Is there another service if they start branching out? Or can you still serve them when they start opening up satellite offices in other cities?

Will you be able to serve them just as efficiently and as cost-effectively?

Is the size and quality of your human resource up to the challenge?

Is your cost accounting structure flexible to accommodate the creation of new forms of cost? Is your own expansion seen as a cost or investment?

Are your training programs progressive enough to adapt to the changing and expanding responsibilities of your team?

Know Who Will Actually Pay

The most important thing is to discern who will actually pay--The decision-maker.

If you have to remember anything about knowing your customer this last thing should be it.

Most of the mistakes salespeople make when qualifying institutional prospects, is in not understanding the decision-making process of organizations.

You will not be able to pin down who will eventually sign the check if you do not understand the decision-making process of your customer's organization.

Your communication process for reporting action taken or easing up payment terms and writing your terms and conditions in a service agreement may be greatly affected by the perception and action of the person eventually paying for the service or product.

Getting Your Customer Profile Right

Do you have a list of your primary customers who contributed 80% of your gross revenue last year? 

(Remember the official receipts and the delivery receipts? This is the place to start.)

Can you tell which products or services did your primary customers buy or pay for? (See, you're still going back to that delivery receipt and official receipts.)

How much of each of the products or services did they buy? (Need I say more?)

Do you know which of your customers were the most expensive to serve or the cheapest?

Can you rank your products and services according to net profit contribution?

Which of your customers was paying for the products or services providing the most net profit contribution?

Can you categorize your customer under a special group or groups based on the services delivered and mode of payment?

What is the demographic profile of the contact persons in your institutional customers?

Is there a common profile in terms of age, industry, sex, civil status, length of service in the company, rank, etc.?

Are certain groups of customers using certain products or services because of their industry, location, size, market share, market niche, profitability, etc.?

Do you have quantitative and qualitative descriptions of your existing customer?

The problem really is that most entrepreneurs either don't care about customers or don't really consider knowing customers as an important part of their day job. 

You as an entrepreneur have to change the way you see your customer.

You have to change the way you take in or see things.

When you started as an entrepreneur, you were great at doing it. 

Eventually, you will have to shift from being the Big Boss to being a manager with a system and a process. 

You must evolve.

But then again, you may need to satisfy your ego first. It may take a while before you get over that.

Usually, you'll be saying something like: "I've lasted this long in this business, why would I need to change myself at this point in my success!"

I guess you're an immortal and not too worried about getting old and dying like the rest of us. 

Yeah! Go right ahead. Don't change.

Even the biblical Moses took so long to make up his mind before realizing he was the One. 

God had to orchestrate a lot of difficult circumstances before Moses came to the right frame of mind and took cognizance of what ought to be.

He single-handedly convinced the Jews that they need to look at a greater plan.

His management style was not near any form of democracy we know now.

Even Moses had to accept that he has to change his management style.

I read Moses was more than 80 years old before God asked him to delegate to 10 capable men.

With each of the ten selecting ten more down their own tribes or clans.

It was the first official act of delegation with a specific structure ever recorded on a document--The Bible.

It may not be a coincidence that the oldest and most successful of the militaristic states and societies have subscribed to this formula of delegation. 

Even God believed in changing structure and management style. He practically dictated the span of management to Moses.

You may like being a superstar and just winging it!

You'll probably be around the next hundred years or so managing your business and not worried about where you're really going, who's taking over, and who's supervising who.

Moses had his job literally cut out for him because God literally wrote the rules for him. The Egyptians were literally sick of him. The Red Sea was hands down a split decision which eventually led to the Egyptians being overwhelmed with a sea of challenges.

Eventually, Moses did accept his fate to be The Leader who was going to lead the Jews out of Egypt and into the Promise Land.

Customer Service: Who Is Your Customer?

Customer Service is easier to comprehend if we believe that the universal concept of good manners should also be considered common business sense.

When you look at it, organizations are made up of people.

Ultimately, the Customer even if your business documents say it's a corporation will always end up being a human being.

Have you ever seen a corporation as a machine?

We must therefore understand what we are really offering. We must know who are we doing all these for.

Who Is Your Customer?

When identifying Customers from the Customer Service perspective, you are only looking at two (2) major kinds: Internal and External Customers.

People in your organization who need your products or services to get their jobs done are your Internal Customers.

On the other hand, people or organizations outside yours who require and buy your product or service to satisfy a need or solve a problem are your External Customers.

You need to know the distinction between the two for purposes of managing processes and measuring results.

Both require respective Customer satisfaction metrics in some way to measure the quality of service or product delivery.

Your concern for Internal Customers is cost-driven while for External Customers it is revenue and profit-margin-driven.

The approaches to communication and service delivery will be different.

The proximity of Internal Customers to you makes it relatively easy to deliver Internal Customer service.

External Customers however will require different media or channels to communicate to you.

You will have no way to determine where your External Customers are, physically and in mind, at any given moment to specifically trigger communication.

If you are working for a retailing organization selling microcomputers and their accessories and providing maintenance service, you will have Internal and External Customers.

Your Accounting Department may have people who will be using PCs that will need your maintenance service.

It will be quite odd to tell accounting to go call your competitor for the service you already have in-house.

Your External Customer may be a company, individual or any organization using PCs that may need your services.

The quality of the delivery and the constitution of "good" Customer Service is hinged on the expectations of that Customer and the execution of the service.

Beyond the measurable results, the quality of the service or product is really based on how close we are to meeting and satisfying customer expectations.

Business Model Canvas by Alexander Osterwalder

The book "Business Model Generation" was written by Alexander Osterwalder and Yves Pigneur with the participation of 470 practitioners from 45 countries the objective of which is to come up with a simple, relevant, and intuitively understandable representation of how a business works.

The model is supposed to become a shared language among those who wish to create new strategic alternatives.

This common language is supposed to allow us to challenge our assumptions about the four main areas of a business: customers, offer, infrastructure, and financial viability.

From these four main areas of business, the Business Model introduced by Dr. Osterwalder and Dr. Pigneur can best be demonstrated via the nine basic building blocks that present how a company makes money.

These building blocks are key partners, key activities, key resources, value proposition, customer relationships, channels, customer segments, cost structure, and revenue streams.

Under infrastructure are three (3) building blocks: key partners, key activities and key resources.

Key Activities
These are the most critical activities that will deliver your enterprise's value proposition. 

The things you need to do to move assets so you can deliver value to your customers.

Key Resources
The resources you need to create value for your customer.

These are the assets deployed to support the business and make enterprise sustainable.

Partner Network
The necessary relationships you create and nurture between you and your suppliers to maximize gains from activities and reduce risks.

These relationships enable you to focus on your core activity.

Relationships include strategic alliances created between competitors and non-competitors such as joint ventures, cooperative alliances, etc.

Under the area of offering is your value proposition.

According to Alexander Osterwalder, your enterprise's value proposition is what distinguishes you from your competitor.

The value proposition is achieved through design, branding, status, price, risk reduction, convenience, usability, newness, customization, performance, etc.

The area of business that helps you focus on Customers is customer relationships,  channels, and customer segments.

Customer Relationships
Customer Relationships are driven by the business need to acquire customers, to retain them, and the expedient goal of generating more sales from each customer from each distinct group.

Customer Segments
According to the book "Business Model Generation", customer groups represent separate segments if

• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitabilities
• They are willing to pay for different aspects of the offer

Customer segments can be Mass Market, Niche Market, Segmented, Diversified, and Multi-sided Platform/Market.

Channels
According to Dr. Osterwalder, channels have five (5) distinct phases: awareness, evaluation, purchase, delivery, and after-sales.

In Awareness, we ask ourselves the question "How do we raise awareness about our company’s products and services?"

In the Evaluation phase, we need to help customers evaluate our organization’s Value Proposition.

When we get to the Purchase phase we seek out ways to allow customers to purchase specific products and services.

The question of how to deliver a Value Proposition to customers is the focus of the Delivery phase.

Once we have delivered our value proposition, we are now in the After-Sales phase where we figure out how to provide post-purchase customer support.

Finances always come in two (2) dimensions: The cost structure on one hand and the revenue stream on the other.

The business must determine where its revenue stream is coming from.

Will revenues come from transactions resulting from one-time customer payments or is it from recurring revenues coming from ongoing payments?

An enterprise can generate revenues from the sale of assets, usage fees, subscription fees, lending, renting leasing, licensing, brokerage fee or advertising.

The cost structure describes the cost that your enterprise incurs when it operates a business model.

You must understand how to distinguish between cost-driven and value-driven structures.

Are you leaning towards a simple reduction of cost to deliver value or are you focusing more on the creation of value instead of minimizing cost?

Business Model Generation is a concept that entrepreneurs can use to get an insight into their existing business and to create an enterprise the way they want it.

You can read these exciting possibilities in the book.

The book by Dr. Alexander Osterwalder and Yves Pigneur is available from Amazon Books.