NHS & Marks & Spencer's

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The NHS & Marks & Spencer's

Abstract

The aim of this CRM report is to provide recommendations towards developing a customer experience improvement strategy for both the NHS and Mark's and Spencer's Food.

The key objectives throughout this report are as follows;

* To identify weaknesses in meeting the value propositions

* To identify the strengths based upon the organisations core values

* To apply and recommend CRM models and techniques which could enhance the customer experience

This report has identified issues with the current value proposition, management structure and budgetary consideration in relation to the NHS. These issues have been highlighted throughout section 1, which outlines how the current customer experience is being affected due to the silo management structure, by which the organisation is run. This type of management approach is creating issues throughout the NHS, which have been seen to create many levels of management, poor internal communication, motivational issues and low levels of empowerment amongst staff.

This report has also identified the key strengths of Mark's and Spencer's Food proposition and how the organisation engages with its customer's to improve their experience. However, it has also been highlighted that with the application of specific CRM models, the organisation would be able to improve their customer's experience in line with their value proposition as well as create a long term customer experience strategy.

The key conclusions and recommendations found in aid of implementing a Customer Experience strategy for the NHS was to change the current silo management structure to a more systemic approach which would ensure a more effective way to meeting the value proposition could be made, keep cost to minimum whilst improving the customer experience.

The key conclusions and recommendation found in relation to Mark's and Spencer's Food was to implement two CRM models for one customer experience strategy. After careful evaluation, it has been recommended that the applications of Round's model and the QCi Customer management (customer life-cycle) framework would be most effective. This would benefit the organisation in the following two ways;

* By moving M & S to a more customer valued approach towards engaging with their customers

* Monitoring the customer journey from beginning to end

If all models are applied then the customer experience will improve greatly over time becoming more aligned with the value propositions.

Introduction

This report will examine the performance of The NHS and Marks and Spencer's Food and is in two parts. Section 1 will be based upon an analysis of the current customer experience delivered by both. The examination of both organisations current performance in relation to their current customer experience will be highlighted through their proposed value proposition, the organisational structure, current internal and external problems and their approach towards customers.

Section 2 will give recommendations into how both organisations can improve their customer experience through the implementation of CRM models and techniques; that could benefit the customer's experience, whilst better enhancing and effectively meeting the value proposition, both strategically and efficiently.
This section will also highlight the significance by which these CRM models can benefit both organisations both short and long term, with little investment and a change in mentality and drive.
This report will conclude by summarising the importance of the recommendations for both organisations and the implications for both, failing to correct these issues. Comparisons will be drawn between the two with key models being conceptualised and concluded.

Assessment of Current Customer Experience

1.1 Introduction

This section of the report aims to assess and analyse both Marks and Spencer's food and the NHS in terms of their value proposition and their current customer experience. Both organisations are very unique in relation to their value propositions, however through analysing the current customer experience of both, there may be an opportunity for improvement through the application of customer relationship management techniques.

1.2 The NHS

2.2.1 Back ground

The NHS was initially founded on July 5th 1948 as a Labour incentive which set out to revolutionise the way in which UK citizens received health care. The NHS proposition was simple, to ensure all NHS services were available to all regardless of wealth, social class, age, race and gender.

The value proposition for this newly established organisation was one of the first of its kind in the western world, which aimed at replacing the old insurance based system only afforded by some. The Governments proposal was to finance the NHS through national insurance contributions and tax from UK workers and employers, who would each pay a share of the NI contribution, therefore providing a national health service applicable to all.

2.2.2 Problems with the NHS

Currently in 2010, the NHS is still experiencing many problems and issues due to both internal and external factors, which has in turn caused their value proposition to become distorted over the last 60 years of operating. The majority of these problems stem from the NHS operating with a very Silo approach rather than a systemic way of thinking, which is a main cause of increasing Government pressure and significant influence on how the NHS is run.

This increased pressure has resulted in the customer experience being distorted through these fundamental problems;

· A Post Code Lottery

· Waiting List Prioritising

· Regional Variation with the Level of Health Care Provided

· Prescriptions Paid for by Many

· Optical and Dentistry charges

However, these issues are almost all a derivative of the increased Governmental pressures and significant influence imposed on the NHS, in relation to how it's run. Fundamentally, this has in turn affected the way in which, NHS staff are able to strive and deliver, the organisations value proposition. This has been highlighted through centralisation and commonly imposed targets as well as a command and control culture seen across the majority of NHS hospitals.

These imposed targets have affected the level of care provided by NHS staff to patients, which has resulted in the practices performed being for the sake of hitting targets, which may be counter-productive to patient care. A common example of this is patients being moved to an overnight ward and treated as a part of morning rounds, if they cannot be seen within the four hour A & E target; they may otherwise have been seen within four and a half hours and had been discharged.

This type of command and control culture which imposes targets with a top down management level structure has meant that the NHS is commonly viewed as very bureaucratic, setting a comprehensive range of unrealistic and un-achievable targets and goals with the current silo structure in place. The underlining issue however, is that the value proposition has to be delivered in the context of these targets, which creates limitations with the flexibility that front end staff can provide to end customers, whilst creating a black and white mind set. This silo structure and command and control culture can be seen in the diagram below;

2.2.3 The Management Structure

The management structure within the NHS is typical of an operation that is using a silo approach within its organisation. This can be seen in the way in which the NHS operates through the following;

Ø Many Levels of Management: There are many levels of management within the NHS, which has created the command and control culture, which can be seen through most levels.

Ø Poor Internal Communication between Management Levels: There are many communication issues between the various management levels in the NHS. The poor internal communications are a prime example of how the organisation has not evolved its internal structure post-war.

Ø Poor control of actual and potential target conflict: As middle management set un-realistic targets with a top-down level mentality, the result is poor control of actual and potential target conflict, within the NHS as a whole.

Ø Motivational Issues amongst Middle Management and Front Line Staff: Issues concerning motivation arise amongst middle management and front line staff, whereby the Government's influence of setting targets and budgetary controls, leaves middle management and front line staff feeling disheartened and un-motivated within the job role. However, this always then leads to the customer experience being poor and the value proposition being distorted.

Ø Low Levels of Empowerment and Role Definition amongst Front Line Staff: As NHS staff working within an organisation that is built with a top down level mentality, it is very common to find low levels of empowerment and role definition amongst front line staff who are working the longest shifts, at the lowest end of the pay spectrum.

In 2008, a T.V series was aired called, “Can Gerry Robinson fix the NHS” which was made to highlight the issues concerning the management structure within the NHS with the result being that many of the above issues were raised.

2.2.4 Budgetary Considerations

The main issue with the NHS budget is simple; the target driven culture and bureaucratic management structure has resulted in their being significant levels of resource wastage. This in turn has left many frontline staff having to deliver the value proposition with inadequate resources themselves.

1.3 Marks & Spencer's Food
1.3.1 Background

Mark's and Spencer's is one of the UK's best known high street retailers, having been established in 1884 and currently being the largest non-food retailer in the UK. In 1948, Mark's and Spencer's introduced its food department which became one of its strongest SBU's within the organisation. M & S food is sold at present in-store, through the simply food retail network and with 338 food stores across the UK and a 3.6% market share, they have become one of the most recognised and valued brands of today.

1.3.2 M & S Food Value Proposition

Mark's and Spencer's food has become one of the organisations key strengths, which is built on core values embedded within their value proposition; “Quality worth every penny”. These core values have ensured that the M & S food proposition is focused around high quality, restaurant styled food.

Core Values:

* Quality

* Value

* Innovation

* Trust

* Service

Another key strength of the M & S food has been their ability to ensure that all customers play a key role within their value proposition, which is highlighted in within the Slogan, “Your M & S”. The advertisements for M & S food have been one of their strongest campaigns, which incorporates the organisation focused effort on delivering high quality food, built on core values which have surrounded the brands image, value and perception since 1884.

M & S food has always been perceived by consumers as very innovative with high quality and value associated with their range. There is also a high level of trust with the brand and the consumers which is supported by a friendly and efficient service that has been at the forefront of the customers experience in-store. As the M & S customer experience has always been exceptional with many maintaining a high perception of M & S food during their lifetime-value, the organisation has always scored higher than the average score for customer service in comparison to their competitors.

In a recent study produced by Mintel, three out of four M & S customers positively recommend the brand to friends and family as the value proposition has appealed more towards older, affluent consumers within the ABC1 categories of the social economic scale.

Below shows the perceived perception by M & S consumers of their food in relation to their strongest competitors Tesco's and Waitrose;

1.3.3 M & S Food Approach towards their customers

Mark's and Spencer's activity recently would suggest that they are taking a very customer centric approach towards their customers. They are currently running a ‘wise buys campaign' and a ‘dinner for two for £10', which has gained a lot of good media and press coverage as well as met the needs and wants of the majority of their customers.

One of their main objectives was to offer high quality food that forms the key element of M & S proposition with a value price that reflected current market conditions. They have also had the ability to highly customize the online shopping experience, which they have incorporated through their online shopping site, ‘shop your way'. An added addition to this is an online facility that allows customers to leave reviews for other customers, which is a very customer centric, interactive way to engage and understand the customer's experiences.

Mark's and Spencer's has also got a dedicated unit that scans the market for key emerging customer trends, which they can identify quickly and respond to customer needs. (CIU Customer Incite Unit)

2 Improving the Customer Experience

2.1 Introduction

The customer experience of any organisation can always be improved, which is the mentality of most regarding their customer's experience. Both the NHS and Mark's and Spencer's can defiantly improve this and do so through the application of CRM models and techniques, which will be highlighted in the section below.

The NHS has a very ‘command and control' culture which has resulted in the organisation taking a silo management approach towards work. To improve the customer experience, the organisation will need to take more of a systematic mentality and approach towards work, which will also benefit the customer experience in the long term.

Mark's and Spencer's Food is excellent at being customer focused, however to improve the customer experience they may need to try to analyse their ‘customer value and customer centricity' and how they can reach these as a progressive target.

2.2 The NHS

3.2.1 Command and Control (Silo Management) Vs Systems Thinking

After an analysis of the NHS and its current problems stemming from a command and control mentality, it would indicate that they have in place a ‘silo management structure', which is symptomatic of organisational dysfunction.

This typical ‘command and control' thinking was highlighted by Seddon, J (2003) in which he described the impact and result of this dysfunctional activity;

* A Top-down hierarchy

* A Functional design

* Decision making being very separated from work

* Performance measured through output, targets, standards related to the budget

* A contractual attitude towards their customers and suppliers

* The role of management is to manage people and budgets

* A built in ethos of control

* Change centred on reactive projects

* Motivation is very extrinsic

The result of the NHS being structured on a top-down management style mentality, structured around business functions, has ensured that the flow and drive of organisational development and change to meet targets are present throughout. However, Seddon, J (2003) explains that; ‘without there being some type of (Mechanism) or method for aligning the development of new capabilities across the organisation, inconsistencies are created within the customer experience.'

It has also been highlighted that; “Failure to recognise the relationship between the parts of a system leads to a Silo mentality. This focus is on parts of a system, rather than the whole, can be the cause of numerous organisational problems such as resistance to change.” A systematic approach to service improvement evaluating systems thinking in housing, office of the deputy prime minister (2005).

It is recommended that the NHS use a more systemic approach towards their organisational development and mentality, to run more as ‘a network with interdependent components that work together, to try and accomplish the aim of the system.' W. Edwards Deming, (1993)

It was also highlighted by Deming, who stated that, ‘A system must have an aim. Without an aim, there is no system. The aim must be clear to everyone. The aim must include plans for the future. The aim is a value judgement.' W. Edwards Deming, (1993). Although the NHS has a value proposition “its aim”, has increasingly become distorted because it is not fundamentally clear to all levels within the organisation.

It is also recommended that to combat and improve the poor internal communication between middle managers and poor control of actual and potential target conflict between them and front line staff, it should be viewed that the people work in a system. The sole purpose of middle- management should not be to manage the staff and budgets, but rather work on the system to improve it, with the help of front line staff.

Below is an example of the improvement that would come from a far more adopted systemic approach by the NHS;

This type of NHS systemic thinking would benefit the organisation and in-still a mentality of constantly improving the organisational learning and communication between departments; giving empowerment to low level front line staff, whilst creating role definition for many.

In turn, the customer experience would be more aligned with the organisations value proposition, which could be delivered more effectively.

2.3 Mark's and Spencer's Food

2.3.1 Rounds Model: Improving Alignment and optimisation- by design

It is recommended that Mark's and Spencer's food apply “Rounds” model which is used to improve alignment and optimisation by design. The foundation and principle behind Rounds model is to; “Help organisations align their operational and customer management capabilities to maximise the satisfaction, retention and value of both its customers and its employees whilst reducing operating costs and increasing return on capital investment.” Rance, D (2009)

For Mark's and Spencer's Food to understand their customer experience, they will need to look at two aspects of the cycle;

* What they intend as an organisation to happen at the point of a customer engagement

* What the customer actually experiences during and after this engagement

To analyse these two important aspects for understanding the customer experience in accordance with Round's baseball model; ‘Which represents the journey to customer centricity and is the customer dimension that is missing from most organisations” Round (2009) it will provide M & S Food with a language that will help define disconnects and misalignments within the organisation.

Mark's and Spencer's Food is currently sitting at “second base” on Rounds baseball model, as the organisation is currently focused on satisfying customers by creating a consistent customer experience through end-to-end business processes and driving continuous improvements. M & S Food are at a stage in their life-cycle whereby they have built a good reputation, a distinct image, consistently high quality service and products whilst creating a high level of trust with their customers.

It is recommended that M & S Food tries to move more towards “third base”, where they try to build on the foundation of their service excellence to maximise customer value through the application of strategies for each individual customer, moving from being customer focused to a more optimised customer value stand-point.

This application would mean that M & S Food would not move away from building customer loyalty through the customer experience but instead create “raving fans” through optimising customer loyalty and focus towards a mentality whereby the customers are valued more as individuals. However, I believe that Mark's and Spencer's would struggle to move towards “third base” and implement these changes within their system at this present time, as the effectiveness of their already customer focused approach is still being measured in success.

2.3.2 The QCi Customer Management Model

It is recommended that Mark's and Spencer's Food analyse the customer life cycle, using a framework which is at the centre of the QCi Customer Management Model.

“Customer life-cycle thinking is a prerequisite for practising excellent customer management.” Starkey, M (2000)

Mark's and Spencer's as cited before, is a very customer focused organisation and with the application of this framework they will be able to know which life-cycle stage each customer, as well as what proportion of the customer base is at, through each life-cycle stage.

Through the application of this framework, M & S food will be able to analyse the customer journey from beginning to end, which can be seen below;

Mark's and Spencer's Food should use the customer life-cycle framework within the QCi customer management model to ensure the constant flow of the customers journey. All parts of the cycle need to work together so that the customer experience can always be analysed in accordance with the organisations value proposition.

4.0 Conclusions

This report has examined the Customer Experience performance of The NHS and Mark's Spencer's Food and found a number of issues with both. The NHS has a value proposition which has been distorted due to many internal and external problems stemming from a very silo management approach centred on measuring performance based on output, targets and standards related to the budget; which are more commonly enough un-achievable both short and long term for different levels of staff.

Therefore, it has been recommended that the NHS take more of a systems thinking approach towards the structure of the organisation and the way in which they communicate between middle-management and front line staff. Systems thinking would not only benefit the staff within this top-down hierarchy mentality, but change the way in which the value proposition could be delivered more effectively.

Although the success of M & S Food is evident, as an organisation they could still have better focus on the customer's value and track their journey/experience more effectively. The implications of failing to correct this issue may be that they are left behind, as competitors focus more on becoming customer centric and customer focused.

The implications for the NHS of failing to correct these issues will eventually result in the organisation being unable to treat patients effectively, whilst over spending on a budget that should be more than efficient for an organisation of this size.

4 References

Seddon, J (2003) Freedom from Command and Control, a better way to make the work work

Goodman, J., O'Brien, P., Segal, E. (2000), "Selling quality to the CFO", Quality Progress,

Peelan, E. (2005) Customer Relationship Management, Essex: Pearson Education Limited, Page 6.

Reinartz. W, and Kumar. V, (2002) The Mismanagement of Customer Loyalty. Harvard Business School.

Reicheld and Sasser (1990) as cited in O'Malley, L. (1998) “Can loyalty schemes really build loyalty?” Journal of Marketing Intelligence & Planning, Vol. 16, Issue No 1, pp 47-55.

Round (2006 [What We Do] what we do, available from http://www.round.co.uk/what_we_do.html [Accessed on 17/01/10]

Seddon. J. (2005) Freedom from Command and Control. New York: Productivity Press.

Woodcock. N, Stone. M, and M.W. Starkey. 2000. “State of the Nation Report One”, Chapter Two. Relationship Marketing, Customer Relationship Management or Customer Management, Business Intelligence.

Woodcock, N. and Stone, M. 2003. “State of the Nation Three”, Chapter One, Customer Management: Key Messages for Senior Management. Business Intelligence.

Starkey. M, Williams. D, and Stone. M. (2002) The state of customer management performance in Malaysia. Marketing Intelligence and Planning, Volume 20, Issue 6, PP 378 – 385.

 

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