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Using Customer Insight to Transform Government

Improving the delivery and effectiveness of public services

Key messages:

  • There’s a growing gap between the level of service citizens expect from government and what they believe they’re actually getting. In retail, consumers have grown accustomed to getting more for less whereas the opposite is true in government.
  • Leading governments can work toward (and some already are) improving customer service by developing personalized customer service strategies that meet the varying needs and preferences of their citizens. There needs to be a new way of approaching decision making—less guesswork, more reliance on facts.
  • New customer service models, powered by the latest social networking and collaboration technologies, are making it easier for citizens to engage with their governments.


Governments have been asking taxpayers for more revenues while providing what is often perceived to be the same old product. This flies in the face of everything the taxpayer/consumer has grown accustomed to in the private sector—continually getting better products and services for less. As governments brace themselves for what could be some of the worst years in recent memory for public finances, proposals calling for further tax increases will be even less palatable.

Many governments have invested significant amounts of time and money trying to bolster customer satisfaction—yet in many cases, they go about improving customer service the wrong way. Many government agencies, for example, have invested heavily in state-of-the-art customer relationship management (CRM) technology to give them a single, integrated view of their customers and to maintain a mutually beneficial dialog with them. The problem is that many organizations view CRM solely as a technology issue and assign it to the IT group, when in most cases the real issue is fundamentally rethinking the business model and culture of public services. Technology can enable this change, but it cannot, by itself, instigate and sustain it.

In the rush to move from in line to online tools and support, public managers often do not stop to answer the basic questions that underline effective and efficient CRM: Who are my customers? And what do they want? Customer-centered transformation goes far beyond automating Industrial Era business processes. It requires first stepping back to understand the end-to-end experience from the user’s perspective and then using those insights to improve the experience offered to customers. Some leading governments have successfully understood the importance of personalized customer service strategies—that some families have very complex needs that require considerable attention, some businesses just want to comply with government measures and keep their interactions to a minimum, and there are individual citizens who just want to be left alone. Meeting the needs of all these groups is exactly what customer service in the public sector is all about.

Public managers can utilize leading customer experience practices to bolster decision-making capabilities, enhance government’s ability to execute on major program and policy initiatives, improve service delivery and reduce costs. Making effective use of these approaches requires public managers to understand the full range of tools and techniques available to them and how and when to apply them.

Reform strategies

Define a customer experience vision

Leading organizations begin by defining their customer experience vision and then aligning their “back office” (delivery channels, systems, performance management processes, training, etc.) to deliver this vision. They go outside the walls of the organization and invite customers to contribute feedback (using Web 2.0 technologies and other interactive channels) to make their service offerings more compelling.

Wiring out inefficiencies

Delivering a good customer experience should be a cost reduction initiative. A financial benefit model has to be put in place that says that if, for instance, employees are trained to better handle a particular transaction type, it will result in fewer calls back into the call center, or less foot traffic into the physical location.

Identify and address the varying needs of citizens

The nature of many of the policy challenges facing governments today—from meeting growing workforce retraining needs and controlling long-term health care costs, to serving the needs of an increasingly aging population—lends itself well to an approach that identifies and addresses the varying needs of different customer segments.


Support fact-based decision making

New York City aggregates and analyzes the millions of calls that come into its 311 system each month to better understand the types of questions citizens have and the services they need. In a similar vein, police departments in Los Angeles and New York City use a computer statistics program, CompStat, to map crime data to geographical regions in real time to guide decisions about where resources should be deployed to reduce crime rates.

Ensure services are accessible and efficiently delivered

The U.S. Internal Revenue Service enlists software companies and tax preparation firms as channel partners in its effort to get more Americans to file their taxes online. The massive advertising campaigns from these IRS partners played a major role in convincing more than half (58 percent) of all American taxpayers to file their taxes online in 2008.

Use customer-centered transformation to reduce costs

In 2002, the U.S. Postal Service (USPS) faced heightened competition from private sector delivery services and a huge uptake in electronic commerce and deficit spending. In response, USPS upgraded the automated system and created a team of specially trained agents to handle frustrated callers. This resulted in a 19 percent increase in the number of calls resolved in automation without adversely affecting customer satisfaction, and USPS ended up with an annual savings of $7 million.

Next steps

  1. Diagnose the current state. Collect hard voice-of-the-customer data to answer the following questions: Why do customers contact you? Why do they come into a physical location? Are there certain patterns around how and why customers contact you? What can you deduce from these patterns about the different customer segments?
  2. Develop and prioritize improvement initiatives. Once an organization has collected voice-of-the-customer data to understand why customers behave in certain ways and what types of problems they experience, the next step is to develop and prioritize ideas for how to improve the customer experience and develop a compelling business case for the top improvement initiatives.
  3. Decide what is feasible and when. This means understanding internal capabilities—perhaps an organization can make a particular improvement; perhaps it can’t. Address the short- and long-term issues: What can be done right now? What should wait until next year? What should be put in the wait-and-see category?
  4. Do a pilot to see what works — and what doesn’t. Before doing a wider rollout, see how the improvement initiative works in practice. Data — not a gut check — should underpin the decision.

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