The problem with “internal customers”

Founder's Mentality - Internal customersOn a recent trip to Delhi and Mumbai, I had meetings at eight founder-led companies and the same question arose at three of them: Should we introduce the notion of “internal customers” to increase the sense of accountability and responsiveness among our staff people?

The conclusion we reached together was an emphatic no!

Any reader of these blog posts knows that customer focus is a big part of maintaining the Founder’s Mentality℠. And in that context, the argument for “internal customers” seems compelling. It goes like this:

  • For employees who are customer facing, the idea of being customer-centric is easy. But for folks in staff or supporting roles who have no real opportunity to interact with customers, the notion of customer focus just falls flat. What are they supposed to do differently?
  • Given this, if we help people in support functions define their internal customers, all of our customer initiatives can also apply to them. If sales people can improve performance by serving our external customers with fast response times and zero defects, why can’t accounting and legal do the same for the various internal departments they serve?
  • This puts everyone on the same agenda. Some of us are serving external customers, some of us are serving internal customers, but all share the same customer mission.

One executive in Mumbai made a very compelling case for the internal customer: “Very few of us are in customer-facing roles,” he said. “If we come out with a big customer-centricity push, what are we telling people? Are we saying their jobs aren’t important? One way to deal with this is to create internal customers. We say to an accountant, ‘Your job is to provide the best accounts for the head of receivables. He’s your customer. If you serve him as well as we serve our external customers, then we will fulfil our mission.’ This avoids a hierarchy of ‘those that serve customers’ and the rest. This gives everyone a mission.”

There’s a lot of good sense in this, but we agreed that designating internal customers is ultimately a bad idea. Here’s why:

1. There’s only one customer. That’s the one who buys your product and services, ideally comes back for more and occasionally brings a friend. Let’s not confuse things by introducing other customers. When we say, “Let’s focus on the customer,” we need to make sure our eyes and ears focus externally, not internally.

2. Any employee should be able to link what they do to a customer benefit. In fact, the process of defining these linkages will identify plenty of stuff that might need rethinking. We have talked a lot in these blog posts about the “kings” of your business, the ones who deliver your proposition to your customers. We have also talked about the “court”—a very important set of jobs that serve the folks who are serving the customers. Making sure everyone can identify his or her role as king or court is an invaluable exercise. Court members should always be able to show how they support the kings.

3. Internal actions should always be aligned to external goals. Not only should court members know how they help the kings support the customer, but they should also know how their activities support specific customer goals. If the customer goal is to have zero-defect delivery, for instance, the staff person should not be thinking about how to pursue zero defect for internal audiences. His or her focus should be: “How can my activities help the kings achieve zero defect for customers?”

4. Internal customers lead to “gold plating” functions that real customers aren’t willing to pay for. While the notion of internal customers sounds good on paper, it has a checkered history in the real world. It tends to produce functional-excellence programs that aren’t linked to strategic goals. It leads to initiatives like zero-defect efforts for internal customers that simply aren’t required by real customers. It encourages the belief that everything is important and that we should trade off between internal and external customers.

Rather than resorting to this sort of distraction by creating an alternative universe of internal customers, companies should focus on the real challenge: Deciding on the few customer goals that really matter and working with the front line to define the direct and indirect actions needed to achieve them.

We live in a world of energy-sapping, soul-destroying complexity, which means companies must do everything they can to simplify and focus. One easy step is to make sure that when we say the word “customer,” we all look out, not in. Everyone should share the same thought: How do we find new customers, sell more to the ones we already have and, by wowing them each and every day, get them to recommend us to friends?

This entry was posted in Frontline obsession, The paths to Great Repeatable Models by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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