Deep Insights:
• Talking to and observing customers to gain a deep understanding of goals, challenges, and the context in which they come to interact with you.
• Ethnographic research, journaling, videotaping, focus groups, one-on-one interviews at home or at work, creating collages, and talking to suppliers, allies, and influencers are common techniques.

Experience Flow:
• Outlining the steps the customer goes through to achieve his/her goal, including the timelines, the impact, the costs (financial, time, and effort) and the experiential elements such as missed expectations, surprises, or confusion. Watching for where things go wrong or off course.
• Using an internal group representing all of the different processes and functions that play a role in that customer experience.
• Or conducting a co-creation focus group where customers and agency staff create the experience map together.
• Doing this separately for distinct segments. Using segmentation research first if the different segment profiles are not known.

Positive and Negative Touchpoints:
• Capturing where there is high value and a positive experience and where there is no or little value and a negative experience.
• Identifying gaps that have high value to the customer and high value to the agency. Value to the customer means achieving their goal as easily as possible. Value to the agency may involve operational efficiencies, more favorable citizen responses, or pre-empting downstream problems.

To respond to these challenges, managers will have to fundamentally rethink service mix and service delivery. Certainly, that means applying technology. But to meet the dual demands of lower cost and improved service, it must be done judiciously. The key to leveraging technology lies in first understanding the market and then tailoring service to the varying needs and preferences of different customer groups.

CASE STUDY: U.S. COMMERCIAL SERVICE

The U.S. Commercial Service (CS), the trade promotion arm of the U.S. Department of Commerce’s (DOC) International Trade Administration (ITA), provides an example of how improved market understanding—in the CS’s case, small and mid-sized businesses (SMEs)—can lead to improved service and better mission accomplishment.

In 2010, President Obama announced the National Export Initiative (NEI) aimed at doubling U.S. exports over five years while supporting millions of new jobs. With a network of over 1,400 trade professionals located across the U.S. and in U.S. Embassies and Consulates in nearly 80 countries, the CS is well positioned to spur growth in exports. However, to deliver services more efficiently to a larger number of companies, the CS had to streamline its marketing and operating model.

Taking a Fresh Look at the Marketplace

While the CS had research from current customers, it had no current statistically significant market research about the overall SME market. To remedy this, they partnered with the DOC’s Manufacturing Extension Partnership and the U.S. Census Bureau, as well as the Export-Import Bank, to conduct a market segmentation study.

In a survey of managers from over 1,400 SMEs with some export experience, almost two-thirds of the respondents expressed an interest in expanding export sales. However, only about one-third reported being aware of how the CS’s services could help. Clearly, there was untapped export potential for the CS to target.

The survey also showed three competency-based market segments:

1. New and inexperienced exporters (26% of the overall market) begin by mastering the mechanics of exporting—such things as complying with U.S. and foreign trade laws, arranging payment and financing, and shipping.

2. Moderately effective exporters (33% of the market) grow export sales by improving their capability in marketing and planning—identifying foreign customers and markets, developing an international business plan, conducting due diligence on foreign distributors, and so forth. 

3. Successful exporters (41% of the market) are good at both mechanics and marketing and planning and rely on a wide range of outside resources to achieve export successes.

With increasing export competence, companies export to more countries and experience greater growth in export sales. Analysis of the survey data showed that “moving” 20% of the companies in the less effective export categories to the successful category will generate an extra $116 billion in revenue by 2015. That represents a lot of jobs!

Insights from the Data

The market research challenged some of the CS’s long-held assumptions:

• Export success is not dependent on the length of export experience but rather on the sequential mastery of the export mechanics and marketing and planning effectiveness areas.
• Direct sales—not foreign distributors, agents, or representatives—is the top exporting channel.
• Price does not appear to be a driver in seeking exporting assistance.

It also contributed some new insights: 

• It currently takes companies about five years to get into three-plus export markets. This pace will have to accelerate to meet the NEI target of doubling exports within five years.
• The U.S. government is the top choice for export assistance.
• Building awareness is key to expanding the penetration of the CS’s services.

Acting on the Data

Armed with these market insights, the CS is working with ITA on several promising directions: 

• Developing more interactive, self-service options on its websites and working to improve brand consistency across its worldwide network. This should both increase exposure among the 62% who not aware of CS services and lower costs.
• Accelerating efforts to help current exporters expand into new markets while steering inexperienced exporters to the Small Business Administration for assistance. This service reallocation capitalizes on the CS’s core competency: assistance with marketing and planning.
• Focusing outreach and service delivery on high-growth sectors and international markets that are ideal for U.S. companies. This should help deliver on the NEI.
• Revisiting its pricing strategy to make sure it is aligned with the goal of increasing exports.

“As U.S. government agencies think about how they will respond to the Executive Order to streamline and improve customer service and outcomes, I encourage them to confirm their assumptions about current and prospective customers. As a result of our market segmentation study, we have a much clearer understanding of where we provide unique value and are allocating our resources accordingly in a way that improves the customer experience.”

 Suresh Kumar
Assistant Secretary for Trade Promotion &
Director General of the U.S. and Foreign Commercial Service

 WHAT’S NEXT FOR YOUR AGENCY? 

The CS experience shows that market insights can help agencies revise service strategies, leverage technology, and increase market penetration, resulting in better service at less cost.

Government agencies face a different relationship with the people they serve. Taxpayers do not choose to buy products and services from the agencies, and there is no competition. Repeat customers are not a positive metric, and the bottom line is not linked to having lots of customers, particularly in any compliance area. Agencies do not look for customer satisfaction as having happy customers who are willing to make referrals. Money or assets can be taken away, an enforcement role is present, and the law is involved. The end goal is different.

However, there are several ways in which the taxpayer and the relationship between the taxpayer and the agency is customer-like, and it benefits the agency to take advantage of all the knowledge and practices that exist:

• Transacting business: Whether or not taxpayers have a choice, they do business with government agencies. They call, visit, dialogue, send correspondence, make decisions, get information, transact, etc. It benefits both the agency and the taxpayer to make it as easy as possible to do business together. I’ve always believed that the mantra “make it easier” made sense as the basic mission for taxpayer satisfaction. Basic customer service is in fact involved.
• Taxpayer Choice: Taxpayers do have some choice which is affected by the way the agency offers its products and services. They can choose to work directly with the agency and its channels or work with an intermediary. The degree to which the former choice is easy, convenient, and low- cost does affect their choice of whether or not to use an intermediary. For example, if the IRS is indifferent to working with practitioners versus taxpayers (financially, operationally), then there is no need to shape services accordingly. If, however, the IRS and certain taxpayers or certain situations would be better handled with a professional, then can the IRS do anything to encourage that choice?
• Taxpayer Behavior: What the taxpayer does and how he/she behaves is usually linked to a bottom line, so it is beneficial to try to shape behavior. The more proactive the agency can be in shaping taxpayer behavior, the more they can create win-win outcomes. Many of the principles of shaping behavior come from classic marketing in the private sector: how to write correspondence so that the reader understands as well as acts upon it; how to design the web to solve problems rather than just give information; how to handle a call to a toll-free line in a way that the taxpayer is less likely to call again. This is where the field of customer experience and communications in industry can be very helpful to designing the taxpayer experience. As in the private sector, the ability to drive the individual’s behavior does have an effect on the bottom line. In the case of a business, the behavior desired is to buy more. In the case of a government agency, the behavior desired is to complete forms in error-free fashion, meet application deadlines, understand and follow eligibility requirements, and make timely payments.
• Image: Branding, in the true sense, does not really apply to government agencies, but it is true that people’s images of government are shaped by their service experiences (as well as their general attitudes and beliefs).