Thursday, August 21, 2008

The customer is always right

Cross posted from All Things Reconsidered

There are several customer-centric tropes in the business world: “listen to the customer,” “the customer is always right,” “make the customer happy.”

It is harder to find this kind of focus in the world of social action, nonprofits or philanthropy. First of all, who is the customer? Is it the direct beneficiary of the service (the hungry person, the school child, the museum visitor, or the clinic patient)? Or is it the funder of the service provider (foundation, government funder, individual donor)? Or is it both?

Here’s the thing, when it comes to philanthropic institutions and customer service the question of who is the customer is almost a second-generation matter. When it comes right down to it, our civic institutions are not very good at listening to any of the possible customer groups. Customer satisfaction as a measure and tool – real feedback from customers (whoever they might be) – that actually changes organizational practice, focus, or services is tough to find. We don’t know if the customer is right or wrong, because we rarely ever ask.

Foundations typically haven’t seen themselves as having customers. This is starting to change with the grantee perception data and reports from the Center for Effective Philanthropy. More and more foundations are commissioning these surveys, responding to the feedback, and posting the reports on their websites for all to see. At the same time, CEP is amassing a database of results that allow for industry-wide benchmarking – so when foundations get their own data there is data there for comparison purposes. Soon, it may be ‘standard industry” practice to do these surveys, and foundations that don’t conduct the surveys or share their reports will be the outliers, not the other way around. Real organization change doesn’t just come from doing the survey – but being held accountable to what the survey finds, to what your peers are doing, and to what the “industry” is doing.

Nonprofit organizations do conduct user surveys, and then face the twin challenges of time and money to respond to the findings. Boards, funders, and partners rarely ask organizations for data on what their direct service customers think. Simply asking for this information would be useful first step. But then those that do gather and use the information still do so mostly in isolation – there isn’t (yet) a comparable body of data from which to determine “industry benchmarks.” A shelter can learn from its findings and compare its own results over time, and this is better than nothing. But the kind of peer or competitor comparability that can spark real organizational change is still missing.

There is a lot of work underway to develop nonprofit and philanthropic ratings, outcome measures, and standards of operating procedures. In the course of this work it behooves us to remember two things: How do these measures reflect what the customer thinks? How can we gather and use customer input in ways that actually drive improvement?

Every business from television production to auto manufacturing can point to some kind of industry-wide customer satisfaction measures and processes – from Nielsen ratings to J.D. Powers and Associates to Consumer Reports – that they use to gauge and improve their work. The web has only made this more so - see AngiesList, C/NET and Yelp for examples ranging from plumbers to doctors to tech gadgets to hair salons.

Customer satisfaction as a tool for change reaches beyond individual organizations to the consumer rights movement, a combination of grassroots activism, public awareness, educational programs and regulatory structures, that is built around helping customers make informed, appropriate decisions based on accurate information. Shouldn’t we expect at least as much from our philanthropic institutions as we do from fast food restaurants and toy stores?


Anonymous said...

I read your posts and worry that what you are calling for is regulation and standardization of an "industry" that by its nature should remain free to explore, try out ideas and social programs and be open to failure. Overregulation will take away much of the innovation that is inherent and/or implied in the nonprofit sector.

Lucy Bernholz said...

Thanks for your comment. What is interesting about this particular post, and the customer feedback loops that are described, is that not one of them has a regulatory root. They are all industry generated, enterprise created solutions to self-identified shared challenges. I do agree that regulation is a blunt sword - often causing new problems as it seeks to solve old ones. This post makes no calls for regulation - I am simply pointing out what are evolutionary moments from other industries revealing themselves within philanthropy. Which I do, by the way, absolutely see as a regulated industry (definition: tax code driven set of enterprises selling similar sets of products). It is already regulated - I'm not calling for more or less, simply that the enterprises within the industry recognize the ways in which their behavior, incentives, practices are already prescribed by the codes which make the enterprises possible.

That said, if one wanted to create massive change across philanthropy or nonprofits, regulation is the tool with which to do it (Again, I'm not advocating this, simply pointing to what history has shown, both in philanthropy and most other industries).

Johnm said...

I appreciate your academic analysis of foundations and philanthropy in general. I worry however that you tend to make broad judgements about how foundations function. You assume that civic groups do not listen well. In my ten years as director of a medium sized family foundation I have not found that to be as rampant as you allege. Could you define civic institutions a little better.

On another point, I think nonprofits and foundations in general are very bad at making use of social software tools, which if used properly, could avoid perceptions that they do not listen well.


Lucy Bernholz said...

Thanks for your thoughts. And your point is well taken - I intentionally paint with a broad brush, perhaps even more often than I care to admit, though my goal is to provoke new thinking so the broad brush seems to work best.

With 75000+ foundations and 1.5 million+ civic institutions in the US alone - and readers from around the world - it is hard for me not to use the broad brush to make the point.

I'd love to hear about more organizations that do listen well, that do rely on feedback and improve their services accordingly - I don't know too many of any kind of enterprise - commercial, nonprofit, public sector or blended - that don't have lots of room for improvement at, my company, and this blog included! Thanks for the Feedback!