Customer Service - An International Perspective

Garry Law

Manager Brisbane Water, Brisbane City Council

Service, How is it Accessed
Service, Who Does It
Corporatisable Council Services
Brisbane City Council as an Example


Customer service is being revolutionised by new ways of managing the initial customer contact, through new ways of making information about services available and by the commercialisation of service delivery traditionally thought to be part of a public service.

The models for these are international. Indeed the information systems and potentially, the emerging service providers for these new information and customer systems may well be delivered across international borders.

The commercialisation models which have been applied at higher levels of government are not always a good fit to local government, because of the principal difference which distinguishes local government - it is local. Their benefits can be accessed though, if the models are adapted to the needs.

Service - How it is Accessed

This paper will look at customer service from two directions, how it is accessed and who does it. On the first, there is a strong trend in service industries, being driven by advances in technology.

Our customers have two primary needs in their contact with us, for information and for response to service requests they are making of us. Both are fundamental to service. It is only with freedom of information on the availability of services and their right to service that our citizens can understand their entitlements. It is only with effective channels for requesting services that the entitlements can be realised.

Dealing with these in turn:

Information: Our traditional means of making information available, typically of publications and responses at customer counters, are about to face a revolution. It will be driven by the Internet. Australia is at the vanguard of home computer ownership, at the vanguard of ownership of modems connected to those computers and at the vanguard in creation of web sites accessible on the Internet. With the powerful search software that is accessible through the Internet and is destined to become all the more powerful when software with active search agents becomes universal, the tool is all the more powerful. We have a highly computer literate population with ready computer access.

There can be little council information which does not go through the ubiquitous word processor. Having it available in that form is a first step to having it more widely available electronically. There can be relatively few pieces of council information which demand communications hungry graphics to be intelligible. In any event, even if they are, the advent of much higher speed communications channels is only a short way off. There can be few barriers to having very broad information about councils available on the Internet. Well managed, it will produce very well structured information on the council and information which is much more current than traditional published sources.

The pioneers are already there. Our computer literate populations hacking about can find what world's best practice is in the space of a few minutes. How many of us have tried? My quick search yields a few addresses you might try to see. Beware, you will have customers who have already been there. This is what they will shortly be expecting of you.

Table 1 Local Government Web Sites.

One item of information which can well be put on the Internet is a council's standards of service and its performance against them.

The obvious questions arise over how local government will respond to this trend. Do we all have to go down the path separately to create our own access systems and secondly, surely councils can't put all their information outlets into this form and risk creating an elitist form of access to entitlement? The latter is certainly a major concern. Clearly councils can't immediately abandon their traditional information outlets and disadvantage those without computer skills or access. The answer to this problem is in part a measured transition, but also to have computer access available through locations accessible to the community, like libraries, and to have the information accessible by inquiry over the phone, of which more below. Questions of access for non-English speakers and of visually impaired people, cannot be neglected either. There will continue to be special needs of some customer groups which this medium will not cover.

On the first point I have glossed over the difficulties of getting information into accessible English, of getting it into a logical structure, so inquirers can follow a logical cascade to the information they want. The expense and the allocation of responsibility for maintaining currency of information are not to be overlooked as issues either. I believe the larger councils will not be overly stretched to provide this. Smaller councils may well find it daunting unless they are adept at matching systems to need.

Will all councils have to build their own? I believe not. I think council requirements will be sufficiently predictable that providers will quickly emerge to help with these services. Standard packages of front end inquiry screens suitable for adaptation to particular council needs should be readily creatable with facility for some individuality. Nor will councils need to own the servers for such access. This could readily be part of the service. Such service providers could physically reside anywhere in the world. The start of the virtual council?

Some users need more sophisticated information. Many councils have plan information which needs to be able to be accessed by people considering developments. Many councils have Geographic Information Systems with plan information on council assets, restrictions and environmental information. The technology to make these available electronically is available. Councils can charge for this information if they choose.

Response to Service Requests: A revolution has been overtaking service businesses in the past decade. It is the advent of sophisticated call centres. It seems extraordinary that a technology well over a century old, the telephone, is still causing revolutions. The reason for the revolution now is the link made through a human operator to information data bases and work scheduling systems available on a screen, at the phone answering work station.

Call centres are staffed with trained staff, selected specially for their suitability for the task. Centres have sophisticated systems for predicting demand and scheduling staff. They have sophisticated systems for monitoring performance on things like time to answer calls, time to deal with a call and lost calls. But their potential limits of sophistication have not been reached. The technology for handing on a screen of information, with a live phone call to a specialist back room is at the "bleeding edge" of the technology for instance.

Why are people doing this? Firstly the customers like them. Well set up, they give great service. A phone call is answered by someone who accepts responsibility for the problem, has useful information at hand and does not pass the call on to some unanswered extension. With the right systems in place they trigger service orders with commitments as to when service can be expected and generate follow up return calls as to the satisfaction with the service.

Businesses like them because they are efficient as well as providing good service. They are cheaper than counter services, cheaper than paper based services through the mail and give great information on the timeliness and acceptability of services to customers. Lastly they free up specialist staff from answering queries about when something will be done, when they are better employed getting on with it. This enhances efficiency.

Call centres are relatively slow in coming into councils. There are good reasons for this. Councils have a myriad of services compared with the average service business, like a bank, or a utility like an electricity retailer. Moreover they are much more prone to being in "silo" structures where the engineering functions deal with the calls about potholes and the drains, the bean counters deal with rates enquiries and the planners deal with the building consent enquiries. At least they do when they are in the office, or not otherwise busy on the phone to someone else.

Councils typically have several columns of phone numbers in the phone book. Sophisticated service businesses have one service number. The general switchboard number of a council is often the worst one to call for any real service. Insiders know the "right" person to call, but what about the poor outsider?

A system for a bank involves a much lesser degree of process redesign and of operator training than one for a council. One of my sons had a temporary job recently for a bank. The training period was two days before he went live. It is inconceivable that a council call centre operator could start that soon on the whole range of services a council provides.

Utilities generally are being slow to integrate billing, service enquiries and faults response into one call centre. Many are operating two centres with different systems. The faults response centres are often co-located with network system control rooms. It is possible these are continuations of functional "silos" in these businesses.

My prediction is that this split will not continue. Customers are not interested in internal organisation and don't want to have to be bothered with it. Rather the call centres will become more sophisticated and will become the operators of the front end of the work scheduling systems which will feed information to and from the field operators. They will have access to summarised condition information on the utility networks so they can respond better with information to customers on outages. Network control rooms will be separate from call centres and be sources of summarised information.

As data into mobile work stations becomes more sophisticated, there is no need for the traditional depot with its supervisors and clerical staff receiving service orders and dispatching field crews. Even with some sophisticated work scheduling systems there will still be a role for expert intervention in work scheduling to check and re-allocate priorities. This will be I believe, a monitoring role rather than a channel controlling all work allocation. The crews will operate to electronically dispatched work schedules, will signal back the completion of tasks on the same systems. They themselves will do some closures with customers, in the field. These closures will generate production of bills for services which are chargeable. These crews with good field delivery support of supplies will operate independently of bases, starting and finishing on site. Depots and their cultures will become a thing of the past.

I am talking here of a lot of sophistication behind a simple front end contact- a telephone. This will be a paradox for councils, the increasing complexity of behind the scenes systems needed to provide a simple front end for service contact with customers.

What kinds of systems are needed by councils to go down this path? One is a systematic and simple compendium of information on council services which can be accessed through a screen. Sound familiar? -yes it can be the same system of structured information as external Internet browsers can access. However there needs to be more. There will need to be access to rates and other charging systems for dealing with billing enquiries, access to Geographic Information Systems for some service enquiries and access to work flow management systems so enquiries on progress can be answered and indeed access to the same systems to generate the work orders which start the work off.

Such an internal information system has recently been given a name - an Intranet. Interestingly, the sort of search tools that are used on the Internet prove to be pretty handy for running an internal information seeking system as well. What are the boundaries to information available externally as against internally? Earlier I suggested the information available might be the more static information, like policies and physical plans. Need that be the case? If someone is waiting a service call is there any problem in letting them see where they are in a job queue over the Internet? It could well save repeated calls from a customer anxious for an update. Again could not a routine service request be lodged electronically rather than have to go through an operator?

With this enhanced availability of council specified standards of service and ability of customers to monitor service performance, there will come a greatly enhanced accountability of councils. There has been a trend for agencies like councils to be exposed to the payments of penalties to customers when they have not met their specified service targets for individual customer services. The penalties are paid to the customers who suffered the bad service. It has some relationship to the point I have just made as it reinforces information as a tool of the customer in getting service. Some utilities have done this voluntarily while others have had it imposed by regulators or owners. I don't believe they are much of a spur just through their financial impact. Admitting to having paid them, as a requirement of public reporting is potentially as much of a spur to the pride of the managers. However there are other accountability mechanisms in councils as I shall cover below. I don't think penalties need be a universal feature of our service arrangements though they may have a place.

How can a council, particularly a small one, follow a trend such as this in having call centres and the systems behind them? The investment in building a sophisticated call centre is considerable. Some hints as to the future come from national service businesses and from wide spread utility businesses. They are condensing their control centres, typically into one per enterprise. They are condensing their call centres down to one per enterprise. Some are trans-national. Clearly economies of scale and the lack of sizeable disincentives to long distance data transmission are hard at work.

Can local government access these without losing the advantage of being local? That is going to be a question to grapple within the next decade. Some service providers may well emerge who will offer the service to councils, offering the service remotely but with systems sophistication a small council could not afford. It can be personalised in that the phone can readily be answered in your council's name. But the phone answerer will not readily know that the reason for the traffic jam is the race meeting or that the mayor will not be welcoming the delegates to the rural women's conference because she is on holiday in Bali. That will be a loss of service. But then that sort of intimate knowledge is lost in a large council too. Councils are not good at building shared systems but this could be an area that adjoining small councils may well find a benefit in.

Before leaving how services are provided, a brief comment on agents. Many service businesses are reducing the shop fronts they operate as their phone service systems become better. Some residual functions that customers require like payment of accounts by cash or cheque over a counter can be handled by agents. There is not much individual character in such a service, but for those of us not in the banking business, is that where we want to have our service edge? I would think not. After all, not even the banks put much store in it now - witness the universal ATM.

Service - Who Does It (Or - The Business of Councils and Council Businesses)

What is the role of local government in the provision of services? The role of government in services is very much a moot point at the moment in many western societies. As local government is a creature of higher levels of government we risk having the conclusions of that debate taken from those higher levels and imposed upon us without understanding of the characteristics which are natural to local government and different from higher levels. This subject is I think well worth exploring in the context of customer service because service to customers is so central to councils and so central to the alternative commercial providers of the same services.

I will not be exploring the question of contracting out of local government services here. Rather I will simply observe there is virtually no service which is not able to be contracted out in some way. The British model, the predominant model in New Zealand local government and the Victorian model give us ample evidence of that. Rather I want to explore the role that council trading enterprises might fulfill for in Queensland we are about to be given a power to create them and debate on what might be formed into them is well alive with the Queensland response to National Competition Policy as it applies to local government, and the Queensland Commission of Audit findings.

At higher levels of government the dominant philosophy over the past decade has been to reduce the role of government in service delivery.

The role of government is seen as being:

The strong emphasis has been away from government having detailed involvement in service delivery, towards establishing consumer sovereignty and away from hidden wealth redistributions in non-rational service charges. That is, towards user pays.

Service delivery is through corporatised agencies or through the private sector. A central question is the role to be played by a government in such provision. Do they remain a purchaser of the service or do they leave that function to the citizens themselves? There is no one answer to that question, but it needs to be asked in respect of different services and answered case by case.

Lets look at commercial businesses. Any such business wants a number of fundamental things:

Trading operations formerly run as government services have had these rules run over them as they have been corporatised or privatised. It is the tests lower on the list that have been drivers of freeing some businesses from government ownership as they will perform better in those areas free of the restraints of political owners. It might be thought these ideas are as readily applied in local government as they have been elsewhere. I don't believe they are and the reason is not just parochial interest, or provider capture. Though these are factors, it is more from the difference between the levels of government.

Higher levels of government have different roles from local government. These roles include (or have included) traditional trading operations such as ports, airports, postal services, telecoms, railways etc. All are relatively discrete and have been run that way. There is a wide range of other activities, public broadcasting, defence, health, education, social welfare etc. Traditionally our taxes and user charges have gone into some government black hole from which somehow these services have emerged, only some of which we individually have an immediate involvement or interest in as recipients. Do we as citizens understand all of this in any detail? We hold elected representatives of these levels of government accountable in some way for the performance of government but not in any detailed way. We don't expect different parts of such government services to be integrated. While we somehow expect value for money it is without any real knowledge of how these services are funded or of the bigger picture of the objectives they are run to. We lack experience of many of the services or have diminished understanding of them.

Local government is different. The difference is well known to people who work in the area and not always known by people who have worked in commercialising higher levels of government services. It is different because it is local. All of our customers see all of the services. They can better judge value for money across the board because they see them all and because the services are more tangible. An example: When I go to my local library I can make a judgment on its efficiency and its customer focus, after all I am its customer. Its services seem to be out in the open. Can I visit a national library and make the same judgment? I am much less sure of the task of a national library. I'm sure there is some need -doesn't everyone have one? - so it must have some value, but I am poorly equipped to judge it. Why is so much of the space in the building closed to public access? I'm not even sure that I am the customer.

Our customers expect our services to be connected to each other. They expect integrated outcomes - a townscape which works practically and aesthetically, development which is sustainable, services which don't conflict with each other and are well matched in resource use to overall needs and ability to pay.

Our customers expect (probably unreasonably) individual staff of a council to be able to answer questions on many aspects of its services. Importantly the councillors are held accountable for council services in a much more detailed way than at other government level. This is not surprising for it relates to the local character of the services and to representation ratios - see table 2 for the representation ratio of different government levels.

Table 2 Representatives per resident for different government levels

Further local government customers expect their local government to concentrate on servicing their local territory and not operate as entrepreneurs seeking to provide services elsewhere if that is where best advantage obtains. They also believe councils have an obligation to provide service. Legally this is not always the case but the expectation is powerful.

If we approach the provision of local government service delivery with the same stance as has applied in other levels of governments we would separate service or product streams into businesses and corporatise them, allowing them to operate as businesses in the ways listed above and importantly interact directly with customers in their own name, servicing and billing them directly and marketing directly to them. How does this fit with the different face of local government?

The following table, Table 3 indicates a fairly comprehensive lack of fit.

Table 3 Match of business requirements with customer expectations

The crosses represent areas of conflict. As can be seen there are many. Can the model be made to fit? I believe it can but only with some compromises to both the commercial model and to the traditional ways in which councils work.

It is necessary to remember that with compromises some of the advantages will be lost. The advantages of a commercial model are considerable in driving efficiency of operation and efficiency of capital use. A glance at the commercial and council business models attached will show the differences are primarily there, not in areas of quality and service which some in local government wrongly assume to be their preserve.

Some options exist:

  1. A pure corporatised model - the federal and state model. The compromise is more on the council side.
  2. A corporatisation of operations downstream from direct customer service only
  3. Operations only corporatisations - the New Zealand local government model as applied typically to roading operations. The compromise is heavily on the business side on efficiency of capital use.
  1. Here the business owns the infrastructure assets. The council owns the shares in the business, not the assets. With this first the role of the council is that of an owner of a business and regulator of its service and price quality if that is not fixed by a market. This should give good business results but will not deliver an integrated service. It will only deliver integrated planning outcomes with special attention to statement of corporate intent interactions. The role of councillors in customer representation is much reduced and this will not be readily accepted. Competition will often become a matter to be pursued inside the business in its purchase of services rather than by council itself. Good capital optimisation outcomes can be expected. Strong linkages from costs to prices will occur. Innovation in end customer pricing and marketing will occur. Integrated services like call centres will not happen across a council. The business has multiple customers and an end customer focus.
  2. With the second the primary interaction with the customers is undertaken by council, who sets prices and collects the income. It may be that rates continue to be the source of income. The business is contracted to the council and the role of councillors in customer representation can continue though they just act as purchasers in respect of the business, not managers. The business can own some of the downstream infrastructure assets which help it provide service to the council. The council may in future be able to get competition in services to itself and in the provision of new downstream assets. Some capital investment optimisation will occur whereby whole of life costs are considered for the assets in the ownership of the business but not otherwise. Weak linkages will exist from costs to prices. Service integration can happen. The business will have only one primary customer, the council, and end customer focus may be diminished.
  3. Here all the assets other than tools of trade belong to the council. The business is contracted to the council and the role of councillors in customer representation can continue though they just act as purchasers in respect of the business, not managers. Council can readily create competition in provision of operations and maintenance services but it cannot expect good outcomes in capital optimisation as the investor lacks the direct incentive to consider the operations and maintenance costs. Weak linkages will exist from costs to prices. Service integration can happen. Corporatisation may be unnecessary in this model. A business unit may well suffice. New Zealand local governments have commonly used this for building, parks, water and sewerage operations and maintenance. The business will start with one primary customer, the council, and will have diminished end customer focus but if a council is prepared to free the business to operate outside its jurisdiction then it may well gain new customers.

There will be a case for choosing the model to suit the service. The first model is probably what the proponents of corporatisation usually have in mind. I hope I have convinced you that a choice is not straightforward. When corporatisations occur they are often controversial. Some single issue advocates often appear in favour or against with passionately held views based on a single issue perception of the consequences. The issue is not simple. The considerations are multi-dimensional.

With any option there will need to be some separation of roles occurring in a council. Councillors will have the roles of:

in respect of services where they have previously happily mixed all three.

Council staff will need to have the different functions clear to so they can best advise councillors on each. If some separation of these is not undertaken the directors and managers of the businesses will find the situation most confusing. Indeed they may be left with no clear field of operation for them to manage the business. Clarity in commercial direction of a business will be best achieved if politicians (and council chief executives) are not on the business boards. There is a case for their being there in the initial transition to a business, but not afterwards.


Corporatisable Council Services

Turning lastly to actual council services, it is sometimes alleged that council services are all public goods and should be tax funded. Services relating to public goods can be contracted out and funded from rates but they are not corporatisable in the first model as there is no attached income stream. An income stream is attachable to many council services. The following diagram, Table 4 goes into some typical council services.

Table 4 Some typical council services and how they are paid for

It is my belief that the council services which are public goods are a small part of the overall services. But councils often do not charge user charges for some things even where it is possible. The investment needed to charge for roads, water and sewerage by volume to domestic users and sports facilities is considerable. This is a disincentive. The argument with libraries and some sports facilities is more an economic / social one. The marginal cost of use is small and the community utility is best advantaged by maximising the use of the facilities by not charging for them.

Community acceptance comes into it strongly as well. Roads use charging is controversial and refuse collection charging unconventional.

The services of water and sewerage are strongly capital intensive increasing the attraction of the pure corporatised model, provided there is an attachable income. The services of parking and commercial building rental are relatively non-strategic and a similar outcome can be considered. Special exhibitions promotion could be considered for an operating only business. Some New Zealand councils have these.

The justification for investments in art galleries, museums and sports stadia are not commercial. Councils are looking for other outcomes as well. This does not make anything other than the operations only business model attractive for them. Refuse operations may be a potential fit to all three depending on the degree of capital intensity and the ability to charge. Inclusion of transfer stations and disposal facilities in a business may be more achievable than a full vertically integrated business including domestic collection, or in other words the second model.

Outside the services on Table 4there are some downstream services which councils can also consider. Vehicle and plant fleet ownership and operation is well suited to a full corporatisation. Road construction operations can only be considered for an operations only corporatisation.

Table 5 summarises this analysis.

Table 5 Potential commercialisation forms for different services.

Brisbane City Council as an Example

It may be of interest in relation to the above where Brisbane City Council stands currently:

Figure 1

3 August 1996