In last week’s post, we touched on the massive impact coronavirus has had on the service industry and small business. Weeks later, the situation has escalated to a point where the landscape has changed dramatically. Working from home virtually has become the new normal in the social distancing environment. There has never been a better time to evaluate how to introduce the five elements of business agility into your company. Once agile strategy management is in place, the next step is to introduce agility into the day-to-day operation of your business.
In this post, we will discuss how to map out your business process using the concept of value streams, and how to identify the most important streams in your business. We will also touch on how to improve value streams by focusing on customer success and identifying the bottlenecks in systems your business uses.
What are Value Streams?
A value stream is the series of actions a business uses to create a continuous flow of value to a customer. Common examples include performing weekly lawn maintenance service, performing a home improvement project, selling a vacation package, and helping a home buyer navigate the real estate purchasing process.
Most businesses usually have multiple value streams, especially those with multiple products or service offerings. Many retail and agency businesses have value streams for both their customers and their suppliers.
It is crucial that you understand the individual steps required to provide value to your customer. This includes making customers aware of your business, the sales process, customer onboarding, delivering your product or service, collecting payment, post-sale follow up, remarketing, and more. It is also imperative that you ensure that the value stream aligns with your business strategy.
How to Identify a Business Process Using Value Streams
Let’s consider a lawn care business, which many can identify with as either a business owner or a customer. Lawn care businesses usually offer a variety of services, some of which are recurring and some of which are one-time projects.
Step 1: Choose a Product or Service that Generates Value
On the surface this seems self-explanatory, however, there are a few things you should be aware of.
First, a product or service does not have to require an exchange of money to be an exchange of value. Consider that most businesses hire support personnel that does not directly contribute to sales but provides value, such as billing and office administrative staff. Many business owners offer products and services that are promotional, meaning that the customer gets some benefit for free in exchange for providing information that can be valuable for the sales process of another product. Other products and services support customer retention, like web site bill payment and customer service.
Second, some products and services are simply more essential to the business and more profitable overall than others. In our lawn care company example, weekly lawn maintenance service is the core, most profitable service. Other one-time services like spring lawn aeration are important but not as high of a priority to focus on at the start.
Step 2: Map Out the Essential Steps that Generate Value
Again, this step sounds easier than it actually is. Many people start with the customer already engaged in the process, but the truth is that there needs to be both customer demand and a significant sales and marketing effort before a customer engages.
Our lawn care company’s weekly lawn maintenance service might have the following value stream as a business process:
- Customer Demand: Customer decides they want someone else to maintain their lawn.
- Marketing: Business runs marketing through referrals, direct mail, Yelp sponsored listings, Google AdWords, and Facebook Ads.
- Lead Generation: Customer finds Business website and requests a quote using an online form.
- Sales Qualification: Business learns more about Customer’s individual needs, and determines if Business can help Customer.
- Sales Quote/Closing: Business estimates the cost for weekly service, provides a written proposal to Customer and explains the Business value proposition.
- Customer Onboarding: Business provides Customer with a welcome package, schedule for initial and upcoming service appointments, and information needed to log into a bill payment website to pay bills.
- Service Delivery: Business performs weekly lawn maintenance for Customer.
- Service Followup: Business leaves detailed information for Customer on services performed on the last visit, thanks them for being a customer, and requests referrals and online reviews.
- Customer Service: Customer requests additional services or communicates issues that need to be resolved immediately or on the next service.
- Billing: Customer logs into the bill payment website and adds credit card information for automatic recurring bill payment; Business verifies the payment and contacts Customer if necessary.
Step 3: Identify the People and Systems Required for Each Step
Value streams don’t run on their own. Each step requires a team member or system that the customer interacts with throughout the value stream. In our example, we would need:
- Someone to run marketing campaigns
- Salesperson / Sales operations
- Customer service representative
- Billing representative
- Multiple lawn care specialists
We would also need:
- Marketing management system
- Website
- Customer relationship management (CRM) system
- Field management system for service delivery
- Email / text communication system
- Billing / payment system
- Accounting system
Step 4: Identify Gaps and Areas to Improve Business Processes
Identifying those roles and systems gives you a large amount of information. Many small businesses usually have one person – often the business owner – in several or all of those roles. Many of the systems identified may happen on paper or in a simple spreadsheet. Perhaps many of these roles and systems may not exist at all, leading to customer churn, cash flow issues, and poor online reviews.
Mapping out this value stream lets us see where the business gaps are. Do we need more people in the field to deliver service? Do we need to hire an outside service provider like an independent CPA to help? Can we use a virtual assistant to help with customer service? Did we find a step that we don’t currently perform today? Does this service align with our overall strategy?
Looking at the mapped out service, we can also see where opportunities for improvement are. Do we need to start using a CRM instead of a spreadsheet? Can we run marketing more efficiently by using an online software as a service tool? Can we lower our costs by evaluating a new bill payment vendor? Can we simplify customer service using a chatbot or a frequently asked questions (FAQ) page on our website?
Remember to Think Like the Customer
The most important question when identifying where your value streams can be improved is this: Is this best for the customer? Is your value stream designed with a customer’s daily life in mind? Where are the most likely places your customer will look for you? How does your customer want to interact with you? How can you make your service blend into your customers’ daily lives as much as possible? Do we deliver our product or service with the best quality possible?
If your business is frequently causing interruptions in your customers’ daily schedule or keeping them from getting things done that are important to them, they will leave for a competitive option. Evaluating your value stream and thinking like your customers will ensure you do everything possible to be a valued partner to them.
Improving your business processes starts with looking at your business operations in the shape of value streams. Value streams allow you to follow the continuous delivery of value your business provides through the entire customer journey. Analyzing your value streams gives you the information you need to identify missing pieces in your team, missing systems, bottlenecks, and missing steps that need to be added to your processes.