Designing and Using Service Audits

In today’s highly competitive world, most of us have a choice about where to buy our products and what to be faithful to. And with the improvement of own-label goods in recent years, it’s no longer a straight trade-off between price and quality. That’s why so much depends upon the service component of a proposition – a way to differentiate a company’s offer, even when the ‘core’ product itself may be very similar to others, and widely available.

So how does a firm go about designing its service proposition to beat the competition ?

Customer Faithful recommends using Service Audits and focusing the attention on the tangible and intangible benefits that customers receive for their custom. Here, we give a brief summary of how to construct them.

  1. Start With The Customer – There is no substitute for customer intelligence. To beat the competition you have to know the target audience you’re trying to appeal to, and what they want most. Many firms already have this data in great detail. But if you’re new to market research, don’t let complexity or cost dissuade you from this vital building block. If properly managed, our experience has shown that just 4 customer focus groups will capture 80 per cent of the relevant issues from any given customer segment. As ever, we advise categorising the insight into two groups - the functional, tangible benefits such as price and availability that customers can value and easily compare – and the intangible benefits which relate to how they like to feel, such as confidence, trust, fun and so on.
  2. Define Your Competitor Set – next, you need to be clear about which companies you are competing against, as these will form the number and scale of audits you’ll need to conduct. Perhaps not every competitor is targeting the same customer segments that you are – e.g. a local garden centre retailer may be competing against DIY chain stores when selling lawnmowers, but not for specialist bedding plants. It’s important at this stage to document the brand values that each competitor is offering too, as these will also feature in the audit. Typically, more than half of all the intangible benefits that focus groups identify are delivered by brand behaviour, rather than product attributes
  3. Tag Your Audits – when conducting the service audits themselves, don’t model the data capture on old-fashioned mystery shopping surveys. Instead, we’ve taken our lead from Facebook, and devised a free format way of ‘tagging’ each moment of the customer experience. Rather than completing a set script of questions and observations, we create functional and emotional tags, which inventory ‘what we got’ and ‘how we felt’. When we come to analyse the data, we then have the ability to filter for all of the things that created ‘trust’ or ‘friendliness’ – whenever and wherever they occurred. For competitive advantage in service, this is the best way we’ve found to be able to compare how brand behaviour is being delivered and how customers value it.
  4. Prioritise Your Findings - service audit data is all well and good, but only smart implementation of changes will improve the bottom line. We advise using three criteria to help direct your energy on where to improve, and we’ll return to the garden centre retailer illustration to demonstrate its application:
  • Business Model – what service learning impacts the way we make profit? Imagine that ‘convenience’ and ‘personal attention’ tags have repeatedly appeared as what older customers value most? For a local garden centre basing its profit formula on frequent, loyal purchases from near-by customers, they might offer a home delivery service, along with planting advice on arrival. It could offer discounts for allotment owners in the town, and even sponsor Council garden
  • Service Activities – simple features such as providing car boot liners to customers and offering to load their car for them would differentiate a garden centre from its DIY rivals, and reinforce customers’ perception of service as something to come back for and stay loyal to.
  • Customer Outcomes – a service benefit that lives on beyond the delivery itself can be a powerful differentiator. A garden centre could link its transaction database and outbound email to send personal reminders to its customers on when to prune the shrub they bought or protect it from frost. This enables both a relationship to be maintained and customers to receive benefits they value on an on-going basis

In summary, we use service audits with our clients to ensure that their own proposition is consistent with what customer want and value, and also to validate to what degree such benefits are differential in the wider marketplace.

For more information about using Service Audits in your business, contact us at

ToolboxRick HarrisComment