In yet another example of misunderstanding Lean thinking and methodologies, I have ocassionally had people tell me that Lean can’t work in a retail or customer service environment. If Lean were simply about crudely copying the tools Toyota developed, that would be true, but it isn’t, so it’s not.

In fact, Lean is about how we think about the business, how we think about customers and their needs, how we think about business problems, and how we design solutions to those business problems. Lean thinking applies in virtually any business and, I dare say, in most human endeavors. Let me give an example.

I have a friend (which many acquaintances find surprising) who works as an operational support person in a retail operation. He occasionally has to fill in answering phones, and he has repeatedly gotten stung on “secret shopper” calls.

My friend typically can’t recall exactly what he did wrong, but typically he failed to follow precisely the company’s directions for trying to make additional sales (i.e., “upsell”) or didn’t use the right buzz words to make products seem more attractive. In any case, the last time they caught my friend making a mistake on a secret shopper call, they told him if he got caught again, he would be written up. Needless to say he’s demoralized and looking for another job.

Let’s face it — employees hate secret shoppers. Not the secret shopper person, necessarily, but the whole concept of secret shopping. For them, there is no up side to dealing with a secret shopper.

Management isn’t unreasonable in wanting employees to try to upsell. Upselling can dramatically increase the gross margin (retail selling price minus the wholesale buying cost of the product) on any one sale. Many businesses are in markets are so competitive and have margins so tight that failing to get even a few relatively small, high-gross-margin add-on sales every day can put the business in jeopardy. In an attempt to overcome this problem they institute secret shopper programs to try to insure that the employees are upselling.

Unfortunately for employees, the most common approach to secret shopping is a typically stupid mass production approach to trying to deal with a legitimate problem. Let’s look at how a Lean organization would solve the problem, and compare that to how a mass production organization handle such problems.

A fundamental problem the secret shoppers constantly find is that employees make mistakes in the way they answer the phone.

In a mass production environment, management knows everything. Managers know that, when there is a problem they must find somebody to blame. Managers know to “set goals” for “compliance,” knows to “counsel” the employee to stop making mistakes, knows to “motivate” the employee, knows all sorts of other nonsense.

Lean organizations are different. Once you know people are making mistakes, the most direct route to a solution is to simply make it more difficult to make mistakes.

For example, the place my friend works has no script written out and posted at the phones or computer screens so employees know what they are expected to say. There isn’t even a checklist to follow. There is nothing.

It seems to me the first and simplest solution is to write a script, or at least an outline of a script, on some plastic or cardboard placards, and attach them to the sides of the computer screens. Then, when employees are talking on the phone, they have some guidance as to what they are expected to say instead of being expected to randomly remember all the stuff they are supposed to say. That seems only fair.

Such placards will probably require some refinement; it’s unlikely they would get it right the first time. And this probably won’t completely eliminate mistakes, but it will reduce them.

Oh, by the way, installing such placard would fall under what Toyota calls “mistake-proofing.” And having a standard way of talking to the customer would fall under what Toyota calls “standard work.” So it seems Lean — a way of thinking about the business, about the customer, about the needs of the customer, about the problems of the business, and how to solve those problems — does work in a retail environment.

But even this mistake-proofing and standard work won’t completely eliminate mistakes. The remaining problem is that employees will still be threatened with write-ups for making a mistake. For the employee, there is no upside to taking a secret shopper call. There is only a downside. That’s stupid.

A far better solution is to reward employees for a job well done instead of punishing them, mass production style, for making a perfectly human mistake. After all, the placards are very likely to require employees to use stilted, unnatural language. It makes it harder for employees to get into the flow of a conversation with a customer, so they are likely to continue making some mistakes.

Rather than punishing employees, what I would suggest doing is creating a points system that allows an employee to earn points for doing the job right.

A point system isn’t always appropriate, but the place my friend works has something like 13 steps they have to follow in placing an order, upselling, and urging customers to order online.

That’s a lot of steps. It’s easy to miss one — or several — and management has to decide what what is more important — beating up employees, or increasing sales.

If you want the sales, make a deal wherein the employee gets a point for every right step in the secret shopper process. For example, in a pizza restaurant, the secret shopper might end the call by saying the following:

“Okay, Joe, this is a secret shopper call. I need you to cancel that order and grab a piece of paper to write some things down….”

“You know the deal, right? Once you get 50 points from secret shopper calls you can have anything in the restaurant for free?”

“You only picked up nine points on this call. You could have picked up 13. If you had asked if I wanted some ice-cold drinks, I could have given you another point. Remember, you have to say ‘ice-cold,’ though.”

“I could have given you another point if you had asked if I would like to add some cheese sticks, and another point if you had asked if I cared to try one of our delicious  deserts….”

“So tell me what you wrote down: ice-cold drinks, cheese sticks, desert, order online. Do that next time and you get the whole 13 points. Okay?”

This would be a vastly better approach to monitoring employee selling habits. This is a Lean approach to making the business work better.

Of course some would argue that the cost of giving away food defeats the purpose of upselling. What’s worse, mass production managers imagine the cost of a pizza is the menu price, say $18.

Wrong.

The cost of the pizza is the marginal cost, that is, the food cost only. In a typical restaurant food costs are around 25% – 30% of total costs. All other costs are essentially fixed, so the cost to make an $18 pizza is only about $5.

Management has to decide which is less costly: demoralized poorly-trained, mistake-prone employees with high turnover, or a few placards stuck on the computer screens and occasionally awarding an employee with $5 worth of pizza for a job well done.

Of course most managers will stick with the old fashioned (i.e., stupid, mass production) way of thinking about problems and how to solve them. Managers in a Lean organization know there is a better way, and will use that better way, even in a retail environment.

The key is to know that Lean involves understanding what the end state of a process needs to look like (in this case, employees consistently and willingly try to upsell), figure out what stands in the way of getting to that end state (no written script readily visible, poor morale) then find simple, inexpensive ways to deal with those problems.

With practice Lean thinking becomes easier to do, and it can be applied almost anywhere in almost any business. Including in a customer service environment. I dare say, especially in a customer service environment.