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Internal customer is a technical term used in management science popularized by Joseph M. Juran. He defined internal and external customers as anyone affected by the product or by the process used to produce the product, in the context of quality management. Internal customers may play the role as supplier, processor, and customer in the sequence of product development. An internal customer or internal service provider can be anyone in the organization. An internal customer can be a co-worker, another department, or a Internal customer satisfaction leads to External customer satisfaction distributor who depends upon us to provide products or services which in turn are utilized to create a deliverable for the external customer. In general, internal customers don't have a choice. For example, if the sales department doesn't like accounting's credit policies, they can't fire that department and hire another. He claimed that the organization must understand and identify both internal and external customers and their needs. The organization must focus on its primary task of satisfying the customers requirements and expectations. If one department, individual or process within an organization supplies another such within the same organization with goods, information or services then the latter is described as the internal customer of the former. For example, a dispatch department may be the internal customer of a packing department, which in turn may be the internal customer of the manufacturing process. Juran advocated 'exceeding the customer's expectations.'

WHY INTERNAL CUSTOMERS ARE IMPORTANT 1. First of all they are they fundamental asset of an organization, without
which an organization cant run its business 2. Servicing the internal customer creates opportunities to expand our network of people available to assist us in a variety of situations. The more you meet with fellow employees or talk to them, the more you are aware of how they can assist you and in turn assist the customer. You have better opportunities for advancement because your interest in others increases your knowledge of your institution. You provide quality service on a consistent basis to all customers- internal or external!


1. Unhappy employees are less productive and more likely to have higher absence rates 2. Satisfied employees are more productive, innovative, and loyal 3. Increases in job satisfaction lead to increases in employee morale, which lead to increased employee productivity 4. Employee satisfaction leads to customer retention 5. Between 40 and 80 percent of customer satisfaction and loyalty is determined by the customer-employee relationship, depending upon the industry and market segment.


While companies focus thousands of dollars on external customer service in hopes of wooing and retaining customers, little attention is being paid to the effect poor internal customer service has on overall customer satisfaction. It all starts within your organization! Sooner or later the ripple effect reaches your external customers. To really walk your service talk, your commitment to internal Customer service must match your company's external focus on customer care. When we think of customer service we think of staff serving customers over a Counter or over the phone. But customer service occurs within your organization as well. How well does a staff serve its internal customers: other departments, its Management, vendors and consultants? Believe it or not, it all counts. Internal Customer service refers to service directed to others within your organization. It refers to your level of responsiveness, quality, communication, teamwork and Morale.

INTERNAL CUSTOMER SATISFACTION PROCESS It consists of the following major steps.

1. Identify internal customers. 2. Evaluate the role of the credit, collection and accounts receivables administration (as a functional group) within the organization (self evaluation). 3. Determine actual performance level through survey of internal customers. 4. Determine the level of satisfaction required within the organization through survey of internal customers.

5. Measure satisfaction level of internal customer with respect to needs and Expectations. 6. Identify improvement opportunities in work process required. 7. Determine process potential and develop action plans for better service. 8. Monitor, control and update.


1. Have each department identify who is their internal customer and who is their internal supplier/s. 2. Request each department to talk to their internal customers and ask them specifically what is needed for them to do their jobs that they provide. 3. Have them ask these internal customers what they currently do that disappoints them in delivering what they provide. 4. Request they ask these internal customers what they could do that would delight them and make their jobs easier. 5. Document all of the above. Keeping internal customers satisfied and happy is the first step towards creating external customer loyalty. According to the Service Profit Chain (developed by the Harvard Business School) this is where it begins. Yet, from what Ive seen, there are so few businesses that look at their organization as a microcosm of many customers and suppliers within the overall company and within departments themselves. For instance, the telephone receptionist is a supplier to most every individual and department delivering the product of calls or messages. It is a like a chain, each link is important to the overall strength of the chain. When there is a broken link, the whole organization is weakened. When one internal department supplier is always late, delivers bad or wrong output, acts discourteously and disrespectfully to the next department it makes it much more difficult for the other departments to ensure the final external customer is happy and satisfied. This is what creates the tension and stress that frustrates employees and causes their job dissatisfaction. Customer service must become a requirement for all employees within an organization, not just those that deal with external customers.


Employees must focused on delivering timely, effective, quality products and services to employees in other departments, otherwise, service to external customers can suffer.

The latter impacts the organizations reputation and bottom line, which ultimately affects the organizations ability to hire, train, and provide income and benefits to its employees. If you ask most employees and their supervisors if they believe they deliver effective internal customer service, they will likely say Yes but then qualify their answer with But we can do better. They are probably right in both cases. Most employees make an effort to be professional, project a positive image and to address the needs and wants of their internal customers. The challenge is that their organizations systems, policies and procedures often stand in their way. Let me explain. In many organizations, people are hired into various internal positions (e.g. human resources, marketing, sales, facilities, cafeteria, accounting, or security) but are not trained in effective customer service skills. In fact, the phrase customer service is likely not used in the context of providing products and services to others in the organization. Internal customer satisfaction is typically not measured and workers are not held accountable for their success rates in that area. Unless a customer complains or compliments an employee, their supervisor typically assumes that everything is being done well and provides positive feedback on their performance review. All of this could start by forming an interdepartmental team made up of representatives from all departments and a representative from human resources and the training department. These people could brainstorm what currently works and what needs to improve related to internal service. Customer satisfaction feedback could be gathered through a written survey coupled with focus groups of 8-10 customers and hosted by human resources and/or an external customer service consultant.


Below are few tips that can help you out on building excellent relationships with your employees and making sure that they will want to give all they can. Consider your employees as your customers. Too often employers forget this. Without them you are not going to succeed. This is your first step: to acknowledge them as the most valuable members of the team. Be available and present for them. You would always make yourself available to your clients do the same for your employees. They need to know that you are there for them, and that everyone is playing on one team. Be willing to share the companys goodies. Does your office purchase holiday gifts? Purchase additional items for your employees. If you as a manger receive a gift from a vendor, share it with your team. It is not the actual item that has so much value but your willingness to treat your internal customers with kindness and respect. Exceed your employees expectations. You can create great relationships if you focus on this. Do more for them than it is expected. Take them out for dinner or lunch once a month just as a gesture of team spirit. Offer unexpected theatre tickets or restaurant gift certificates for

those who have few or no sick days within a period of time. Host a company play day at a local park. The possibilities are wide open the results are long-lasting. Communicate the companys direction. Keeping employees informed offers them a feeling of empowerment. It cements the fact that they ARE part of the team. It also helps with aligning individual goals with those of the organization. Take time to provide detailed information about the businesss future and your internal customers place in it. Follow-up and ask for their feedback. Just as you ask for feedback from and follow up with your external customers, be sure implement open communications between you and your team. When you involve employees in the daily activities of the organization, they participate more, volunteer more and they take ownership more quickly. Say thank you. Can you imagine a transaction that takes place with an external customer where thank you is never said? You simply wouldnt tolerate that for long. The same applies to internal customers. When a project is finished when a report is completed at every opportunity, say thank you. While internal customer service programs may take additional time and money, the company-wide results will far surpass the expenses. You will soon find yourself surrounded by those who are willing and, yes, even excited to work for your firm.


Sub processes support the employees who produce and deliver products or services. Support processes include human resources, facility management, technology service and internal marketing. Human resource support includes facilitating the selection, development and motivation of employees within the organization. First, employees need to understand their role in the work system and how the work they perform is aligned to serve others in the organization. The development of employees involves learning new skills and ways to prepare themselves for tomorrow's responsibilities. The human resource function should also support high performance through compensation and recognition. Employees need to be encouraged to problem-solve at the source, be innovative and take reasonable risks to achieve company goals. Facility management is concerned with not only the protection of the company's assets; its highest priority is to the health and safety of the employees. In addition to the obvious safety precautions, a careful analysis of ergonomics ensures that the workplace is suitable for the work being done. The physical work environment affects both employee productivity and well-being. Managing the environment is an important part of enabling employees to meet and exceed their work expectations. Technology support can make the difference in a company's competitive edge. Technology can be used to reduce costs and improve information flow and availability.

Standards for data input accuracy and timing of input are part of making sure employees have what they need to perform their work. Performance measurement is integrated with prioritizing work. It identifies and measures those activities that are important to serving customers, whether internal or external. There is always the old adage, "what gets measured gets done." Measures help management manage by fact. Production may have performance goals such as the completion of work orders on time. Purchasing may be measured on frequency or percent of materials out of stock. Questions like, "What does an employee do to support product and/or service delivery?" or "What deliverables do they have?" help identify what to measure. Measurements help employees focus on the priorities and serving their internal customers. Improvement strategies may include sharing of successful strategies across the company, recognition and reward programs for innovation, information from customers of the internal processes, use of alternative technology and process analysis. Some firms may require a redesign of the complete system to achieve


Established internal processes, training, measuring performance and improvement strategies are all important to orienting and expecting your people to recognize their internal customers. They help build satisfaction with the work environment and loyalty to the firm. When employees recognize who they serve within the organization, and treat them as a high priority like an external customer would be, not only does performance improve, employee satisfaction and loyalty increase.


E - Easy to Approach Executive Management Style M- Meritocracy P Performance driven Promotions L Learning Opportunities O Organization structure is Flat Y Yes to Democracy, No to Bureaucracy E Environment is family-like E Effective Communication with CEO S Suitable Participative Work Environment