I think a lot about customer service. I wear my Institute of Customer Services badge with pride. You would think, therefore, that I would be supportive of the concept of the internal market.
Well I’m not, at least not completely.
The idea of the internal market is that services and functions within an organisation treat each other as though they were normal, fee-paying customers. This will engender a sense of competition and put services on their metal as they strive to improve service levels under the implied threat of losing the business to some other provider.
This is all fine if it improves customer attitudes, communications and responsiveness to business enquiries.
But there must be a difference between a customer who works for the same organisation as you and one that does not.
As an example, a car mechanic goes to buy a printer cartridge from a local stationer. The mechanic needs the printer cartridge as he has some invoices to send off, to get the cash in to maintain his garage business. The stationer however, wants to sell the cartridge so that he can trade and build a successful stationery business. The objectives of the two organisations are linked but are completely different.
Now imagine another example. A bicycle manufacturer is large enough to have an internal marketing service and also an internal print service. Here, the role of the marketing department is not in itself to become a leading marketeer, its role is to help the company sell more bicycles. The role of the print department isn’t to become just an effective printer, its role is to help the company sell more bicycles.
Unlike external customers, the internal customers should have the same overall corporate objectives as each other.
Where the wheel falls off is when internal customers start to argue about cost. If, as in the above example, the marketing service decides that it can buy the print cheaper externally then the internal market can quickly descend into a farce.
The marketing service will spend time obtaining and comparing quotes from the internal and external providers. It will probably need to set up a small team of buyers and administrators to support this. Meanwhile, the print service will have to spend time responding to the quotes and fiddling with its prices to appear cheaper. It too will need to add resource to be able to compete. Valuable management time will be wasted arguing about the merits of trading with each other.
All of this adds cost to the organisation and detracts from the objective of selling more bicycles. This money can only come from somewhere and that must be from the price of the bicycle, making the company less competitive.
OK, so the print service may be more expensive at times than an external provider but then the company has three choices, either get rid of printing altogether, make a financial adjustment at year end to compensate the marketing service or just put up with it. After all, it is all the company’s money.
The internal market has a place in improving organisations’ competitiveness but it is not a panacea for all of its problems. Organisations should decide whether or not it is right for them to have the internal services that it does. It should market test these services regularly, involving the internal customers.
Once the decision is made however, internal services should always buy from each other. It will be cheaper in the long run and make the company more competitive in the real market, the one with external fee-paying customers.
Thoughts from a Guerrilla Worker 