Cost and quality – a common trade off many would think. Do you want high cost, high quality or low cost, lower quality? It’s a typical question we all face when we go to the supermarket. Do we select the finest vegetables or the misshapen carrots someone else has rejected purely on looks, regardless of taste? But this is an over-simplistic view, particularly in the world of public services. It also misses a fundamental issue about the definition of quality.

Quality does not mean ‘best’ but rather, in most cases, ‘adherence to expected or required standards’ which will include affordability. In the public sector many citizens know what they expect, but some also need help in defining how it’s best delivered to them. The other big issue here is the assumption that quality always costs more. And we constantly hear that public services would improve if only they were better resourced. We at PricewaterhouseCoopers would contend, however, that quality need not necessarily cost more. The real challenge is to find more cost-effective solutions that deliver higher quality outcomes and ultimately more satisfaction with public services at lower or the same cost.

How many public bodies understand demand for their services and what would really make a difference, from the citizens’ perspective? Experience of demand for public services suggests that:

• A relatively small number of citizens consume a disproportionate amount of public body resources – perhaps 20 per cent of residents consume 80 per cent of resources – so demand is very heterogeneous. Consumers of large volumes of one public body’s services are very often large users of others – so being customer-centric makes a great deal of sense because being passed from pillar to post has a huge impact on citizens’ satisfaction.
• Some bodies are delivering customer-centric services already, but on the whole, there is insufficient segregation or tailoring of service provision compared with demand. Service delivery in terms of both what is delivered and how it is delivered is often too homogeneous.

For some customers, too much is delivered in the wrong way and this implies potential over-resourcing or waste that could be improved from an efficiency perspective.

So how could these ideas and a better understanding of customers be employed to improve the matching of supply with demand and save money? E-government is the classic example. Too many public bodies see e-channels as an add-on rather than a substitute. Technological exclusion is a risk, but if we understand customers better, we can serve those with technology where it suits. The money saved from more traditional channels can then be reinvested into better services for those that really need them.

A hub and spoke approach can be an effective model here. Public bodies and others can collectively secure scale economies by delivering back office, more commoditised and more e-based services in the hub whilst providing much more tailored services in the spokes. In some communities this might be a joint service centre or could be more e-based for communities of similar interest, but with large geographical distribution.

Perhaps public bodies need to think about citizens differently and design service delivery to meet their needs better. In this way they can ensure greater adherence to standards or demands (better quality) at a lower cost for many, and more tailored services for some.

But this in turn requires a much better understanding of the customer base, what the private sector would refer to as segmentation, and greater flexibility and tailoring of what is delivered and how. One size fits all will never be best value or provide best overall satisfaction. Would you rather walk down to the local library to borrow a book, only to then to have to return it, or download an audio book to your MP3 player? Some will prefer the former and others the latter and each has a different cost.

The ultimate goal must be to spend less on delivery and yet achieve more satisfaction. Some organisations are doing this, but it requires a radical change in understanding of the customer and then responding with the appropriate services, delivered in a tailored way.