Jane Frost has spent the last three years persuading HM Revenue and Customs (HMRC) officials to rethink the way they operate. As director of the Individuals Customer Unit, she believes that there are myriad ways in which organisations could do things better if they would just listen to customers, think about tasks and systems from customers’ point of view, and design processes and procedures accordingly.

Not only does this approach make life easier for the taxpayer, argues Frost; it also makes things easier and cheaper for the tax collector, who can spend less time tidying up mistakes and chasing non-payments.

The key is to take into account how people are going to behave. Frost has a very neat and simple way of explaining this, using something she spotted in Hyde Park. “Two paths are coming together and there is a worn piece of grass between the two, and someone assiduously goes there and puts up a sign: ‘Don’t walk on the grass’.” This, she says, shows how time and energy can be wasted trying to fight people’s natural impulse to follow the shortest route.

In an HMRC context, Frost cites the fact that letters often used to be sent out containing technical, Latin terms. Frost argued that many people don’t understand Latin, so to send them letters containing such words would only result in more calls to the HMRC helpline. The danger is of using “words which we at HMRC understand, and which are correct policy, but actually just drive the customer doolally”, she says.

Another great example of language as an obstacle, says Frost, concerns a taxpayer whose first language is not English calling for advice because she is struggling to understand why a letter about her tax return does not mean she will be getting some money back from the taxman.

This all sounds like common sense – or “Janet and John, book one” as Frost describes it – and she says most people have got to grips with the idea. However, it hasn’t always been like this: “This is wildly exciting for me because ‘customer-based activity’ is an area where – although there has been commitment to it and statements about it in the past – we’re only just getting to a stage where we’re realising its value,” says Frost. “I’ve been at HMRC going on four years, but it was an area that was completely greenfield before then.”

Frost is not saying that HMRC had never thought about the customer before then. The agency understood its business customers – big companies, agents, accountants – well, she says: “We talked to them all the time, [but] we didn’t know our individual customers because we didn’t [talk to them].”

This was because, historically, HMRC rarely needed to interact with individuals. People stayed in the same job; tax was organised via their employer; direct contact was minimal. However, the world is changing, and HMRC now has to grapple with a population that hops from job to job; drops out of work for periods of time; has multiple jobs. “You need to understand your individual, your mass market, as well as your high-value [business] interaction,” Frost says.

Getting people on board

The idea of designing services around the customer is something that the cabinet secretary has talked about regularly, and Frost says it is also something that was at the heart of the new organisation born out of the 2005 merger of Inland Revenue and HM Customs and Excise. Since moving four years ago from the BBC – where she was responsible for feeding customer insight into a major rethink of the BBC’s brand – Frost has been evangelising about the need for HMRC to rethink the way it treats taxpayers.

Frost is keen to emphasise that this new way of thinking is not something that can remain the preserve of her customer unit. Her directorate can “champion the cause”, but “it should be about everyone doing these things”. Inevitably, not everyone has jumped on the bandwagon. Frost won’t use the word resistance because “it is an invidious word”, but does say that “people are really, really busy and doing the best they can with the tools they have”; sometimes “life is too complicated” for people to find the time to completely reorganise the way they work. She also accepts that it is “very difficult for people who have grown up with a language to understand that their language is not being understood by the people they’re talking to”.

The appropriate response for her and her team is not to start “wandering around, hitting people on the head, saying: ‘You must do ‘customer’.” Her preferred tactic is to show colleagues where the focus on customers has already worked (see boxes for examples) and set out a business case. “The customer approach is not just an emotional ‘nice to have’; it’s where the benefit is to your business”, she explains.

One great source of hard evidence is customer complaints. Frost describes them as “the cheapest way of finding out” what is going on in a business. “A lot of complaints are just telling us about the nature of our interaction, the nature of our communications,” she argues. “You get complaints about tone and style which are very cheap to fix, but they tell you about how people are relating to you and what they think about you.”

HMRC has been using its complaints data to provide an indication of performance since 2007. One interesting side effect is that Frost doesn’t mind if complaint numbers go up, because that means customers are telling them more and more about where the system isn’t working. “You can turn a relationship around with the good handling of complaints,” says Frost. She would only be worried if the number of complaints being upheld by the ombudsman was increasing. “Those mean that you really have got something wrong,” she says.

Error rates can give another indication of where things need to be redesigned. A higher than average number of customer errors associated with a particular form or payment may indicate a problem with a process, rather than deliberate attempts to defraud. Like those taking a short cut across the grass in Hyde Park, people may be following their natural instincts, rather than purposefully destroying the grass. The solution is to change the process, not to constantly fight a losing battle to change people’s behaviour.

Thinking like a customer

That does not necessarily mean producing reams of guidance, because there is evidence that guidance actually creates more mistakes than it prevents, Frost says. “Think about it: a lot of people we work with have low literacy and numeracy; we provide them with lots of pages that they can’t read. It just worries them, they start looking things up and making the wrong decision.” The result of this thinking is that HMRC has reduced the amount of guidance it sends out with forms. In one fell swoop, the department has reduced its carbon emissions, its postage costs and the amount of errors in submitted forms: “three great things coming out of customer understanding,” says Frost.

Interestingly, Frost says there is only so far you can go to design human error out of your processes, because a core level of mistakes will always be made. “About five per cent of people, as capable as you and I, will make an error transcribing their name and address onto a form. So please stop worrying about forms that have a five to 10 per cent error rate, because that is a natural [minimum] limit. You can stop investing in those areas and put your efforts somewhere else.”

This customer-centric approach will yield a number of benefits, argues Frost. Most obvious is a more user-friendly service that is better received by the people using it. This in turn benefits the business, because there will be higher take-up of services and a more efficient relationship between user and provider: in the case of HMRC, this means taxpayers who fill in their tax forms correctly first time and don’t take up advisers’ time with queries.

This efficiency frees up money which can be invested in “the things that really matter”, continues Frost – such as putting extra money into helping groups of people who really struggle with filling in forms, or making sure that online provision is completely compliant with disability standards.

Such changes do, of course, require some investment – in redesigning letters or guidance, for example – of both money and staff time. However, Frost does not believe it has to be a huge investment. She paraphrases HMRC chief executive Leslie Strathie: “Think big, start small, scale up fast.” An example of this, says Frost, is to send some basic information to people who are about to become eligible for a pension. “We have found a reduction of something like a third in those intending to call us [with pension queries], just by sending them a piece of paper,” she says. “Small, low-cost, respectful of the customer.”

Frost believes that HMRC is a government leader in designing services around the customer. “We’ve talked to almost every other Whitehall department recently… helping them use the techniques we use,” she says. The 2005 merger instigated a massive push for tax collectors to change the way they do business, she says, so HMRC has had a head start in this field. “I don’t think there is anybody else [in Whitehall] who has a customer director, and there are two of us [in HMRC],” she says.

However, Frost does not think it will take long for Whitehall colleagues to catch up – not least because the budget restraints expected in the next few years will require some radical rethinking. “There ain’t much that you can do radically differently except deal with the customer in a better way,” she argues. “I don’t know how many options people have beyond developing change through this area.” Big new IT systems will be too expensive, she says by way of an example. “We’re going to have to do more for less; therefore we have to re-engineer what we’re doing,” she argues.

Common-sense, small-scale, relatively cheap ways to improve services and cut public spending. It sounds like exactly the kind of initiative that departments could do with in the age of austerity; and it sounds like something that we will see more and more of in the months and years to come.