In January 2023, the clock starts ticking for 36 new or second-term US governors, their cabinets, and agency heads. The first one hundred days of a new term in office represents the traditional window of expectations for delivering impactful changes for the public while laying the groundwork for broader, sustainable improvements. Many pressing problems will be vying for attention and resources, but new McKinsey research suggests there is one area where state leaders could start delivering significant results for the constituents they serve: customer experience.
Customer experience is a function of expectations compared with a lived experience. Our research finds when a customer’s experience (as a constituent, business, or another government agency) utilizing state services meets or exceeds expectations, it can boost trust in government, improve morale among the civil services, diminish negative media coverage, and lower costs for government agencies.
For McKinsey’s latest State of the States benchmark, we surveyed nearly 80,000 Americans across all 50 states and Washington, DC, to gain a more thorough understanding of people’s experiences with 21 common state government services. Our goal was to identify pockets of excellence and gain insights into what is driving improvements in states that excel in certain areas (see sidebar “Survey methodology”).
Overall, when asked to assess satisfaction with government services alongside nine private-sector industries, respondents ranked government last. Still, as our data below show, many states stand out as delivering customer experiences on par with top-rated private-sector industries.
The highest customer-experience-satisfaction rate for a single state beat all but one private-sector benchmark and is nearly 30 percentage points higher than the lowest-ranked state (Exhibit 1). That gap illustrates that some states are delivering excellent customer experiences, setting a bar that all states could aspire to reach. And understanding the drivers of those states’ performance could help governments meet rising customer expectations.
Customer experience also varies within individual services, between the paths people take to accomplish tasks within them—their journeys—and the channels they utilize during those journeys, such as online, phone calls, or email.
Across our research, five key insights emerged:
- Excellence is attainable. Customer experience differs sharply not only between states but also among the services they offer. Across states, there is a substantial 40 percentage-point difference in average satisfaction between the lowest-rated service (childcare support in one state) and the highest (vaccination services in another). State governments have an opportunity to close that gap and achieve excellence. Some states are delivering customer experiences on par with private-sector industries and even achieving levels of customer satisfaction that are up to 50 percent higher than some private-sector industries such as cable and satellite TV.
- Customer experience matters. States that have higher rates of customer satisfaction enjoy higher trust in government, lower cost-to-serve, lower risk of negative public coverage or commentary, and greater levels of voter participation. Residents are, on average, four times more likely to agree that their state provides an adequate standard of living (on aspects such as affordability, education, and health quality) when they are satisfied with customer experience.
- Not all services are created equal. The experience with some state services drives an outsize proportion of a resident’s overall customer satisfaction with a state. Nationally, our research finds that five out of 21 services—vehicle services, taxes, public transit, affordable housing, and unemployment insurance—account for more than half of overall satisfaction. Understanding which services matter most to state residents, and where gaps in satisfaction exist, could help states prioritize where to get started.
- Experiences vary across communities. Customer experiences are influenced by where people live, what resources they have, their identity, and where they are in the journey for each service. States could consider improving experiences for specific groups to drive overall satisfaction.
- ‘All of government’ approaches work. Across services, we asked residents to rank their experiences with specific steps (that is, journeys) when doing business with their states. We found that some steps heavily influence overall satisfaction levels. For example, two of the early steps in a journey across 14 potential steps—learn and apply—drive, on average, 41 percent of satisfaction across all services. This suggests that states have an opportunity to make a strong first impression by focusing on these critical early steps and implementing enterprise-wide solutions across government, such as digitizing forms or one-stop-shop apps.
When starting a new or second term—or even outside of traditional election cycles—governors, cabinet members, and agency chiefs could secure quick wins to improve customer experience while pursuing a foundational transformation across government to anchor people, processes, and technology in customer centricity. To help in these efforts, this article outlines a three-phase approach that state leaders could consider: build aspiration and purpose across state agencies and functions, identify high-impact opportunities, and enable successful transformations.
Phase one: Build aspiration and purpose
Improving customer experience can yield significant value for US state governments and their constituents. By establishing a link to value, state leaders could help build a clear aspiration for change and establish a road map for achieving it.
Our research finds that people who say they have more satisfying experiences with public services generally also share positive perceptions of their state on metrics such as affordability and education quality. By contrast, people who are dissatisfied with their customer experience are likely to believe that their state is not performing well on key benchmarks.1 These improvements in customer perception happen nonlinearly. Our research finds that as customers move from dissatisfied (score of one to six) to neutral (score of seven or eight), and especially from neutral to satisfied (score of nine or ten), the number of people who say their state is performing well on key metrics increases sharply (Exhibit 2).
States that achieve that kind of step change in service delivery could see a clear and compelling link to value including the following:
- Increasing trust in government. Our research shows that a gain in average customer satisfaction of one percentage point is associated with an increase in trust in state government of 1.3 percentage points on average, and up to 1.5 percentage points in some cases.2 This suggests that some states could see trust among constituents double by improving customer experience.3
- Lowering cost to serve. Our research finds that, on average, more satisfied customers make fewer phone calls to state contact centers and, in many cases, fewer in-person visits to field offices. By converting dissatisfied customers to satisfied customers, states could see a marked drop in incoming calls and a commensurate increase in the use of lower-cost channels (for example, digital). Some services, such as vehicle services and taxes, could reduce calls by as much as 20 percent by improving satisfaction, freeing up funding and capacity to address other state priorities (see sidebar “Digital services: Colorado’s efforts”).
- Mitigating negative perceptions of state agencies. Customer experience can also affect media coverage measured by public comments about a state service, including negative public reviews, complaints lodged, or constituents telling others about a poor experience.4 Our research finds that better customer experience can decrease the risk of negative coverage by up to 75 percent, and holds across different types of services. Answering contact center calls and addressing public complaints—particularly ones that require high-touch responses from case workers—can be costly. Reducing these negative perceptions through excellent customer experience could save state governments money and time.
- Improving civic engagement. Residents who experience more positive interactions with state services are more likely to engage in civic life. For example, our research indicates a nine-percentage-point difference in voting behavior among customers who are satisfied with state services compared with those who are not.5
In addition to establishing a clear rationale (a link to value) for investing in customer experience, states could establish a road map that prioritizes strategies based on impact, feasibility, and amplification. Impact reflects the value that can be captured relative to the aspiration and timing—within the first one hundred days of a new term, for example. Feasibility can help determine whether the agency currently has the resources or the ability to mount new resources to execute on a particular use-case transformation. For example, would current technology and workforce be sufficient, or would new tools and skills be required? Finally, the question of amplification could prove critical because it can help determine the extent to which the use case in question can embed the ability to execute on more use cases.
Phase two: Identify high-impact opportunities
Once state leaders have a clear aspiration and case for change, they could enable a transformation by setting a baseline of customer experience and importance for residents. This baseline could help them swiftly zero in on key services and journeys that are most important to constituents and uncover where the biggest opportunities for improvement may lie.
Once the opportunities have been identified, states could then invest in initiatives to optimize customer experience from end to end across public services, journeys, delivery channels, and demographic groups (see sidebar “Focusing on what is important to residents: Retirement benefits in Maine”).
A key finding of our research is that certain services disproportionately influence customer experience. To get a handle on which ones could yield the biggest impact for a state’s transformational efforts, our benchmark measured which services are most important to residents’ overall satisfaction with their state, how often residents use these services, and residents’ relative satisfaction with each service (Exhibit 3). Nationally, vehicle services, taxes, public transit, affordable-housing assistance, and employment benefits are seen as the most important—driving over half of overall satisfaction. But fewer than 40 percent of residents say they are satisfied with their experiences interacting with these services.6 Our research also finds that states with high overall customer experience tend to overperform on the services that are most important to their residents.
To improve customer experience, states could redesign not only the services that matter most to people but also the drivers of satisfaction underlying them. Our research shows that, in most states, reliability, transparency, and ease of use drive 35 percent of resident satisfaction with a state service. However, this varies based on the service. One state set out to improve customer experience for residents using its Department of Motor Vehicles by shrinking processing and wait times. But a deeper benchmarking analysis found that accuracy was the most important driver of this particular customer segment’s satisfaction. Informed by this insight, the department adopted a new “first-time-right” ethos and identified initiatives to lower errors and painful revisits by up to 40 percent.
Customers experience a variety of journeys when accessing public services, from learning about them to submitting applications and then receiving services. And just like services, some journeys have a disproportionate impact on customer experience. To find out which ones, we asked US residents about 14 different journey steps they have taken across 21 state services (Exhibit 4). The journeys include the following steps: learn, apply, wait, check, obtain approval, enroll, access, receive, use, renew, update, appeal, cancel, and resolve.
We found that across states and services, residents say they are most satisfied with their receive journey step. But the learn and apply steps together drive more than 40 percent of average customer satisfaction. This suggests that focusing on experiences at the point where customers start engaging with a service could hold significant opportunity for a high-impact transformation. Addressing low-satisfaction journeys could also generate significant improvements. Nationally, appeal, cancel, and resolve top the list of least-satisfying journey steps, reflecting the opportunity for an all-of-government approach that some states have taken to redesign their services (see sidebar “Streamlining user interface for employment benefits in Wyoming”).
Across all 50 US states and 21 services, 60 percent of residents report a strong preference for digital channels, compared with 30 percent for phone and 27 percent for in-person. However, across all services, residents say that they are using each of these channels more than they would like, with dissatisfaction for phone and in-person channels especially pronounced. This suggests there is an opportunity for states to improve customer experience by supporting users as states transition their services to digital channels. Across all states, some 37 percent of residents say that they had significantly increased their use of digital channels to access government services during the COVID-19 pandemic, and nearly 90 percent say that they would continue to use those channels. But here, too, are sharp disparities between customer preferences and usage rates. While 79 percent of residents across all services report using digital channels, only 60 percent prefer to do so (see sidebar “Digital solutions customers prefer”).
Our research also finds that across all services, nearly 80 percent of customers switched channels throughout the course of their journeys. This varies widely across services, with the highest level of channel switching (over 90 percent) involving financial assistance for small businesses, and the lowest level (44 percent) involving tax services. This insight suggests that customers who need to channel switch are likely experiencing more process complexity, increasing the chances of poor individual interactions and decreasing cumulative satisfaction over time. And residents may need more or different support to use digital channels effectively, such as access to affordable, high-speed internet service, devices, and higher levels of digital literacy.
Across all US states, our data show that certain groups have poorer experiences based on their demographic and socioeconomic backgrounds (Exhibit 5). Looking at income level, for example, our data reveal a strong correlation between household income and satisfaction, with the two rising in lockstep. Low-income residents making less than $25,000 report they are 18 percentage points less satisfied with government services than high-income residents. Disparities such as this were found by gender (both male versus female and male versus no gender specified), race (White versus non-White7), and geography (urban versus suburban and urban versus rural).
We asked respondents about several equity-driven solutions that states could pursue and scale to address these disparities. We found that, across all states, residents voice the greatest preference for strong and affordable internet access, phone calls that are answered in two minutes or less, and flexible fees and payment support. By pursuing initiatives such as these, states could embed equity into cross-governmental efforts to improve customer experience (see sidebars “Structural factors and differences in customer experience” and “The potential benefits of an equity mindset”).
Phase three: Enable successful transformations
States that have transformed services successfully typically invest in foundational enablers that sustain early improvements and then build on those to scale customer centricity across the whole public-services enterprise. These enablers span three areas: culture and capabilities, organization and governance, and technology.
Culture and capabilities
Successful transformations often pivot on mindsets and behaviors. Shifting from a culture where only a few frontline employees see customer experience as their responsibility to one where all employees do could drive a successful transformation. Making that leap often entails investing in capabilities such as human-centered design, where customers are put at the center of service delivery. Governments that invest in their workforces in this way could substantially increase their ability to deliver satisfying customer experiences.
Organization and governance
Governments that deliver successful customer experiences tend to organize themselves around customer-oriented outcomes and power their decisions and actions with data. Establishing customer-experience-monitoring systems could allow states to use real-time data to drive improvements. Leveraging data in this way can be done prior to modernizing the underlying legacy technology systems and could cover the following four components:
- Build data architecture (for example, data hubs, lakes, warehouses) and use APIs to exchange information with systems across resident services and journeys.
- Securely catalog and standardize resident data across government (for example, master data management and standards).
- Use event-driven architectures for real-time, more synchronous updates (for example, an address change to one system triggers an event that publishes updates to other databases and systems that are linked to it).
- Use modern technology (for example, AI, machine learning, business rules engines, and chatbots) to improve residents’ experiences across services and journeys.
Our research highlights multiple aspects for states to consider as they seek to adopt an all-of-government approach to customer experience by applying enterprise solutions across agencies to address common pain points. Shifting to cloud technology and analytics is often the foundation of delivering more effective public-sector services. States are at different points in their cloud journeys; many are moving toward public cloud services that are centrally hosted by a third-party provider (platform as a service and software as a service) to help configure and automate residents’ experiences.
Public cloud automation could encompass multiple channels and, when used effectively, unlock benefits such as promoting continuity of look and feel and enabling faster deployments of enhanced customer experiences. These solutions can also be easier to use and maintain, help ensure compliance with accessibility and security standards, and even integrate features for core services such as multifactor authentication and single sign-on, digital signatures, and chatbots. States could prioritize how they migrate and adopt cloud services based on use cases that matter most to their residents.
Our research is clear. Customer experience matters, with higher satisfaction levels driving greater trust in government, cost savings, and fewer negative media mentions. And there are many opportunities for US state leaders to identify high-impact opportunities and pursue critical enablers to start generating more satisfaction across services, journeys, delivery channels, and demographic groups. As new and second-term state leaders consider how to deliver meaningful positive impacts for the public, focusing on customer experience could deliver results residents feel immediately, while laying the foundation for a sea change in public satisfaction down the line.