Over
35 years ago, Peter Drucker insightfully observed that a company’s first task
is “to create customers”. But today’s customers face a vast array of product
and brand choices, prices, and suppliers. This is the question: How do
customers make their choices?
We
believe that customers estimate which offer will deliver the most value.
Customers are value-maximizers, within the bounds of search costs and limited
knowledge, mobility, and income. They form an exception of value and act on it.
Then they learn whether the offer lived up to the value expectation and this
affects their satisfaction and their repurchase probability.
What
is Customer Satisfaction?
Satisfaction
is the level of a person’s felt state resulting from comparing a product’s
perceived performance (or outcome) in
relation to the person’s expectations.
What
is Customer Value?
Customer delivered value is the difference between total customer value and total
customer cost. And total customer
value is the bundle of benefits customers expect from a given product or
service.
Who
is a Customer?
Ø Business needs customers to survive and exists in the market.
Ø Customer is important person in business.
Ø A customer is someone who brings his expectations to the
organization, and it is their job to meet there expectation and satisfy their
wants.
Ø A customer is the blood of any business without which it cannot
function.
A
Customer is for life – Make it possible
Ø
Select the right customer through market research.
Ø
Know your purpose for being in the business.
Ø
Move customers from satisfaction to loyalty by focusing on
retention and loyalty schemes.
Ø
Develop reward programs.
Ø
Customize the products and services.
Ø
Train and empower the employees in excellent customer
service.
Ø
Respond to customers’ needs with speed and efficiency.
Ø
Measure what is important to the customer – always add
value.
Is Customer – really important!!
C - CARE FOR THE CUSTOMER
U - UNDERSTAND THE
CUSTOMER
S -
STUDY THE CUSTOMER
T - TRUST THE CUSTOMER
O - OBLIGE THE CUSTOMER
M - MEET
THE CUSTOMER
E - EVALUATE THE CUSTOMER
R - RESPOND TO THE CUSTOMER
S
- SELL AND WIN THE CUSTOMER
Know
what the customers are worth and know their point of view
Firstly, let
us look at how the true value of the existing customers can be calculated. Many
businesses spend about 75 percent on their marketing budget in a search for
more new customers. The cost of this marketing mistake is a negative effect on
the overall profits of the organization. It is a mistake because:
v
It costs substantially more to win a new customer than it does to keep
an existing customer.
v
The longer a business keeps a customer, the more profitable that
customer is for the business.
v As a customer’s lifetime value grows, the more
dependent they become on the company, and the less susceptible they are to the
competitors’ offers of low prices.
The
Customer’s Eye View
From the customer’s viewpoint, the
organization behaves like an ideal suitor. Their every need or wish is not only
provided for but also anticipated and personalized. At every opportunity and
interaction, the customer is made to feel not only special, but also perhaps
the most special and valued customer the organization has.
Customer Care
“Customer care is a customer service that seeks to
acquire new customers, provide superior customer satisfaction, and build
customer loyalty.”
We are now in
the 21st Century, which is the era of the “The Never Satisfied
Customer”. The expectations and demands of the customers will keep growing in
the coming days. In today’s market scenario customer is the “king”. All
companies are striving hard not just for customer satisfaction but also
“Customer Delight”. To maintain customer loyalty, it is very important for an
organization to have a good relationship with them.
“ONE SATISFIED CUSTOMER IS EQUAL TO 100 NEW CUSTOMERS” Understanding this
factor, many companies are striving hard to keep their existing customers
happy. They are spending enormous amount of money to retain their customers.
Today the growth and profitability of any organization depends on the number of
satisfied customers that it has, not its financial assets.
To
maintain customer loyalty and brand loyalty, it is very important for any
organization to have a good and long lasting relationship with its customers.
Building long lasting customers requires understanding their needs,
expectations, feelings, etc. once it is know what the customers expect, it is
simple and easier to fulfill their expectations and delight them.
In this context “Customer Care” is very critical. It
is about understanding and building a strong bond between the organization and
the customer continuously, by serving him in the best possible way when he
knocks at your door, or maybe when he requires you to knock at his door.
Customer’s difficulties and problems, valuable
suggestions, ideas towards the organization, products, services and people will
help the organization in becoming a better enterprise by developing new
products and offering superior service. This will also make the customer feel
good that he, his problems and his ideas are important to the organization, and
will help the organization to build a better relationship.
Who would have imagined 15 years ago, for example
that organizations such as Amazon.com could capture market share from the high
street by offering the customer a wide selection of value for money products
backed by a quality service? Or that companies such as First Direct could
fundamentally challenge the traditional way customers do business with their
bank by offering a friendly, efficient service 24 hours a day, 365 days a year?
As competition has become more global and more
intense, many organizations have realized that they cannot compete on price
alone. It is in these market places that many companies have developed a strategy
of providing superior customer care to differentiate their products and
services.
Surveys suggest that service driven companies can
charge up to 9 % for the products and services they provide. They grow twice as
fast as the average company and have the potential to gain up to 6 percent
market share.
We have to ensure that Customer Lifetime value is
created and this is an immensely powerful tool as it helps companies to work
out how many transactions it will take to recoup the initial investment in
attracting, and servicing each new customer and generate a worthwhile return.
What
is an Excellent Service?
An excellent service is a pre requisite to create
and maintain customers, but what exactly constitutes good service?
Most people’s definitions will be based on personal
experience. The garage which unexpectedly provides complimentary umbrellas to
its customers when they come to collect their cars and it’s raining; the
newsagent who gives the customer a free sweet when they come in to pay their newspaper
bill- these would seem as good service. Ask anyone for their opinions and you
will find that, even when discussing the service received from one organization
alone, customers’ expectation and experiences vary.
One person’s shining example of the treatment he or
she has received can be another person’s horror story. Yet it is the perception
of each customer that counts. The perception of customers is their reality.
Customer service is about perceptions: it is often a subjective and intangible
experience.
As Professor Levitt points out: “The customer is
aware of only failures and unsatisfied situation but not of the success and
satisfaction.”
The perception of the service which customers
receive is dependant upon their expectations. If the treatment which the
customer receives is better than his or her expectations, this is excellent
service. If the treatment which the customer receives is less than his or her
expectations, this constitutes bad service.
Customer
Centric Organizations
“There is only one boss, the
customer and he can fire anybody in the company from the Chairman down, simply
by spending his money somewhere else.”
These words by Sam Walton, CEO of Wal-Mart truly
testify the power wielded by customers in today’s market. Any activity of a
business enterprise must be directed towards delighting the customer in the interest of the broader goals such
as profit maximization, reputation building and so on.
It has become imperative these days to place the
Customer at the centre of any organization. This enables an organization o
enjoy the following benefits:
o
To differentiate itself from the competition
o
To improve its image in the eyes of the Customer.
o
To minimize price sensitivity.
o
To improve profitability.
o
To increase customer retention and satisfaction.
o
To enhance the reputation of a company.
o
To improve staff morale.
o
To increase employee satisfaction and retention.
o
To increase productivity.
o
To reduce costs.
The
Changing nature of Customer Service:
A new concept Customer
Delight emerges
There are two distinct types
of attributes: those that maintain satisfaction and those that create delight.
Satisfaction-maintaining attributes tend to be core attributes frequently
considered the price of entry in the marketplace. Delight-creating attributes
tend to be soft, long term relationship-building factors.
Today it’s about delighting
the customer. The focus has shifted from satisfying the needs of the customer
to delighting him beyond expectations. It is this, which ultimately drives
repeated purchasing and unalloyed Customer Loyalty. Customer delight is not
just about better product performance.
Consumers have a certain
degree of expectation from a brand and in most cases the brand is likely to
deliver a level of performance pretty close to that expected by the customer;
however when customers get value or benefits beyond what they had expected, the
brand has succeeded in delighting the customer. Common sense suggests that a
delighted customer may be more loyal to a brand than a satisfied customer may.
How is a Customer Delighted?
Customer delight is about
providing a set of tangible and intangible benefits beyond the features, a
combination of which provides value beyond what the customer had expected to
receive from the brand. Put it simply it means something that will make the
customer say “Wow”! Customer delight is an objective, which is to be kept in
mind continuously. There is no fixed benchmark to be achieved. As competition
intensifies, the companies must update their value proposition to gain an edge
over competitors, by providing the best of services, the most attractive of
offers and the lowest of prices companies look to thrill the customers and
drive home delightful results.
Delighting the customer does
not come cheap. It requires and investment in time, resources, and technology,
continuous updating of services and maintenance of database of customers to
initiate the process. But it is known that it is more expensive to find a
customer than to delight.
Today the
customer has emerged as the single most crucial factor affecting the business.
A bad experience can be devastating from the point of view of the company as it
loses more than one customer. On the flip side delighting the customer can go a
long way in creating goodwill and winning over customers from rivals. Thus,
most companies have resorted to providing 24/7 supports to their customers.
This goes a long
way in receiving valuable feedback in the form of complaints, suggestions and
more importantly provides an opportunity for a company to nip any problem in
the bud. But in order to delight the customer a company must improvise on
solving problems through a single service window. This is defined as the ability to recognize a customer as a single
entity across the many products/services that an organization may have marketed
to him.
In many
organizations, different departments of that organization operate as separate
entities and have separate customer service teams. However, the customer buys
different products and services from that organization because he/she sees
value in "belonging" to that brand.
Thus one member
of your Customer Care department must be equipped to provide all solutions to
your customer.
Not many people know Wipro
is a six-sigma company. Under the leadership of its illustrious head Azim
Premji the company has undertaken several top-notch customer satisfaction
initiatives. They have 40 customer care black belts who are proactive in the
process of analyzing what needs to be done to satisfy the customer. They are
engaged in fixing customer satisfaction parameters and anticipating problems
faced by the users.
Apart from this, Wipro’s
15000 odd employees get on to the SAP system to satisfy customer satisfaction
indices. Here they are supposed to
report reaction time to problems of customers and solutions to problems of
customers thereby continuously looking to improve and reach new heights in
Customer Delight.
Also a company’s activities must not be
restricted to problem solving. It must remain proactive in finding ways to
delight the customer. Employees thus play a key role in this regard. They must
realize that for an organization to perform at its peak, services have to be
provided at their very best. But very often it is seen that employees themselves
are not satisfied and in such situations one cannot expect the Customer to be
given first class service. As is rightly said, “When there are disgruntled
employees there are Disgruntled Customers”.
At a macro level it must be understood that India
Loyalty Programs have become
a popular means of providing Customer Delight. They are an incentive for the
customer to stay with the brand. The biggest value of a loyalty program to a
customer is “The more you buy the more you benefit.” Here we look at the
example of Tesco. Tesco Club card is the world’s most successful retail loyalty
program. It is the world’s leading Internet supermarket and probably the best
retailer in the world managing customer relations.
Through its Club card, Tesco
has learned that rewarding good customers is great for business. A loyalty
program ensures repeated purchasing and gives you the ability to mass customize
mass communication, and provides information, which can be analyzed. Within
three months Tesco analyzed the test results and launched a national program.
It has proven to be a great success leaving customers delighted and competitors
far behind.
“To know me is to love me”
Personalization has become the key word. Most companies collect information
about their customers’ tastes, preferences, and other personal details. A
company needs to be passionate about service. The passion would first become an
integral part and then a driving force that would produce stupendous results.
Organizations need to empathize with the customer. Very often companies forget
the human touch and this has cost them dear. The example of Virgin Atlantic
speaks volumes here:
Whereas most business class
Airlines around the world provided luxurious services to their business class
flyers and pampered executives with free limousine pick ups Virgin went a step
further and provided a unique experience to the customer, a pick up in a Harley
Davidson. This ensured a delightful and thrilling experience and provided a
break to the customer from the sleek limos they were already used to. At the
airport terminal, they were provided with top class services in the form of a
special lounge fully equipped with all top class facilities.
The in-flight experience was
the icing on the cake. In the middle of the cabin a full sit down bar, a chance
to have a massage or a manicure during the flight and the menu on business
class, Ice Creams. Virgin understood that the executives were human and knew
that they would treasure an experience, which would enable them to enjoy a
lip-smacking cone of Ice cream rather than the clichéd caviar and wine.
This value proposition paid
off and the results of Virgin Atlantic speak for themselves. Today Richard
Branson can make any of his products successful just by attaching the word,
“Virgin” to it because customers attach delight to any of the offerings of this
company.
Some more strategies to delight the customer would
include Collaborative Marketing, where value is provided to customers through
marketing partnerships with brands that are relevant to the customers in your
database. It means identifying brands that your customers would be interested
in and then creating an opportunity for those brands to offer an incentive to
your customers, which would not otherwise be possible for a win-win situation
for both parties. The customer benefits, the brand benefits as they get a
database of potential customers and obviously so does your brand.
Great Customer
Experiences create an emotional attachment to a company, and once that
emotional bond is created it is difficult to break, and thus can become a
long-term differentiator. The importance of a single customer cannot be
stressed about enough. Starbuck’s can make a cup of coffee an experience to
remember, Nike with it’s customized shoes offers sheer joy to a budding athlete
and McDonalds has given a new meaning to dining out with the family.
These
experiences, which a company creates to delight the customer, separates it from
its competitors. No doubt, you pay a price premium but you do get an
experience, which surpasses your expectation.
L’Oreal products
have delighted the customer. Each product is fine- tuned to perfection. Take
the simple example of a bottle of nail enamel. The cap is manufactured in one
country, the brush stick in another and the cap in a third. The company
believes in not compromising on quality and to provide the consumer value for
money and that little bit extra which builds a customer for life.
In the Indian
context Customer Delight as a concept is slowly catching. Although an up market
offering it has become unavoidable. Personally one feels sheer joy at a Baskin
Robbins outlet where you are allowed to sample each and every flavour before
placing an order. This concept although started long ago is a definite crowd
puller. Similarly, while flying aboard Air Sahara the “bid’n win” offer has
gone a long way in pleasing the customer. The proceeds of the auction go to
charity and the customer is as pleased as punch returning from a journey
carrying more luggage than when he started.
Customers are
an organization’s greatest assets. Customers are to be satisfied in all
respects but with the intense competition today, only those who can delight the
customer and create memorable experiences at every stage can survive. Customer
Delight therefore means taking that extra step putting in that extra effort to
make customers every visit an experience that delights him and he is prompted
to return time after time for more of the same. Delighting the customer
undoubtedly pays dividends because as we know a delighted customer is the most
effective form of advertising.
The ways to
delight a customer are many. A company in today’s fast-paced world of cutthroat
competition to survive has to place the customer in perspective and serve him
to the best of its abilities. It has to work on its weaknesses and build on its
strengths and just be different.
A statement from
a Harley Davidson executive sums it up, when he says rightly about their
strategy,” What we sell is the ability for a 43 year old accountant to dress in
black leather, ride through small towns and have people be afraid of him.”
Thus
we see how Customer’s form the backbone of any business and how a company. To
keep to keep afloat in troubled waters must resort to providing excellent
Customer care and building long-term relationships with the Customer.
Customer
Retention
As customers begin to experience better service
their expectations tend to rise. Furthermore the service experienced is
transferable in the mind of the customer. The customer makes conscious and
unconscious comparison between different service experiences, irrespective of
the industry sector. Customers expectation for example of the service
experience they will receive from a car rental service may be based not only on
their expectation and experience of the service itself but also experiences
they might have had in the high street or on the Internet with other car rental
companies and other leisure and travel organizations.
A company’s ability to attract and retain new
customers therefore is a function not only of the product or product offering
but also the way it services its existing customers and the reputation it
creates within and across marketplaces. Many organizations overlook the
potential of their existing customers and this has cost them dear.
The numbers say it all when
they highlight the importance of retaining a customer:
o Reducing customer defections
can boost profits by 2-85 percent.(Harvard
Business School
o The price of acquiring new
customers can be 5 times than the cost of keeping current ones (US Office of
Consumer Affairs)
o The return on investment to
marketing for existing customers can be up to seven times more than to
prospective customers. (Ogilvy and Mather Direct)
Yet while most companies regard the acquisition of
new customers as a crucial element in their sales strategy, very few of them
record customer retention rates and even fewer analyze the reasons why
previously satisfied customers become dissatisfied and go. Again the numbers
speak volumes:
§
50% of the customers are lost in a five year period.
§
50% of the employees are lost in four years.
§
Replacement customers will not contribute to profit unless they are
retained for at least three years.
Only best-practice organizations such as Toyota
The
key to Customer retention is Customer loyalty
“If you want a place in the sun,
You’ve to put up with a few blisters”
Today’s customers are harder to please, they are
more informed than ever before, more price conscious, more demanding, less
forgiving, and approached by many competitors with equal or better offers.
Companies seeking to improve their profits and sales
have to spend considerable time and resources in search for new customers. It
is not enough being skillful in attracting new customers, it is more important
to retain the existing customers.
It is very much necessary to work passionately for
loyalty and retention. The company’s aim should be to go beyond the customer’s
expectations, to satisfy and to delight them.
The key to customer retention is customer loyalty. A
highly satisfied customer stays loyal, buys more products which the company
introduces, upgrades existing products, pays less attention to competitors’
brands, and is less sensitive to price offers.
It is in this sense wise to call the recent buyers
and enquire regarding the product performance and to know their satisfaction
level.
The
organization should try to exceed customer’s expectations and not merely meet
them, because customers who are just satisfied still find it easy to switch
over when a better offer comes along. But a delighted customer creates an
emotional bond with the brand, not just a rational preference and this result
in high customer loyalty.
Acquiring new customers can cost more than the cost
involved in satisfying the existing customers. These satisfied customers tell
more people about good products, services, and experiences. But an unsatisfied
customer will give his opinion to many people. If this happens, the number of
people exposed to bad word of mouth may grow exponentially. Company should not
risk losing customers by ignoring a grievance or a small issue.
The cost involved in winning back lost customers is
often less than attracting the new customers. Customers maximize the value of
the organization. It is very important for the organization to understand this
fact that a satisfied customer does the best advertising for the company.
Why do consumers change products?
Service
is a key determinant in the choice of a product.
Reasons for choice of
product:
§
7 percent technical specifications
§
50 percent manufacturer’s response and liability.
Reasons for changing
product:
§
8 percent quality or cost.
§
40 percent dissatisfied with service.
A
customer’s reasons for initial purchase decisions therefore, can be both for
tangible and intangible factors, the service feature relating to both
performance and sense of caring:
Tangible:
§
Performance
§
Quality
§
Reliability
§
Cost
Intangible:
§
Sense of Caring.
§
Courtesy to customer.
§
Willingness to help.
§
Ability to solve the problems.
Reasons
for developing long-term relationships with customers:
On average it is estimated that cost five times as
much to attract a new customer as it does to keep an old one. Long term
relationships with customers are therefore more profitable because:
1. The cost of acquiring new
customers can be high.
2. Loyal customers tend to
spend more and cost less to serve.
3. Satisfied customers are
likely to recommend your products and services.
4. Retaining existing customers
prevents competitors from gaining market share.
Why
does good Customer Care matter?
Good customer care matters for the
survival of any business. All businesses lose customers for one or the other
reason.
Business surveys indicate that firms lose customers
for various reasons, which are as follows: -
ü
If customers die.
ü
If customers move away.
ü
If customers float from one business to another.
ü
If customers can buy more cheaply elsewhere.
ü
If customers change to a competitors on recommendations of a friend.
ü
If customers are chronic complainers and buy according to their whims
ü
If the front line staff and others giving service are indifferent and
show little interest towards the customer and his problems.
0 comments:
Post a Comment