Some time has passed since we discussed the value of customer service and support—more specifically, the impact a customer-centric company has on the bottom line. From a supplier perspective, we recently discussed this topic with a new partner starting up in the print arena. The partner chose to standardize their new business based on excellent customer service, not technology or price.
At a recent SGIA SPIRE Meeting, we had the opportunity to listen to Eric Fraterman of Customer Focus Consulting of Toronto, Canada. Fraterman’s motto is "customer focus for a sharper competitive edge."
Fraterman believes every action should be shaped by a relentless commitment to meeting and exceeding customer expectations regarding product and service quality. We agree! However, the whole organization must be aligned toward customer satisfaction or this approach can never work. It requires an upside down view of business—viewing the organization through the eyes of the customer, rather than through the eyes of an investor. Interestingly enough, the investor’s goals are not lost in this process. Increasing customer satisfaction markedly increases market value and profitability.
As a contrast to this customer-centric approach that enhances investor equity, we recall a classic illustration of the reverse—company centric. A major plate manufacturer faced declining revenues and sales volume due largely to new digital technology but also from increased competition. At a national meeting, the sales force was sternly told to pump up volume. The assembled salespeople were informed that their primary job was to feed the factory. They were told if production levels dipped, costs would increase dramatically. Consequently, profits would fall.
The salespeople muttered amongst themselves that they thought their primary job was to serve their customers, not the factory. Many built their careers around customer service. When they succeeded at that, factory production followed.
Now, they were told to focus on the factory, not the customer. Many felt the message was wrong-headed. Some understood the feed-the-factory philosophy as a signal to change companies or even careers.
Fraterman’s belief is similar to those employed at the factory. He wants to determine how to make it easier to do business with customers in an organization. Take for example something as simple as having a customer ask valid questions about an invoice. It slows down the organization and creates concerns in the eyes of the customer. How many times does your organization get questions that could have been solved before it became an issue?
A Lot at Stake
A one-point increase in customer satisfaction translates into a three percent increase in market value. With that statistic, the question is, "Why would any company want to have less than great customer satisfaction?" Besides in-creased market value, some other benefits are included in the following points.
Reducing customer defection by five percent can increase profitability by 25 to 80 percent. This varies with the cost of acquisition of a new customer.
High customer satisfaction allows a company to increase market share an average of six percent whereby low rated businesses lose two percent market share each year.
A company with loyal customers has a price-to-earnings ratio that is 11 percent higher than those in the average category of customer satisfaction.
Part of this profitability is achieved due to price support. High rated businesses can generally charge nine percent more for their goods than low rated businesses.
None of the above has anything to do with the added possibilities of a superior product—instead these companies benefit when they maintain the business relationship with the customer base.
To achieve high levels of customer satisfaction the process needs to be initiated from the top. Many times you’ve heard the phrase, "the company takes on the personality of the CEO." Here, more than anywhere else, this is abundantly true. If the CEO glosses over customer satisfaction by not giving an organization the tools necessary to achieve it, failure is assured.
How does a company achieve customer satisfaction? Doing it right the first time—every time—must be the goal. This is called the Outside-In game plan. There are three parts to this plan—organizational alignment, increased employee commitment, and a customer focused operating environment and culture.
It is abundantly clear that for an organization to succeed, intensely managing service quality at every level of the organization is essential. It is only through such commitment that the organization becomes focused toward a single, shared vision of customer focus and customer value. A vision that energizes people and the organization to accomplish extraordinary things is key. With this in place, be assured that current and future customers feel comfortable—and invited—to navigate through your organization.
You Need to Change If …
You continually manage rather than oversee, develop, and implement a service brand strategy. If this is the case, business must move from reactive customer service management to creating enduring customer loyalty.
When there is an insufficient alignment between customer service improvement goals and the strategy, people, processes, and rewards implementing it, you also have a problem. In this instance you must instead provide the organization with documented, sequential steps, measurements, and accountability—exhibiting your sincerity about the need for customer alignment.
Another concern is when employees are unable to see the connection between your current customer improvement initiatives and programs and the normal mode of operation. They have a hard time shifting between the two. Through daily performance, the management must emphasize and embrace the business goal of customer commitment very clearly.
The numbers speak for themselves. Ignoring the concept of customer alignment has obvious and harmful consequences for any company or organization that wants to succeed. Too many organizations realized this only through costly omissions or ignorance. Ignoring your greatest asset, the customer, has a lasting negative result. You make a conscious decision to link the customer and your results through empowering your organization.
Linking the customer to business results leads to observable, measurable improvement of what matters to the customer—their own satisfaction. Results are managed with relevant methods and metrics.
Leadership is the Core of Success …
Empowering an organization leads to a customer-centric practice. It takes a sustainable commitment that is both personal and financial.
Consistently reinforce the big picture. Demonstrate the why, what, how, and who of each project. Ensure that there is a full understanding of where the initiatives fit into the big picture.
Actions speak louder than words. Customer relationship management is a business process and bad processes hinder good business practices. Create new processes that leverage what customers want. Customers characterize providers based on perceptions of behavior— perception is reality. Also, changing each employee’s job to an understanding of how their actions limit—or enhance—the company’s reputation in the eyes of the customer is critical. When focused on the customer aspect of business, the bottom line becomes promising.