According to a GartnerG2 report, online retailers looking to solidify their business amid difficult economic conditions must deliver convenience to customers above price. The survey reports that 79 percent of online customers value convenience when making a purchase, more than twice as many as the 32 percent of respondents who say lower prices are their main concern. Erin Kinikin, vice president of the research and advisory firm Giga Information Group, says surveys of ISP businesses show that consumers consider good service equivalent to competitive pricing—both are top reasons for subscribing. Kinikin rates strong service at EarthLink as the reason for an attrition rate about half that of EarthLink’s similarly priced competitors.
We read every day that customer expectations of service are on the rise. Like Moore’s Law of computing, customer expectations seem to be doubling every eighteen months. And, that’s not just for online retailers and ISPs. Service is important for every business. But is it everything? Is its importance the same in all industries, for all companies and, more importantly, for all customers?
Companies have always believed that “best customer service” for everyone is a hallmark of CRM. Unfortunately, trying to serve everyone equally well usually means serving everyone equally poorly—an expensive, inefficient effort. The concept of CMR changes that. Letting the customer manage the relationship means delivering the service level the individual customer wants, with a trade-off on price. Some retail chains have been founded on this principle. For example, Wal-Mart knows it’s not Nordstrom and offers less expensive items without the consistently outstanding customer service. IKEA says, “We do our bit. You do yours. It’s easier to save money when we all lend a hand.” They ask customers to assemble their own furniture and manage their own delivery. IKEA also does not accept special orders and has limited service in their stores. So even though Wal-Mart and IKEA don’t customize service levels for individual customers, both are examples of CMR in action— delivering only the service level customers want which, in turn, allows them to offer lower prices.
Trying to provide “best customer service” to everyone is one more reason for CRM failure. Customers look for different levels of service from different businesses. The same customer who is annoyed at having to wait thirty seconds for a sales associate at Saks will wait patiently in the long checkout lines at Kmart and Wal-Mart. The contrast in customer expectations is not just different for different companies in the same industry. Customers’ service expectations also vary by industry. They have learned not to expect the same level of service from their utility or phone company that they do from their bank or broker. The more personal the business relationship, the higher the expected level of service.
None of this should be new. What’s new is the need to realize that both expectation of and desire for service vary by each individual customer—even within a company. So the fact that customer expectations of service are on the rise does not mean you should try to provide “best customer service” for every one of your customers—only the level of service each individual customer desires and expects Providing more leaves you overgiving for no benefit; providing less means you are going to lose a customer.
Allowing the customer to manage the relationship in this way not only deepens the relationship between the customer and the company, but also it can save the company money. This is not a matter of cutting corners to see how little service you can get away with for a customer. Finding the right balance requires that the company create the kind of dialog with customers that will teach the firm each individual’s service requirements. When companies get this kind of feedback they are often surprised at how much money they were wasting by providing services some customers found to be of no value.
Xiameter, an online arm of Michigan-based Dow Corning that sells silicone products directly to industrial buyers, understands this. They instituted a “no service” approach for some of their best customers who didn’t really require follow-up customer service and tech support. Michael Lanaham, commercial director of Xiameter, says, “A lot of customers were saying to us, ‘We buy a lot of silicone, we know how to use it, and we don’t need the technical expertise you are known for.’” For these customers, Xiameter has set up a less expensive real-time ordering and inventory system that offers no technical support. Sales communications are handled primarily by e-mail, with responses normally given within one business day.[3 ]This is the ideal win-win situation. Customers don’t have to pay for tech support they don’t want or need, and the company is able to reduce the size of the service staff to save money.
 “Convenience Trumps Price for Online Shoppers,” 1to1.com, December 24, 2001, p. 5.
Lou Hirsh, “Customer Service—Who Cares,” crmdaily.com, December 19, 2001, p. 2.
[3 ]Lou Hirsh, “No Customer Service Please,” ecommercetimes.com, May 28, 2002, pp. 1–2.