Improving customer value

Whether it is a small business such as a local pizza shop, the members of a tennis club or users of a large mobile phone network, customer loyalty is everything. Outstanding customer service requires an attitude that is not aloof, arrogant or out of touch. Business success is determined by its ability to nurture intimate, two-way learning relationships with their customers. This is the distinguishing factor in the modern marketplace . We must all be directors of first impressions in every dealing we have with each customer. As Esther Orioli from Q-Metrics says, customers do not remember logos or catch phrases; the new economy is built on relationships. So if you wish to win the knowledge game you must always have the customer clearly in your sights.

If the customer knows about you and you know about them, you are both better placed to share the spoils of exchange. The goal is not about selling for selling s sake or simply giving advice, but is about improving long- term shared value. This shared benefit far transcends the value of the current transaction. It moves beyond just price to providing strong guarantees , added benefits and back-up support.

In most cases you want people to return as passionate fans who vividly remember their last positive experience. This is vitally important in a twenty-first century e-business model where it is so easy to shop elsewhere or bypass traditional retail and distribution outlets if someone so desires. In most cases, people now expect to be involved in a partnership that counts on their input and involvement.

In reality, how well a business treats its customers will indicate how well it grows its competitive advantage or advances its reputation. This is increasingly important in a marketplace where people are expecting the very best with no unpleasant surprises . This view is supported by a 2001 Accenture study that found 91 per cent of Fortune 1000 companies said greater focus on the customer service experience and building customer loyalty is most critical.

In modern times business must adapt to a sophisticated and/or fickle consumer who in many cases knows, or pretends to know, more about your product or service than you do. An example of the power of customer knowledge can be seen in the purchasing of cars . If you are looking for a car with air conditioning and a CD player, a consumer can browse the Internet for the exact vehicle they are seeking on the day they are in the market. When it comes to negotiating with a dealer , they are coming to the table from a position of greater knowledge. This shift in consumer power means that the salesperson or call centre staff often can be less well informed than the customer. You only need to consider how easy it is for a consumer to be in the know very quickly, by using consumer magazines, reference journals, books, networking, web chat rooms, discussion groups and searching the World Wide Web, to understand how the power has shifted. Just ask your local doctor about the level of research carried out by some patients before they walk in the door. They are armed with drug names , side effects and their own medical history. So managers and their staff had better be ready and, if nothing else, should treat customers with respect whether their knowledge is accurate, inaccurate or they are trying to bluff their way through.

In addition to the shift in consumer power, businesses are constantly exploring new ways to position their products, services and know-how in the marketplace. The result is a constant battle to influence consumer behaviour and grab new business. This is not surprising, given how society is swamped with so many brands, logos and promotions on a daily basis. Business needs to be far more personal and clever in how it relates to your customers. The same can also be said of how you treat your employees , suppliers and business partners . As Bryan Bergeron in his book, The Eternal E-Customer , says, loyal customers are like loyal friends and loyal employees, they cannot be bought, they can only be developed.

For more facts about consumer trends and loyalty, explore Table 12.1.

Vic Hunter, author of Business to Business Marketing , claims it is thirty to forty times more expensive to acquire new customers than it is to manage existing ones.

On average, satisfied customers tell between a quarter and a half the number of people as compared to dissatisfied customers. However, the good news is that, if you handle complaints quickly and well, 95 per cent of dissatisfied customers will become loyal again.

James Rosenfield in his article, ˜Customer focus-pocus , makes the important point that traditionally in industrialized economies, customers tell fifteen people about their experiences. Now with one keystroke the customer can tell 150, or 1500 or 15 000 people, not to mention the potential impact a phone call to a local radio or television station can have on your business.

People tend to stay with the same brand unless they are dissatisfied. They like brands with a good reputation because it makes them feel safe and helps them manage complexity. This can be seen in the supermarket where the Food Marketing Institute says the amount of time people spend in a supermarket has dropped in the last ten years from an average of forty-two to twenty-eight minutes. People are opting to choose a known brand and get out quicker. Similarly, customers on the Internet prefer to use trusted providers such as Yahoo, AOL and Lycos. For example, in Australia in April 2002, 66 per cent of Internet users visited ninemsn, as against 55 per cent one year earlier. e-Marketer Inc indicates that the best click-through rates for e-marketing on web sites are now well under 5 per cent. For example, permission-based e-mail is 3.2 per cent, non-permission based is around 1.25 per cent and banner ads on web pages are around 0.3 per cent, so the news is not good. In more recent times, European trials of direct short-messages system marketing to portable hand-held devices is claimed to be over 15 per cent, most likely because it is novel .