Qualityworld
The people factor
As customer power grows, innovative companies are moving beyond traditional marketing methods and customer relationship management (CRM) to become wholehearted proponents of the customer agenda. Professor John Murphy takes a look at the new wave.
For decades, companies relied on push marketing, whereby products and services are simply 'pushed' onto the consumer. Then, in the 1990s, the emphasis shifted to relationship marketing as 'customer care' and slogans like 'delight your customers' became the mantra of many marketers.
Those tactics have long been losing their effectiveness, particularly as consumer power and savvy continue to grow. Thanks to digital technologies like the internet, today's increasingly sophisticated consumers expect companies to do more than just satisfy them.
It's all about trust
In response, innovative companies are now trying a different approach: they are providing customers with open, honest and complete information, and then finding the best products for them, even if those offerings are from competitors. They are truly representing their customers' best interests and even becoming advocates for them.
The strategy behind all this is that if a company advocates for its customers, they will reciprocate with their trust, loyalty and purchases - either in the present or the future. The firm might then command higher prices for its products and services, as many customers will be willing to pay for the extra value. And when people trust a company, they will often tell others about it (the power of referral), helping to reduce the organisation's costs for acquiring new customers. The key to the advocacy strategy is that a company must become trustworthy in the eyes of the customer.
Developing trust-based relationships requires the company to become more transparent to customers, supplying them with honest and open information. Inter-net travel services like Expedia and Orbitz, for example, provide information on virtually all flights and fares, enabling consumers to choose easily among different options. The central promise of Dell Computers is direct accountability between individual customers and Dell. There are no middlemen and their sales people act as the single point of contact. That also means that one sales person will work with the customer until the product is delivered; it also means that if there is a problem, one support person or customer service representative will work with the customer until the problem is solved.
Customer collaboration
Customer advocacy also requires an even higher level of product and service quality than relationship strategies, because without superior products, a company that is honestly trying to represent the customers' best interests will not be able to recommend itself. To develop trust, a company must partner its customers.
A good approach is to help customers help themselves. This tactic expands the notion of a consultative selling relationship into an engagement that is more purely consulting, in which a company helps its customers even in areas outside the strict boundaries of its product line. Although altruistic in appearance, such partnerships can greatly benefit a company if those customers prosper and increase their purchasing. Collaborative work between a company and its customers helps build trust between the two parties, and many organisations have come to rely on their customers for valuable information, including design ideas. In the software industry, for example, user groups routinely help manufacturers by identifying bugs (and developing patches for them) and by creating lists of desired features for new releases. To encourage such activity, a company can supply its customers with tools to help them solve their problems, with the side benefit of creating customer solutions that sometimes lead to successful future products.
General Motors Corp has created a new software program - Auto-ChoiceAdvisor that helps prospective customers select the vehicles best suited to their needs. The tool asks buyers for information such as how they plan to use the car, how much they are willing to pay, what features they feel strongly about and what brands they like or dislike. Using this data, the adviser then presents a ranked list of its top eight suggestions, including vehicles from manufacturers other than General Motors.
Extraordinary customer service
The implementation of a customer-centred organisation which is fine-tuned to bring about extraordinary customer service would also go a long way to developing extraordinary customer relations and service. Customer service is much more than attentiveness to customer satisfaction. Customers do not want to be merely satisfied, they want the feeling that the organisation considers their business to be vital to its operation. The entire work environment, including the physical and the psychological environment, should encourage and reinforce team collaboration focused on providing superior customer service.
Some organisations need to assign critical aspects of their customer service to specialised customer service representatives who understand the specific needs of the customer. In such an arrangement, each customer service representative must have the technology to immediately access all the customer information they might need. Additionally, in customer-centred organisations, the customer service function is highly rewarded, given more fiscal responsibility and viewed as a core process of the organisation.
Technology has also developed to allow immediate access to a customer's service history and purchase patterns. Some organisations also require call centres for many customer contacts. The success of the call centre representatives will be in direct proportion to their training and technology. However, call centres are not the complete answer to customer service. An overloaded centre without recourse to the rest of the staff during busy times will merely create frustration for a customer.
The new way for call centres
Companies also need to put the appropriate customer contact centre performance measurements into practice to ensure that the metrics they use are the ones which matter the most to customers. While oper ational-minded metrics such as call volumes, talk time and average speed of answer (ASA) have long been the focus of contact centre managers, academics and practitioners alike have often had to answer the question: Do such metrics actually matter to the customers?
One of the reasons operational metrics such as the ones mentioned above are most often used by companies is because they are easy to obtain. Most managers can track trends in operational areas. However, operational metrics have certain serious limitations. The most important one is the fact that they reflect only what happened inside the contact, giving no clue as to what may be happening outside the organisation in the competitive environment or customers.
The operational metrics are historical rather than predictive and internal rather than external. They offer no insight into each caller's expectations. Do customers really care whether their calls are answered in 20 seconds or 22 seconds? Would they rather wait 30 seconds if they knew that they would be connected to a customer service representative who could handle their concern in one call? These are questions that should be considered.
As a solution to this, eight new customer friendly metrics could be considered:
- quality scores, such as key service standards
- a low agent/supervisor ratio to encourage individual empowerment
- clearly specified training time
- levels of turnover
- percentage handled on first call (also known as first/final or one-and-done)
- schedule adherence
- error rate (data entry)
- employee satisfaction, an 'up and comer' - as very few companies gauge this regularly (eg quarterly)
The key therefore is to identify and use the metrics which matter most to the customers. The Institute of Management and Administration (IOMA) report, January 2003 presentesd a summary of key performance indicators (KPIs) and their effect on customer satisfaction (see table 1).
KPIs that increase customer satsifaction | KPIs that casue customer dissatisfaction |
|---|---|
|
|
Table 1. IOMA report showing a summary of KPIs
The people factor
At first glance, customer trust might seem to be only the responsibility of a company's marketing, advertising, sales and distribution functions. In reality though, an advocacy strategy requires participation from the entire organisation. For example, R&D, engineering and manufacturing are critical to creating high quality products that meet the needs and standards of demanding customers. Human resource planning is also an essential part of successful customer service, because anyone working for an organisation represents that organisation.
An organisation needs to be fully aware of the impression that is gained by somebody who contacts the company. Human resources must hire the right people (and train them properly) for any job that requires interactions with customers. Management must create the incentives and organisational structures that lead to a culture of trust. Specifically, the values of the company must reflect the primacy of customer advocacy, and the organisation must also engender the trust of employees and other stakeholders. After all, if employees cannot trust their own company, why should customers?
The most important asset in a company is the people. Employees in a customer-centred organisation are competent and empowered to deal with all but the most technical customer questions. Even in the call centre, representatives no longer just answer questions; customers truly enjoy having a well-trained, knowledgeable person to deal with their concerns or orders. The retail company Nordstrom was probably one of the first retailers to empower customer contact people with the right to do pretty much anything necessary to satisfy the customer. The company's business philosophy uses an inverted pyramid with customers, and the sales floor employees who have direct contact with them, at the top and management beneath. They designed such a structure to support the front-line employees in serving customer needs. The employees are paid above market rates and are given more authority to do things, whether it's a price adjustment or a return or dealing with customer problems. The ability to give their front-end employees the necessary authority to deal with the customers is a distinctive advantage in comparison with other companies which have very rigid rules and do not give much authority to the front line.
Staff incentives
Employees are no longer easily dispensable. They represent the company's first market. If companies are not investing in and listening to their employees as well as their customers, they are probably missing opportunities to create competitive advantage. High turnover in companies is a major problem that can only be addressed through trust. If employees do not trust an organisation to provide equitable pay, training and advancement, they will not stay long enough to be effective team members.
Nordstrom employees are also managed by contest. Departments, as well as individuals, compete for prizes, including cash, store discounts and trips. Store and department sales figures are internally available for comparison and individual sales per hour figures are posted. Top sellers who exceed specific sales targets for the year are honoured with rewards such as gift certificates, outings or events in their honour, and special business cards etc. Top performers are also encouraged to lead staff meetings and workshops and to share tools and experiences with fellow workers. Workers who consistently do not reach targets are given special training as well.
An emotional connection
Dell Computers also emphasises the emotional aspect of relationship building with their employees, which they proclaim is particularly important in maintaining morale among its 36,000-strong work-force. According to Dell, internal communication is most effective when it touches the employees on an emotional level. To that end, Dell keeps employees apprised of how customers are using Dell Computer systems to make a better world. They touched their employees' emotional chords by telling them about an international aid organisation in sub-Saharan Africa which was using Dell wireless notebooks to help farmers increase their annual income.
A recent government report further highlighted the significance of the people factor when it encouraged large companies to include information on human capital management in the operating and financial review of their annual reports. The Kingsmill Report suggests a broad framework for companies which includes spelling out the link between human capital management and strategy as well as relevant information on employee training, development and retention.
Shiny happy people
Two vital stakeholders dominate this article: the customer and employees. An essential challenge for all companies is the connectivity between the two. Simplistically, some people are of the opinion that happy employees equal happy customers. It is not quite that simple. Extensive research at Manchester Business School points to an intervening variable, namely processes, which ensures the consistency and repeatability of deliverables to the customer. Happy employees, of course, can enhance the effectiveness of these processes.
Organisational cohesion is determined by the degree of compatibility between the organisation's values and those of the individuals who belong to it. The more successful companies really live their values and further ensure that the values of prospective employees are compatible. Meaningful values are useless unless they are lived. Communication, respect, integrity and excellence sound like credible values -these were the corporate values of Enron. Unfortunately this is not the only company with a hollow set of values. Most value statements, even in large corporations, are bland and misleading, often creating cynical employees and dissatisfied customers.
Core values, out of necessity, must be integrated into every employee-related process, such as recruitment, performance management systems and criteria for promotion and rewards. Colgate-Palmolive, for example, has a set of behaviours that reflect how employees live their values of caring, global teamwork and continuous improvement, and these are taken into consideration at performance reviews. Companies that get this equation (customer/employee) right are well on the road to sustained growth and success
Biography
Professor John Murphy is a visiting professor of customer management at Manchester Business School (MBS). He combines this academic role with consultancy work, specialising in service quality management and customer retention. He is also director of development for MBS with responsibility for identifying and formalising partnership opportunites for the school. His most recent book, The Lifebelt: The Definitive Guide to Managing Customer Retention, was published in 2001.
