Customers First! -- Leading Edge Principles and Trends

Agdex#:	846
Publication Date:	06/99
Order#:	99-013
Last Reviewed:	08/99
History:	Original Factsheet
Written by:	Dorene Collins - Marketing and Customer Service Program Lead/OMAFRA

Table of Contents

1. Customers First
2. Loyalty
3. Messages
4. Statistics Prove It!
5. Conclusion
6. Helpful Contacts
7. References

Businesses that focus on enhancing the customer's "experience" will take the lead heading into the new millennium. Current trends tell us that successful businesses focus on building customer loyalty above all else. This Factsheet will introduce a number of customer service strategies to compliment a business marketing plan.

Customers First

Customer service is both a management function and an integral part of your business marketing strategy. Marketing strategies outline how your marketing objectives will be achieved. For example, if the objective is to increase market share, the marketing strategy states exactly how the increase will occur. Marketing objectives for profits, cash flow, and market share can be achieved by increasing the number of users, increasing the rate of purchase, retaining existing customers and having them repeat their purchases, or acquiring new customers.

You can provide excellent customer service and retain current customers by focusing on the 4 C's:

• Consumer Needs - meet their needs and maintain their satisfaction.
• Cost to Satisfy Needs - gaining customer satisfaction doesn't have to be expensive.
• Convenience - being accountable to your customers will allow them to voice their concerns.
• Communication - talk to your customers, they want to help and give their opinions.

Customers keep a mental tally of six basic needs that must be met. These include:

1. Friendliness
2. Understanding and empathy
3. Fairness
4. Control
5. Options and Alternatives
6. Information

How do you ensure that the needs of the customer are being met?

Firstly, you must identify the gaps and barriers in your business that are keeping you from meeting specific needs. Lack of product knowledge, outdated policies, or faulty or misleading communications could be standing in the way of maintaining a customer-focused business. You can identify gaps and barriers by talking directly to existing customers, or surveying former and potential customers.

Research has resulted in the development of the Rater principle to address customer needs:

1. Reliability: Negotiating, offering, then ensuring products/services do what is promised, accurately, and dependably.
   
   
2. Assurance: Confidence that any help and support required will be provided.
   
   
3. Tangibles: Things that people judge you on - comforts like washrooms, parking, phones, etc.
   
   
4. Empathy: Respect and caring, not interfering. Providing service at a convenient time. Putting yourself in the customer's shoes.
   
   
5. Responsiveness: Your willingness to efficiently respond to issues and/or concerns.

If you are launching a new business, a sure way to increase your odds of gaining the competitive edge is not through a remarkable product or service, but through exceptional customer service. Often, customers are not concerned how the product or service was developed, grown, or manufactured, they just want to have a fulfilling experience acquiring it.

Applying the RATER principle to your business provides a common sense approach to customer service.

(Above graph courtesy of Saskatchewan Research Council)

Loyalty

For most customers, there is a level of service that is expected from your business. In today's competitive market place, businesses that exceed the expected level of service build a roster of loyal customers. Market research has proven that loyal customers or repeat customers represent 80% of your business. Put another way, loyalty equals growth and profitability for your business. Also, customers whose problems are resolved to their satisfaction are significantly more loyal than those never experiencing a problem in the first place.

Customer loyalty is all about relationship building. Your business cannot be all things to all people, so focus on a niche of people that you know will consistently come to you with their needs.

This involves committing to the Zero Defections principle, ensuring that your loyal customers are sustained and not lost to the competition. Loyal customers help grow your business by spending more money over time on your product or service, as well as giving referrals to others.

A good relationship with your loyal customers involves knowing as much as you can about them. Businesses should never make assumptions regarding customer needs and expectations. Delivering exceptional customer service is an evolving process, a journey that involves re-inventing your product or service on a continual basis in order to continually 'wow' your customers.

Messages

In today's fast paced world, we are exposed to more information or messages on a daily basis than our ancestors living in the 17th century were in an entire lifetime. As staggering as this statistic may be, businesses must ensure that their messages continue to win the hearts of loyal customers as well as attracting new ones. It is also important the message you send through a variety of advertising media matches the product or service you provide. The customer must know your business in order to make a purchasing decision. It is important to communicate to the customer whether your business provides:

1. Product Leadership - Best Product (e.g., Microsoft)
   
   
2. Customer Intimacy - Best Total Solution (e.g., Disney)
   
   
3. Operational Excellence - Best Total Cost (e.g., Wal-mart)
   

In a competitive marketplace, those businesses that do not focus on one of these customer values often lose out to a value focused competitor.

Statistics Prove It!

Many businesses work towards reducing or eliminating customer service complaints. As a growing and prosperous business, you should welcome this kind of information! It is from such feedback that you can focus your time and resources to rebuild the customer relationship.

Why don't more dissatisfied customers complain?

Firstly, it is psychologically hard to complain. Secondly, customers often don't know how to complain or can find no venue for offering their complaint/feedback. Most businesses do not proactively encourage complaining and actually conspire to make it difficult to complain.

It is important for complaining customers to talk to the business owner, not others. Talking gives the business owner the chance to return the customer to a state of satisfaction so they will be more likely to visit the business again and make important purchases.

Businesses that offer a rational explanation and demonstrate sensitivity and concern, will find the complaining customer responds accordingly.

How can complaints/feedback be encouraged?

1. Promote organizational "caring and empathy".
   
   
2. Let the customer know you want to hear from them, make it clear that you want honest feedback, and show you can deal with feedback.
   
   
3. Access is always an important component of quality service. The customer must perceive easy and welcome access.
   
   
4. Provide and market alternative complaint channels, for example, comment cards, e-mail, telephone.
   
   
5. Help managers and staff encourage complaints. This includes education regarding observation, active listening and problem solving.
   
   
6. Enable and encourage front line staff to solve problems. They are there to protect the business from angry customers.
   
   
7. Make it worth the customers time to complain - resolve the complaint and notify the customer of the action taken.
   

Eighty-two to ninety-five percent of customers will come back if their complaint is resolved satisfactorily, and they will tell on average five other people. This is an important factor when you consider that it costs five times as much to get a new customer as to maintain an existing customer. Welcoming and addressing complaints, therefore, represent another common sense approach to building your customer base and loyalty.

Conclusion

Common Principles in Delivering Exceptional Customer Service:

1. Build a customer focused business and sales will follow.
2. Understand customer needs and exceed their expectations.
3. Build a loyal customer base - a wise business investment.
4. Welcome customer complaints and resolve them with integrity and efficiency.
5. Consistently study your customer and evaluate your service.
   

Helpful Contacts

1. OMAFRA Products and Services Catalogue. Offers a selection of helpful Factsheets and publications dealing with Business Planning and Marketing. For your copy call your local Ontario Ministry of Agriculture and Food (OMAFRA) office or 1-800-267-8097 .
   
   
2. OMAFRA's Agriculture and Rural Business Development Unit. A number of helpful web sites are available that deal with business planning and marketing: OMAFRA Website or call: 1-888-466-2372 ext. 3166.
   
   
3. "Starting Your Business" Booklet produced by the Ministry of Economic Development and Trade (MEDT)
   or call 1-800-567-2345.
   
   
4. Canadian Farm Business Management Council (CFBMC) Product Catalogue Offers a selection of helpful Factsheets and publications dealing with Business Planning and Marketing. For your copy contact: 1-888-232-3262 or visit the CFBMC website www.cfbmc.com/

    

References

Advanced Customers Service Training Course. York University - Schulich School of Business. November, 1998.

Advancing Customer Satisfaction In Your Business. Saskatchewan Research Council.

Reclaiming Higher Ground: Creating Organizations that Inspire the Soul. Secretan, Lance, H.K., Macmillan Co. of Canada, February, 1997.

Processing Angry Customer's: Sour Apples Into Cider. Mahoney, Dr. Ed. Michigan State University. MI, USA.

Putting the Service - Profit Chain to Work. Harvard School of Business - Business Review. March - April 1994.

The Loyalty Affect. Reichheld, Frederick. Harvard School of Business.