Firms must go beyond customer service

The Jakarta Post ,  Jakarta   |  Wed, 12/13/2006 1:45 PM

Gaby Motuloh

In the hope to retain customers amid the keen competition, more and more companies have spent a big amount of time and money to train their front-liners on service excellence, equipping them with the skills and behaviors needed to meet the growing customer needs. Various loyalty programs have been launched. Margins have been slashed to the bone in response to huge discounts offered by competitors, mostly newcomers trying to get a slice of the pie (such as in the credit card business).

Studies have indeed shown that customer satisfaction has a direct link to sales and profitability. Loyal customers will not only buy more, but also refer business and even act as companies' advocates, something which is far more powerful than any advertisement or sales campaign.

Obviously, customers nowadays are faced with enormous choices in all kinds of product lines offered by companies globally. Can friendly and helpful service people make customers stay despite relentless persuasions by competitors throwing attractive gimmicks in their laps? How low can one go in pricing?

A study conducted by Forum Corporation through extensive interviews with top executives of renowned companies across three continents revealed that successful firms with extremely loyal customers such as Amazon.com, Harley-Davidson and Harrah's go beyond exceptional service to Branded Customer Experience -- a customer experience built on what customers value and delivered so impeccably that customers have no reason to switch to competitors, even at a lower price.

The research identified six principles -- embarking on leadership, people and business practices -- which the winning companies consistently engaged in, i.e.: 1. Leaders deliver a branded customer experience 2. Leaders are profoundly customer focused 3. The customer experience and the employee experience are inextricably linked 4. Managers engage the employees around the customer 5. The business is managed around the customer and 6. Customer knowledge is zealously acquired. These experience dimensions supported by 25 common organizational practices formed the basis of Forum's two books, Uncommon Practice: People who Deliver Great Brand Experiences (written in partnership with Interbrand) and Managing the Customer Experience.

Apparently, top executives of these exemplary companies did not simply train their service people and hope for the best. They systematically designed a desired experience for their customers based on absolute clarity about which customer segments contributed the highest margin and presented the highest potential (""target customers""), what these customers value, and what the companies needed to do to earn loyalty -- and delivered the experience consistently. Behavior-driven market segmentation has proven more effective in creating a customer-focused strategy compared to the historical geographical segmentation.

The research dramatically underscores the importance of leaders' roles and actions in implementing a customer experience that builds brand loyalty. Leaders in the great companies understood their customers well and made decisions based on what were good for the customers. They instilled ""the courage of conviction"" and ""profound customer focus"" into the organizations. They integrated customer-experience metrics into performance measures and emphasized the use of leading indicators such as: waiting time, return visits, referrals, and attendance at customer events to improve performance. They strongly believed that consistently exceeding customer expectations is the only course to keep the customers -- and make money.

Customer data (not judgments or instincts) were considered crucial. By acquiring and analyzing in-depth information about customers and their needs, they were able to offer solutions beyond their customers' expectations. For example, as a result of tracking its customers' buying behaviors, Amazon.com was able to recommend specific books that might be of interest to every individual customer -- and increased sales. Amazon has also kept improving the customer-friendliness of its website and delivery process, allowing customers to spot the whereabouts of their orders at any point in time, which was another step forward in the customer experience. As Jeff Bezos, founder and CEO of Amazon, says, ""experience is bigger than customer service.""

Another significant finding of the research is that employees are not only critical in delivering a desired customer experience; their satisfaction equally matters. Leaders of the top-notch companies involved and valued their employees. Strategy and priorities were centered on both customers and employees -- the two most important stakeholders.

When Forum's consumer panel was asked ""How important was each of the following in making your experience excellent?"" (7 for ""extremely important"" and 1 for ""not at all important""), the scores were: -- 6.33 for the actions taken in response to a problem or request
-- 6.24 for the company's employees who serve me
-- 6.16 for the delivery of the product or service
-- 5.86 for the convenience of doing business with the company
-- 5.78 for the features of the product or service
-- 5.76 for the price, including rebates or discounts
-- 5.41 for the company policies or procedures, and
-- 2.81 for the company's advertising or promotions

The customers clearly regarded people as the most important contributor to their satisfaction, second only to the actions taken by companies to resolve problems. Pricing was seen as much less critical while advertising and promotions got the lowest score.

The unmistakable highlight of the study is, if we want to succeed in this tough environment, make customers our utmost priority, value employees, equip and energize them to consistently deliver the desired customer experience, and do what we have to do in the organization to make things happen (innovation, process alignment, technology, etc.). Profits will likely be the reward.

We can make use of the 25 loyalty-inducing practices demonstrated by the leading companies to help us take actions against the opportunities to win customers' hearts and their pockets (and the cost spent on the service training will not be a waste).

For further information on Forum, visit www.forum.com.

Gaby Motuloh is the managing director of Daiva Asia, a training and consultant firm specializing in banking risk management and customer-focused strategy. You can reach her at gabymotuloh@cbn.net.id.

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