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Discovering Solutions that confound organizations

Organizations firmly believe that they are providing exactly what their customers desire. Ask any firm, and the Paretto Principle always emerges. 80 percent of organizations think they excel at customer service. Ironically, less than 20 percent actually do. Bain and Company’s research shows that only 8 percent of companies truly deliver on customer service.

Our present environment is plagued by a gap in service delivery. There are various reasons behind this gap, but we believe two key issues contribute to it: a) greed and b) deficiencies in customer relationships.

Greed. Management consultant Peter Drucker has made many notable statements, but in his book The Practice of Management, Drucker clearly states, “There is only one valid definition of business purpose: to create a customer.” Presently, organizations are hindered by two fundamental problems: competition and productivity. The focus is so intense that raising revenue, increasing profits, and improving productivity all disregard the indispensable focus on customer satisfaction.

Notable examples of avarice are evident in companies like Starbucks, the airline industry, and retail establishments. Whenever an organization believes it can achieve higher growth, they raise fees without considering their impact on customers. Before the fees rise, customers stick around either due to first mover advantage, like in Starbucks’ case, or value, such as American Airlines. However, when fees increase, customers tend to abandon ship for cheaper and more appealing alternatives.

The solution for any firm is to thoroughly analyze the potential market losses when considering new revenue streams. New revenue means nothing if it leads to the loss of a core customer base. Customer satisfaction should never be taken for granted.

Customer Relationships. Building connections with customers is a difficult endeavor, unless you focus on your core asset. As mentioned earlier, an organization’s entire strategy should revolve around the customer. Important strategic questions to ask are: “Who is our customer? Why do customers choose us? What value does our firm provide? How do we effectively communicate with our customers?” These questions shape the beliefs, values, and attitudes of the entire company. Furthermore, it is crucial to treat customers as assets. Without customers, nothing happens – nobody gets paid, and the electricity doesn’t power the plants.

Here are some techniques to effectively align with your clients:

Refrain from CRM. While we acknowledge the power and functionality of Customer Relationship Management (CRM), too much emphasis is placed on these trivial software systems. Stop trying to replace human interaction with software. Just like a political candidate, if you want to engage with people, do so directly – don’t rely on emails.

Interaction. The proliferation of the Internet and technology has taken away the most valuable asset in any relationship: interaction. Avatars like Procter & Gamble and Southwest Airlines recognized long ago that the key to excellent customer service is personal engagement. Get out from behind your desk and start having real conversations. Make it a priority to meet with your clients as often as possible.

Enculturation. The entire organization must embrace a customer-centric focus. Everyone should understand why the company is in business. FedEx serves as an exemplar in this regard, where the culture revolves around guaranteed overnight delivery.

Value and Brand. It’s undeniable that customers buy products for the service they provide. They buy based on the experiences of others. Speed, cost, and service all contribute to the customer’s perception of value. Cadillac and Coca-Cola have become industry standards due to their success in delivering exceptional value. Not many claim to be the “Taurus” of their industry.

Avatars and Advertising. When your service is so strong, your existing customers become your advocates. When prospective clients speak highly of you without any prompting from your advertising efforts, the customer gap diminishes significantly. Crocs, the apparel company, built a billion-dollar empire with minimal advertising.

Value. It cannot be stressed enough – what customers consider valuable goes beyond price. Price is just one component of value. The concept of value is intricate, and instead of speculating in board meetings, management should directly ask the customers for their opinions.

Feedback loops. In addition to visiting clients, ensure success through customer briefings, focus groups, interviews, 360 feedback, and other essential mechanisms. Customer service is multi-dimensional, requiring organizations to connect the dots between customer insights and their current offerings. This includes improving organizational functions and reducing response times.

The roads to exceptional customer service and customer loyalty are challenging, uncharted, and complex. Moreover, today’s competitive landscape further complicates matters. There are numerous paths to take and bridges to build in order to close the gaps. However, the most crucial step is not just discussing these matters in boardrooms and leaving them unresolved. Broken promises are the missing pieces of the puzzle, and addressing them becomes the key to future growth. Filling customer gaps requires the entire organization, from top to bottom, to prioritize and emphasize the customer as a vital corporate asset.

© Copyright (c) 2008 Drew Stevens, PhD

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Ihab Salloum