The answer runs deep into the realities of management. Executives talk about customers as if they are some strange and separate breed, described with demeaning phrases like 'punters' and 'bums on seats'. The executive bums are similarly insensitive to the most important customers of all - their own staff. These customers depend on top management for sensible strategic direction, the effective operation of efficient systems, and proactive treatment as humans, not as 'human resources'.
When staff are mismanaged, customers inevitably suffer. That's why travel expert Hal Rosenbluth entitled his book on customer service The Customer Comes Second. To put your external customers first, in other words, put your employees first. Hard statistical evidence has established a clear link between three types of satisfaction: employee, customer and shareholder. Satisfy the first, and the customers love you more: investors follow suit as sales and profits duly rise.
But many managers, even retailers, whose customers are highly visible, prefer the ivory tower to the store floor. They hatch their absurdities (some of them manifest, like Sainsbury's low-price advertising disaster with John Cleese) behind closed doors. Impervious to suggestions and criticisms from staff at the sharp end, and to the potential huge contribution of middle managers, they are hardly likely to listen to the customers, who are supposed to be kings (and queens).
Yet Andy Grove, the mercurial chairman of Intel, emphasises that customer complaints, 'both internal and external' are 'a very important source of information'. That's patently true. So how chief executives answer personally addresscomplaints - or don't - speaks volumes. There are too many like the telecoms boss who, upon receiving a heartfelt moan beginning 'the service you provide to Cellnet customers is awful. I hope that this letter will not prove my point all over again by being entrusted to the customer service people for response'fulfiled the prophecy.
Properly used, the internet, like other hi-tech systems, can improve responsiveness. That won't happen with a website like BA's, which lists a 'dedicated' queue-up helpline, but gives neither names nor email address for 'customer relations'. Likewise, established retailers can - and should - also benefit from the web. Yet the serious faults identified in Plaut's study included, not just a bundle of hyped-up dotcoms, but also high street names: WH Smith, Dixons, Tesco, Sainsbury, etc. Most surprising is the performance of Dell Computer, whose website generates gigantic volume but flunked the returns test.
The sad experiences suggest that senior managers never take the elementary step of anonymously sampling their own service and services. If they are afraid of uncovering a can of worms, that's probably what they will find. Instead they should always be investigating and eradicating, digging right down to the underlying causes. Incommunicado bosses who delegate customer care to underlings, and never check their miserable performance, are themselves infected by systemic diseases that only they can cure. That vicious circle is everybody's root problem.
Guardian Unlimited © Guardian Newspapers Limited 2002
CERTIFICATE DISCUSSION
Marketing Fundamentals - Syllabus Reference 1.6
It is increasingly important for organisations to develop long term relationships with customers. Explain the marketing term relationship marketing.
Discussion
Research shows that it costs over five times as much to recruit (gain) a new customer as it does to retain an existing one. Hence the investment that companies, such as those mentioned in the article, in loyalty schemes such as Nectar. Marketing orientated organisations are customer focused but this concept considers the buyer-seller relationship as a single transaction. Relationship marketing considers that this is a longer-term relationship developed over time through appropriate communications and the ‘personal touch’.
This is true of consumer and business markets. The organisation seeks to identify individual customer needs and seek ways of proactively meeting these. Card loyalty schemes such as Nectar enable customers to collect points on purchases and exchange these for ’rewards’ such as money-off coupons, cinema tickets etc.
In order to develop relationships with customers, organisations need to develop close relationships with the markets on which it depends, such as supplier markets. The “Five Markets Model of Relationship Marketing” reminds which these are:
Influencer – for example, government and EU.
Employee recruitment markets – to ensure that potential recruits understand the nature of relationship marketing and the skills required by employees.
Supplier markets – to develop long-term relationships with suppliers so they can rely on supplies being available when required.
Referral markets – include all those organisations that mey refer customers or act as intermediaries.
Internal markets – to develop a customer-focused culture so internal customers concentrate on meeting the needs of profitable ecternal customer groups.
Relationship marketing recognises the value of long-term customers (who tend to spend more) and uses technology such as customer databases to identify promotional opportunities .
Marketing Environment - Syllabus Reference 2.6 – 2.7
Why is customer loyalty so important for organisations in a competitive environment?
Discussion
One organisation that recognises how important customers is Southwest Airlines (US based). Each pay check is marked, "From our customers" so staff are reminded who ‘pays their wages’ each time they receive them! The prevailing organisational culture emphasises the need for consistent customer satisfaction. However, in a competitive environment, even this is not a guarantee that customers will return. It is now necessary to take actions that develop a relationship with the customer, to encourage customer loyalty by reassuring the customer that they understand their needs and can meet these better than the competition!
Customer loyalty is also important because research shows that the longer the relationship, the more money the customer spends. They also act as ambassadors for products and services, referring work colleagues, family and friends. Real loyalty exists when the customer return to the same supplier consistently without testing out alternatives. However, this is rare. In terms of supermarket shopping, consumers tend to be creatures of habit but may prefer to try out another supplier ‘for a change’, following a recommendation or because their favourite brand of coffee is on ‘special offer’.
In business-to-business markets, the relationship between buyer and seller for a single transaction tends to be longer than that in the consumer market. This enables the seller greater scope for gathering information about the buyer that will enable them to continue the relationship.
The actors that affect customer loyalty include:
Price - customers are lured away by lower prices or sales promotions. The supermarket giant, Asda has responded to the Nectar launch by stating that 93% of shoppers prefer lower prices than collecting points to exchange for gifts etc.
Product – customers move away when the product no longer meets their needs.
Place – the Internet, for example, has opened up a new channel so customers who prefer to shop online may move to supppliers who offer this facility.
Service – poor service is unlikely to be tolerated by most customers.
Lack of need – the customer’s requirement for the product or service has ended.
Reputation/Image – bad publicity can harm an organisation’s image in such a way that certain customers no longer wish to be associated with it.
Each of the four organisations that run the Nectar scheme hope that customers from the other three organisations will also become customers. Each are satisfied that their image will not suffer by being connected with the other three. However, the article concludes with a quote predicting that this scheme will probably not be a significant factor in attracting new customers for the participating organisations, merely encourage greater loyalty from existing ones. The problem being customers need to spend a lot of money to get anything worthwhile.
Customer Communications - Syllabus Reference 1.4
In order to create successful longer-term customer relationships organisations need to establish a customer-focused culture. Discuss how effective internal customer communications contribute to this.
Discussion
In order to developing a customer-focused culture, everyone in the organisation must put the customer (internal and external) and their needs first - the message is to 'think customer' at all times. Internal communication plays an essential role in building and sustaining this culture.
Satisfying the customer must be at the centre of everything the organisation does so at each link in the internal customer/supplier chain the questions that must be asked (and answered) include:
∙ Who is the customer?
∙ What do they want now and in the future?
∙ How can those needs be met successfully?
∙ How can future needs be met?
In addition, internal PR must inform employees of the messages given to external customers so all communications are consistent. Employees must understand how to communicate corporate identity and their role in sustaining this. Internal communications used by organisations to keep their employees informed about the vision, values, mission and business objectives include:
∙ Newsletters.
∙ Notices.
∙ Face to face meetings.
In addition, organisations should be regularly surveying all staff, not only front-line staff, to discover new ways of meeting and continuing to meet customer needs.
Marketing in Practice - Syllabus Reference 4.8
According to the article, Nectar’s Achilles heel (what went wrong) was technology. Discuss the role of ICT in helping supermarkets, such as Sainsbury, develop successful customer relationships.
Discussion
The article reports the problems experienced by consumers who wanted to register online for the new Nectar loyalty reward scheme. The Internet proved so popular that the volume of traffic caused the site to crash ‘over and over again’.
Many supermarket chains use customer loyalty schemes to encourage customers to return on a regular basis – the more they spend the more points they accrue so the greater the reward. Points are offered on selected products – and these may be the most popular items or on products that need a sales boost.
ICT plays an important part in enabling supermarkets to provide a quality service to customers by:
· EPOS – electronic point of sale.
· Recording product sales levels and linking this to stock control.
· Extranets – suppliers have access to part of the company internet to enable them to know when to send supplies.
· Recording and storing customer information to be used for promotional purposes.
· Recording and storing information on individual customer points earned on loyalty schemes.
The new Nectar scheme also asks customers for their email addresses when registering – although they can tick a box to say that they do not wish to receive unsolicited emails on special promotions.
Customers can also use touch screen TVs to find out more about current, in-store sales promotions when they visit and request money-off coupons for those they are interested in.
Finally, all supermarkets have online ordering facilities so customers can do their weekly shop via the Internet and request a delivery time so the goods are delivered to their door.
Observe how ICT is used by your local supermarket – this might include the ability to calculate the cost of goods as you shop and pay via an automated checkout rather than standing in a queue at a manned checkout.
