Why Customer Focus Differentiates
Discover the benefits of customer focus and the link with customer loyalty and profitability..
Has this ever happened to you? You're in a hurry. You
want to complete your business and the person serving you is preoccupied
with something other than serving you. Then when you are served, you might
get an insincere apology for the delay followed by the completion of your
transaction. If asked to describe this experience you would likely respond
"That's typical" or "It's nothing more and probably a little less than I
expected."
Welcome to the world of the average consumer.
Most people will probably tell you that good service is just common sense.
They would also invariably say "For something so common, it sure is hard to
find!" Edward R. Murrow said it very well: "What is obscure, we eventually
see. What is obvious usually takes a little longer."
Research from a litany of reliable sources tells us that the primary reason
that customers switch their loyalty from one company to another, in the
range of 40% to 68%, is because of a perceived attitude of indifference on
the part of the service provider. Sure, some leave because of price, or
product quality, or other personal reasons; but the vast majority leave
because of Poor Service.
These days, customers are really in the driver’s seat. The options and
choices of similar products at similar prices at similar quality levels are
greater than ever.
Advances in technology, reductions in production time and access to global
distribution mean that products and services can be duplicated and
customized faster than ever before. And your customers know this!
Consumers have more choices than ever before. This creates an interesting
challenge. How do you create value when customers today are not seeing much
difference in the choices they are offered?
Customers tend to look at value from four perspectives:
- the Price of the product or service,
- the Quality of the product or service,
- the degree of Innovation offered by the product and
- the Service provided to customers.
The quality of products continues to improve universally and competitors
have developed the ability to duplicate even the most complex of those
products. Innovation attracts younger consumers but no sooner do we see one
innovation, than someone else comes along and clones it plus adds a few more
bells and whistles.
Consider the evolution of the flat screen LCD TV. A couple of years ago, few
could afford such a luxury item. Now there are LCD TVs to fit a wide range
of budgets. And in addition to the traditional manufacturers of televisions,
it seems that any one who manufactures computers also has their own LCD TV.
Developing a competitive advantage based solely on product quality and/or
innovation is very difficult. And sustaining it is very expensive. You will
also find that there is more price parity today than ever before. Very few
companies can compete for long using price as a differentiating factor. By
shifting your emphasis to service quality, you will find the greatest room
for differentiation.
For most companies, customer loyalty is the key to future profitability and
growth. Corporate newsletters, national periodicals, and most executive
speeches are peppered with a litany of examples demonstrating the
relationship between customer loyalty and profitability. In almost every
market we've learned that retained customers:
- Are less expensive to serve because they know their role in the process.
- Tend to lower marketing costs.
- Often purchase more over time.
- Are open to purchasing new and different products as they are offered.
Clearly, customers value service and whether they get good service or not,
they expect it. If they don’t receive service at a level that meets their
expectations, they will go elsewhere until they find it. Whether the economy
is on the down swing or the upswing, no one can afford to lose customers.
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