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A Service Organization's Survival Guide
TO Win Customers for Life
Ms. Candice Ng-Chee
Managing Partner, MetaCore Asia
G-CEM International Partner (Singapore)
www.mcore-asia.com
This article is exclusively written for G-CEM.
The economic crisis is a rude awakening call for all of us. But life goes on and we have to pick ourselves up - both from the business and personal fronts. From the business perspective, there is no better time then now to return our focus on what we tend to take for granted - our existing customers, who can be an asset in more than one way. To survive the pessimistic outlook, we also need to re-skill and re-position ourselves so as to stay relevant and valuable in the market.
But where do you start?
Start by taking a strategic view of your customers. What you want to establish is a loyal customer who will stick with you in good and bad times. From continuity of his patronage, increased spending, and paying price premiums to referring other customers to buy from you, and cooperating with you to identify new solutions (which means new revenue streams for you) that would better serve his needs, a customer is no longer just a consumer these days. The endorsement, referral and collaboration you can get from a loyal customer are so valuable that it warrants a game plan to nurture and treat your different customers differently. Knowing what to do next in order to make these happen would be our guide to surviving the down economy.
What should you do ?
Meta-analyses (Palmatier, Dant et al. 2006) (see diagram 1) had found that to win customers for life, organizations have to continuously build trust, commitment , satisfying and quality relationships with their customers.
To achieve these, your company must possess expertise in every aspect of the service value-chain, as well as demonstrate your willingness to invest in building a long-term relationship with the customer, be it people, time or money.
Customers will always look for some special treatment (relational benefits) when deciding whether or not, how much and how long they would patronize your services. To facilitate this decision making, frequent interactions with them is necessary to understand their priorities, expectations and which part of the service process/value- chain you can best make a difference (where they need help most).
Of course, for the above to occur, the conditions are also that both your customer and your company have an existing commercial relationship, share certain similar values, are open to communications and will compromise for conflict resolution.
However, as the challenge in every company is different, the management will need to decide on how they would want to moderate the relational outcomes by tweaking some parts of the service offerings, channels, markets and communications. I have always felt that one of the most effective ways to do this is through a customer experience plan because it encompasses the totality of a customer's interactions with the enterprise's product, people and process. Commonly known as 'Customer Experience Management' or CEM, it has been defined as 'a blend of a company's physical performance and the emotions evoked, intuitively measured against customer expectations across all moments of contact' . Under normal circumstances, a CEM plan would require a strategy, corporate endorsement, stakeholders' buy-in, mind-set change, competency in the subject matter and some process re-engineering. However, given the economic constraint, we will attempt to look at a tested framework for a quick win.
Taking a leaf from another empirical study from the academia, we have a glimpse of an alternative framework that suggested Service Quality (SQ) as the foundation for Relationship Quality (RQ), and Relationship Quality as the basis for Customer Loyalty (CL).
The study by (Roberts, Varki et al. 2003) (diagram 2) to measure the quality of relationships in consumer services showed that SQ has a strong direct impact on RQ but not CL; and that RQ in turn has a strong direct impact on CL. What it means to management is that you need to first get our house in order before you can be credible in winning the relationship of your customers; and unless you build a satisfying relationship with your customers, they are not likely to be loyal to your brand.
According to the model, you could review five SQ constructs - Tangibles, Reliability, Responsiveness, Reassurance and Empathy, and five RQ constructs - Integrity, Benevolence, Commitment, Satisfaction and Affective Conflict, depending on your current state.
Each of these constructs is in-turn characterized by a list of attributes. For instance, 'Tangibles' could encompass the physical product, store location, service hours, and ambience etc. and 'Empathy' could include how your employees relate to the customer's issue at the counter or over the phone'. These are not exhaustive and you should check out other combinations out there to find one that fits your business model and situation best.
Alternatively, you could also identify what each of these dimensions mean to your customers by conducting a primary VOC research.
When reviewing your SQ, you could do a quick dipstick test by asking your customers two very important and functional questions:
Q1: How important (rank) is each of these service attributes to you? and
Q2: In you opinion, how are we performing (score) in each of the above service attributes?
Repeat these two questions over the ten constructs and their respective sub-attributes and you will end up with a prioritized survival list.
Take for example, if your high value customer ranked response within same day as the most important criteria in terms of their expectation of your service quality (say under the construct of 'Responsiveness'), but scored your company badly in this aspect, this would give you an indication that unless you get this disparity (and other high priority ones) fixed, this customer is not likely to want to build further relationship with you other than one that is transactional.
Reviewing each SQ constructs and their respective attributes may be a tedious job but a necessary one if you wish to develop relationship quality and customer loyalty. Sometimes you might just find that reshuffling the things you do and the way you do it from the customer's perspective will just do it! But even that calls for a change of business approach from a product-focused to a customer-centric one.
Turning quality relationships into loyalty outcomes ~
Business process will get a little more complex when you enter the relationship phase because the implications go beyond the tangibles into iterative reciprocity. The customer will know if you really care about his welfare, respond to his problem with understanding, if he can count on you - before he would share more pertinent information about himself with you, continue to buy from you, refer his circles of friends to you or give your brand positive word-of-mouth.
Mutual trust and commitment began to form the corner stones in the relationship phase as people reveal more of their vulnerable sides and become more affective.
Identify opportunities where you could effectively reassure them of your trustworthiness and affective commitment via the 7Cs - Communication, Content, Customer Care, Convenience, Customization, Community and Connectivity (please see other articles where this is discussed in more detail at http://www.g-cem.org/eng/results.jsp?key=candice.
When the group of loyal customers starts to gain momentum, you will know it is time to formalize a loyalty program. As running a customer recognition program requires tremendous resources from recruitment to retention and activation, make sure you remember to optimize "the level of spending on relationship marketing programs, based on a trade-off between the benefits of relational programs and the cost of implementing (them)." Your underlying objective must be to improve the quality of relationships with these loyal customers because the behavioral outcomes are what you are after.
Upon seeing the results of your investment in SQ and RQ, it would be reasonable for you to get more buy-in from your management to turn these initiatives into a committed strategy, train your company in the methodology, empower customer-facing staff, review their performance measurement, integrate key touch points for a more seamless customer interaction, and provide a more conducive environment for cultivating more transparent communications between the management, your staff and your customers. These will pave the way for a continuously trusted, committed, satisfying and quality relationships with your internal and external customers.
SERVQUAL, CRM, CEM or 1-to-1, they can all be your survival kit to retaining and activating your customers even in bad times. Surely there must be some gems in them judging from the success of Amazon, Nordstrom and Ritz Carlton, who have embraced these concepts in one way or another? Or for that matter, the winners of G-CEM's Customer Management and Customer Experience Awards' in Asia Pacific?
With a bagful of survival kits (not tricks), I hope they will keep you afloat till the storm is over.
References:
Palmatier, R. W., R. P. Dant, et al. (2006). "Factors Influencing the Effectiveness of Relationship Marketing: A Meta-Analysis."
Roberts, K., S. Varki, et al. (2003). "Measuring the quality of relationships in consumer services: an empirical study." European Journal of Marketing 37(1): 169-196.
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About the Author
A specialist in Customer-based strategies, Candice?s domain expertise includes Customer-centric Strategy and Roadmap Development; Voice of Customer Research; Customer Segmentation; Needs Differentiation; Customer Experience Design; Customer Development; Relationship Management, Social Marketing and Advocacy Marketing. Known for her passion and professionalism in these areas, Candice is a much sought-after consultant and coach by top MNCs in the region.
Dedicated to promoting best-in-class Customer-based Strategies for companies in Asia, Candice also contributes her expertise regularly to the CRM Communities in China and Asia through whitepapers, workshops and speeches. With a strong belief that Customer-centricity is one of the ways to value creation and a virtuous business cycle, Candice focuses most of her works on the building of core competencies that strengthen company-customer relationships. By pursuing a Doctorate Degree with special interests in Relationship and Social Marketing, she hopes to enhance the wellbeing of both the business and social communities. |
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