how many of these companies spend the same time, energy and money to maintain and grow their existing customer base?

MAINTAINING  CUSTOMER SERVICE STANDARDS

 WHEN THE CASH IS LEAN

Many companies spend enormous amounts of time, money and energy to acquire new customers. Yet how many of these companies spend the same time, energy and money to maintain and grow their existing customer base? In today's marketplace, where most companies are feverishly working to grow market share, prospective users get the attention and deals while loyal customers sometimes get left in the dust with little attention and less desirable offerings.

“PENNY- WISE & POUND-FOOLISH”  APPROACH

The  challenging economy  is putting consumer companies such as airlines, banks, and retailers in the difficult position of cutting back the service levels that customers have come to expect in recent years. These companies are closing retail locations, reducing hours of operation, and making do with less staff in stores and call centers. Meanwhile, faced with rising costs, they are also increasing prices, either overtly or through fees. As a result, customer experience research shows that satisfaction scores are reversing the upward trend of the past few years and actually dropping in a number of industries.

So it’s not surprising that most executives think compromising service levels is a mistake.

How can consumer businesses make necessary investments in service while facing the pressure on revenues and costs? Our review of the companies with the best customer service records in ten industries suggests that one key is to minimize wasteful spending while learning to invest in the drivers of satisfaction. Specifically, companies should challenge their beliefs about service and test those beliefs analytically. Many will discover that long-held but

seldom-reviewed assertions about what customers really want are wrong.

Consider service levels, specifically average time-to-answer, which is one of the most common metrics used in call centers. Service levels—often based on regulation or historical precedent—are set by call-center managers and then used to calculate staffing requirements. But service levels are challenging to maintain and costly to improve: raising them by 10 percent requires much more than a 10 percent increase in staff.

You can see this happening today with cellular and phone service providers. It seems that every week there is a new deal available to people whom are willing to switch phone plans. Customer loyalty crumbles as customers chase the next best deal. To counter a similar trend, one insurance brokerage firm took bold action when they saw term life insurance rates decrease significantly over recent years. They decided to contact every customer who had a term policy with them and let those customers know that they could obtain more dollar coverage or increased term length for the same monthly investment. Customers were ecstatic. As a result, company insurance policy sales went up because the goodwill that was demonstrated by the brokerage firm generated more business for them from their current customer base.

HOW TO ENGINEER A SERVICE TURNAROUND

Why are service turnarounds so tough? One reason may be that the front line at a service company is the product. A manufacturer's customers can't usually tell when workers at its production plant are unhappy. At a service company, on the other hand, any dip in morale is painfully obvious.

Another reason is that frontline staff control communication with customers. One of their jobs is to keep customers informed when things go wrong. In the mid-1980s, when Indian Airlines was experiencing service problems, one of us was told by a gate agent, "If you didn't want your flight canceled, you should have picked another airline" — hardly an inducement to repurchase. By contrast, manufacturing companies can manage customer communication much more directly through their head office and salesforce.

Since most management thinking about turnarounds is based on manufacturing companies, the strategies usually advocated may be counterproductive in a service context. Bring in a new management team? Better make sure you can do so without wounding the confidence of frontline employees. Reduce costs? You could, but you risk undermining morale, which will impair product delivery and disappoint customers. Establish tight control over day-to-day operations? Easier said than done when your key frontline employees are remote from management.

To make matters worse, service company turnarounds are far more likely than manufacturing turnarounds to become caught in a vicious cycle of deteriorating performance. Faced with poor results, managers cut costs, slashing headcount and trimming service. This damages the product and disheartens frontline employees. Poor morale translates into poor service. Customers lose confidence and defect to competitors, and the bottom line suffers.

MAINTAINING CUSTOMER  LOYALTY

Sometimes companies forget that, over time, their existing customers become more knowledgeable about competitors' offerings. Thus, buyers need to be continually resold on the company and the products and services it offers. One lawn care company experienced a loss of customers to its competitors due to what appeared to be lower competitor prices. However, when they compared their pricing structure with the competition, they discovered that their price was actually comparable. Their competitors had unbundled the various components of the lawn care service, pricing some components separately, thereby giving the appearance of a lower price. Consequently, this lawn care company went back not only to its lost customers, but also to all its existing customers with a new pricing structure that gave all customers more choice as to the service package and pricing level that would best fit their needs.

Companies that want to maintain customer loyalty for the long haul need to effectively gather relevant customer information through their sales and service force, or through outside customer data gathering firms. Customer information is vital in figuring out what products and services your current customers value, and how you subsequently need to update or evolve your product or service's positioning and packaging. This information can give you a significant edge over your competitors. For example, that same lawn company surveyed a subset of its customers and discovered various customer profiles. Some customers wanted to interact with and learn from the lawn service person, while others just wanted the work done without seeing the service person at all. Armed with this and other learning from its customer data-gathering, the company trained their sales and service personnel to position and package their company's offerings to any current customer situation. As a result, they improved their customer retention rate.

SUMMARY

Improving your company's customer service is a two-pronged approach. Externally, a company needs to decide which customers it needs to initially and subsequently focus on. The business needs to examine what it is doing to generate new customers and what it needs to do to maintain, or effectively prune, existing customers.

Internally, a company needs to figure out what's working and what needs improvement with respect to its key internal supports. Committed leadership is required to keep efforts going despite inevitable pain and adversity, especially in a highly competitive business. Initial efforts need to be targeted, starting small and building momentum. Employees and suppliers need to be involved in analyses and actions in order to generate uniform commitment and ensure that improvements stick. Employee competence and confidence needs to be built to sustain your company's advantage over the long haul.

Performing all these external and internal efforts proactively and intelligently will generate and ensure long-term success for your business.

with best compliments

Dr Wilfred Monteiro