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Why Customer Focus Differentiates

>> by Ray Miller

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.


Ray Miller
About the author:

Ray Miller is Managing Partner of The Training Bank,  a Training and Consulting firm specializing in Customer Focus, Service Improvement, Leadership and fully customized training solutions. He is author of the book That's Customer Focus and The Customer Focus Companion. Ray is also known for his highly effective training programs; Customers Forever, Customer Focused Leadership and The Wow Factor.

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www.thetrainingbank.com

 

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