In previous posts I have discussed the work of Treacy and Wiersema and their three areas of marketing focus, management efficiency, product and customer focus. The model suggests that a business prioritises one of these three areas and achieves excellence in it. As long as the other two areas match industry average standards, the consumers will ignore them and focus on where the business achieves excellence.
In recent years, particularly in mature economies, a customer focus has become the primary marketing strategy of many businesses. The reasons for this are complex.
In many mature economies, a far greater element of GDP is reliant on services rather than manufacturing.
Some academics argue goods sectors are becoming commoditised. I don’t agree with this assessment. In fact the opposite is true. Many manufacturers, through the use of mass personalisation, Just in Time supply chains and high tech production facilites, have enabled consumers to have almost limitless choice in the goods they buy. If a consumer can choose almost bespoke products from any manufacturer, those manufacturing businesses have to find other areas of differentiation. This has led to greater emphasis on the product halo and improved customer service. Increasingly consumers are aware of the levels of service offered by all businesses whether they are a manufacturer or a service provider.
Customer service is now an important point of differentiation for businesses who are keen to exploit the logic of the service/profit chain.
- Satisfied employees provide better service quality. Satisfaction amongst employees improves employee retention. They stay in your business and gain better knowledge of your products and systems. Satisfied employees present themselves better and are more productive. They are more committed to the goals and values of a firm.
- The improved levels of service provided by satisfied employees is noticed by customers. Customers feed on employee satisfaction and you retain customers longer.
- Retained customers exhibit loyalty and they buy more.
- Loyal customers improve profitability. They cost less to serve than new customers. They need lower marketing budgets. The costs of retaining loyal customers are lower than the costs of new customer acquisition. Loyal customers are more likely to recommend your firm to others. Retained customers reduce costs, reduce risk and improve revenues.
- A positive feedback loop develops. Satisfied customers treat your staff better. Employee and customer satisfaction levels reinforce each other. Both measures of satisfaction improve.
This chain mirrors the balanced scorecard approach where improved organisational learning impacts internal process measures, which then impact customer satisfaction measures, which in turn improves financial measures.
There are five key aspects to improved customer service:
- Empathy – a caring individualised level of service.
- Tangibility – good standards of equipment and facilities, High standards of personal appearance amongst staff.
- Reliability – Staff are dependable and service provision is accurate.
- Responsiveness – Staff show willingness to help. Service is prompt.
- Assurance – Staff have the ability to inspire trust and confidence amongst consumers.
These are the five pillars of SERVQUAL. You should look to optimise these aspects and measure them through both staff and consumer satisfaction surveys.
Increasingly businesses are looking to move beyond traditional customer service and develop deeper relationships with consumers. This has led to the development of relationship marketing strategies and the development of key account profiles.
Increasingly service provision is through the careful development of customer experiences.
- The process of using a company’s products is seen as part of an overall customer experience and as impacting how a customer thinks about an organisation.
- Peer to peer interactions are important to the overall customer experience. A holistic experience is required where the interactions between individual customers are important.
- Relationships are developed across multiple transactions. In business to business markets, the aim is for clients to see your business not as a supplier but as a partner or colleague
- Your brand image is developed in the minds of consumers to such a level that it forms part of who they are. It becomes a statement of how consumers express their personalities and identities.
- Customer purchases are not seen as purely rational. Buying your products becomes an emotional experience.
The development of relationship marketing, the importance of consumer expectations for customer service and the need to create customer experiences should all play an important part in the development of you marketing plan.