A few years ago, I was reading an article by the motoring journalist Jeremy Clarkson about why he changed the format of the television programme Top Gear from one of journalism to one of entertainment. One of the reasons he gave was that aerodynamics and mass manufactured components meant that many mass market cars were all but identical. To review these cars often meant focusing in minor details whilst over all performance was all but identical across the market.
So if products across a market are increasingly a homogenous mass, how do you differentiate your offer from that of your competitors. Increasingly service has become the prominent source of differentiation in developed economies.
Customer service, before and after purchase is an increasingly important part of a differentiation strategy. When Kotler defined the marketing mix for goods, he included only 4 ‘Ps’. Other marketing academics extended Kotler’s model by adding three more ‘Ps’: People, Process and Physical Evidence; but only in relation to services.
Today, all firms, both those who produce and supply goods, and those in service industries, need to develop a marketing mix which includes the service elements of the extended 7P marketing mix.
There is logic in making customer service matter in your organisation:
- Satisfied employees provide better customer service quality. Satisfied employees stay longer in your organisation and they are more productive. they become more knowledgeable and are more committed to the goals of the organisation.
- Service quality is noted by customers and customer satisfaction is increased.
- Customers become more loyal and are ‘stickier’, they stay longer with your offer and its is harder for your competitors to prise them away.
- Loyal customers are more profitable. The longer you keep a customer, the more you earn from them. Loyal customers spend more. They cost less to serve and to promote to. They are less likely to leave on the basis of price.
- There is a positive feedback loop: As employees become further satisfied, this reinforces customer satisfaction.
Developing strong customer service which is closely linked to your brand and corporate identity doesn’t just differentiate your company from your competitors, it is a source of improved revenues at reduced risk.
Kaplan and Norton, when they developed the Balanced Scorecard were thinking along these lines. Remember, they directly linked:
- Better company learning and innovation; to
- Better systems and internal processes; to
- Better customer results: to
- Better financial returns, and those returns could be invested back to:
- Better company learning and innovation.
This leads us to the five dimensions of Servqual, the quality assurance system focused on reducing cognitive dissonance in the processes of interaction between an organisation and its stakeholders:
- Reliability: Your ability to provide services dependably and reliably.
- Responsiveness: Your willingness to help customers and other stakeholders. Your willingness to act promptly.
- Assurance: Customers know you have knowledgeable and courteous staff who inspire trust and confidence.
- Empathy: You provide caring, individualised attention to stakeholders
- Tangibility: Your service standards are reflected in the physical attributes of your facilities, equipment, and the appearance of your staff.
Running a successful business today is more than maximising profit margins or increasing manufacturing output. You need a holistic view of your market and your organisation. You need to improve service in a way which individualises your organisation and which differentiates your business from that of your competitors. Bad customer service is far more likely to lead to loss of business and company failure that other factors.