It pays to have loyal customers

A SATISFIED customer brings repeat orders and becomes a vocal testimony of the company. Market leaders recognise that customer service is the key to winning customer loyalty. It is heartening to note that the manufacturing sector is also realising the importance of providing good service to customers. In the new economic scenario, companies cannot afford to have a shopkeeper mentality. They have to strive to acquire as well as retain customers. The cost of servicing an existing customer is less than the cost of acquiring a new one.

As competition increases, most products come on par on parameters such as price, quality, technological superiority. What differentiates one product from the other is the augmented product. An augmented product is a bundle of the basic product - the after sales service and the perceived and other benefits offered to the customer. Research shows that customers mainly quit due to indifference in handling the customer after the sale is over.

According to research findings 68 per cent of customers quit due to an indifferent attitude displayed by an employee or a dealer while only 19 per cent quit due to product dissatisfaction and 5 per cent quit due to competition.

A company can take certain steps to enhance customer loyalty. The first is to design a product that adds value. Quality is something that is built into the product right from the design stage, it is not something that must be tested at the inspection stage. Customers buy a product to fulfil certain needs and the greater the fit between the product and the customer's needs, the more satisfied the customer will be. Building customer loyalty is a long-term process and it requires a top-down approach to implement it in the company.

The next step in building customer loyalty is to identify the customer experience and perfect it. Mr. Jan Carlson, erstwhile CEO, Scandinavian Airlines, calls the moment at which the customer comes in contact with the company a `moment of truth'. A Moment of Truth (MOT) is what customers experience when they come in contact with the company. Thus a customer experiences a MOT when he/she receives a call from the company, a letter from the accounts department or meets a representative of the company. Even the company's visiting card represents a MOT.

Each MOT adds to what the customer feels/thinks about the company. A company must be careful about each and every critical business aspect. For example, Hotel Maurya Sheraton has identified 4,000 MOTs and uses these to train its employees. The company must manage each MOT so that the customer experience is mostly positive. In this context having Key Customer Account Managers to handle important customers may ensure that all the customers' MOT are handled appropriately.

The third aspect of building customer loyalty is the continuous improvement of service standards. What is a best practice today becomes a common practice tomorrow as more competitors start offering the same service. It is important to be alert and to keep innovating to meet customers' expectations. A few factors that fuel customers' expectations are:

*Promises the company makes

*Promises the competitors make

*Past performance of company

*Past experience with company

*Customers' perception

Another important aspect of customer service is consistency. Customers do not like being handled by different people every few months. Employee turnover needs be controlled.

The next step in building customer loyalty is to sell the message of customer service to the people within the organisation. After all business is about P2P (people to people). As already mentioned the top management needs to adopt a customer centric approach where not the day-to-day business operations but customer is most important. Everyone in the organisation must understand that there is a cost to losing a customer. The cost includes:

*Bad publicity/ loss of goodwill

*Hassles such as litigation, corrective work

*Damage limiting exercise such as PR, advertising

*Customer's shifting loyalty

*Encouragement to competitors

*Employee demoralisation

*Delayed payments

Customer relation training therefore should be an important aspect of employee training. The employees should also be taught that talking about the company, or personal talk in front of the customer would not be tolerated. The conversation should be restricted to the customer's needs only.

The fifth step in building customer loyalty is building good internal customer networks. The company must have systems and procedures for acquiring and acting upon customer feedback. People on the frontline often echo the voice of customer within the company. This can be used to improve service and enhance customer satisfaction. In this age of the Internet and rapid communication, many companies tend to overlook the importance of the human touch in business transactions. This point is particularly well brought out in the Airline industry. Experience shows that many foreign tourists make it a point to stop at the airline office and chat with the staff in the counter. They are appreciative of this facility that is not available in their country, where almost everything is computerised.

The last step in building customer loyalty is handling customer complaints. A research study by Technical Assistance Research Programs Inc. (TARP), U.S. shows that customers with a problem tell 10-20 people about it. 60 per cent of the complainants will stay with the company if the complaint is resolved. A customer whose complaint has been resolved tells five other people about the treatment he/she received. While dealing with complaints the following should be remembered:

1. Complaints within a certain limit are a natural phenomenon.

2. Facilitate the presentation of complaints. Try to locate unexpressed dissatisfaction.

3. Do not create complaints by giving loosely worded or evasive guarantees.

4. It is useful to formally note down all complaints.

5. Eighty per cent of the times, customer service should be preventive - should be towards preventing complaints, 19 per cent should be corrective - solving complaints and 1 per cent should be towards crisis management.

6. To be able to judge a complaint and the customer's reaction endeavour to see it from the customer's point of view. Sometime even a delay in delivery may result in business loss for the customer.

7. The customer is not always right, but for the sake of business it may pay to let him believe that.

8. Never argue with an angry customer. First it is most important to cool him down or deal with him later.

9. While compensating a customer it is better to do so in terms of a future credit period or by adjusting the amount against future sales. Cash compensations should be avoided.

10. Do not jump to conclusions about the honesty of a customer. Give him the benefit of doubt.

11. Always let the customer feel that his complaint is being dealt with seriously, keep the customer informed and avoid delay.

12. Avoid handling complaints by correspondence. You achieve more in face to face interaction.

13. If a complaint must be rejected, provide good and plentiful reasons tactfully.

In conclusion, it may be said that the most important step in building customer loyalty is to realise that the customer is the focus of the business and to understand that the business exists to service the customer.

Rohan Ajila

(The author is CEO, Indiamarkets)

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Section  : Business
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