. PART I – INTRODUCTION 1. Introduction to customer relations 2. Core concepts 3. Facets of customer relationship management 4. Importance of customer relations 5. Global perspective on customer relationship management 6. Role of Human Resources in Customer Relationship Management PART II –CUSTOMER RELATIONS, CUSTOMER SERVICE & PUBLIC RELATIONS 1. Customer Relations and Customer Service 2. Customer Relations and Public Relations PART III – CUSTOMER RELATIONS MANAGEMENT 1. Customer interaction cycle 2. Understanding customers 3. Customer response . Complaint management 5. Traditional Vs Customer focused manager PART IV – CUSTOMER SATISFACTION 1. Factors affecting customer satisfaction 2. Measurement of customer satisfaction 3. Customer satisfaction measurement methods and techniques 4. Analysis of customer satisfaction measurement 5. Customer satisfaction monitoring 6. Promoting customer satisfaction ? PART V – CUSTOMER RETENTION 5. 1 Economics of customer retention 5. 2 Which customers to retain 5. 3 Strategies for customer retention PART VI – CUSTOMER SERVICE 1. Importance of customer service 2.
Customer service practice in Kenya 3. Challenges of customer service 4. Customer service structure PART VII – CUSTOMER RELATIONS PROCEDURES AND STANDARDS REFERENCES: 1. Sugandhi, R. K (2003). , Customer Relationship Management Planning, New Age International (P) Ltd. 2. Francis Buttle (2004), Customer Relationship Management; Concepts and Tools. Elsevier Butterworth Heinemann 3. Swift, R. S. (2001), Accelerating Customer Relationships using CRM and Relationship Technologies. Upper Saddle River, NJ: Prentice Hall 4. Hofmeyr, N. , and Rice, B. (200) Commitment – led marketing.
New York, John Wiley 5. Gamble, P. , Stone, M. , and Woodcook, N. (1999), Customer Relationship Marketing: Up Close and Personal. Kogan Page 6. Graham Roberts-Phelps (2005). Customer Relationship Management; How to turn a good business into a great one. Thorogood Publishing Ltd. 7. Kotler, P. , and Keller, K. (2007), Marketing Management. 12th ed. Pearson Education. EVALUATION Assignment 10% [pic]Continuous Assessment Tests 20% Coursework total 30% Final Exam 70% Grand total 100%
PART I: INTRODUCTION 1. 1 Introduction to customer relations “Life returns what one gives it. Similarly, customers return what Supplier gives it” “What you are is customer’s gift to you; what you become is your gift to customer” The marketing concept holds that the key to achieving its organizational goals consist of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. It crystallized in the mid – 1950s and has been expressed in many colorful ways: “Meeting needs profitably” • “Find wants and fill them” • “Love the customer, not the product” • “Have it your way” • “You are the boss” • “Putting people first” • “Partners for profit” The marketing concept rests on four pillars: • Target market • Customer needs • Integrated marketing, and • Profitability. The selling concept takes an inside – out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promotion to produce profitable sales. The marketing concept takes an outside – in perspective.
It starts with a well defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits by satisfying customers. 1. 1. 1 The Customer concept Today many companies are moving beyond the marketing concept to the customer concept. Whereas companies practicing the marketing concept work at the level of customer segments, a growing number of today’s companies are now shaping separate offers, services, and messages to individual customers. These companies collect information on each customer’s past transactions, demographics, psychographics, and media and distribution preferences.
The ability of a company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the Internet, and database marketing software. 1. 1. 2 Changing markets and markets response The marketplace is not what it used to be. It is radically changing as a result of major societal forces such as technological advances, globalization, and deregulation. These major forces have created new behaviors and challenges. Customers increasingly expect higher quality and service and some customization.
They perceive fewer real product differences and show less brand loyalty. They can obtain extensive product information from the Internet and other sources, which permit them to shop more intelligently. Marketers are responding to these challenges through customer relationship marketing. The fundamental principle upon which relationship marketing is founded is that the greater the level of customer satisfaction with the relationship – not just the product or service – then the greater the likelihood that the customer will stay with us.
The importance of retaining customers is that there is strong evidence that customer retention and profitability are directly related. It seems that the longer the customer stays with us, the higher the likelihood that they will place a greater amount of business with us, even to the extent of single sourcing. 1. 1. 3 Customer relationship For any business success there are three important agencies which include the following: • Customer • Investor/ shareholder • Employees An organization in order to become globally competitive, needs to provide enefits and enhance value to all the three parties referred above. A relationship can not exist in isolation. It gets established due to mutual respect between supplier and customer. It is established through personal contacts and involves emotions, sentiments and respect. The relationship plays a major role in business growth, customer satisfaction and loyalty. Consider for a moment what you would have to do to lose all your customers. The list might include some or all of the following: • Ignore them • Lie to them • Fail to return calls or answer letters or e-mails Fail to deliver on promises • Miss expectations • Be rude to them • Stop all marketing activity • Patronise them • Fail to open on time or be available at the right times • Not listening to them • Poor follow-up • Incompetent staff • Poor product quality • Confusing pricing • Treating them as if they were in the wrong. There are many critical aspects behind any customer defection, including: 1. Too little contact 2. Too little individual attention 3. Poor quality attention – especially when problems are encountered 4. Generally poor service levels and standards. . 2 Core concepts 1. 2. 1 Customer A customer may be defined as anyone who is willing and have the ability to buy our products or services. Customers can alternatively be defined as the only valid purpose of a business. 1. 2. 2 Marketing Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. 1. 1. 3 Competition Includes all the actual and potential rival offerings and substitutes that a buyer might consider. 1. 1. 4 Marketing network
Consists of the company and supporting stakeholders with whom it has built mutually profitable relationships. 1. 3 Components of customer relationship management (CRM) Customer relationship management is a methodology to achieve global excellence through customer satisfaction. It tracks customer’s history, needs and coordinates company’s multi – pronged interaction with its customers for business excellence. The facets of CRM include: • Customer needs • Customer response and influence • Customer satisfaction • Customer loyalty • Reclaiming lost customers • Customer complaint • Customer service
Pillars of customer relationship management 1. Personnel 2. Technology 3. Organization structure 1. 4 Importance of Customer Relations Customer relations is a process that helps the organization to identify customer needs and refocus its strategy to serve them better. It helps the company to achieve business growth through development of competitive edge and excellence. Some of the major issues it addresses are: • Identify customer needs • Help in rediscovering the customer and understanding him/ her • Identify fields requiring new technology and development • Identify strong and weak points of supplier Provide feedback to the supplier on his/ her total operation • Provide feedback and new information on competitors • Benchmarking to achieve global excellence • Details on the aspects on which customer is happy with the supplier and on those where he feels that improvements needs to be incorporated • Action plan to make organization customer – centric • Assists the organization to have information which is necessary in building strong public/ corporate image Customer relations is a strategic business and process issue.
The principles of customer relations are developed out of market/customer focus, methodology involving the understanding of need based market segments, the development of segment based proposition and the management of delivery against those propositions to maximize the customer value. It is the understanding of this segmental relationship and the ability to generate action plan to maximize benefits to the customer. An effective customer relationship results in maximizing business and profits throughout the customer life cycle.
The best customer relations strategy should aim at making the customer interested in the growth and development of competitive edge for the company. The success of customer relation is making customer as the company’s marketing office or transforming customers into company advocates. Customer’s interest in the company is derived from the expertise (a combination of skills, products, technology, and service etc. ) the organization possesses in the eyes of the customer and the benefits it can provide to the customer. There are several cases where satisfied/ delighted customers recommend other new customers to the company.
For example: A customer who perceived a firm to be selling television sets will be delighted if the seller offers free delivery and installation. He/she is likely to recommend new customers interested in buying television set to the dealer. There are also many cases where a customer had gone out of the way to help the supplier in getting the business against all odds. For example, in Kenya, loyal customers remained with their banks even in difficult times when banks raised their charges. Uchumi loyalists also supported the company by buying from the supermarket even when stocks were running out of the shelves.
In consumer segment there are a large number of cases when the customer purchases products on the confidence and comfort they feel in a particular supplier because of the image he enjoys. New products introduced by suppliers like Nation media group, Microsoft, Kenya Breweries, Coca Cola find ready market due to their established image. Customer relations management is the study of finding out methodologies for establishing this relationship. It finds out factors that provide comfort and confidence to the ultimate customer by which not only he/she purchases the company’s products but acts as marketing agent for the company’s products. . 5 Global perspective on customer relationship management As global markets become increasingly integrated, all firms from the largest multinational to the smallest entrepreneur must be able to find a market niche which enables the firm to survive in highly competitive markets and to prosper by finding the best ways to market the needs and desires of the target consumers. In order for a firm to create and sustain international competitive advantages, there must be strong competency in understanding which customers provide the best long term opportunities for profitable relationships.
International businesses have the ability to exploit three sources of competitive advantage. All three of these advantages are enhanced or made possible via the implementation of customer relationship management practices. The first competitive advantage is global efficiency. By expanding internationally rather than remaining in its country of origin, a firm can lower its costs and improve the bottom line performance via location advantages. Customer relationship management is very important in this context, as a firm must fully understand the customer profile that is most likely to provide them with a profitable long term relationship.
A second competitive advantage is multi – market flexibility. Large multinational firms must respond to changes in numerous markets that are all interrelated. Successfully understanding the difference in markets worldwide will provide for a competitive advantage over the long term. A third competitive advantage is achieving worldwide learning in the modern corporation. The need for understanding the customer in various markets is essential, but so is the need for listening to the internal customers as well. 1. 6 Role of Human Resources in Customer Relationship Management
The relationship between the customer and the firm is essentially developed as a relationship between two living beings based on mutual respect for each other. The employees of the firm play a very important role in shaping this relationship, as they are the visible part of the firm in touch with customer. Their attitude, action and approaches shapes the impression a customer makes about the firm. The customer will start liking the firm if he/she finds that the company’s human resources have knowledge and skill. Positive attitude and orientation of the employees strengthen this bond.
Human resources play key functions which contribute to customer relations building. A few examples of these functions are discussed below. a) Planning Clearly, as an organization decides to adopt customer relations strategies, a great deal of planning must take place so that customers are efficiently and effectively served. For example, a supermarket store needs to take careful steps to design their store lay out such that customers can easily access various products. Another key in planning for customer relations involves understanding customer needs and desires.
For example, in certain product categories customers may have little interest on colour of the product as compared to quality or price. b) Communication Human resources serve key roles of communicating with customers. This communication may build or break customer relations. Employees of the firm are the originators (source) of information. Their choice of media/ channel and message content affects either positively or negatively customer relations efforts. Public relations officer for example aims at creating positive image for the firm.
This may assist in building good customer relations. It is important to for employees to learn customer’s language i. e. words, slang, symbols, acronyms etc. Part of maintaining a good relationship with your customers is keeping them in your “communications loop” about what is happening in your company on a regular basis. c) Service delivery You can not separate delivery of service from employees of the firm. The manner and speed of service delivery have repercussions on customer relations with the firm. Employees offer instant service response based on various customer needs.
Employees offer service throughout the customer life which includes the following stages. 1. Contact phase Goal: to gain a new customer. Contact through marketing, advertising, telemarketing, personal selling, direct mail, promotions, and publicity. 2. Acquisition phase Goal: to increase customer retention. Employees should collect as much information about the customer as possible. Employees offer customers post-purchase reassurance. They also establish the foundation for a long-term relationship. 3. Retention phase Goal: to create long-term, committed and loyal customers.
Employees help develop a service philosophy. They also increase the responsiveness to customers. They should also identify and close service gaps and improve the service recovery process. Employees assist in measuring customer satisfaction. 4. Loyalty phase Goal: to extend your customer’s loyalty. Employees play a role in counteracting defection rates and patterns. In addition, they are responsible for provision of accurate customer information. They should therefore ensure that they know products inside out and back to front! d) Managing customer interaction life-cycle 1. Receiving Tone of voice (volume, fluctuation, clarity, rate of speech, emotion) o Verbal language (attitude, effectiveness, appropriateness) o Body language (presence, eye contact, spatial proximity, facial expression) 2. Understanding o Listening for feelings and facts o Asking questions to clarify o Restating feelings and facts 3. Helping o Offering information and options o Setting realistic expectations o Getting agreement on course of action 4. Keeping o Checking for satisfaction o Thanking them for their time o Follow-up PART TWO CUSTOMER RELATIONS, CUSTOMER SERVICE & PUBLIC RELATIONS 2. CUSTOMER RELATIONS AND CUSTOMER SERVICE Definition of Service The International Standardization Organization (ISO) defines a service as a part of the total production concept. To produce means to create added value, that is to say the created value is larger than the sum of resources expended during the production process. Services are often ‘invisible’ and thus difficult for the supplier to explain and for the customer to assess. This places special demands on customer relations to prevent wrong or excessive expectations of the market. Priority of service Service must become a management concern in a competitive environment.
It enables the company to differentiate itself from competitors. Management should take time to work closely with staff to understand service issues. Objective of service provider Same as for all other marketers, to make (develop) and provide service offerings that satisfy consumer needs and expectations. The aim to close the gap between service expectations and perceptions i. e. the customer gap. [pic]Expected service Customer gap Perceived service • Service marketers can only close this gap if they understand how customers choose and evaluate their service offerings. • Organizations should strive to understand customer requirements.
This can be achieved by undertaking consumer research • Service is a tool which can be used to build customer oriented business that treats customers as individuals and focuses on their lifetime value. Customer service model Customers who contact a company need two major things; • Solution to a problem • They want to feel ‘special’ The most important elements in making customers feel special include the following: o Speed and time o Personal interaction with customers o Expectations o Courtesy and competence o Information and keeping customers informed o Attitude and customer liaison Long term relationship Service provision as drama Providing a service is like being on stage, service is a performance, where all involved must understand their roles and the script. The service providers are like actors their skill, commitment to the ‘show’ their appearance, their moods are all on show! Services with high degrees of contact require higher levels of performance from the actors and also applies for services that involve repeat visits. Beyond the actors the physical setting is also very important, the stage, its appearance, comfort, design must all be right.
As like in drama service roles and scripts must clear which roles will be performed in the presence of the customer, which is the backstage, how the event will follow (script) i. e. how will they be sequenced? For example the dental procedure is an experience that is well sequenced, the customer does actually go with the expectations of a script. Lastly just like in drama, compatibility of service customers is important. The presence of other customers in services like theatre, sports, restaurants etc cannot be overemphasized. They become an important part of the ambience and the service experience.
Incompatibility of customers, e. g. clientele in a health club compromises the service quality. Tips to ensure success There are some important steps that you should take to ensure that your enterprise provides better customer service. Know what each customer expects from the enterprise: 1. Customer product – high quality every time, preferably above expectations 2. High perceived value – attention to detail and added service touches 3. Clear benefits – stated and personalised 4. Reliability – no broken equipment or promises 5. Customer service – responsive and knowledgeable . Guarantee/warranty – deliver what you promise ‘or your money back’ 7. Accessibility – everybody should be available to talk to a customer 8. Complaint resolution – fast response always 9. Positive experiences – don’t serve your customers, delight them. 2. 2 Customer Relations and public Relations 2. 2. 1 Introduction Cultip et al. (1985) defined Public Relations as “the management function that identifies, establishes, and maintains mutually beneficial relationships between an organization and the various public on whom its success or failure depends”.
Public relations (PR) is the management through communication, of perceptions and strategic relationships between an organization and its internal and external customers, for mutual benefit and a greater social order. Public relations is about organizations building relationship with its publics to build positive relationships in both directions. In today’s globally competitive market, companies have to seek ways to enhance the corporate brand image and to gain customer loyalty. Customer loyalty is influenced by public relations. A company’s investment in public relations activities enhances company – consumer relationships. . 2. 2 Role of PR in building customer relations Public relations like other promotional tools e. g. advertising, sales promotions and direct marketing aims at communicating with the intended customer segments to achieve certain objectives. These objectives may range from building company image, attracting new customers and building trust among existing customers. PR in particular aims at enhancing a strong positive relationship between the company and its actual and potential customers. This is achieved through the following means: (a) Changing consumer perceptions
Schiffman and Kanuk (2007) defined perception as the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. People act and react on the basis of their perceptions; the way they sense and interpret the world around them. Perception depends not only on the physical stimuli, but also on the stimuli’s relation to the surrounding field and on conditions within the individual. Perceptions can vary widely among individuals exposed to the same reality. Consumers’ perceptions are fundamental to understanding acquisition, consumption, and disposal of goods and services.
Negative perception reduces consumer demand of the product and in extreme cases may result to consumer exit or switching to a competitor’s brands. PR provides the necessary stimuli through communication to correct/ change negative stimuli and to build positive perceptions about the firm and its products. Public relations therefore influence customer satisfaction evaluations, behavioral intent and actual behavior. Customers that stay with the firm possess a higher level of PR perception and satisfaction compared with those who leave. (b) Raising customer loyalty
PR may raise customer loyalty through increased awareness. This could in turn increase the company’s income, enhance market share, and achieve other corporate objectives. PR helps to increase intimacy between the company and its customers which contributes in enhancing customer loyalty in the long run. (c) Influencing consumer’s brand association PR can enhance brand knowledge and establish brand awareness through recall and recognition. PR can further enhance the brand associations of brand image, draw emotions, and create brand attitude and experience.
Consumer’s product share of the mind and share of the heart are as a result of various PR efforts by the firm. Unfavorable brand image reduces the positive effects brought about by PR, and thus the contribution towards raising consumer loyalty becomes negligible. (d) Raising consumer’s self – congruency The phenomenon of high self – congruence implies that consumers’ values and benefits are mixed with those of the company. Higher consumer self congruence enhances the establishment of commitment and meaningful relationships with the organization and intensifies customer loyalty.
Therefore, organization’s PR can help raise consumer’s self – congruence; the higher the self – congruence, the higher the consumer loyalty. Congruency can be achieved when consumers perceive the people behind the brand as caring and genuine. Conversely, consumers’ reaction to PR depends on their levels of self – congruence and how their expectations match the company’s properties presented through PR efforts. If consumers’ self – concept and perception of characteristics, associations and values are identical to the company conducting PR activities, consumers attach a higher degree of acceptance of the company. e) Trust building Consumers buy products based on trust they have upon the firm and its products/services. When consumers lose trust on the company’s products, they desist from buying those products and spread bad word – of – mouth about the company. Public relations define trust as being constructed of the dimensions of integrity, dependability, and competence. Relationship marketing scholars argue that trust is a given in relationships and that trust is the foundation of customer relations with the firm.
Trust can also be defined as a multi – dimensional construct involving confidence; goodwill; faith; integrity; justice; veracity/sincerity; competence; reliability; dependability; benevolence/generosity; risk; and vulnerability. PR helps organizations to skepticism among customers about the sincerity of the organization’s actions. A negative attitude can arise from skepticism over an organization’s honesty and fairness on executing PR activities. Skeptical consumers doubt the integrity and fairness of organization’s PR initiatives, and tend to distrust organizations.
Sensors for Customer Understanding These sources can be categorized into two classes: • Internal • External A detail description is presented in the table below. |Internal Agencies |External Agencies | |? Marketing Department |? Consultant | |? Project Management |? Financier | |Group |? Competitor | |? Marketing Information|? Customer Meet | |System (MIS) |? Customer Perception | |?
Customer care |Survey | |? Office Staff |? Wholesale | |? Field staff |Distribution | |? Service Department |? Agents | | | | Customer understanding helps in; • Customer’s business potential which is importance to supplier. Customer’s value to supplier depending upon his business potential, paying capacity, attitude, orientation and preference. • Customer needs. Market Research and Customer Relationship Management One of the biggest application of marketing research is in the field of customer relationship management. It helps a company to have feedback on its performance, get different customers’ opinions and about how they rate different suppliers in the field. It also provides an opportunity to the organization to revalidate whether strong and weak points it had attributed to itself are also shared by its customers and the kind of differences that xist and reasons for it. It can give feedback on the following subjects: • Satisfaction level of customers with the company in general and more specifically with its technology, quality, service, performance, and price • Identify strong points for leveraging and weak points for improvements to further increase customer satisfaction • Create data bank on the competitors and benchmark them as per customer feedback • To identify major areas in which the company is ahead of its peers and where it is lagging behind • Price sensitivity Market share and reasons for its trends • Feedback and background information on potential customers • Reasons for poor profitability • Reasons for typical customer preferences • Possible business solutions to various problems • Basic data for future growth Market Research Process In the market research process the following activities are involved: ¬ Identification of objectives ¬ Planning – approach ¬ Data/ information collection (field work) ¬ Data analysis Report preparation Identification of Objectives Before a market research is undertaken, it is necessary to define the basic objectives of the work. Identification of objectives is necessary to give focused direction and approach to the next phase of market research. It also has a profound impact on the methodology, sample size, questionnaire and other techniques adopted for the work. While defining objectives, it is important to ensure that they are SMART (specific, measurable, attainable, realistic and time bound).
Planning Planning of activities includes the following: ¬ Identify time – horizon if research is for market trends and behavior ¬ Identify information required ¬ Decide methodology ¬ Budget ¬ Time schedule ¬ Analysis method Data and information collection There are two methods for collection of data. These are: ? Desk research (secondary source); and ? Field survey (Primary data) Desk research This is the first step in any market research activity.
It consists of collection of published information and study of it. The major advantages of desk research are that it is relatively cheap, requires comparatively less time and does not require more manpower. The secondary source of information can include the following: ¬ Company’s past records ¬ Government publications (e. g. economic surveys, population census) ¬ Business journals ¬ Any other published data Field survey (primary source)
Though desk research can provide substantial amount of information, it suffers from the disadvantage that it does not provide any information where emotional touch and sensitivity is concerned. Desk research can not provide complete market feedback on customer perception, attitude, behavior and the way he thinks. The advantage of field survey is that it provides first hand information. It is therefore accurate and depicts the correct picture. The information is complete and is objective and cannot be influenced unlike secondary data which can be biased.
Sources of primary data include: ¬ Customers ¬ Consultants ¬ Retailers ¬ Wholesalers 3. 3 Response to customers by suppliers The word ‘customer response’ basically means supplier’s ‘reaction’ to the ‘action’ taken by the customer. It is the content, quality and time taken to reply to customer that determines the quality of response. The party who receives response, gets number of messages from the way the response is being made. It speaks about the importance the vendor attaches to the customer.
Response is a communication that transfer the total details about the company’s culture to the customer. Market forces in the present day business dynamic; require that customer service and satisfaction take priority over all other key performance indicators of an organization. Given the intensity of competition among businesses, improving business performance through higher customer service has become an absolute top priority. Quickly responding to customer needs has provided a new motivation for businesses to improve their processes and design leaner operations.
For retail businesses, quickly responding to a customer’s needs has become a total necessity. Different responses convey different perceptions about the company to the customer. These different types of perceptions can be classified in different categories based on the effect they create on the customer. These are: Impression ¦ Totally satisfactory ¦ Full information with personal touch ¦ Full information but with indifference ¦ Uninterested Attitude ¦ Positive and helping ¦ Indifferent Negative Information transfer ¦ Full ¦ Part ¦ Nil ¦ Negative Emotional touch ¦ Yes ¦ No Efforts ¦ Extraordinary (going out of the way) ¦ Normal ¦ No efforts Concerns and empathy ¦ Fully involved ¦ No involvement Clarity ¦ Full ¦ Partly ¦ Negligible Understanding of query ¦ Fully ¦ Partly ¦ Misunderstanding A response can have different combinations of the above characteristics and can produce results/ impression on then customer.
It can lead him/ her to any of the following situations: ¦ Fully satisfied with positive feelings and gratitude towards companies ¦ Fully satisfied with no emotional attachment to the company ¦ Partly satisfied but with or without emotional attachment to the respondent depending upon the attitude and the efforts put in by the company ¦ Totally dissatisfied but no negative feeling about the company ¦ Totally dissatisfied but with negative feeling about the company
In case the company is able to satisfy the customer and develops an emotional bond with him/ her, the company succeeds in developing a relationship with the customer and in retaining him/ her. On the other hand, if the response is unsatisfactory and the customer finds the company’s attitude negative or indifferent, then he/ she starts exploring other alternatives. As a result, the company loses a business opportunity. Thus, customer response provides an opportunity to the company to build business relationship and long – term customer loyalty.
If not utilized properly then it becomes a liability rather than an asset. Similarly it provides customer behavioral feedback on the company and it helps in shaping customer relationship with the company and determining the loyalty and attachment of the customer to the company and to its brand (s). The customer also gets information on the following about the company: ? Initiative ? Drive ? Objectivity ? Pragmatism ? Company orientation ? Customer concern ? Customer importance Case study 1
One customer purchased toothpaste from the market of a particular brand. He found the tube half empty inside. He sent a message to the company. Prompt came the reply along with another tube of the toothpaste and an apology letter from the company. The customer was very happy at the promptness of the reply, the positive action taken by the company and the concern they have shown towards a small and insignificant customer. The customer made it a point to mention this incident to many of his friends and colleagues and naturally with the appreciation for the company.
By first and positive response, the company had converted a complainer into its business ambassador. Case study 2 There was a similar experience when a customer purchased a magazine and found an interesting article on native place about tourism. As he started reading it, he was horrified to see factually incorrect information to the extent of its location and the way and mode of reaching it. So upset was he that he wrote a letter to the publisher bringing to his attention factual details and mistakes in the article and requested him to publish correct information so that the tourists would not have difficulties.
Though the editor and publisher of the magazine were prompt to acknowledge the mistake and thank him for bringing it to their notice, they never published the correct version in their magazine fearing an adverse impact on the reputation of the magazine. They thought that the number of people visiting the place based on the article would be very small and they would rather like them to suffer difficulties than expose their reality to all the readers.
This particular customer was highly upset with them as he thought that the magazine was least bothered about the customer and would not hesitate in making them lose heavily for small income/ benefit to themselves. He felt that on the other hand the editor and the publisher never cared to check the authenticity of the information based on which many tourists would make their programme and, on the other hand, coming to know of the mistakes, they never felt the necessity to correct the mistakes.
The gentleman never again purchased the magazine and made it a point to tell his other friends about it. The publisher lost goodwill, reputation and customers. What Response Must Provide The company must understand that response is the first step towards relationship building and can make or destroy his future business based on the customer’s opinion and perception derived from the response. He must appreciate that response initiates a channel of communication that can be nurtured to mature into mutually beneficial business relationship.
For this to happen, the reaction or response from the company must generate positive feelings in the customer and should help in building of positive image about the supplier and in establishing linkages with the customer. A good response must have the following qualities. ¦ Confidence builder ¦ Comfort provider ¦ Comprehensive ¦ Create bond ¦ Informative ¦ Positive ¦ Fast ¦ Approachable Response Medium The medium of response can be any of the following: o Face – to – face communication o Telephone E – mail o Fax o Letter Assignment Discuss the advantages and disadvantages of each of the above medium in responding to customer complaints. 3. 4 COMPLAINT MANAGEMENT In today’s competitive market environment customers have high expectations of the goods and services they receive. They are no longer prepared to put up with poor service without voicing their opinions. Traditionally, many organizations have viewed complaints in a negative manner. Employees in these organizations make the customer feel they have no right to complain.
Barriers are put up which make it difficult for the customer to receive a satisfactory resolution to their complaint. For example, heavy emphasis is put on warranties and guarantees. When dissatisfied consumers fail to tell management about something that went wrong, the firm stands to lose. Those who do not complain often simply disappear, defecting to competitors, spreading negative word-of-mouth to friends and family members, and denying the firm an opportunity to correct mistakes it will probably repeat.
Consequently, firms have tried to encourage customers to voice their complaints directly to frontline employees. Why Customers complain In spite of all the best efforts made by the company in ensuring that it supplies quality goods and provides efficient service and puts the customer on top of its priority list, the company may frustrate the customer by not coming up to his expectations, resulting to complaints. Complaints start when the company’s performance is below customer’s expectations or below the promises made at the time of business deal finalization.
A customer then has the option to simply migrate or make a complaint to the supplier. Normally, he opts to complain only if one or more of the following conditions exist: ¦ The customer is looking for complaint redressal from the supplier and has the confidence and trust in the company’s ability to address the issue. ¦ In customer’s opinion, the company has performed below its capability and resources unintentionally ¦ There exists an emotional bond between the supplier and the customer
A complaint is a positive indication that though the customer is unsatisfied, he is still not ready to migrate and if his grievances are addressed properly, he may continue to remain with the company. Thus though the seeds of complaint are deficient performance or customer dissatisfaction, their generation is a positive outcome. Complaints should be taken as early warning system. They indicate dissatisfaction of the customer. If not handled properly or given due attention or discouraged, it may lead to loss of customer.
On the other hand, if handled properly, they may result in enhanced customer satisfaction and loyalty. It may also lead to mutual understanding already existing and may further strengthen the relationship bond between the company and the customer. If a company does not bother about complaints, the word spreads fast that the supplier is arrogant and it is not interested in customers or about his relationship with them. Many customers start getting the feeling that the company is only interested in making money and customers are of no interest to the company. Advantages of complaints
Feedback Customer complaint is a focused feedback on what is wrong with the company, his products and services, or employees. This also provides feedback on the weakness in the company’s process. Deficiency identification A complaint can highlight deficiencies in products and services. It can provide important information on product quality, material, performance, and comparison with the best in the product category. Generic defects Complaints are an important source of identifying generic defects. It is necessary that the company properly classify and compile the complaints.
If they are of repetitive nature and lead to formation of a pattern, they indicate the possibility of generic defects. This can be due to error at the time of design or may be due to faulty process/ manufacturing etc. Customer needs and perception A large number of complaints get generated because of the supplier’s failure to understand the customer needs or failure to read the market. This results in product/service performance different from the one desired or anticipated by the customer. Market Trend and Behavior A complaint is an important source of getting information on market expectation, trend and future behavior.
It indicates not only customer’s needs but also throws light on the way of his thinking. Close scrutiny of complaints can provide important inputs on different aspects of market behavior like technology, price, completion time, efficiency and service requirements. Classification of complaints Factual ¦ Delay deficient performance ¦ Quality warranty obligation ¦ Breakdown Behavioral ¦ Lack of attention ¦ Lack of priority ¦ Carelessness ¦ Improper behavior ¦ Attitude ¦ Lack of cooperation ¦ Lack of communication
Habitual ¦ Compulsive ¦ Publicity ¦ Negative attitude ¦ Competitor’s jealousy Distractive ¦ Aggression to protect against non payment ¦ Non adherence to supplier’s instruction ¦ Negligence ¦ Overall delay Customers complain when they experience one of two conditions: their expectations are underperformed to a degree that falls outside their zone of tolerance, or they sense that they have been treated unfairly. Customers also have a zone of tolerance for service and product performance.
The range of tolerable performance will depend on the importance of the product, or the particular product attribute that is giving cause for complaint. Tolerances will be stricter for more important products. No-one likes receiving complaints. However, a complaints management process needs to be developed that takes a positive view of customer complaints. Customers who complain are giving you a chance to identify root causes of problems as well as to win back customers who are unhappy, and therefore retain their future value. Worryingly, customers who do not complain may already have taken their business elsewhere.
A complaints management process should enable companies to capture customer complaints before customers start spreading negative word-of mouth or take their business elsewhere. A complaints management process that is simple and transparent should facilitate the capture of complaints. Some companies use dedicated free-phone and fax lines. Some reward complainants. The purpose is to generate enough complaints to enable them to conduct root cause analysis and identify the causes of failure. Complaints enter companies at many different customer touch points: • Accounts receivable Order processing • Sales engineering • Logistics • Customer contact centre The system needs to collate complaints from around the business, then aggregate and analyze them to identify root causes. The starting point for empowered complaint management is making clear to members of staff what authority they have to deal with complaints. It is no use saying, for example, that employees are empowered to deal with complaints as they see fit. Managers need to be explicit about how far and what sorts of things this means. CASE STUDY (BEST PRACTICE PARTNERS)
Customer Complaints Viewed as Opportunities for Improvements Best-practice organizations consider complaints as opportunities for improvement. These companies understand the link between complaint resolution and customer loyalty and work hard to act immediately on problems that can be easily resolved. Company B, for example, believes that complaints are a primary measure of customer dissatisfaction, and it encourages employees to bring complaints to the forefront in a variety of formal and informal ways. The organization wants to know its shortcomings as well as what it does well.
It created a Complaints Handling Process Improvement Team to maintain the complaint process. Team members report team activities to their departments and bring concerns within the units back to the complaint team. At Company E, complaints are critical to the business, and the company seeks out customer communication-no matter how negative. Each documented customer complaint is reported and reviewed by the Leadership Team at team meetings every two weeks. Proactive Feedback To encourage this critical customer feedback, 75 percent of the best-practice partners proactively solicit complaints from customers and employees.
Company C, for example, created an Associate Response Center to encourage employees to call with ideas, complaints, and process improvements. Meetings, conferences, and e-mail permit upward communication of these issues as well. Company A also solicits ideas and feedback from employees. Its tool, the “Value Network,” provides an opportunity to manage customers and share comments within the system, as well as a mechanism to include employees in the complaint process. It captures voice of the customer feedback from an 800 number.
Representatives report the Value Network is a “powerful support tool” that has led to significant changes within the complaint process. In addition, Company A assembled a Representative Council Team to bring employee dissatisfiers (sic) and ideas to the attention of senior management. 3. 4. 3 Link to Customer Satisfaction Measures All of the best-practice companies incorporate complaint management measures as part of their overall customer satisfaction measures. This link is critical to the success of the complaint management process and customer satisfaction overall.
As a result, complaint center managers, supervisors, team leaders, and customer service representatives are accountable for customer satisfaction and performance of the complaint management process. At Company E, for example, complaint measures are related to customer satisfaction measures. One of the six factors that make up the customer satisfaction index is the number of complaints divided by the number of lines invoiced. In addition, Company E reviews “implied complaints,” such as past-due shipments, failed products, and credit memos, as a measure of its success. 3. 4. Results of Studies on Customer Complaints Handling ¦ Studies of customer dissatisfaction show that customers are dissatisfied with their purchases about 25% of the time but only about 5% complain ¦ The other 95% either feel complaining is not worth the effort or they do not know how or to whom to complain ¦ Of the 5% who complain, only about 50% report a satisfactory problem resolution. ¦ On average, a satisfied customer tells three people about a good product experience ¦ The average dissatisfied customer gripes to 11people.
If each of them tells still other people, the number of people exposed to bad word of mouth may grow exponentially ¦ Customers whose complaints are satisfactorily resolved often become more company loyal than customers who were never dissatisfied ¦ About 34% of customers who register major complaints will buy again from the company if their complaint is resolved, and this number rises to 52% for minor complaints. ¦ If the complaint is resoled quickly, between 52% (major complaints) and 95% (minor complaints) will buy again from the company. Every complaint is a gift if handled well ¦ The company should encourage companies to complain by simplifying complaint process (e. g. online, Mobile phone/ SMS, contact visits, complaint boxes, toll free numbers) ¦ Company should empower employees to remedy the situation on the spot ¦ Establish systematic approach for addressing service failures (e. g apologies) ¦ Research has shown that customers evaluate complaint incidents in terms of the outcomes they receive, the procedures used to arrive at those outcomes, and the nature of the interpersonal treatment during the process. Getting front – line employees to adopt extra – role behaviours and to advocate the interests and image of the firm to consumers as well as take initiative and engage in conscientious behaviour in dealing with customers can be a critical asset in handling complaints. ¦ The firm should increase the quality of its call centre and customer service representatives ¦ Handling phone calls more efficiently can improve service, reduce complaints, and extend customer longevity 3. 4. 5 The empowered complaint handler An important element in the positive handling of complaints is the attitude and behavior of employees.
Service providers who deal with dissatisfied customers need to : ¬ Have a customer-focused attitude and a positive “can do” attitude towards complaints. ¬ Demonstrate customer empathetic skills in dealing with complaints. ¬ Have a good knowledge of the company’s products, systems and procedures. ¬ Know what level of authority they have to deal with complaints. ¬ Use the information they gain from complaints to promote continuous improvement so the company can take action to overcome the causes of complaints. 3. 4. 6 Suggested standardized complaint form 1) Originator name……………………… Position………………………. (2) Time complaint submitted Hour ………. Day ………… Month……… Year ……… (3) Customer Name…………………………………………………………….. Address …………………………………………………………. Order number…………………………………………………. (4) Carrier Name…………………………………………………………….. Address ………………………………………………………….
Motive unit (initial and number …………………………. (5) Product type……………………….. Lot number ……………….. (6) Container number …………………… Type…………….. Size ….. (7) Warehouse number …………………… Location …………………….. (8) Firm order number ………….. Invoice number…………… (9) Complaint information General information ………………………………………… Unique circumstances …………………………………….. The differences between a traditional manager and a customer-focused manager . Focus Firstly, a traditional manager focuses on current goals. Their time and their energy is preoccupied with a series of probably corporate internally focused objectives – whether this is making a sales target, budget, profitability or some other goal, such as market share. On the other hand a customer-focused manager is led and empowered by a vision. A vision based on quality as well as quantity and results. A vision that inherently has a customer satisfaction measure and a vision that creates a feeling of pride and satisfaction in working in that way. 2. Response
A traditional manager is largely reactive – making decisions, implementing plans based on the input of those above them, around them or in the external environment. Today’s manager is largely proactive. Today’s manager doesn’t wait for things to need a reason for change; they change things for the sake of it. Whether this is just simply the office layout, the times people take their lunch, company policies, prices, brochures, and markets – everything else has to be a proactive activity today. If you wait for the market to change you will probably always be one step behind.
One step behind what the customers need and want and what your competitors are doing. 3. Employee participation A traditional manager will often seek, either directly or indirectly, to limit other people’s participation. Typically, meetings between managers are excluded from input from other people, or they don’t involve other people perhaps as much as they should do – this is never seen as necessary. Today’s manager has to promote involvement; they need opinions, thoughts, ideas, and feedback from all levels within the organisation. The best way of achieving this is by one of two methods.
The first is one we could loosely name ‘random communication’, where just by simply creating the environment where people can mix and mingle, communicate, participate and share, ideas can be distributed. The other way is by doing something slightly more formal, by putting in place a series of waterfalls or communication falls where information and participation flows around the organisation. 4. Rewards Traditional managers will probably reward people based on their qualifications or long service. A more customer-focused manager will reward and recognise people based on their ability to enhance customers and deliver excellence.
Another thing that has to change if you are going to move forward and lead successfully in a customer-focused organisation is that you have to let go of solving problems yourself. As Peter Drucker said: ‘Delegation is both the hardest thing and the most essential thing for any successful manager to do’. 5. Information management and communication A traditional manager also sees their role as controlling information. They will keep their staff and other people on a ‘need to know’ basis. This is not how it works. Information should be shared, but not broadcast.
A good manager will communicate actively and pro-actively to all concerned. He or she will keep them informed of the information they need to deliver the best possible service to the customer. This means the information is timely, relevant and understood. 6. Results based Most importantly a customer-focused manager ‘walks the talk’. He or she must act congruently and with the same values and honesty that they want their staff to deliver to their customers. That means they keep commitments, it means they under promise and over deliver, and they make everyone of their employees feel special and a valuable member of the team.
Ways for improving management of others to deliver higher customer satisfaction: 1. Listen to other people around you, no matter what their experience or lack of it and listen without judgement – every opinion is a valid one. 2. Use praise. Use praise more frequently and more sincerely than you’ve ever done in the past. 3. If you can’t say something positive, don’t say anything Negative criticism has virtually no practical application. If you have to say something then think it through and put it into a positive context. Remember that people will normally do the best they can with what they have.
If they are not doing the best that they can, then you need to help them to see what can be done and what talents, resources or alternatives exist for them. 4. Always be seen to be fair and honest. If there’s one thing that can demotivate staff and people around you quicker than almost anything, it is people having favourites. 5. Share your concerns. Remind people what you’re doing, where you’re going and why you do what you do. 6. Become a teacher. Instead of finding fault, managing by exception, and pointing out where people are going wrong, become obsessed with helping people become twice as good as they are now.
Don’t ask yourself ‘what can I do for myself’? Instead, ask yourself ‘how can I help my team become a better team’? Take a few minutes at regular intervals, at random times during the day if necessary, and teach people different ways of doing things – upgrade their skills, explain different aspects of the business, formalise it – put together different training programmes so that people, over a period of time, will really move forward in both their skills, their knowledge and their habits. 7. Develop yourself.
If there’s one way that you can get other people to become more interested and more focused on improving themselves, it is to lead by example. Take time to read useful information, not just novels, books or newspapers but actual up-to-date books and texts from the experts within your industry. 8. Only do the most important things. Ask yourself that question or a version of it every single minute of the day: ‘Is what I’m doing now helping directly or indirectly to increase the number and quality of the customers our organisation has? ’ Because if it doesn’t affect the customer, it shouldn’t be done.
PART IV: CUSTOMER SATISFACTION 4. 1 Introduction Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectations. A customer whose experience falls below expectations will be dissatisfied. Customers whose experiences match expectations will be satisfied while those whose expectations are exceeded will be very satisfied or delighted. A widely quoted study that linked levels of customer satisfaction with customer behaviour identified several types of customers: ¦
Loyalists – completely satisfied customers who keep purchasing ¦ Apostles – whose experiences exceed their expectations and who provide very positive word – of – mouth about the company to others ¦ Defectors – who feel neutral or merely satisfied and are just as likely to stop doing business with the company ¦ Terrorists – who have had negative experiences with the company and who spread negative word – of – mouth ¦ Hostages – are unhappy customers who stay with the company because of a monopolistic environment or low prices and who are difficult and costly to deal with because of their frequent complaints ¦ Mercenaries – are very satisfied customers who have no real loyalty to the company and may defect because of a lower price elsewhere or on impulse, defying the satisfaction – loyalty rationale. Companies should strive to create apostles, raise the satisfaction of defectors and turn them into loyalists, avoid having terrorists or hostages, and reduce the number of mercenaries.
In the end, the actual experience of a product is evaluated on the basis of expectations. One can differentiate the following standards: a) Expected performance That which the customers expect based on prior experience. This standard of comparison is made up of experiences with the same or similar products (also with other brands). b) Desired performance What the customer ideally imagines. The optimum standard of comparison is being used here. c) Minimum tolerable performance This is the minimum that a customer can expect. d) Adequate performance What the customer sees as being reasonable, and which can be achieved according to reasonable means. e) Product type norms
Normally present level of demand. According to this standard of comparison, the normal or the usual is expected. f) Best brand norms The level of standards that is present with the best choices currently being offered. g) Comparison level Experience with similar products, or knowledge of those products hat other consumers have received. Here, the relationship between costs and benefits is decisive. 4. 2 Factors affecting customer satisfaction/ Determinants of customer satisfaction Satisfaction depends on product and service quality. Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
We can say that the seller has delivered quality whenever the seller’s product or service meets or exceeds the customers’ expectations. Total quality is the key to value creation and customer satisfaction. One of the major ways to differentiate a service firm is to deliver consistently higher quality service than competitors. The key is to meet or exceed the target customers’ service quality expectations. Their expectations are formed by: ¦ Past experiences ¦ Word – of – mouth ¦ Advertising. The service provider needs to identify target customers’ wants in the way of service quality. Customers will be satisfied if they get what they want, when they want it, where they want it, and how they want it.
The service provider faces trade – offs between customer satisfaction and company profitability. What is important is that the service provider clearly defines and communicates the service level that will be p