Know-How Exchange : Student Questions

sadia_na,

There are a lot of answers to your question and remember this is just from what I have gathered Over the past 20 years.

Q1.)
A.) Companies really don't know (from actual experience) the true value of doing business with a customer geniunely.

B.) Some companies have so many acquisitions in it's life time then down size without considering the man power or technology that they need to put in place to handle customers geniunely. Some of them do this in an effort to show profits that are not customer based. i.e. the profits are man-made from down sizing not customer purchases. (some smaller companies have this same problem from a man power and technology stand point).

Q2.) In this age of information you might be surprised how little companies know because of the burden of work and lack of man power. They actually know very little about the things they need to know to keep up with the vast changes in information and technology which is why some of them have called me in to talk about customer service functions. And then if they have the knowledge their work force is so small and people over burden and ignorant that they can not implement what they know needs to happen to correct the problem. Then there are others that know and start out making the changes but they geniunely can not keep up with the cycle of knowledge groweth and technology changes necessary to keep them out in front and eventually fall behind.

One great man said "those things that I know to do, that I do not. And those things that I desire not to do that I do." I hope this helps a little. Work smart, read a lot and always under-promise and over-deliver my friend. Is there anything that I can do for you?

Your Servant, Deremiah, *CPE

The cost of providing customer service is a function of the level of service provided, and it is not a linear relationship. As the level of customer satisfaction approaches 100%, costs skyrocket.

And so it is not as simple as waving a magic wand and saying, "satisfy them". For any business, there will be a most profitable mix of services and level of customer satisfaction, and it will not be 100%.

Customer service and customer satisfaction are difficult to gauge.

Many businesses assume that if they satisfy a customer, they own them for life. What most businesses fail to realise is: the customer is free to shop anywhere the minute they walk out your door.

We never own a customer, and loyalty is something that is earned gradually over time. Break your customer's sacred trust once, and they are off to the next guy faster than lightening crosses the sky.

I would agree that most buisinesses don't understand how to judge a customer's satisfaction, and they don't know how to encourage loyalty. It has been my quest for 18 years to devise scoring and measuring systems within my own business so I could quantify satisfaction, and qualify a customer's loyalty.

How can you score whether a customer is satisfied? Its a constantly moving target, and it varies from customer to customer. In my own dry cleaning store, I asked my customers if they could describe to me what constituted quality dry cleaning so that I could satisfy my customers better...and the responses came back like this:

One said, "last time I picked up my order, I took it home and loooked at it under a microscope, and I could still see a very faint mark where the stain was, so obviously this is not quality dry cleaning"

Another said: "If its over a hanger and wrapped in plastic - two big thumbs up!!!!"

So, from my exercise, I formulated my own scoring system to evaluate satisfaction. I looked at how an American football referee measures yardage during a game. Up and down the length of the field, plays advance back and forth. The ref's use two markers joined with a length of chain to measure progress or loss. This gave me the idea that I needed a uniform system of measurement (the ten yard chain) that regardless what was happening in my business (like the chaos on the footbal field), I could use a constant measurement to gauge the performance of the play. I set the standards of quality that I wanted my staff to provide (my ten yard chain and two markers), and then used a personality score chart for each customer in my point of sale system. A Pita class customer was the type who demanded "Personalized Individual Total Attention (it could also stand for Pain In The Ass). If my staff had tried their best according to my quality production standards I assigned them, and the customer would complain, I could judge how far "out of norm" the situation was, and weight the customer's complaint(s) accordingly. If my staff would go above and beyond the standards set for them, and could keep such customers happy so that they never complained, the system would score a touchdown!

As for loyalty, well, that too can be scored. Have you ever noticed that all customers are not created equal? If you look up the Pareto Principal, you'll find that you get 80 percent of your business from just 20 percent of your customers.

How interesting that if you had 100 customers, just 20 of them would account for such as dramatic portion of your business....so much so that these few overshadow the other 80.

Does this mean the other 80 are disloyal? Or, ar the 20 super loyal?

I score all customers on three factors: Recency, Frequency, and Monetary values. I noticed that customers who have been in recently, and are frequent customers (meaning they make more than one purchase) and have spent more money than most (monetary), are the types of customers most likely to come back and purchase more from me. These customers, by definition and by pattern, are Loyal custoemrs because they are the ones least likely to go to my competition.

So, you can see, setting standards and watching how your measuring systems really work to qualtify your customers is a lot of very detailed difficult thinking...and few businesses will spend the time to develop such processes because they are too busy trying to survive (and stay in business). I know few businesses even attempt to learn about their customers, let alone study them to discover their habits.

Its far too easy to simply ask ten folks, "How are we doing", and be satisfied with ten lies"You're doing great", than it is to see beyond the "white lies" and really find out what your customers think.

Customers vote with their dollars, and they vote with their feet. If I see the frequency between visists is going down, and the dollar values going down, and its been longer and longer since the customer was last in, I'll KNOW that something is wrong. The trick is, to learn how to read the score to head off trouble before it begins.

I hope this causes more questions that it answers.

Darcy (Customer Loyalty Network)