Description
service can be used as a source of a competitive advantage using service differentiation, image differentiation, product differentiation.
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Customer Service, as a Route to Competitive Advantage
Your Customers Are Your Most Valuable Asset - Treat Them Right!
It has been said that on average a happy customer or client will share their experience with three other people, while a negative experience will be retold upwards of 6 to 7 times. Today’s Era of Hyper-competition Hyper-competition is a key feature of the new economy. New customers want it quicker, cheaper, and they want it their way. The fundamental quantitative and qualitative shift in competition requires organizational change on an unprecedented scale. Today, sustainable competitive advantage should be built upon corporate capabilities and must constantly be reinvented. Many firms strive for a competitive advantage, but few truly understand what it is or how to achieve and keep it. A competitive advantage can be gained by offering the consumer a greater value than the competitors, such as by offering lower prices or providing quality services or other benefits that justify a higher price. The strongest competitive advantage is a strategy that that cannot be imitated by other companies. Competitive advantage can be also viewed as any activity that creates superior value above its rivals. A company wants the gap between perceived value and cost of the product to be greater than the competition. One of the most important questions people ask when they are focused on improving their quantity and quality of business is: “What is my competitive advantage? What makes me unique, memorable, special… what truly sets me apart from the rest?" While there are no definitively right answers to that question, most people come to some conclusion that customer service is a critical component of your competitive advantage. For most businesses, the service they offer can vary from exceptional to not so hot, depending upon circumstances. Why is that? Why does the same company, and even the same people within that company provide world class service some of the time, and marginal service (or worse) other times? That answer can be found in asking a different question: “What makes you (or your staff) happy when serving your customers?” While these answers also vary, most people come up with some sort of variation of “I am happy when my customer is happy.” Do we enjoy dealing with agitated or disgruntled people? Normally not. We derive our joy from delivering value, by making others feel good about their experience, and by exceeding people’s expectations. What comes first then? The happy customer or the happy person serving the customer? This The happy person serving the customer needs to come first, because it is a very unusual day when your customer comes to the company people to cheer them up.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Customer Service, as a Route to Competitive Advantage
We believe exceptional customer service is rare because society has become somewhat immune to what could be described as borderline abusive treatment. Do we all remember many such incidences where we our self experienced or heard someone else describe a truly exceptional customer service experience? We would contrast that with our personal experiences or stories we have heard from others describing their experiences often ranging from awful to even worse. In order to envision exceptional, we probably need to consider the operative word, service. In this context, service could mean work or the performance of duties for others. Doesn't sound too exciting, does it? In the same context, exceptional could means being the exception, unusual, or perhaps well above average. If we add the word exceptional, that spawns a little more excitement. In the commoditized "Wal-Mart" world that we live in, customers have a smorgasbord of choices when buying the same or similar products or services. The factor which most often differentiates average (or even above average) from exceptional is our people. Human Performance Strategies has studied customer behaviors based upon the non-cognitive function of the human brain. Non-cognitive intelligence is more commonly referred to as Emotional Intelligence. The most important thing required to deliver exceptional customer service boils down to the recognition and affirmation of human values. Here are some of the views and considerations regarding exceptional customer service: • Developing processes to ensure exceptional customer service is a savvy business practice and it is obviously much less expensive to retain versus replace customers. • When you make a mistake with a customer always overcompensate. • Ask, don't assume. Always get the customer involved in solutions; e.g. if we could resolve this issue to your satisfaction what would it look like, what's seems fair to you? • Remember, people tell, on average, three people about exceptional customer service experiences and eleven about their unsatisfactory experiences. Run the numbers! • All other things being equal, exceptional customer service creates unique competitive advantage with the same or even fewer resources. • What company is doing today to inspire the best from its people to deliver exceptional customer service? Does it know how its customers feel about doing business with it? Do they remain loyal by chance or do their encounters with company people motivate them to return again and again? A little competition can be a healthy thing. It can also be both costly and disastrous if the company is not up to par with others in its particular business or industry. How it handles competition can be a direct link to the success or the failure of that company. It can, however, significantly increase its chances of coming out on top by creating a competitive edge. Having a competitive edge means possessing an advantage over the competitors. Before one can accurately identify its competition, it's crucial to first define and analyze its target market. Companies should ask themselves:
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Customer Service, as a Route to Competitive Advantage
What are you selling and to whom? Next, it should make a list of those companies trying to do the same. What are their strengths and weaknesses? Their strategies and goals? How do they draw in customers? What, if anything, makes them stand out from the pack? If company does not have this vital information, it should get it quickly. Assessing its competitors openly and honestly will play a key role in helping it develop a competitive edge. Most of the successful companies have sized up their target markets and zeroed in on a unique approach to meet their customers' needs, values and expectations. Through important considerations like location, product, services and product features, they have somehow found a fresh spin, a new way to offer buying incentives that similar companies either can't or don't offer. Once the company has developed a competitive edge, maintaining it will be a daily challenge. It will require it to forecast where the trends and changes in its industry will come from, and what the company can do to stay ahead of the game. It will demand that the company should continuously track its competitors and their future plans. Company will also need to recognize that through the course of time its customers' needs may change due to a variety of circumstances.
The centerpiece of any strategy is encapsulated in an organization’s Winning Proposition. If an organization can’t define its Winning Proposition in a simple and compelling way, it cannot claim to have a strategy. What does winning mean? Does it mean your ability to survive? Does it mean keeping your shareholders happy? Does it mean providing benefits for your customers and stakeholders and the communities in which you live and operate? Does it mean having the largest market share? Winning encompasses all of these things, but to take it out of the realm of slogans we need a rigorous measure that tells us unambiguously whether we are winning or not. This can be distilled to one simple test: a Winning Proposition must clearly produce a competitive advantage for your organization. “Winning Proposition must clearly produce a competitive advantage for your organization.” Unfortunately, “competitive advantage” is one of those buzz phrases that has become a substitute for thought. We have all heard executives proclaiming proudly that their organizations have a competitive advantage without offering any clear explanation of what that means. The fact is that competitive advantage is very tangible and can be evaluated, so there need be no speculation about whether it exists. In fact, I would argue that it is the single most important gauge of organizational success. To clarify this assessment, we need to define exactly what we mean by competitive advantage. The underlying idea is that in a competitive environment, everything is comparative. Absolutes have no meaning. If we hear that an Olympic athlete has run the 100-meter race in 9.8 seconds, this tells us very little (unless he or she was the only runner). But if we hear the athlete won the gold medal, this tells us everything. The same is true in business.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 4
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Now, let me pose a question. In attaining competitive advantage, which is more important: providing unique benefits for customers or achieving superior operational effectiveness? This question is a trap. Clearly, the one without the other (at least to some degree) is not the answer. The temptation is to say both and be done with it. But while both are true, that answer is incomplete and therefore misleading. Doing both obviously is necessary, but it’s not sufficient. The real answer is that competitive advantage lies in the difference between the two. It’s the gap that says it all. Mind the Gap If you have ever visited London, you probably have had the experience of riding on the London underground railway system. When a train pulls into a station and the doors open, a loud announcement echoes along the platform. Three short words caution passengers to watch their step as they get on and off the train, to avoid tripping in the space between the train and the platform: “MIND THE GAP!” Competitive advantage in a business entails exactly the same injunction: Mind the gap! There are many gaps you ignore at your peril. At its most fundamental, though, competitive advantage means achieving a bigger gap than your competitors between the value your customers see in your product and the costs you incur in providing that product.
Figure 1. Achieving Competitive Advantage “Competitive advantage means achieving a bigger gap than your competitors between the value your customers see in your product and the costs you incur in providing that product.” This gap is not a matter of subjective opinion. It can be objectively assessed, as Figure 1 illustrates. As this diagram shows, you achieve competitive advantage if your value/cost gap is bigger than that of your competitors. Let’s briefly examine the elements involved in this simple measure. Value can be described as the numerator, and costs as the denominator. The denominator (costs) is straightforward. Any organization can—and should—regularly benchmark its costs against those of its competitors. Published data, supported by good analysis,
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 5
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can be relied upon to produce a well-grounded comparison. This is not particularly difficult. It is done all the time. But what about the numerator? How do you compare the value your organization creates against your competitors? The crucial point to understand is that there is a dynamic interaction between value, price, and volume. Value is the driver—the prime mover, if you like. Price and volume are derivatives of value; they have no independent existence. So to assess the amount of value you are creating, look at its outputs: price and volume. This is the ultimate gauge of the amount of value you are generating. How do you measure whether you are producing superior customer value? Rather than just claiming it, you can assess it. When you are generating greater value than your competition, you can either charge a premium price without sacrificing volume, or you can improve market share at comparable prices. If you are losing on value, then both volume and price will be under pressure, and one or both will be falling. Market share does not have a life of its own; it’s a child of customer value. Similarly, price does not have an independent existence; it, too, is a derivative of value. This logic is ruthless: Your customers will convey it to you very loudly in very simple terms. Customers will buy more of your offerings, or pay you a higher price for them, only if they place a higher value on them than the competing alternatives. And, of course, the reverse is also painfully true. Stretching the Elastic Band How can you improve your competitive advantage? Think of an elastic band stretched between value and costs. The wider you can stretch this elastic band, the greater your competitive advantage and the larger the amount of profit being generated. “When you compete on costs, you are really competing only against yourself. Winning on value is much tougher. You have to outcompete your rivals.” Many businesses are tempted to compete on efficiency alone, and constantly stress operational effectiveness as a cure-all. In many ways, this is an easy way out. If you want to reduce costs, competitors can’t stop you. But when you compete on costs, you are really competing only against yourself. Winning on value is much tougher. You have to outcompete your rivals. Competing on costs is a requirement for staying in the game. Creating superior value is a necessity for winning the game. The key, of course, is to pull both upward and downward on the elastic band. Knowing where and how to stretch the band are strategic decisions that ultimately decide the difference between you and your competitors. Take a look at the airline industry. Many of the big carriers fly the same type of aircraft to the same destinations in similar time slots with comparable safety records. With all this sameness, there is no basis for creating competitive advantage, right? Wrong. Airlines such as Virgin Atlantic and Singapore Airlines are able systematically to charge a price premium over their competition. Why? Simply because they concentrate on understanding the most important needs of their customers and on delivering a better all-round experience, consistently. We know they are creating greater value, because their customers are paying them more. We can’t argue with the facts.
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Cemex, the international cement company based in Mexico (which recently ran into difficulties for financial engineering, not operating reasons), achieved competitive advantage by pulling the elastic upward. Its costs per ton are similar to its largest global competitor, Holcim, but its price per ton is much higher.[1] Cemex provides higher value through a superb just-in-time system for cement deliveries that keeps construction projects humming along without delays, a major economic benefit. Cemex’s customers agree, and are willing to pay a higher price. There is, in the final analysis, no such thing as a commodity. Many people might consider cement or an airline trip to be a commodity, but these examples prove otherwise. To be sure, you can try to compete on price, but price cuts can be quickly neutralized, and the net effect is to transfer profits to customers. What companies like Cemex, Virgin Atlantic, and Singapore Airlines demonstrate is that when you consider the total customer experience, not just the underlying product, you can always find ways of generating superior value. To call your product or service a commodity is to abandon the pursuit of value, and hence the pursuit of competitive advantage. A second point is that it is perceived value that counts. A brand is a perception of value in the mind of the customer. The customer’s subjective reality is your objective reality. “It is perceived value that counts. A brand is a perception of value in the mind of the customer. The customer’s subjective reality is your objective reality.” Consider the following example: In the mid-1980s, Hitachi and General Electric jointly owned a factory in England that made identical TV sets. The only difference was the brand names on those sets. Through superior image building, which created greater trust in the minds of customers, the Hitachi units sold for $75 more than the GE sets, and sold twice as many![2] That’s what prompted GE to get out of the TV set business. It would never be able to match Hitachi’s profitability because it had lost the game on the perception of value. When you think about it, you can never win by competing on price alone. The customer won’t let you. In the customer’s mind, you are competing on the relationship between price and value. This is true whether you acknowledge it or not. As Warren Buffet has pointed out, value is what customers get, and price is what they pay in return. The two are inextricably connected.
Case of GM and Toyota: GM’s Race to the Bottom Cautionary tales teach us as well. One of the most instructive examples I know is the sad story of General Motors’ inexorable death march—a cautionary tale with few equals in the scale of its value destruction. This was not a sudden, unexpected event; it was a saga that played out over about 40 years. The causes of the misery were not hidden. They were starkly visible. And yet GM seemed strangely incapable of addressing the reality that was slowly killing it. In its prime, GM boasted more than 50 percent of the U.S. auto market.[4] It seemed unassailable. Its array of brands, as its advertisements proclaimed, matched “every purse and purpose,” albeit concentrating on the larger vehicles Americans preferred. Its profits were monumental. But since the first oil shock in the late 1960s, that market share has steadily declined and incredibly, now sits at under 20 percent. As a result of this catastrophic market-share slump, GM experienced a
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financial collapse and eventually had to be rescued by the government. What led to this tragic downfall of an American industrial icon? The outline of the story carries a familiar ring. As GM grew to prominence, it became bloated, bureaucratic, inward-looking, and complacent. Product quality slipped further year by year, causing long-lasting damage to the image of its brands. It became a sitting duck for a customerfocused competitor. Enter Toyota, which had a perfect opportunity to make its move when oil prices spiked again in 1980. Essentially, Toyota pursued a three-pronged attack on a vulnerable GM. It: • Introduced highly reliable, fuel-efficient cars, which consistently outperformed GM brands on product quality. • Instituted the lowest manufacturing costs in the industry, based on the awesome Toyota Production System. • Developed superior brand appeal, based on the total customer experience, exemplified by its Lexus brand. While Toyota was the most successful, other Japanese competitors, such as Honda, followed a similar strategy, as GM’s market share drained away bit by painful bit. What was GM’s reaction to this meltdown? Astonishingly, senior management repeatedly blamed the company’s woes on its so-called heritage costs. During the good years it had agreed to generous worker benefits, such as pension and healthcare payments for retirees. These obligations eventually came to represent a cost penalty of about $2,500 per car, versus Toyota. There is something I have never been able to understand about this explanation. Presumably, these heritage costs were fixed, rather than variable, costs. Therefore, as GM’s market share continued to fall, the “heritage” cost penalty per car would inevitably rise, making this a largely self-inflicted wound. Let’s assume that roughly half of the cost penalty ($1,250) was due solely to GM’s market share collapse. This would mean that the $1,250 was actually a value deficit, not a cost deficit. Another telling statistic is the estimate by James Womack, who heads up the Lean Enterprise Institute, that GM typically sold its cars, after discounts and cash rebates, at $2,000 less than the comparable Japanese models.[5] The statistic is revealing because it explains how GM’s value deficit translates directly into dollars. Now let’s tally this up. If we add the $1,250 per-car value deficit arising from the market share loss to the cash discount gap of $2,000 per car, that puts GM’s total value deficit at a jawdropping $3,250 behind Toyota on every car it sold. It is not my purpose to take cheap shots at a company in dire circumstances. What I am interested in is the lessons we can learn from its difficulties. To begin with, it is pretty clear that GM’s fundamental problem was only in part due to its cost disparity, important though that was. Its fatal “illness” was that it was losing out badly on value. How do we know that? Let’s go back to our equation to assess competitive advantage. GM’s problem lay in its crumbling numerator.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Toyota/Honda’s Value/Cost Advantage versus GM’s Both its market share and auto prices suffered serious declines versus Toyota and Honda. The Japanese car makers cleaned GM’s clock at the value game. Toyota and Honda stretched the elastic band both at the top and the bottom to a much greater degree than GM was able to (see Figure. With this persistent deficit on value, GM’s fate was sealed. In recent years the company tried mightily to save its way to success, but this seldom works. Each time it experienced a negative step-change in volume, it moved to cut its costs to match the lower volume. By the time it had reached the lower cost level, volume had dropped even further, so it embarked on yet another round of cost cuts, in an endless chain reaction. With costs chasing volume downward, this amounted to a race to the bottom. “Strategy is a bet on the future. Once you start to lose the value game, it’s very difficult to scramble back, and your options for the future are severely limited.” It’s understandable that GM—and other organizations in similar situations—turn to cost-cutting as a strategy for salvation. Costs can be controlled internally; competitors cannot stop you. But lower costs represent a limited advantage. The competitor that beats you on value is the more serious long-term threat. Strategy is a bet on the future. Once you start to lose the value game, it’s very difficult to scramble back, and your options for the future are severely limited. To be fair, GM recently did make up impressive ground on quality. However, in products with a long purchase cycle, brand image is very “sticky,” and in the end, product improvements came too late to save the company.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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The key lesson here is that if you have a value problem, then that is what you must acknowledge and fix—and fast. You can’t cure a value problem through cost reductions. It’s like having liver disease and treating your lungs instead, and then expecting a cure. The only salvation for GM would have been an early diagnosis of the value issue and an urgent set of measures to turn around its brands. Failure to treat the right disease is what ultimately led to bankruptcy. Value Leadership through a Winning Proposition Pursuing value is obviously the right thing to do, but this is plainly not a competitive statement. It ignores the most important question of all: How much value? In a competitive marketplace, absolutes have no meaning. It’s the margin of difference—the gap—that counts. All value is relative, and customers have choices. Competitive advantage comes from providing greater value than your competitors for your chosen customers. The task, in other words, is value leadership. “Competitive advantage comes from providing greater value than your competitors for your chosen customers. The task, in other words, is value leadership.” This is where the words we use really matter. If something is crucially important, we should make it explicit, not hint at it indirectly. The problem is that companies so often allow the competition for superior value to be implicit, so that it happens by default. They need to make it explicit, and the way to do that is through a clear Winning Proposition. An organization’s Winning Proposition encapsulates measurable competitive advantage and defines how an organization will win the competition for value creation. It does that by answering these questions: • What unique benefits will we offer our customers that will provide a compelling reason for them to choose us over our competitors? • How will we translate this exceptional customer value into superior financial returns for our enterprise? These two questions force you to define how to capture both superior customer value and superior economic value, and how to convert the one into the other. The first question is a reminder that we must adopt an outside-in view of the world. An insideout view will lead you to think you are selling products or services. But if you take an outside-in perspective, it becomes clear that customers are not buying products or services; they are actually buying benefits. “An inside-out view will lead you to think you are selling products or services. But if you take an outside-in perspective, it becomes clear that customers are not buying products or services; they are actually buying benefits.” For example, when customers buy Windex, the window cleaner, the benefit they are seeking is not the product itself. They are seeking streak-free, clean windows. When they buy a lawn fertilizer, they want to create a beautiful lawn that will enhance their homes and be the envy of their neighbors. If these products fail to deliver on the benefits, the underlying businesses will fail. Many businesses make the mistake of defining themselves purely by the products they make—“We’re in the fertilizer business.” What they find hard to do is define the competitive
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benefits those products provide. Defining those benefits with clarity not only makes them more competitive, it clarifies to everyone inside the organization what they need to concentrate on, each and every day. The second question is actually a zinger. If you don’t have to generate superior profits, the first question becomes dead easy. You could just load your products with lavish benefits and sell them at half price! Customers would love that. Balancing the first and second questions is what makes business success so hard to achieve. Note that this second question challenges a business to aim at superior financial returns. Why not just satisfactory returns? There are a few compelling reasons for this: • Investors, just like customers, have choices. Superior returns enable you to raise capital more readily and at a cheaper cost than competitors. • Competitors with higher gross margins can outspend you on R&D, advertising, and human development, to fuel their growth at your expense. • Consistently superior financial results eventually raise the price/earnings ratio on your stock. A strong stock price can be used by you as currency for acquisitions. Conversely, a weak stock price can make you an easy acquisition target. What’s Your Winning Proposition? The GM debacle underscores the need for every business to have a clear Winning Proposition that will define its competitive advantage and galvanize the energies of its people behind the right things. In order to lead an organization effectively, that Winning Proposition has to live in the hearts and minds of all the employees who are expected to act on it. Many executives seem to have difficulty nailing down a clear Winning Proposition, and too often will fudge this critical component of their strategy with some vague rambling statement that doesn’t do the job. That’s tantamount to an army marching into battle without a clear definition of how it will win, with the general saying, “Just go out there and fight. Execution is everything.” That clearly is a cop-out for effective leadership. “The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide.” The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide. Here are some examples: Google: “We organize the world’s information and make it universally accessible and useful.” Lego: “We offer products whose unique design helps children learn systematic, creative problem solving—a crucial twenty-first-century skill.” Institute for the Future: (a nonprofit research organization, of which I was once the chairman): “We are sense makers about alternative futures, to help organizations make better decisions in the present.” Hallmark Cards, Inc.: “We help people connect with one another and give voice to their feelings.”
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The key attribute of all these statements is that they focus on the superior benefits customers will receive, not just the internal actions these organizations will take. They offer a compelling reason why customers should choose to do business with them. What’s not a Winning Proposition? “We are the best in our industry at operational effectiveness.” My answer is, that’s good, but it’s not enough. You can be as efficient as you like, but if you don’t have customers, you’re broke. You must describe both your numerator (customer value) and your denominator (costs). Another common response to my question: “Our efforts are all directed at creating superior shareholder value.” Unfortunately, this statement is not useful. Shareholder value is an outcome (like the bottom line), not a strategy. It’s like a coach telling a football team that they need to end the game with the highest score. We can assume they know that already. The question is how. Without creating superior value for customers, I doubt there is a business in the world that can generate superior shareholder value. Leaders need to define how an organization will generate that customer value. Shareholder value will surely ensue—provided, of course, it does that efficiently. A Winning Proposition is, in short, the centerpiece of strategy. If an organization can’t define its Winning Proposition in a simple and compelling way, it can’t claim to have a strategy. The acid test of whether an organization has a Winning Proposition is whether the resulting actions achieve competitive advantage. “The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide.”
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Porter defined cost leadership and differentiation in products as two parameters on which organization can have competitive advantage. Differentiation concept can be extended further for building competitive advantage: Service Differentiation Companies can also differentiate the services that accompany the physical product. Two companies can offer a similar physical product, but the company that offers additional services can charge a premium for the product. Mary Kay cosmetics offers skin-care and glamour cosmetics that are very similar to those offered by many other cosmetic companies; but these products are usually accompanied with an informational, instructional training session provided by the consultant. This additional service allows Mary Kay to charge more for their product than if they sold the product through more traditional channels. In the personal computer business, Dell and Gateway claim to provide excellent technical support services to handle any glitches that may occur once a consumer has bought their product. This 24-hour-a-day tech support provides a very important advantage over other PC makers, who may be perceived as less reliable when a customer needs immediate assistance with a problem. People Differentiation Hiring and training better people than the competitor can become an immeasurable competitive advantage for a company. A company's employees are often overlooked, but should be given careful consideration. This human resource-based advantage is difficult for a competitor to imitate because the source of the advantage may not be very apparent to an outsider. As aMoneymagazine article reported, Herb Kelleher, CEO of Southwest Airlines, explains that the culture, attitudes, beliefs, and actions of his employees constitute his strongest competitive advantage: "The intangibles are more important than the tangibles because you can always imitate the tangibles; you can buy the airplane, you can rent the ticket counter space. But the hardest thing for someone to emulate is the spirit of your people." This competitive advantage can encompass many areas. Employers who pay attention to employees, monitoring their performance and commitment, may find themselves with a very strong competitive advantage. A well-trained production staff will generate a better quality product. Yet, a competitor may not be able to distinguish if the advantage is due to superior materials, equipment or employees. People differentiation is important when consumers deal directly with employees. Employees are the frontline defense against waning customer satisfaction. The associate at Wal-Mart who helps a customer locate a product may result in the customer returning numerous times, generating hundreds of dollars in revenue. Home Depot prides itself on having a knowledgeable sales staff in their home improvement warehouses. The consumer knows that the staff will be helpful and courteous, and this is very important to the consumer who may be trying a new home improvement technique with limited knowledge on the subject. Another way a company can differentiate itself through people is by having a recognizable person at the top of the company. A recognizable CEO can make a company stand out. Some
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CEOs are such charismatic public figures that to the consumer, the CEO is the company. If the CEO is considered reputable and is well-liked, it speaks very well for the company, and consumers pay attention. National media coverage of CEOs has increased tremendously, jumping 21 percent between 1992 and 1997 (Gaines-Ross). Image Differentiation Armstrong and Kotler pointed out inPrinciples of Marketingthat when competing products or services are similar, buyers may perceive a difference based on company or brand image. Thus companies should work to establish images that differentiate them from competitors. A favorable brand image takes a significant amount of time to build. Unfortunately, one negative impression can kill the image practically overnight. Everything that a company does must support their image. Ford Motor Co.'s former "Quality is Job 1" slogan needed to be supported in every aspect, including advertisements, production, sales floor presentation, and customer service. Often, a company will try giving a product a personality. It can be done through a story, symbol, or other identifying means. Most consumers are familiar with the Keebler Elves and the magic tree where they do all of the Keebler baking. This story of the elves and the tree gives Keebler cookies a personality. When consumers purchase Keebler cookies, they are not just purchasing cookies, but the story of the elves and the magic tree as well. A symbol can be an easily recognizable trademark of a company that reminds the consumer of the brand image. The Nike "swoosh" is a symbol that carries prestige and makes the Nike label recognizable.
The following questions are designed to help companies determine whether they have a competitive edge: • • • • • • • • • • • • • • • • • • Have I clearly defined my company and its target market? Who are my competitors? What is my company's clear-cut strategy and plan for success? Do I regularly track my competitors' moves? Do I take advantage of my competitors' weaknesses? What have I learned from my competitors' mistakes? What have I learned from my competitors' strengths? Do I take advantage of competitive opportunities? Does my company possess a uniqueness that easily separates it from my competitors? Would I pay money to use my own product or service? How do my prices compare with the rest of my industry? Who are my customers? Do I have a loyal customer base? Am I sensitive to my customers' needs and requests? Are my employees trained in customer service? What trends do I see for my industry in the future? Do I have the capabilities and resources to compete in the market five to 10 years from now? What is my vision for my company five to 10 years from now?
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Identify Your Customers Once the companies have a handle on its competitor’s information, the next important step is to clearly define its customer base. To clearly identify its customer base, company can ask itself following few questions: • Where do my customers live? • Approximately how old are my customers? • Are my customers primarily male or female? • What is the income level of my average customer? • What are my customers' needs? • What motivates my customers to buy, i.e., price, quality, credibility, customer service, location, etc. • When do my customers do their buying? Daily? Weekly? Monthly? Annually? Seasonally? • How much research do my customers do on a product or a service before spending money? • What services or products are my customers willing to spend more on? • What services or products are my customers willing to spend less on? • What are my customers' buying trends and habits? A good way to identify what customers want is to talk with them and really listen to what they have to say. Customer feedback can be a cheap and invaluable tool in creating a competitive edge. Getting to know about customer service: Why do we go in one particular grocery store or the dry cleaner, or eat at a particular restaurant. Consciously or unconsciously, we make decisions about which businesses will get our own hardearned money. Do we choose the big grocery store over the small corner market? If there are two dry cleaners close by, do we tend to go to one instead of the other? If so, for what reasons? Differentiation: In today's crowded marketplace, consumers have lots of choices. In order to gain a competitive advantage, company must give customers a reason to choose it over the competition. It must make it its business to see that its product stands head and shoulders above the crowd. While lowering prices is certainly a viable way to reel customers in, there are other things one can do to make company unique simply by using a little imagination and creativity. The following are ways to differentiate the product and/or company from your competitors: • Look at what competitor has to offer. What new spin can a company put on it? • Assess product. Can company add any new features that might make it more desirable or useful than its competitors? • Think of new uses for old products or new ways to package or bundle the offerings • Make sure the products are user-friendly and easy to order. • Can company provide exceptional customer service, hours of operation, guarantees, etc.? • Are there any special services it can offer to its customers that competitors don't?
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Changes in the external environment make companies change their strategies and the offerings: Lifestyle Trends The 1970s were different from the '80s, which were different from the '90s. Lifestyles change with time. Trends come and go. Predicting what will be important in people's lives down the road is no small feat, but it is achievable and can make companies very rich. For example, the trend in the '80s was to work, work, and work. In studying that trend, one could very easily look ahead and conclude that people would eventually run out of steam. Where would they go? A good bet would have been their homes. Thus, home supply businesses in the '90s skyrocketed as more people became homebodies, which created more demand for home supplies and decorations. Technological Trends Technology changes all the time and it is crucial that company keeps up with it. Once some new and viable technology enters into the industry, it should be sure to grab it because most likely the competitors will. Company can keep a few steps ahead of new technology by attending trade shows and conventions. Press releases on technology will also give clue as in to what's in store for the future. Economic Trends Because of economic conditions some years prove good for the company and some prove nad. This can be key in determining when to place the product in the market. For example, if the product is more luxury-driven, chances are it's not going to do well during a recession. Regular dialogue with financial experts, such as stockbrokers and bankers, can help predict how people will be spending money in the future. The economy can directly change the customer base, and one should always have a contingency plan for how to combat it. It is hard work. Real customer service is emotional labor. Companies have to dance between being truly empathetic to a frustrated customer's problem and self preserving as a customer, pushed beyond the limits of human endurance, takes out their frustrations on themselves directly. The former is the norm and the latter the exception, but both efforts take a lot of energy. The problem is, most of the people that apply for customer service jobs could do it. Either they don't have the people skills, but are excellent technically, or they don't have the technical skills. To get people motivated and give them the tools they need to do the job of customer management takes real effort. Some companies’ incredibly lenient return policy allows them to say "Try it, if you don't like it you get your money back immediately, no questions asked" or "I am really sorry that we couldn't get you connected, here is your money back and a free pass for your next connection". By telling customers that this is how we do business, and actually sticking to it, we make our customers confident in our ability to make them happy. We get more risk takers and advocates that push our products into markets where they might otherwise go unnoticed. If companies strive to only be as good as their competitors, they are doing a disservice to their customers- and setting themselves up to lose some of them. What is needed is to go above and beyond what competitors are doing. This may be easier if our product is unique in some way but it is much harder when companies sell exactly the same thing that others sell. The only way to
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differentiate themselves is either with a lower price or better service. And with profit margins continually being squeezed, a lower price is rarely the answer. Markets Today Markets today are global, enterprises can compete across boundaries and into everyone else's territory, distances have been reduced, communication costs are low and one does not need to be in a geographical region to be able to service customers. The internet today enables an organization to communicate with and support customers however far away they might be. The customer also has far greater choice today. The customer is an informed individual, upwardly mobile and with a keen understanding and update of global trends and advances. The customer is far more demanding today than a few years ago. Tolerance levels are lower, the time available to make a pitch a lot less and the forgiveness that one could expect earlier can no longer be taken for granted. The channels for communication have multiplied. Internet, mobile & SMS are the modern methods that provide 24 x 7 availability and global connectivity. Thousands of brands are created everyday, the pitch through media and direct communications has reached enormous proportions, the battle for the share of the customer's mind is a lot tougher. Brand loyalties are easy to upset, a small slip could see a large downside in sales and future potential, bad news spreads fast, there are many competitors willing to fill in the void created by your exit from the customer's goodwill.
Product Differentiation Price is a critical tool for differentiation. Quality and reliability, technology, design, features and service are assumed to be on par with other offerings. Today, competing players, small and big alike, are capable of delivering world class quality at any scale of operations. The others who do not match these are not players anymore. Brand image and perception plays a big role in purchase decisions. Brand perceptions are guided largely by communications and most often more by a direct feel and experience that the customer has. Pricing is dynamic and companies respond to market swings in hours and minutes. Competitor offerings are quickly matched. Market driven pricing is in vogue in many competitive markets and the ability of the company to sustain these prices and drive internal costs down determines profitability. Pricing therefore is a smaller differentiation tool than it used to be. Price is also not always a factor in the customer's mind. Value is more likely to be the decision point. If the customer perceives value in its many hues, price is no longer critical. Customer service is a critical differentiation tool. Assuming that quality of offering and pricing are similar across various competitors, a customer's experience and trust in a brand could be leveraged substantially by better customer service, pro-active initiatives in communication and incentives and a friendly, non-intrusive and responsive front-office. Marketing & Communications Promotions are no longer restricted to print advertising and sales are not restricted to retail outlets or door-to-door selling. The availability of many channels for communication and product delivery and the ability to blend more than one channel and build innovative packages means communications has become more complex and critical. Customer acquisition is a large cost in these days of global competitiveness and universal communications. Competition is getting better and are able to retain their customers well.
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Winning over customers from competition could be very difficult. Breaking into new markets could be as difficult since most markets are now saturated with global players and local wannabes who provide personalized service and innovative offerings while keeping prices very low. Customer retention is therefore very critical. Competitors are forever trying to break-in to the customer's mind and a short blink could be enough to take the gaze away from you. You need to be right all the time to keep the customer and ensure positive brand perception. Word-of-mouth and referrals have become much simpler today. Emails & SMS's can make or break brand perceptions across distance and geographies. Online forums and personal publishings spread good and bad news and opinions across the global rapidly. Keeping customers' happy has never been more important. Front-office The definition of a front office has changed substantially. While earlier it was an office or showroom or a bank branch, it could now be in addition a call center, a website, a chatroom or a channel outlet. Your neighbor or friend could also be a front office in this age of network marketing. Ubiquitous is the name of the game. The more you can be omnipresent, the greater is the chance of higher customer comfort and therefore some brand loyalty.
Customer care for business advantage In an environment like today's, customer care could be a significant advantage and could help create an edge over competition. Customer care needs to be delivered efficiently, quickly and with flexibility that enables a one-on-one personalized experience for the customer. Customer care needs to be holistic, non-intrusive, available 24 x 7, accessible from anywhere in the world. Customer care needs to be 100% : 100% availability to the customer, 100% consistency, 100% response record and 100% fulfillment of customer's needs. Customer care must address everyone from a casual observer, to an interesting prospect, a satisfied and disgruntled customer, a past customer, a user of a competitor's product, a media person or a researcher. The customer care process must travel right through the relationship building and sustaining cycle. The customer care interface and interaction must be consistent all the time. Customer care today encompasses servicing of customer requests, pro-active feedback solicitation, listening in carefully to customer's views, needs and perceptions, looking into any grievances that the customer might have, communicating all the time through personalized and mass communication channels, offering personalized and interactive incentives and promotion programs, getting the customer to participate in the brand. Customer care is about communicating, listening and ensuring a happy experience with your product and organization. Customer care is also about educating, sharing and learning. Customer care could well be the edge for you in building stronger brand loyalties, reducing customer churn and enabling word-of-mouth to create positive brand perceptions and higher customer acquisitions. Technology can help deliver this edge.
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Technology What can technology do for customer care ? For starters it can automate and integrate your internal processes so that your organization is more efficient, responsive and flexible to addressing your customers. Technology could provide you with 24 x 7 interactive front-offices that are accessible from anywhere in the world. Technology could enable your customers to use the most convenient method to reach out and communicate with you. Technology could integrate all this into a single unified environment that brings your organization, your channel and your customers together and ensures every need of the customer is addressed to their satisfaction. Technology could enable you to scale your customer care without having to scale your costs and resources proportionately. Technology could power you to create personalized, one-on-one communications with your customers and deliver this regularly to millions of customers worldwide. Technology could help you educate, train and continuously tutor your team in better management of customer interactions and product knowledge. Technology could help you educate, guide and counsel your customers. Technology could help you monitor the performance of your organization and measure the satisfaction of customers regularly without running out of energy and time. Technology could help you identify and zero in on specific areas of deficiency in your organization. Technology could actually be the key. Technology by itself will not generate a solution. Technology will only enable the solution. Technology will need to be blended with creating of the right attitudes and skills in your team, formulating and following through of an organizational commitment to customer care, creating and maintaining good content for learning, education and customer service, defining and enforcing systems and procedures and adopting a monitoring program that measures performance and success of your customer care program all the time.
Effective customer service is a source of competitive advantage A dissatisfied customer recounts his bad experiences with a business to his friends and acquaintances and, as a result, has a negative effect on the company’s reputation and bottom line. A dissatisfied customer is also highly likely to switch to a different provider, whereas an effective complaint handling process boosts customer loyalty. • Research indicates that the cost to a business of acquiring a new customer is many times higher than the cost of retaining an existing customer • A dissatisfied customer can be turned into a satisfied customer only if he contacts the business
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Reasons why the customer service of a business may not always work well • Too much focus on execution – selling products and services – and a resultant failure to assume a customer-focused corporate culture. • The number of dissatisfied customers is estimated to be much lower than it actually is • Failure to accept criticism; feedback is seen as a personal insult • Not being conscious of the fact that a dismissive attitude towards customer dissatisfaction and inadequate complaint handling processes have a negative effect on reputation and, as a result, significant losses in market share • Customer feedback is not viewed as a positive input and it is not exploited in efforts to improve customer satisfaction Reasons why customers may not complain even when they are dissatisfied? • Not believing that complaints would lead to a positive outcome • Concern that the complaint handling process involves excessive costs in terms of time and money • The monetary value of the product is considered to be too low to make complaining worthwhile Three steps towards better customer service: 1. Make giving feedback easy 2. Handle complaints in an appropriate manner 3. Develop customer service processes
How do you know if your service is as good as your competitor's service? The best way is to begin with some research then to actually go and shop at competitors’’ store. Companies should do it a few times, using all of the contact methods available. It would be a mistake for customers to form a judgment about the company based solely on one interaction. Is it good enough? While shopping at competition's store, company should ask itself if its own service exceeds, meets, or falls short of the standards set by its competitors. Perhaps in some areas they will find that they excel while in other areas they may fall short. Why it's not enough: Using competitors as the standard to measure business will fail to differentiate the company from its competitor. If its customers get exactly the same product with exactly the same service at exactly the same price, there's no difference and they'll just go wherever it's convenient. Company may not want a clientele whose reason for shopping in store over the competition is based on convenience. Instead, it wants them to be loyal patrons who will drive past the competition to get to its store.
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What to do about it. If the competitors know their customers' names, company should know their names and their birthdays too. If the competitors know their names and their birthdays, company should know their names, their birthdays, and their children's names. If company wants to make a preemptive strike against the competition, it should make a list of the many things that it would want a good friend to know about it and start learning that about its customers. It should try to move them out of the zone of "customer" into the zone of "trusted friend." It should go above and beyond what it is expected to do and it will find that the customers will drive past the competition to come to them. It is lot of work. But the sooner the company catches it, the more likely it is that it can turn it around and take its business to the next level. If it's left too long, the customer base will erode to a state of "convenience shopping" and company will have to work doubly hard to get them back. Companies can also differentiate the services that accompany the physical product. Two companies can offer a similar physical product, but the company that offers additional services can charge a premium for the product. Mary Kay cosmetics offers skin-care and glamour cosmetics that are very similar to those offered by many other cosmetic companies; but these products are usually accompanied with an informational, instructional training session provided by the consultant. This additional service allows Mary Kay to charge more for their product than if they sold the product through more traditional channels.
In the personal computer business, Dell and Gateway claim to provide excellent technical support services to handle any glitches that may occur once a consumer has bought their product. This 24-hour-a-day tech support provides a very important advantage over other PC makers, who may be perceived as less reliable when a customer needs immediate assistance with a problem. Horrible customer service is the fastest way to drive your dreams into bankruptcy. No amount of whining, whimpering, and halfhearted excuse-making can remedy selfish behavior. The late 1990? s brought us the age of "more selling, less service". Chasing new customers is the slowest way to grow your business. It takes massive amounts of time and more times than not doesn't even work. You chase. They stay out of reach. Somehow the easiest revenue strategy - investing in the relationships you already have - seems to be the solution that we avoid at all costs.
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Custome Service and Current Happenin in Electr er a ts ngs ronic Produ Industr ucts ries: We have considered laptops, mob biles, ACs, R Refrigerators and Washi Machine for which the ing es markets a not yet matured like we have for TVs. Thoug cell phon industries have seen so are m r gh ne ome revolutio onary trends in the past 3 years the pr roblems asso ociated with it also grew manifolds. For h w this reaso we felt th need of co on he overing it in these projec though the mobile pro cts oduct industr is ry almost at the maturity level. t y About M Mobile Phon Industry and in rela nes y ation with cu ustomer ser rvice: The India telecomm an munications i industry is th world's fa he astest growin telecomm ng munications industry, with 688.38 Million telephone (land 8 dlines and m mobile) subsc cribers and 6 652.42 Million mobile phone connec ctions as of J July 2010 It is also the s t second large telecomm est munication network in the world in terms of number of w d wireless conn nections afte China. Th Indian Mo er he obile subscribe base has in er ncreased in size by a fac of more than one-hu ctor undred since 2001 when the number o subscriber in the cou of rs untry was app proximately 5 million to 652.42 Million in July o 2010. astest growin telecomm ng munications in ndustry in th world, it i projected t India wi he is that ill As the fa have 1.15 billion mobile subscr 59 ribers by 201 Furtherm 13. more, projecti ions by seve leading eral global co onsultancies indicate that the total nu t umber of sub bscribers in I India will ex xceed the total subscribe count in th China by 2013. The in er he ndustry is ex xpected to re each a size o 344,921 of crore (US S$76.23 billi ion) by 2012 at a growth rate of ove 26 per cen and genera employm 2 h er nt, ate ment opportun nities for abo 10 million people dur out ring the sam period. Ac me ccording to a analysts, the sector wo ould create direct employ d yment for 2. million pe .8 eople and for 7 million in r ndirectly. In n 2008-09 the overall telecom equi t ipments reve enue in India stood at 136,833 crore (US$30.2 a 24 billion) d during the fis scal, as again nst 115,38 crore (US$25.5 billion a year bef 82 n) fore. 1902 - First wirel telegrap station est less ph tablished bet tween Sagar Islands and Sandheads. r d 1907 - First Cent Battery o telephones introduced in Kanpur. tral of s d 1913-1914 - First Automatic Exchange in t nstalled in Shimla. 23 Ju 1927 - Ra uly adio-telegrap system be ph etween the U and India with beam stations UK a, m at Kh hadki and Da aund, inaugu urated by Lord Irwin by exchanging greetings with the King of Engla and. 1933 - Radiotelep phone system inaugurate between t UK and I m ed the India. 1953 - 12 channe carrier system introduc el ced. 1960 - First subsc criber trunk dialing route commissio e oned between Kanpur an Lucknow. n nd . 1975 - First PCM system com M mmissioned between Mu umbai City a Andheri telephone and excha anges. 1976 - First digita microwav junction in al ve ntroduced. 1979 - First optic fibre syst for local junction co cal tem l ommissioned at Pune. d 1980 - First satell earth sta lite ation for dom mestic comm munications e established at Sec cunderabad, A.P.. 1983 - First analo Stored Pr og rogram Cont exchange for trunk li trol e ines commis ssioned at Mum mbai.
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1984 - C-DOT established for indigenous development and production of digital exchanges. 1985 - First mobile telephone service started on non-commercial basis in Delhi. Privatization of telecommunications in India The Indian government was composed of many factions (parties) which had different ideologies. Some of them were willing to throw open the market to foreign players (the centrists) and others wanted the government to regulate infrastructure and restrict the involvement of foreign players. Due to this political background it was very difficult to bring about liberalization in telecommunications. When a bill was in parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the number of parties having different ideologies. After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers. Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year. As the unbranded Chinese cell phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 5–6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives were taken by regulators and licensors, the total number of mobile subscribers has increased greatly to 617 million subscribers as of May 2010. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can
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be activated with a monthly commitment of US$0.15 only. In 2005 alone additions increased to around 2 million per month in the year 2003-04 and 2004-05. In June 2009, the Government of India banned the import of several mobile phones manufactured in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in India to track the sale and use of such phones. In April 2010, the Government was also reported to be blocking Indian service providers from purchasing Chinese mobile technology citing concerns that Chinese hackers could compromise the Indian telecommunications network during times of national emergency. A series of attacks on Indian government websites and computer networks by suspected Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially sensitive equipment from China. The companies reported to be affected by this are Huawei Technologies and ZTE.
More Statistics ** - This figures represent sell-in figures that the manufacturers sold to their distributors, operators(service providers) and individual customers. Also, the total number of units sold is estimated number based on the results from the manufacturers.
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New Models: With many companies now entering into the mobile handsets industry various new models have been launched in the past one year ranging from as low as 500 Rs to as high as 40000 Rs. August 2010 Nokia C1, C2 SonyEricsson Xperia X8, Cedar, Aspen, Yendo, Spiro and Zylo HTC Wildfire™ (with Reliance) July 2010 Samsung Galaxy i899 (with Reliance CDMA) LG Cookie Zip (510) June 2010 Nokia N900 Nokia E52, 6700 slide, X3 Samsung Omnia Lite, Star nano SonyEricsson XPERIA™ May 2010 HTC HD mini Grapes CG 888 Fly Booom (MC105)
General Warranty conditions: 12 months without the battery. Six (6) months for the following consumable parts and accessories: batteries, chargers, handsfree kit, cables and any other accessories that comes in box packing with the mobile phone. Repaired part(s) will be warranted for the remainder of the original Warranty Period or for Thirty (30) days from the date of repair, whichever is longer
The Limited Warranty does not cover user manuals or any third party software, settings, content, data or links, whether included/downloaded in the Product, whether included during installment, assembly, shipping or at any other time in the delivery chain or otherwise. The Limited Warranty does not cover a) normal wear and tear (including, without limitation, wear and tear of camera lenses, batteries or displays), b) transport costs, c) defects caused by rough handling (including, without limitation, defects caused by sharp items, by bending, compressing or dropping, etc.), d) defects or damage caused by misuse of the Product. The Limited Warranty does not cover defects or alleged defects caused by the fact that the Product was used with, or connected to, a product, accessories, software and/or service not manufactured, supplied or authorized by the mobile company or was used otherwise than for its intended use. The Limited Warranty does not cover defects caused by the fact that the battery has been shortcircuited or by the fact that the seals of the battery enclosure or the cells are broken or show
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evidence of tampering or by the fact that the battery has been used in equipment other than those for which it has been specified. The Limited Warranty does not apply if the Product has been opened, modified or repaired by anyone other than an authorized service centre, if it is repaired using unauthorized spare parts or if the Product’s serial number, the mobile accessory date code or the IMEI number has been removed, erased, defaced, altered or are illegible in any way. The Limited Warranty does not apply if the Product has been exposed to moisture, to dampness or to extreme thermal or environmental conditions or to rapid changes in such conditions, to corrosion, to oxidation, to spillage of food or liquid or to influence from chemical products. General Problems Which consumers face while using phones: Audio jack of the phone is damaged soon after buying new phone... Joystick of the phone is also not working many a times. Companies take handsets for repair and if it is not repairable they give refurbished handsets instead of new ones. The color matches with the original piece. Complaints of service centers saying they do not have parts in stock to replace when there is need for doing it. Problems in the music player. Problem of phone getting hanged frequently. Charger getting damaged very fast or because of charger the phones getting damaged. Exorbitant service rates and charges for the parts that need to be replaced. Long days for which the service centers keep phones with them for repairing when customers have no spare piece to use during that period. Display problems. A display getting damaged soon after the warranty period is over. Sometimes the signal catching in the receiver fixed inside the phone is so weak that person cannot hear the person on the other side clearly. Keypads are of not so good quality and get damaged very early arising the need for replacement. Software faults and high installation charges. Service center staff not trained properly to handle the phones and parts getting damaged inside the service center which customers notice only after few days and thus have to go again to the service center to get it replaced by paying some more amount. Repairing is of so low quality that same problems resurface again and again thus requiring customers to revisit the service center. Speaker volumes are low and customers have to struggle to listen to the music or call if that is put on speaker. Heating problems in many models and also problems in connectivity to computers for data transfer. Rare but it happens that sometimes the similar looking phones with same models get swapped in the service center creating a whole lot of troubles to the customer later on. A phone automatically makes calls or connects to internet incurring usage charges. Touch screen pads getting damaged very early.
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What a company should do to solve these problems and to give excellent customer service: Companies should make sure the quality of the models of the cell phones they are bringing in the market. The phones without any problems or the mobile handset company which has least number of problems can be a competitive advantage. Service centers should be equipped well with not only sufficient tools and materials but also it should be automated and maintained by computers in the network as far as possible. This will allow users to switch the service center if they are not happy with one, and that too without the need of repeating the history of what problem has occurred in the phone. In the service center the people who represent the company though on the basis of contracts to third party dealers, should be trained and should be aware of companies values and practices. Cell phone industry is almost on verge of maturity stage and hence more and more innovations with low prices to attract the customers are happening. Moreover the average period of using mobile phones is just 2 years to 3 years. Considering this fact there lies a great opportunity for the companies in the repeat business.
Refrigerators and customer service in relation with it: General Problems Which consumers face while using refrigerator Customers generally find some common complaints when they are using the products of companies for their daily usage. 1. One of the common complaints is the leakage in the condenser, where the customer faces an issue where the refrigerator is not effectively cold so the effective use of the product does not take place; it is one basic thing on which the entire model depends and failure of which results in basic failure of the product 2. Customer also faced problems with ice makers, which resulted in lack of ice making in summer season, due to which the customer faces a lot of issues 3. Complaint also was in the control panel where the functions were not properly working which resulted in malfunctioning of the basic functions of the refrigerator 4. The customer was charged with excess amount for service even if the product was under warranty 5. A customer was given false details of the company and its service centres along with its numbers 6. Gas leakage was amongst one of the common issues which was faced by the customers 7. There was a common problem which was prominent by the gap between the customer care executives which spoke to the person having issues and the person actually responsible for repairing it. 8. Excessive noise by the product was again one of the common complaint which was seen in the consumer forums General Problems Which consumers face while using Washing Machine:
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1. The motor of the washing machine is not working properly 2. There is a basic problem of excessive noise of the washing machine which they are operating, which results in lot of noise pollution in the consumers vicinity 3. Water leakage is one of the common problems which is faced by the customer which is awfully irritating for the customer as it increases the work to be done by the customer 4. Delay in replacement of the parts which needs to be replaced is frequent 5. The spinner of the washing machine frequently gives issues to the customers 6. After the consumers have logged a complaint and they are given a time frame in which the consumer expects the executive of the company to be there where the consumer also makes some arrangement of time and space, but when the executive doesn’t turn up it is a big setback for the customer What are the companies doing currently and what should they be doing? The company are falling short in some or the other function, the technicians are not properly Dealing with Customer Complaints When a customer contacts your company to complain about a product or service received, it can be a blessing in disguise. For every person who complains, there can be hundreds who do not bother to complain but who also spread negative comments about your company. In situations where customer complaints occur, the complaint must be dealt with immediately and the cause of the complaint rectified. Some companies are not concerned with quality and often ignore complaints or deal with them dishonestly. Seeking customer satisfaction benefits a company in the long run. Dealing with complaints When the customer pays for a product or service, it is assumed that the product will work correctly or that the service received is as promised. Ideally, the customer will be satisfied, and there will be no complaints. If there is a problem and the customer complains about it, your company should quickly answer the complaint and solve the customer's problem. This is often done through your company's customer service activity. But also, you need to follow up and improve your business processes to rectify the problem. Solve the problem You need to immediately answer the complaint and solve the problem. It may be to give money back, exchange a product or do some repair. Special bonus To make sure the customer is completely satisfied, some companies will provide some special service or a reduced price on another product. This is done to assure the customer will come back for more business. Many retail stores have a generous return policy to satisfy dissatisfied customers. Dishonest customers Unfortunately, there are dishonest customers who will make false claims to get some bonus. Some people will use a product or piece of clothing and then return it, saying they weren't satisfied. High-end women's clothing stores often will have expensive gowns returned after some important event. The clothes have obviously been worn, but the customer says she is not satisfied or has changed her mind. Usually, the store will refund the money.
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Since it is often difficult to tell if the complaint is valid or not, the company will follow the adage, "The customer is always right." But since some dishonest people repeat their crimes, a better adage is, "The customer is always right... once." Price in customer service When a company sells a product or a provides a service, part of the pricing should include the cost of servicing a certain percentage of defective products or complaints. Rectify problem The second thing a company should do upon receiving a complaint is to seek to rectify the problem. Although a company hopes not to get complaints, they often can be blessing in disguise. Sometimes problems can be caught and fixed before they cause serious negative feedback or even legal problems. It is in the company's best interest to solve any problems and try to make sure that they don't happen again. It is foolish for a company not to use customer complaints to initiate a corrective action. Not dealing with complaints Businesses that don't bother about satisfying their customers usually get more customer complaints. Answering them can, of course, cost the company money. Some companies will try to mollify angry customers but many don't even bother. Making money off complaints One software company holds weekly staff meetings to build morale and allow for status reports from each department. One part of their meetings is the report on how many customer problems they rectified the past week. If the number increased, the group was given praise. When asked why they praise increased problem calls, as opposed to working to fix those problems in the software or documentation, the owner said that they charge for each call, so it is a way to increase their income. In other words, instead of making the customer completely satisfied with the product, they preferred some dissatisfaction, so they could fix the problem and make extra money from it. This software package was a high-ticket, expensive application that was mainly sold to small companies. They also charged $50 for a user manual for the software. Since the customers made a substantial investment in the software, they wanted to continue using it. But I wonder how much ill-will was created, even if the application usually performed well. Complaints that fall on deaf ears Have you ever experienced poor service or purchased a defective product and complained about it, only to have your complaints fall on deaf ears? Many companies that have plenty of business feel they don’t need to bother with complainers. These businesses become very independent, especially if they have a product or service in demand. Some continue to succeed, even though they ignore customer complaints, but many will pay the price of lost business and degraded reputation in the long run. Apology mollifies customer A company that responds and apologizes mollifies the complaining customer. But some of these companies never rectify the problem, like the hotel in the above story. The act of responding to the customer and apologizing is good business. Not fixing the problem is risky, though, and may backfire on the company. Could be sued The bug letter story originated some 30 years ago. In today’s litigation crazed society, the hotel would have been sued for millions. Perhaps that is not so bad, if it is a case of ignoring problems.
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But if it was an honest mistake, such litigation can be destructive to the business as well as to society. We all pay more for things, because businesses must insure themselves against nuisance lawsuits. Benefits of satisfying customer complaints There are numerous benefits for a company to properly deal with customer complaints. Satisfied customer First of all, it will help to satisfy the customer, so you will get repeat business or referrals. In fact, in some cases, effectively dealing with a customer complaint can lead to a more loyal customer than others who may not complain or have problems. Can rectify problems Another benefit of dealing with complaints is that you can see weaknesses in your process or products that can be rectified. This will prevent possible future complaints or problems down the line. It is an effective form of customer feedback, although one you hope to eliminate. Major concern about complaints For every formal complaint you receive, there may be 10 other customers who were dissatisfied and who felt like complaining, but who never did. Instead, they change brands and tell their friends of the dissatisfaction. It is said that an unhappy customer will tell 13 people about his or her dissatisfaction1. That is not the type of word-of-mouth advertising you want. The company goal should be to get no complaints at all. Air Conditions and Customer Service in Relation with it: Market For Air condition: The ongoing economic buoyancy in India despite global economic meltdown has offered opportunities for rapid growth of consumer durable industry, and in particularly air conditioners industry. In general, there are different types of air conditioners, but the broader classification was room air conditioners and commercial range of air conditioners. The room air conditioners category consists of both the window and split ACs for the use in residential and commercial spaces. Traditionally, air-conditioners have been considered to be “luxury” appliances, and therefore, the demand for air-conditioners have either come from the institutional segment or from affluent homes in the top metropolitan cities of India. That’s no longer the case. While easy finance options have made air-conditioners more affordable, companies are also going that extra mile to make air-conditioners a “must-have” appliance in more and more middle class India homes. Major Players:
1. 2. 3. 4.
LG Voltas Samsung Videocon
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5. 6. 7. 8. Hitachi Carrier Haier Toshiba
Problems faced by customers While most of the transaction and interactions with the customers are positive, there is some exception in where the customer has a problem and the company fails to address it, and in some rare cases these may end up in court. But before ending up there, both parties would like to have resolved it suitably, especially as they have more to lose financially; they have company integrity and image to lose. Some common problems faced by customers: Complaint 1: Hi sir/madam, This is Ramasamy from chennai we bought 2ton AC this April from the date we are facing many problem in that.It was not working properly it was switching off every 5 min automatically.. 5 to 10 times service engineer came and return but no improvement at last they told that they will replace the AC but there is no response last one month. We need to replace the AC as soon as possible Consumer Name : Ramasamy s Address : 186,Baracca Road,Nammalwarpet,chennai 12.,North Chennai,Tamil Nadu,600012 Email : [email protected] Complaint Against : Product/Air-Conditioners Product Name : BlueStar Organization : P.G Omega Enterprise Organization Address : 56B Shoppingcentre,s.s Nagar chennai-600062 Complaint Details : WE bought 2ton AC it was not working Service Engineer finally conclude to change the AC.But no response from them we need AC to be replaced
Complaint 2:
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I Have Purchesed A Window Air Conditioner On 15 May 2010.But This Ac Is Not Cooling Properly Now As It Did Earlier. Details Are ; Model No. --- Lwa5ew1df1.Ae45ym Invoice No.--- Sinluclu110/1054 Dt. 15 May 2010 Dealer Code No.--- In028478luc07891 My Address --C1/131/Sector J Railnagar Lucknow Tele No. Amit Mobile No. 9453420608 Sometimes, as mentioned earlier, some of these complaints ends up in consumer courts. Below is an actual illustration. Illustration 1 CFBP received a complaint from Mr. Jayesh Lohana in December 2009 about Voltas Airconditioner. He had annual maintenance contract for his 2 Airconditioners. The Airconditioners were pending for repairs since Sep 2009 upon intervention of CFBP the matter has been resolved by Voltas to the satisfaction of Mr. Jayesh Lohana. Voltas in their reply stated –"In reference to your letter bearing ref. No. 61/3380/09 dated 3rd Feb 2010, regarding Mr. Jayesh Lohana’s complaint, we are happy to inform you that the complaint has been satisfactorily resolved." Customers can register their dissatisfaction with the company on any of these websites below:http://www.consumercomplaints.inhttp://www.indiaconsumerforum.org/http://www.icomplaints.in/http://www.complaints-india.com/http://www.consumercourt.in/ Action taken by company: Hence the company provides direct and indirect means to get to the company, before any issue reaches the doors of the court.
Besides providing information to get in touch with the company, now a days the company itself keep is updating its existing poor systems so as to not wait for an customer to call and complaint, but act proactively and keep track of schedules for quarterly and half yearly maintenance and servicing. Also the new software’s and technology helps companies forecast and allocate it resources, be it manpower or money for satisfying the customer, so as to gain customer confidence and loyalty.
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Now since the air condition market is slowing maturing, AC now has shifted from being a luxury to a basic need, cause of cost reduction and external environmental changes, each customer wants to attract new customers and retain them. For doing so, customer service is a essential part of attracting and retaining of customers. Companies cannot now afford to lay back. Also now the customer has been more aware how to take the company to task, which makes the company more liable against poor experience of service or product offered. All companies want to avoid a legal tussle with any customer, as it not only loses its customer but in turn may lose more potential customers and have a poor image in the market as a poor servicer of its products. But based on data accumulated, these companies try to avoid any customer dissatisfaction, and service the customer within the specified period in the policy.
Insurance industry and customer service perspective: As market and business conditions change, insurance companies must cope with a variety of issues: increasing competition, radical re-alignment of markets as a result of deregulation, aging demographics, catastrophic events, corporate governance and regulatory requirements. While addressing these challenges, it has become increasingly difficult to compete on the basis of price and product. One area that can set an insurance company apart is how it provides customer service. Unlike other types of companies, insurance companies are burdened by legal and regulatory requirements that impact how they deliver customer service. Superior customer service exceeds the expectations of customers, agents, brokers and policyholders for the timely resolution of their inquiries, whether it is a simple address change, change of beneficiary or determining the status of a pending claim. The way in which insurance companies view their customers has changed over the last few years. Because of deregulation and other market factors, the opportunity presented to the insurance company by each customer has expanded from the purchase of a single product to a full suite of products over the lifetime of the customer. As a result, insurance companies are moving away from a product focus to a customer focus, with the objective to attract and retain a customer for life. For life insurance companies, there are opportunities to cross-sell each customer other products especially for life events such as starting a family. The life insurance company may cross-sell the customer higher value life policies, annuities, mutual funds, longterm care insurance and college savings plans. Perhaps even more importantly, each customer service transaction provides the instant opportunity to execute company strategies such as customer intimacy, segmentation and product persistency objectives. For Property & Casualty (P&C) companies, the battle for customers, especially in personal automobile insurance, is evident by the sheer volume of media advertising enticing customers to “switch and save.” Customer service and satisfaction become the competitive advantage that enables retaining these customers over the longer term. The ability to retain customers against price competition isn’t just limited to the obvious claim settlement scenario but also to the experiences associated with routine activities around endorsements, billing and payments, culminating in an overall level of customer satisfaction. Once loyalty is captured through service, the company can then market other products
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A key element in many insurance companies is to grow business by selling additional coverage/policies to their existing customer base, increasing the proverbial “wallet share.” This strategy satisfies the dual goals of growth and customer retention. As research studies have proven, customers who have three or more products from one insurance company are more profitable for that company and likely have a higher retention rate because of their hesitation to switch policies to another company due to the time and cost involved. However, each service interface with the customer still must improve upon or extend the relationship. Customer service becomes more than a call center or a contact center but rather an extension of the sales function allowing customer service representatives to identify and qualify those customers who present opportunities for cross-selling. The ability to mine this type of information during the course of a customer inquiry helps companies identify opportunities for cross-selling, of particular value in light of the U.S. “National Do Not Call Registry” and similar laws in other countries. Customer service is the public face of the company and impacts the value held by its brand in the marketplace. Today’s customer includes anyone who influences the purchase and retention of an account such as agents, brokers, consultants, producers, family members, providers, employers, CPAs, attorneys, financial planners, and individuals responsible for repair of an auto, home or boat. Independent of how it is delivered to the customer, companies must provide customer service accurately, quickly, responsibly and comply with legal and regulatory guidelines. And more importantly, insurance companies can deploy a variety of customer service interfaces that are individually suited to how the customer prefers to obtain customer service and to the transaction at hand. Matching the desired customer experience through the use of personalization appropriate to customer’s preference as well as the transaction type and using technology to help manage the customer experience enables insurance companies to build an advantage for their customer service over their competition.
Telecommunication Industry and a customer service perspective in relation with it: All operators are providing their customers customer assistance and advisory services. For the organization of customer service are no strict rules, but the services and prices for them is primarily by the service provider. When consumers choose their service provider, it is useful to consider what kind of customer service you need and its importance in view of the operator's services as a whole. Good customer service is a competitive advantage for the operator. Telecom operators' Internet sites and self-service Telecom operators' Internet sites provide great help for any problem. It offers information on services, prices of services and contract terms. Often there are also instructions and settings for the startup of various services. Most operators have on their internet pages of questions and answers to the most common problems. Some operators have the opportunity to chat where you can get help for their problems.
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Mobile operators in particular, offer their customers self-service. The customer can log into the service at any time by using the user name and password that allows the operator. Through selfservice pages, it is usually possible to order and terminate additional services, change the type of subscription, follow the counting problem and scroll through the call sheet. E-mail and web forms E-mail and web forms are a good means of communication with the operator, on the web pages do not provide an answer to the problem and if the matter is not urgent. Most operators provide on its Internet site the time of the speed issues that come via e-mail or web forms is answered in a normal situation. On the web form provided in the rule the information which is mandatory for the operator to answer the question. If you send an e-mail, describe the problem as accurately as possible. If the question or problem relates to a particular connection or service, it is important that you also give your contact information. Telephone Service The network services will help if you have an urgent problem. Many operators in addition to their normal customer service number are also known as. help desk for technical customer service and a separate number for error messages. Check the telephone numbers of customer and counseling services at your own operator. Also check if the calls are free or fee-based. If the number to customer service for a fee, it means in general that also queuing costs the same as a normal call charge. If the response time on customer service are no rules such as would define the maximum value for their replies. Pressure on the service depends much on the operator, and also at the time of day or day of week. Opening hours for telephone services also vary among the various telecommunications companies. In order to compare the different operators' telephone service has Kommunikatiosnverket required the telecommunications companies to publish quarterly, the average response times on their customer and advisory services. It is the statistical data that does not give precise information about the current situation, but they provide an opportunity to compare the quality of service among telecommunications companies. Also publishes many telecommunications companies to more recent data.
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The-Four-Phases-of-Customer-Feedback-Management Gathering customers' opinions is a crucial part of doing business. In order to survive, a company must understand its customers' motivations, gripes, and desires. Mediocre companies conduct customer satisfaction surveys. So do the greatest companies in the world. However, elite organizations gather, organize, and utilize customer feedback differently. This article will outline the four levels of customer feedback management, in order of increasing sophistication. Like a grading rubric for feedback, each level builds on the last. For the greatest impact on your bottom line, aim for the final level--mastery. Level One: Lack of Customer Feedback Management. When companies first begin conducting customer feedback research, they usually do it in-house. A sales manager may type "customer loyalty surveys" into Google, print out the results, and have employees conduct telephone surveys. The marketing department may email surveys about recent marketing campaigns. Meanwhile, the IT department might be using CRM (Customer Relationship Management) software to analyze customers' demographics and purchasing habits. Customer feedback is being gathered, but there is no organization. Customers have a difficult time answering the company's vague or poorly worded questions. Random questionnaires are followed by random analysis (also often done in-house). Because no one is tracking overall contacts, the same customer could be surveyed five times by five different departments in the same week. Like reading in a dark room, company leaders strain to understand and tie together survey results, if they see them at all. Level Two: Growing Organization in Customer Feedback Management. At this level, company leaders partner with a research company to gather statistically representative samples from customers. The market research company follows established guidelines for obtaining significant survey results. Moreover, they avoid long surveys and multiple contacts to the same customers; this is to protect the respondent pool. Customers become irritated when surveyed too often, and no one likes to complete long surveys. The market research partner also refines the questionnaire for lucidity; customers now understand what they are being asked. Finally, the research results are analyzed and put in reports for upper management. Now leaders can clearly read survey results, but they're not sure how to apply them to boost business outcomes. Furthermore, company executives find it difficult to distribute results to employees, who simply don't have the time to slog through all of the customer feedback results. Level Three: Understanding Through Customer Feedback Management. At this third level of customer feedback management, company leaders have the ability to define which employees should see which parts of survey results. The characteristics of the second level are also present; a research partner helps the company conduct statistically reliable studies, and ensures a healthy respondent pool. Now, however, leaders aren't the only ones that see survey results; the market research company provides access to a feedback management system to distribute results to employees. Sophisticated customer engagement management solutions can allow executives to assign different access levels for each employee. Front-line employees may only be able to see overall engagement levels, while managers can see more complex statistics
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related to their departments, and upper management can see everything. An increased understanding of the customer experience spreads throughout the organization as a result. Although company leaders are thrilled that all employees can now see customer feedback, they are not sure how to use survey results to increase profit and ROI; nor can the prioritize techniques for customer experience enhancement. Level Four: Masterful Customer Feedback Management. The world's top companies fall into this level; they masterfully use customer feedback to drive business decisions and increase profitability and ROI. As in level two, they use Enterprise Feedback Management solutions to centralize and distribute results. Furthermore, these elite organizations harness cutting-edge technology to respond to individual customer complaints and opportunities in real time. Companies that partner with an EFM firm that provides real-time customer alerts software, notifying key employees when an action needs to take place to address customer feedback, truly understand the importance of retaining customers and improving ROI. These companies gain a significant competitive edge by working with a boundary-pushing customer research firm.
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Customer service is part of every product and service A customer relationship does not end when the purchase transaction is concluded. The business has a statutory responsibility to serve the customer even after the conclusion of a purchase or agreement. A business must ensure that consumers are able to exercise their basic rights effectively. In addition, customers must be provided information regarding their rights, such as how to have an invoicing mistake rectified or a defective item repaired. Customer complaints must be handled appropriately. The business is in breach of the law if the consumer is denied the opportunity to make a complaint and contact the business in defect situations. Managing the customer relationship is an integral part of the agreement concluded with the customer. The customer service model is one of the factors influencing the consumer’s purchase decision and choice of service provider. When the customer concludes an agreement with e.g. a telecommunications operator, he simultaneously accepts the service provider’s customer service policy and pricing, which are thereby considered part of the agreement entered into. Customer service is part of every product and service The consumer is entitled to expect customer service from a business after a transaction and agreement has already been concluded. Customer service includes the business • providing the customer with information on his rights, e.g. on how to rectify an invoicing defect or repair a defective product • processing complaints within a reasonable time Give feedback on customer service directly to the business Consumers should give businesses feedback on good and bad customer service. Based on this feedback, businesses can effectively improve their methods of operation. A responsible business listens to its customers. Customers may file complaints with businesses regarding inadequate customer service and demand compensation for damages for any financial costs incurred. For instance, if a business does not provide a free-of-charge channel for filing complaints, the consumer may demand compensation for the costs of filing a justified complaint afterwards. Complaints can be filed and feedback can be provided to businesses by calling their customer service number, by filling out a form on their Internet website or by sending them a free-form email or letter.
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What is a Customer Charter/Code of Practice? The main purpose of a Customer Charter/Code of Practice is to improve access to an organization’s services and promote quality. It does this by telling customers the standards of service to expect, what to do if something goes wrong, and how to make contact. A Customer Charter/Code of Practice helps employees too, by setting out clearly the services their organization provides. Should an organization have one? A Customer Charter/Code of Practice is an ideal way of helping organizations define with their customers, and others, what that service should be and the standard that should be expected. They also help customers get the most from an organization’s services, including how to make a complaint if they are dissatisfied with any aspect or have ideas for improvement. Developing a Customer Charter/Code of Practice will: • help an organization clarify what people want from their services and target resources accordingly • help an organization and its employees look at the aims of that organization, and whether it provides value for money • focus an organization’s employees on the work to improve services and promote quality, and ensure that their knowledge and experience is put to good use • encourage customers to provide feedback on how an organization’s service is delivered • explain to customers how they can help an organization deliver the services they want • help drive and sustain a process of continuous improvement in service quality • help foster good relations with customers generally, most of whom will welcome an organization’s efforts to take account of their views What should it include? A Customer Charter/Code of Practice should clearly set out the purposes and priorities of an organization. In particular, it should: • spell out the standards of service customers can expect • tell customers how to complain if something goes wrong, or service is not met, or how to offer a suggestion for improvement • make clear how customers can contact an organization and get further information • make sure the information is accessible and easy to understand • fully involve customers and employees in its preparation • explain how an organization is planning for further improvement • assure customers that they will receive a fair service • say if there is any relevant legislation • make sure that the publication date is clearly visible, and ensure the content remains current Other points to consider A Customer Charter/Code of Practice should be written in a clear and user-friendly way. Although not mandatory, a Crystal Mark endorsement by the Plain English Campaign would enhance its status.
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It is vital that a Customer Charter/Code of Practice is available in different formats, such as large print and audio, so that customers with particular needs can access it. If an organization is part of an industry where a regulator has been appointed, details of how to contact the regulator should be included.
Handling Customer Complaints: Complaints are good if at all there are going to be there: Britons are shedding their reserved natures and turning into hot-blooded consumers - willing to argue at the drop of a hat and stand up for their rights, according to a new survey. Whether it is too much pasta, the Channel tunnel rail link or too much chilli, who knows? We are becoming more "passionate". More than half of people now complain all or most of the time if they are unhappy with a product - an increase of 18% in 5 years. Complaining has become so prevalent, that two thirds of people now believe that we are better at it than before. But it is age over youth and inexperience, which increases the chances of making a complaint according to this year's National Complaints Culture Survey (NCCS). Two thirds of those over 50 complain all or most of the time if they are dissatisfied, while the under 21s are the least likely to complain.” – BBC News 2009 Real Benefits in Prioritising and Improving Complaints Handling • Nearly all customers would recommend a company to their friends if a complaint had been resolved efficiently. • Four out of five customers would spread the word if a complaint had been handled badly. • Still not many companies seem to be listening to this key customer service point, so there are advantages to starting now. • Despite the rise in complaints, only one in four employees feel qualified to deal with them. • Only one in three customer-facing staff are actually trained to deal with angry customers • Most customers would pay more for excellent service. Definition Of A Complaint “An expression of dissatisfaction whether justified or not” – BS8600 Golden Rules Of Complaints Handling For Organizations Strategic Plan: Have a clear, flexible welcoming and open policy on complaints. A complaint is a gift and you should consider yourself lucky that a customer is prepared to give up valuable time to help you improve your organization. Train your staff and management in complaints handling Give them confidence to tackle the difficult customers and support in their actions. Excellent complaint handling isn’t easy and can sometimes be stressful and feel unrewarding. Confirm its importance in providing great customer service. Give complaining enough priority and authority. Staff should be aware that complaints are a top priority item for your operation, and ANYONE who deals with them must have sufficient authority to resolve them completely.
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Ensure that you can process complaints from all sources: Nowadays there are 4 main ways to complain – in person, by telephone, by mail, by email/internet – and your organisation must be able to handle all of these efficiently. Set up process to log and analyze all complaints and share with everyone: One can learn so much about problems with internal processes, training, specific employees/managers, and product – free. PROCESS & ACTIONS: Thank the customer for complaining. You should consider yourself lucky that the customer is prepared to give up their time and money to let you know they have a problem, instead of just walking away – a complaint is a gift. Say that you are sorry that the problem has happened. This is NOT an admission of guilt on your part, it’s just good manners. Put yourself in the place of the customer. This will instantly give you an advantage, as you not only will have more empathy with the customer, but also you know your business better than them and so can hopefully see the solution quicker. Start with the view that the customer has a valid point, not that he/she are trying to rip you off It is true that there are some professional complainers out there, but they are in the minority, and, if you are a local store, you probably know them anyway. Accepting that the customer may well have a point, even internally, may well trigger off ideas for an acceptable resolution. Get all the facts first: Letting the customer give you all of the information helps you fully understand the situation AND, if they are emotional, will give them time to calm down. Don’t leap straight to the “free gift route” It’s very tempting to give the customer a gift, or vouchers, and in many cases, done properly, it is good service. However, too often it is done INSTEAD of solving the problem, which can lead to more complaints about the same thing because it hasn’t been fixed, and also to the “training “ of more professional complainers. Correct the mistake All of the other points are not really valid if you don’t fix the problem! Make sure that your definition of the right fix is the same as the customers. Learn from every complaint Do something! Fix the process; train staff in the issue; eliminate the fault. Wherever possible let the complaining customer know that they have helped you resolve a problem – they’ll feel great and come back again and again (and will probably tell their friends!). Minimise reasons for complaints Do you have a continuous improvement culture? Do you check customer (and employee) satisfaction regularly? Do you check the quality of the goods sold in your organisation?
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Remember it cost at least 5 times as much to gain a new customer than keep an existing one Keeping this complaining customer should be the top priority, and at these cost ratios you can afford to be generous in your time and effort. ALWAYS respond In person complainers hopefully always get dealt with, but make sure that EVERYONE who complains on the telephone, by letter, or by E-mail gets a rapid and appropriate response. Listen to your staff They nearly always care about your company and doing a good job and are much closer to the customers than you are. Ask their views regularly and make changes when they are sensible. Make sure THEIR complaints are handled too. Lead by example It’s not that your staff DON’T listen to what you say, it’s that they DO listen, so make sure that you are always setting the right example, and giving complaints your personal priority. Reward good complaints handling.
Defining service standards : Service standards are usually defined in terms of: • Timeliness • Accuracy • Appropriateness Timeliness 'Delivery in three days' or 'calls answered in 20 seconds' are phrases that give the essence of a service standard that involves a timeline. These statements need to be defined precisely before they can be considered as true service standards. 'When does the clock start?’, 'Are we expecting 100% success in the timeframe?', 'Is measurement based on working days or calendar days?', 'Does this apply to all locations worldwide?' and 'Does this apply 24 hours/day, 7 days/week?' are some of the questions that have to be asked in the process of defining the standard. So an initial definition of 'answer the phone within three rings' may be implemented as 'Between 8am and 6pm on workdays, 95% of calls will be answered by a human in 15 seconds and 100% in 40 seconds'. Similarly, an initial definition of 'delivery within two days' could become 'For addresses in the UK mainland, parcels will be delivered two working days after receipt of the order'. Accuracy Customers expect accurate information and accurate deliveries - only 100% is acceptable as a standard under this heading. 'We got most of your order right' is a response that is not appreciated by a customer!
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Examples of service standards reflecting the accuracy of a service are 'the information quoted in a telephone conversation is 100% accurate' or 'the parcel received by the customer contained all the goods ordered by the customer'. Appropriateness How often do you hear the exclamation 'they didn't answer the question!' It happens often when politicians are being interviewed on TV but it shouldn't happen in the commercial world. Appropriateness is about ensuring that the customers' expectations have been met, particularly in an enquiry situation. e.g. A customer writes to an organisation with a three-part enquiry. The customer receives a response that is on time, totally correct in what it says - but fails to address one of the three topics in the original enquiry. Such a response would fail the appropriateness standard - again based on a 100% expectation. '100% of the customer's questions were addressed' would be a good starting point for such a standard. How do you create a set of service standards? There are at least seven potential sources of information to help define the service standards for an organisation: • Management • Employees • Existing customers • Potential customers • Lost or former customers • Competitors • Regulatory authorities Management – you should seek information from different levels of management. However do not rely solely on management input - existing customers are a better source. Employees- this group is too often overlooked - 'what do they know' is a view that has been expressed. In fact, they interact with customers every day, so employees are a really valuable source of information and will be expecting to contribute to the process. Existing customers - are rich sources of information. A few focus groups will usually generate an excellent set of customer expectations. Lost or former customers - why did customers not return? They will probably be pleased to tell you! Potential customers- what can you learn from people who are choosing an alternative supplier? The sales team may give you some input but there is no substitute for direct input from prospects Competitive information - mystery shopping and monitoring competitors web sites and literature can reveal useful input. Regulatory authorities – the activities of some types of business are governed by a regulator who sets service standards that must used.
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How many standards should we have? You should have standards that are appropriate to the size, diversity and complexity of the business. Initially, we suggest that you establish a small number of service standards that focus on the absolutely critical areas of your business. You will need a period of time for colleagues to 'buy-in' to the concept of service standards, the monitoring arrangements and the benefits of implementing an effective programme. Once they have become a way of life, consider expanding the range of measures on a 'need to have' not nice to have' basis. You should only have service standards that can be monitored accurately and with an appropriate degree of effort. Planning the Implementation Having defined the ideal set of standards, management is then faced with the challenge of working out how to measure performance against the standard. The standard is of no use if performance against it cannot be measured. Technology often has a role to play in monitoring performance against timeliness standards - particularly in-coming telephone calls. Correspondence management systems also help monitor the timely answering of written communications. Use of technology as part of the process may allow performance results to be based on 100% of all transactions, rather than on a sample. Feedback forms or follow-up calls/questionnaires can be used to check customer feedback. It is important to get expert advice on sampling. At this stage, all ambiguity must be eliminated from the wording of standards so that the whole organisation understands the measure. Suppose that '95% of calls to be answered in three rings' is a draft standard. It leads to the following questions: • What happens to the other 5% of calls? Do we care how long the customer has to wait? • Do we mean answered by a computerised voice or by a real human being? • Does the standard apply 24 hours/day, 7 days/week?
Development of the final wording and the associated data gathering process is likely to require a couple of iterations. Some compromises may be required as the cost of data collection is balanced against the ideal service definition. Accuracy and responsiveness standards are more challenging to monitor. Listening to calls, speaking to customers and independent assessment of written/ email communications against the original enquiry on a sample basis usually provide reliable results. Statisticians should be asked to give advice on sample sizes and data gathering techniques.
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Implementation of Service Standards Ownership, Visibility and Commitment are the key words. Ownership It starts at the top. The Chief Executive and top management team must be sponsors and champions. They must 'walk the talk', own the communication process and ensure initial and on-going focus on standards in every employee briefing. Each service standard must have a management owner, who is accountable for the delivery of the service. Performance against standard will normally be a feature of that individual's annual review. The management owner will also have the authority to implement process and other changes to improve operational performance. But there is no copyright on ideas, so all colleagues should be encouraged to make suggestions for performance improvement. Visibility 'How well are we doing?' should be a question that employees don't have to ask! Customer service standards and the current performance against those standards should be communicated to all employees on a timely basis. Notice boards, memos, email, team briefings, newsletters and the organisation's intranet are appropriate methods. Employees really appreciate the opportunity for discussion. Employees who are based out of the office are frequently overlooked, so they should get special consideration. Commitment The mission or values of an organisation are a good place to 'anchor' the commitment to customer service. The Chief Executive, all levels of management and all employees must be committed to delivering the promise to customers regardless of external or internal influences. It's not easy but remember 'service is your best salesman'. How are service standards used? The main use of service standards is as a tool to confirm to management that customers are receiving what they have been promised. Sales and marketing colleagues will want to take the operational standards and develop them into the sales pitch for the organisation. Whilst the enthusiasm is to be applauded, this approach should be resisted until consistent performance has been achieved and sustained. Service standards, and performance against those standards, should be reviewed regularly with employees. It is important that they know how the organisation is performing. Discussions about service standards can often generate ideas for process improvement to further enhance service delivery. Review of Service Standards Business economics, external factors and changes in the market place all have an influence on service standards. Just as these factors change, so should an organisation regularly review its service standards, probably every 12 -18 months.
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doc_670810323.pdf
service can be used as a source of a competitive advantage using service differentiation, image differentiation, product differentiation.
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Customer Service, as a Route to Competitive Advantage
Your Customers Are Your Most Valuable Asset - Treat Them Right!
It has been said that on average a happy customer or client will share their experience with three other people, while a negative experience will be retold upwards of 6 to 7 times. Today’s Era of Hyper-competition Hyper-competition is a key feature of the new economy. New customers want it quicker, cheaper, and they want it their way. The fundamental quantitative and qualitative shift in competition requires organizational change on an unprecedented scale. Today, sustainable competitive advantage should be built upon corporate capabilities and must constantly be reinvented. Many firms strive for a competitive advantage, but few truly understand what it is or how to achieve and keep it. A competitive advantage can be gained by offering the consumer a greater value than the competitors, such as by offering lower prices or providing quality services or other benefits that justify a higher price. The strongest competitive advantage is a strategy that that cannot be imitated by other companies. Competitive advantage can be also viewed as any activity that creates superior value above its rivals. A company wants the gap between perceived value and cost of the product to be greater than the competition. One of the most important questions people ask when they are focused on improving their quantity and quality of business is: “What is my competitive advantage? What makes me unique, memorable, special… what truly sets me apart from the rest?" While there are no definitively right answers to that question, most people come to some conclusion that customer service is a critical component of your competitive advantage. For most businesses, the service they offer can vary from exceptional to not so hot, depending upon circumstances. Why is that? Why does the same company, and even the same people within that company provide world class service some of the time, and marginal service (or worse) other times? That answer can be found in asking a different question: “What makes you (or your staff) happy when serving your customers?” While these answers also vary, most people come up with some sort of variation of “I am happy when my customer is happy.” Do we enjoy dealing with agitated or disgruntled people? Normally not. We derive our joy from delivering value, by making others feel good about their experience, and by exceeding people’s expectations. What comes first then? The happy customer or the happy person serving the customer? This The happy person serving the customer needs to come first, because it is a very unusual day when your customer comes to the company people to cheer them up.
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We believe exceptional customer service is rare because society has become somewhat immune to what could be described as borderline abusive treatment. Do we all remember many such incidences where we our self experienced or heard someone else describe a truly exceptional customer service experience? We would contrast that with our personal experiences or stories we have heard from others describing their experiences often ranging from awful to even worse. In order to envision exceptional, we probably need to consider the operative word, service. In this context, service could mean work or the performance of duties for others. Doesn't sound too exciting, does it? In the same context, exceptional could means being the exception, unusual, or perhaps well above average. If we add the word exceptional, that spawns a little more excitement. In the commoditized "Wal-Mart" world that we live in, customers have a smorgasbord of choices when buying the same or similar products or services. The factor which most often differentiates average (or even above average) from exceptional is our people. Human Performance Strategies has studied customer behaviors based upon the non-cognitive function of the human brain. Non-cognitive intelligence is more commonly referred to as Emotional Intelligence. The most important thing required to deliver exceptional customer service boils down to the recognition and affirmation of human values. Here are some of the views and considerations regarding exceptional customer service: • Developing processes to ensure exceptional customer service is a savvy business practice and it is obviously much less expensive to retain versus replace customers. • When you make a mistake with a customer always overcompensate. • Ask, don't assume. Always get the customer involved in solutions; e.g. if we could resolve this issue to your satisfaction what would it look like, what's seems fair to you? • Remember, people tell, on average, three people about exceptional customer service experiences and eleven about their unsatisfactory experiences. Run the numbers! • All other things being equal, exceptional customer service creates unique competitive advantage with the same or even fewer resources. • What company is doing today to inspire the best from its people to deliver exceptional customer service? Does it know how its customers feel about doing business with it? Do they remain loyal by chance or do their encounters with company people motivate them to return again and again? A little competition can be a healthy thing. It can also be both costly and disastrous if the company is not up to par with others in its particular business or industry. How it handles competition can be a direct link to the success or the failure of that company. It can, however, significantly increase its chances of coming out on top by creating a competitive edge. Having a competitive edge means possessing an advantage over the competitors. Before one can accurately identify its competition, it's crucial to first define and analyze its target market. Companies should ask themselves:
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What are you selling and to whom? Next, it should make a list of those companies trying to do the same. What are their strengths and weaknesses? Their strategies and goals? How do they draw in customers? What, if anything, makes them stand out from the pack? If company does not have this vital information, it should get it quickly. Assessing its competitors openly and honestly will play a key role in helping it develop a competitive edge. Most of the successful companies have sized up their target markets and zeroed in on a unique approach to meet their customers' needs, values and expectations. Through important considerations like location, product, services and product features, they have somehow found a fresh spin, a new way to offer buying incentives that similar companies either can't or don't offer. Once the company has developed a competitive edge, maintaining it will be a daily challenge. It will require it to forecast where the trends and changes in its industry will come from, and what the company can do to stay ahead of the game. It will demand that the company should continuously track its competitors and their future plans. Company will also need to recognize that through the course of time its customers' needs may change due to a variety of circumstances.
The centerpiece of any strategy is encapsulated in an organization’s Winning Proposition. If an organization can’t define its Winning Proposition in a simple and compelling way, it cannot claim to have a strategy. What does winning mean? Does it mean your ability to survive? Does it mean keeping your shareholders happy? Does it mean providing benefits for your customers and stakeholders and the communities in which you live and operate? Does it mean having the largest market share? Winning encompasses all of these things, but to take it out of the realm of slogans we need a rigorous measure that tells us unambiguously whether we are winning or not. This can be distilled to one simple test: a Winning Proposition must clearly produce a competitive advantage for your organization. “Winning Proposition must clearly produce a competitive advantage for your organization.” Unfortunately, “competitive advantage” is one of those buzz phrases that has become a substitute for thought. We have all heard executives proclaiming proudly that their organizations have a competitive advantage without offering any clear explanation of what that means. The fact is that competitive advantage is very tangible and can be evaluated, so there need be no speculation about whether it exists. In fact, I would argue that it is the single most important gauge of organizational success. To clarify this assessment, we need to define exactly what we mean by competitive advantage. The underlying idea is that in a competitive environment, everything is comparative. Absolutes have no meaning. If we hear that an Olympic athlete has run the 100-meter race in 9.8 seconds, this tells us very little (unless he or she was the only runner). But if we hear the athlete won the gold medal, this tells us everything. The same is true in business.
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Now, let me pose a question. In attaining competitive advantage, which is more important: providing unique benefits for customers or achieving superior operational effectiveness? This question is a trap. Clearly, the one without the other (at least to some degree) is not the answer. The temptation is to say both and be done with it. But while both are true, that answer is incomplete and therefore misleading. Doing both obviously is necessary, but it’s not sufficient. The real answer is that competitive advantage lies in the difference between the two. It’s the gap that says it all. Mind the Gap If you have ever visited London, you probably have had the experience of riding on the London underground railway system. When a train pulls into a station and the doors open, a loud announcement echoes along the platform. Three short words caution passengers to watch their step as they get on and off the train, to avoid tripping in the space between the train and the platform: “MIND THE GAP!” Competitive advantage in a business entails exactly the same injunction: Mind the gap! There are many gaps you ignore at your peril. At its most fundamental, though, competitive advantage means achieving a bigger gap than your competitors between the value your customers see in your product and the costs you incur in providing that product.
Figure 1. Achieving Competitive Advantage “Competitive advantage means achieving a bigger gap than your competitors between the value your customers see in your product and the costs you incur in providing that product.” This gap is not a matter of subjective opinion. It can be objectively assessed, as Figure 1 illustrates. As this diagram shows, you achieve competitive advantage if your value/cost gap is bigger than that of your competitors. Let’s briefly examine the elements involved in this simple measure. Value can be described as the numerator, and costs as the denominator. The denominator (costs) is straightforward. Any organization can—and should—regularly benchmark its costs against those of its competitors. Published data, supported by good analysis,
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can be relied upon to produce a well-grounded comparison. This is not particularly difficult. It is done all the time. But what about the numerator? How do you compare the value your organization creates against your competitors? The crucial point to understand is that there is a dynamic interaction between value, price, and volume. Value is the driver—the prime mover, if you like. Price and volume are derivatives of value; they have no independent existence. So to assess the amount of value you are creating, look at its outputs: price and volume. This is the ultimate gauge of the amount of value you are generating. How do you measure whether you are producing superior customer value? Rather than just claiming it, you can assess it. When you are generating greater value than your competition, you can either charge a premium price without sacrificing volume, or you can improve market share at comparable prices. If you are losing on value, then both volume and price will be under pressure, and one or both will be falling. Market share does not have a life of its own; it’s a child of customer value. Similarly, price does not have an independent existence; it, too, is a derivative of value. This logic is ruthless: Your customers will convey it to you very loudly in very simple terms. Customers will buy more of your offerings, or pay you a higher price for them, only if they place a higher value on them than the competing alternatives. And, of course, the reverse is also painfully true. Stretching the Elastic Band How can you improve your competitive advantage? Think of an elastic band stretched between value and costs. The wider you can stretch this elastic band, the greater your competitive advantage and the larger the amount of profit being generated. “When you compete on costs, you are really competing only against yourself. Winning on value is much tougher. You have to outcompete your rivals.” Many businesses are tempted to compete on efficiency alone, and constantly stress operational effectiveness as a cure-all. In many ways, this is an easy way out. If you want to reduce costs, competitors can’t stop you. But when you compete on costs, you are really competing only against yourself. Winning on value is much tougher. You have to outcompete your rivals. Competing on costs is a requirement for staying in the game. Creating superior value is a necessity for winning the game. The key, of course, is to pull both upward and downward on the elastic band. Knowing where and how to stretch the band are strategic decisions that ultimately decide the difference between you and your competitors. Take a look at the airline industry. Many of the big carriers fly the same type of aircraft to the same destinations in similar time slots with comparable safety records. With all this sameness, there is no basis for creating competitive advantage, right? Wrong. Airlines such as Virgin Atlantic and Singapore Airlines are able systematically to charge a price premium over their competition. Why? Simply because they concentrate on understanding the most important needs of their customers and on delivering a better all-round experience, consistently. We know they are creating greater value, because their customers are paying them more. We can’t argue with the facts.
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Cemex, the international cement company based in Mexico (which recently ran into difficulties for financial engineering, not operating reasons), achieved competitive advantage by pulling the elastic upward. Its costs per ton are similar to its largest global competitor, Holcim, but its price per ton is much higher.[1] Cemex provides higher value through a superb just-in-time system for cement deliveries that keeps construction projects humming along without delays, a major economic benefit. Cemex’s customers agree, and are willing to pay a higher price. There is, in the final analysis, no such thing as a commodity. Many people might consider cement or an airline trip to be a commodity, but these examples prove otherwise. To be sure, you can try to compete on price, but price cuts can be quickly neutralized, and the net effect is to transfer profits to customers. What companies like Cemex, Virgin Atlantic, and Singapore Airlines demonstrate is that when you consider the total customer experience, not just the underlying product, you can always find ways of generating superior value. To call your product or service a commodity is to abandon the pursuit of value, and hence the pursuit of competitive advantage. A second point is that it is perceived value that counts. A brand is a perception of value in the mind of the customer. The customer’s subjective reality is your objective reality. “It is perceived value that counts. A brand is a perception of value in the mind of the customer. The customer’s subjective reality is your objective reality.” Consider the following example: In the mid-1980s, Hitachi and General Electric jointly owned a factory in England that made identical TV sets. The only difference was the brand names on those sets. Through superior image building, which created greater trust in the minds of customers, the Hitachi units sold for $75 more than the GE sets, and sold twice as many![2] That’s what prompted GE to get out of the TV set business. It would never be able to match Hitachi’s profitability because it had lost the game on the perception of value. When you think about it, you can never win by competing on price alone. The customer won’t let you. In the customer’s mind, you are competing on the relationship between price and value. This is true whether you acknowledge it or not. As Warren Buffet has pointed out, value is what customers get, and price is what they pay in return. The two are inextricably connected.
Case of GM and Toyota: GM’s Race to the Bottom Cautionary tales teach us as well. One of the most instructive examples I know is the sad story of General Motors’ inexorable death march—a cautionary tale with few equals in the scale of its value destruction. This was not a sudden, unexpected event; it was a saga that played out over about 40 years. The causes of the misery were not hidden. They were starkly visible. And yet GM seemed strangely incapable of addressing the reality that was slowly killing it. In its prime, GM boasted more than 50 percent of the U.S. auto market.[4] It seemed unassailable. Its array of brands, as its advertisements proclaimed, matched “every purse and purpose,” albeit concentrating on the larger vehicles Americans preferred. Its profits were monumental. But since the first oil shock in the late 1960s, that market share has steadily declined and incredibly, now sits at under 20 percent. As a result of this catastrophic market-share slump, GM experienced a
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financial collapse and eventually had to be rescued by the government. What led to this tragic downfall of an American industrial icon? The outline of the story carries a familiar ring. As GM grew to prominence, it became bloated, bureaucratic, inward-looking, and complacent. Product quality slipped further year by year, causing long-lasting damage to the image of its brands. It became a sitting duck for a customerfocused competitor. Enter Toyota, which had a perfect opportunity to make its move when oil prices spiked again in 1980. Essentially, Toyota pursued a three-pronged attack on a vulnerable GM. It: • Introduced highly reliable, fuel-efficient cars, which consistently outperformed GM brands on product quality. • Instituted the lowest manufacturing costs in the industry, based on the awesome Toyota Production System. • Developed superior brand appeal, based on the total customer experience, exemplified by its Lexus brand. While Toyota was the most successful, other Japanese competitors, such as Honda, followed a similar strategy, as GM’s market share drained away bit by painful bit. What was GM’s reaction to this meltdown? Astonishingly, senior management repeatedly blamed the company’s woes on its so-called heritage costs. During the good years it had agreed to generous worker benefits, such as pension and healthcare payments for retirees. These obligations eventually came to represent a cost penalty of about $2,500 per car, versus Toyota. There is something I have never been able to understand about this explanation. Presumably, these heritage costs were fixed, rather than variable, costs. Therefore, as GM’s market share continued to fall, the “heritage” cost penalty per car would inevitably rise, making this a largely self-inflicted wound. Let’s assume that roughly half of the cost penalty ($1,250) was due solely to GM’s market share collapse. This would mean that the $1,250 was actually a value deficit, not a cost deficit. Another telling statistic is the estimate by James Womack, who heads up the Lean Enterprise Institute, that GM typically sold its cars, after discounts and cash rebates, at $2,000 less than the comparable Japanese models.[5] The statistic is revealing because it explains how GM’s value deficit translates directly into dollars. Now let’s tally this up. If we add the $1,250 per-car value deficit arising from the market share loss to the cash discount gap of $2,000 per car, that puts GM’s total value deficit at a jawdropping $3,250 behind Toyota on every car it sold. It is not my purpose to take cheap shots at a company in dire circumstances. What I am interested in is the lessons we can learn from its difficulties. To begin with, it is pretty clear that GM’s fundamental problem was only in part due to its cost disparity, important though that was. Its fatal “illness” was that it was losing out badly on value. How do we know that? Let’s go back to our equation to assess competitive advantage. GM’s problem lay in its crumbling numerator.
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Toyota/Honda’s Value/Cost Advantage versus GM’s Both its market share and auto prices suffered serious declines versus Toyota and Honda. The Japanese car makers cleaned GM’s clock at the value game. Toyota and Honda stretched the elastic band both at the top and the bottom to a much greater degree than GM was able to (see Figure. With this persistent deficit on value, GM’s fate was sealed. In recent years the company tried mightily to save its way to success, but this seldom works. Each time it experienced a negative step-change in volume, it moved to cut its costs to match the lower volume. By the time it had reached the lower cost level, volume had dropped even further, so it embarked on yet another round of cost cuts, in an endless chain reaction. With costs chasing volume downward, this amounted to a race to the bottom. “Strategy is a bet on the future. Once you start to lose the value game, it’s very difficult to scramble back, and your options for the future are severely limited.” It’s understandable that GM—and other organizations in similar situations—turn to cost-cutting as a strategy for salvation. Costs can be controlled internally; competitors cannot stop you. But lower costs represent a limited advantage. The competitor that beats you on value is the more serious long-term threat. Strategy is a bet on the future. Once you start to lose the value game, it’s very difficult to scramble back, and your options for the future are severely limited. To be fair, GM recently did make up impressive ground on quality. However, in products with a long purchase cycle, brand image is very “sticky,” and in the end, product improvements came too late to save the company.
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The key lesson here is that if you have a value problem, then that is what you must acknowledge and fix—and fast. You can’t cure a value problem through cost reductions. It’s like having liver disease and treating your lungs instead, and then expecting a cure. The only salvation for GM would have been an early diagnosis of the value issue and an urgent set of measures to turn around its brands. Failure to treat the right disease is what ultimately led to bankruptcy. Value Leadership through a Winning Proposition Pursuing value is obviously the right thing to do, but this is plainly not a competitive statement. It ignores the most important question of all: How much value? In a competitive marketplace, absolutes have no meaning. It’s the margin of difference—the gap—that counts. All value is relative, and customers have choices. Competitive advantage comes from providing greater value than your competitors for your chosen customers. The task, in other words, is value leadership. “Competitive advantage comes from providing greater value than your competitors for your chosen customers. The task, in other words, is value leadership.” This is where the words we use really matter. If something is crucially important, we should make it explicit, not hint at it indirectly. The problem is that companies so often allow the competition for superior value to be implicit, so that it happens by default. They need to make it explicit, and the way to do that is through a clear Winning Proposition. An organization’s Winning Proposition encapsulates measurable competitive advantage and defines how an organization will win the competition for value creation. It does that by answering these questions: • What unique benefits will we offer our customers that will provide a compelling reason for them to choose us over our competitors? • How will we translate this exceptional customer value into superior financial returns for our enterprise? These two questions force you to define how to capture both superior customer value and superior economic value, and how to convert the one into the other. The first question is a reminder that we must adopt an outside-in view of the world. An insideout view will lead you to think you are selling products or services. But if you take an outside-in perspective, it becomes clear that customers are not buying products or services; they are actually buying benefits. “An inside-out view will lead you to think you are selling products or services. But if you take an outside-in perspective, it becomes clear that customers are not buying products or services; they are actually buying benefits.” For example, when customers buy Windex, the window cleaner, the benefit they are seeking is not the product itself. They are seeking streak-free, clean windows. When they buy a lawn fertilizer, they want to create a beautiful lawn that will enhance their homes and be the envy of their neighbors. If these products fail to deliver on the benefits, the underlying businesses will fail. Many businesses make the mistake of defining themselves purely by the products they make—“We’re in the fertilizer business.” What they find hard to do is define the competitive
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benefits those products provide. Defining those benefits with clarity not only makes them more competitive, it clarifies to everyone inside the organization what they need to concentrate on, each and every day. The second question is actually a zinger. If you don’t have to generate superior profits, the first question becomes dead easy. You could just load your products with lavish benefits and sell them at half price! Customers would love that. Balancing the first and second questions is what makes business success so hard to achieve. Note that this second question challenges a business to aim at superior financial returns. Why not just satisfactory returns? There are a few compelling reasons for this: • Investors, just like customers, have choices. Superior returns enable you to raise capital more readily and at a cheaper cost than competitors. • Competitors with higher gross margins can outspend you on R&D, advertising, and human development, to fuel their growth at your expense. • Consistently superior financial results eventually raise the price/earnings ratio on your stock. A strong stock price can be used by you as currency for acquisitions. Conversely, a weak stock price can make you an easy acquisition target. What’s Your Winning Proposition? The GM debacle underscores the need for every business to have a clear Winning Proposition that will define its competitive advantage and galvanize the energies of its people behind the right things. In order to lead an organization effectively, that Winning Proposition has to live in the hearts and minds of all the employees who are expected to act on it. Many executives seem to have difficulty nailing down a clear Winning Proposition, and too often will fudge this critical component of their strategy with some vague rambling statement that doesn’t do the job. That’s tantamount to an army marching into battle without a clear definition of how it will win, with the general saying, “Just go out there and fight. Execution is everything.” That clearly is a cop-out for effective leadership. “The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide.” The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide. Here are some examples: Google: “We organize the world’s information and make it universally accessible and useful.” Lego: “We offer products whose unique design helps children learn systematic, creative problem solving—a crucial twenty-first-century skill.” Institute for the Future: (a nonprofit research organization, of which I was once the chairman): “We are sense makers about alternative futures, to help organizations make better decisions in the present.” Hallmark Cards, Inc.: “We help people connect with one another and give voice to their feelings.”
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The key attribute of all these statements is that they focus on the superior benefits customers will receive, not just the internal actions these organizations will take. They offer a compelling reason why customers should choose to do business with them. What’s not a Winning Proposition? “We are the best in our industry at operational effectiveness.” My answer is, that’s good, but it’s not enough. You can be as efficient as you like, but if you don’t have customers, you’re broke. You must describe both your numerator (customer value) and your denominator (costs). Another common response to my question: “Our efforts are all directed at creating superior shareholder value.” Unfortunately, this statement is not useful. Shareholder value is an outcome (like the bottom line), not a strategy. It’s like a coach telling a football team that they need to end the game with the highest score. We can assume they know that already. The question is how. Without creating superior value for customers, I doubt there is a business in the world that can generate superior shareholder value. Leaders need to define how an organization will generate that customer value. Shareholder value will surely ensue—provided, of course, it does that efficiently. A Winning Proposition is, in short, the centerpiece of strategy. If an organization can’t define its Winning Proposition in a simple and compelling way, it can’t claim to have a strategy. The acid test of whether an organization has a Winning Proposition is whether the resulting actions achieve competitive advantage. “The essential starting point for a Winning Proposition is to capture the simple essence of the benefits your organization will provide.”
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Porter defined cost leadership and differentiation in products as two parameters on which organization can have competitive advantage. Differentiation concept can be extended further for building competitive advantage: Service Differentiation Companies can also differentiate the services that accompany the physical product. Two companies can offer a similar physical product, but the company that offers additional services can charge a premium for the product. Mary Kay cosmetics offers skin-care and glamour cosmetics that are very similar to those offered by many other cosmetic companies; but these products are usually accompanied with an informational, instructional training session provided by the consultant. This additional service allows Mary Kay to charge more for their product than if they sold the product through more traditional channels. In the personal computer business, Dell and Gateway claim to provide excellent technical support services to handle any glitches that may occur once a consumer has bought their product. This 24-hour-a-day tech support provides a very important advantage over other PC makers, who may be perceived as less reliable when a customer needs immediate assistance with a problem. People Differentiation Hiring and training better people than the competitor can become an immeasurable competitive advantage for a company. A company's employees are often overlooked, but should be given careful consideration. This human resource-based advantage is difficult for a competitor to imitate because the source of the advantage may not be very apparent to an outsider. As aMoneymagazine article reported, Herb Kelleher, CEO of Southwest Airlines, explains that the culture, attitudes, beliefs, and actions of his employees constitute his strongest competitive advantage: "The intangibles are more important than the tangibles because you can always imitate the tangibles; you can buy the airplane, you can rent the ticket counter space. But the hardest thing for someone to emulate is the spirit of your people." This competitive advantage can encompass many areas. Employers who pay attention to employees, monitoring their performance and commitment, may find themselves with a very strong competitive advantage. A well-trained production staff will generate a better quality product. Yet, a competitor may not be able to distinguish if the advantage is due to superior materials, equipment or employees. People differentiation is important when consumers deal directly with employees. Employees are the frontline defense against waning customer satisfaction. The associate at Wal-Mart who helps a customer locate a product may result in the customer returning numerous times, generating hundreds of dollars in revenue. Home Depot prides itself on having a knowledgeable sales staff in their home improvement warehouses. The consumer knows that the staff will be helpful and courteous, and this is very important to the consumer who may be trying a new home improvement technique with limited knowledge on the subject. Another way a company can differentiate itself through people is by having a recognizable person at the top of the company. A recognizable CEO can make a company stand out. Some
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CEOs are such charismatic public figures that to the consumer, the CEO is the company. If the CEO is considered reputable and is well-liked, it speaks very well for the company, and consumers pay attention. National media coverage of CEOs has increased tremendously, jumping 21 percent between 1992 and 1997 (Gaines-Ross). Image Differentiation Armstrong and Kotler pointed out inPrinciples of Marketingthat when competing products or services are similar, buyers may perceive a difference based on company or brand image. Thus companies should work to establish images that differentiate them from competitors. A favorable brand image takes a significant amount of time to build. Unfortunately, one negative impression can kill the image practically overnight. Everything that a company does must support their image. Ford Motor Co.'s former "Quality is Job 1" slogan needed to be supported in every aspect, including advertisements, production, sales floor presentation, and customer service. Often, a company will try giving a product a personality. It can be done through a story, symbol, or other identifying means. Most consumers are familiar with the Keebler Elves and the magic tree where they do all of the Keebler baking. This story of the elves and the tree gives Keebler cookies a personality. When consumers purchase Keebler cookies, they are not just purchasing cookies, but the story of the elves and the magic tree as well. A symbol can be an easily recognizable trademark of a company that reminds the consumer of the brand image. The Nike "swoosh" is a symbol that carries prestige and makes the Nike label recognizable.
The following questions are designed to help companies determine whether they have a competitive edge: • • • • • • • • • • • • • • • • • • Have I clearly defined my company and its target market? Who are my competitors? What is my company's clear-cut strategy and plan for success? Do I regularly track my competitors' moves? Do I take advantage of my competitors' weaknesses? What have I learned from my competitors' mistakes? What have I learned from my competitors' strengths? Do I take advantage of competitive opportunities? Does my company possess a uniqueness that easily separates it from my competitors? Would I pay money to use my own product or service? How do my prices compare with the rest of my industry? Who are my customers? Do I have a loyal customer base? Am I sensitive to my customers' needs and requests? Are my employees trained in customer service? What trends do I see for my industry in the future? Do I have the capabilities and resources to compete in the market five to 10 years from now? What is my vision for my company five to 10 years from now?
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Identify Your Customers Once the companies have a handle on its competitor’s information, the next important step is to clearly define its customer base. To clearly identify its customer base, company can ask itself following few questions: • Where do my customers live? • Approximately how old are my customers? • Are my customers primarily male or female? • What is the income level of my average customer? • What are my customers' needs? • What motivates my customers to buy, i.e., price, quality, credibility, customer service, location, etc. • When do my customers do their buying? Daily? Weekly? Monthly? Annually? Seasonally? • How much research do my customers do on a product or a service before spending money? • What services or products are my customers willing to spend more on? • What services or products are my customers willing to spend less on? • What are my customers' buying trends and habits? A good way to identify what customers want is to talk with them and really listen to what they have to say. Customer feedback can be a cheap and invaluable tool in creating a competitive edge. Getting to know about customer service: Why do we go in one particular grocery store or the dry cleaner, or eat at a particular restaurant. Consciously or unconsciously, we make decisions about which businesses will get our own hardearned money. Do we choose the big grocery store over the small corner market? If there are two dry cleaners close by, do we tend to go to one instead of the other? If so, for what reasons? Differentiation: In today's crowded marketplace, consumers have lots of choices. In order to gain a competitive advantage, company must give customers a reason to choose it over the competition. It must make it its business to see that its product stands head and shoulders above the crowd. While lowering prices is certainly a viable way to reel customers in, there are other things one can do to make company unique simply by using a little imagination and creativity. The following are ways to differentiate the product and/or company from your competitors: • Look at what competitor has to offer. What new spin can a company put on it? • Assess product. Can company add any new features that might make it more desirable or useful than its competitors? • Think of new uses for old products or new ways to package or bundle the offerings • Make sure the products are user-friendly and easy to order. • Can company provide exceptional customer service, hours of operation, guarantees, etc.? • Are there any special services it can offer to its customers that competitors don't?
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Changes in the external environment make companies change their strategies and the offerings: Lifestyle Trends The 1970s were different from the '80s, which were different from the '90s. Lifestyles change with time. Trends come and go. Predicting what will be important in people's lives down the road is no small feat, but it is achievable and can make companies very rich. For example, the trend in the '80s was to work, work, and work. In studying that trend, one could very easily look ahead and conclude that people would eventually run out of steam. Where would they go? A good bet would have been their homes. Thus, home supply businesses in the '90s skyrocketed as more people became homebodies, which created more demand for home supplies and decorations. Technological Trends Technology changes all the time and it is crucial that company keeps up with it. Once some new and viable technology enters into the industry, it should be sure to grab it because most likely the competitors will. Company can keep a few steps ahead of new technology by attending trade shows and conventions. Press releases on technology will also give clue as in to what's in store for the future. Economic Trends Because of economic conditions some years prove good for the company and some prove nad. This can be key in determining when to place the product in the market. For example, if the product is more luxury-driven, chances are it's not going to do well during a recession. Regular dialogue with financial experts, such as stockbrokers and bankers, can help predict how people will be spending money in the future. The economy can directly change the customer base, and one should always have a contingency plan for how to combat it. It is hard work. Real customer service is emotional labor. Companies have to dance between being truly empathetic to a frustrated customer's problem and self preserving as a customer, pushed beyond the limits of human endurance, takes out their frustrations on themselves directly. The former is the norm and the latter the exception, but both efforts take a lot of energy. The problem is, most of the people that apply for customer service jobs could do it. Either they don't have the people skills, but are excellent technically, or they don't have the technical skills. To get people motivated and give them the tools they need to do the job of customer management takes real effort. Some companies’ incredibly lenient return policy allows them to say "Try it, if you don't like it you get your money back immediately, no questions asked" or "I am really sorry that we couldn't get you connected, here is your money back and a free pass for your next connection". By telling customers that this is how we do business, and actually sticking to it, we make our customers confident in our ability to make them happy. We get more risk takers and advocates that push our products into markets where they might otherwise go unnoticed. If companies strive to only be as good as their competitors, they are doing a disservice to their customers- and setting themselves up to lose some of them. What is needed is to go above and beyond what competitors are doing. This may be easier if our product is unique in some way but it is much harder when companies sell exactly the same thing that others sell. The only way to
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differentiate themselves is either with a lower price or better service. And with profit margins continually being squeezed, a lower price is rarely the answer. Markets Today Markets today are global, enterprises can compete across boundaries and into everyone else's territory, distances have been reduced, communication costs are low and one does not need to be in a geographical region to be able to service customers. The internet today enables an organization to communicate with and support customers however far away they might be. The customer also has far greater choice today. The customer is an informed individual, upwardly mobile and with a keen understanding and update of global trends and advances. The customer is far more demanding today than a few years ago. Tolerance levels are lower, the time available to make a pitch a lot less and the forgiveness that one could expect earlier can no longer be taken for granted. The channels for communication have multiplied. Internet, mobile & SMS are the modern methods that provide 24 x 7 availability and global connectivity. Thousands of brands are created everyday, the pitch through media and direct communications has reached enormous proportions, the battle for the share of the customer's mind is a lot tougher. Brand loyalties are easy to upset, a small slip could see a large downside in sales and future potential, bad news spreads fast, there are many competitors willing to fill in the void created by your exit from the customer's goodwill.
Product Differentiation Price is a critical tool for differentiation. Quality and reliability, technology, design, features and service are assumed to be on par with other offerings. Today, competing players, small and big alike, are capable of delivering world class quality at any scale of operations. The others who do not match these are not players anymore. Brand image and perception plays a big role in purchase decisions. Brand perceptions are guided largely by communications and most often more by a direct feel and experience that the customer has. Pricing is dynamic and companies respond to market swings in hours and minutes. Competitor offerings are quickly matched. Market driven pricing is in vogue in many competitive markets and the ability of the company to sustain these prices and drive internal costs down determines profitability. Pricing therefore is a smaller differentiation tool than it used to be. Price is also not always a factor in the customer's mind. Value is more likely to be the decision point. If the customer perceives value in its many hues, price is no longer critical. Customer service is a critical differentiation tool. Assuming that quality of offering and pricing are similar across various competitors, a customer's experience and trust in a brand could be leveraged substantially by better customer service, pro-active initiatives in communication and incentives and a friendly, non-intrusive and responsive front-office. Marketing & Communications Promotions are no longer restricted to print advertising and sales are not restricted to retail outlets or door-to-door selling. The availability of many channels for communication and product delivery and the ability to blend more than one channel and build innovative packages means communications has become more complex and critical. Customer acquisition is a large cost in these days of global competitiveness and universal communications. Competition is getting better and are able to retain their customers well.
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Winning over customers from competition could be very difficult. Breaking into new markets could be as difficult since most markets are now saturated with global players and local wannabes who provide personalized service and innovative offerings while keeping prices very low. Customer retention is therefore very critical. Competitors are forever trying to break-in to the customer's mind and a short blink could be enough to take the gaze away from you. You need to be right all the time to keep the customer and ensure positive brand perception. Word-of-mouth and referrals have become much simpler today. Emails & SMS's can make or break brand perceptions across distance and geographies. Online forums and personal publishings spread good and bad news and opinions across the global rapidly. Keeping customers' happy has never been more important. Front-office The definition of a front office has changed substantially. While earlier it was an office or showroom or a bank branch, it could now be in addition a call center, a website, a chatroom or a channel outlet. Your neighbor or friend could also be a front office in this age of network marketing. Ubiquitous is the name of the game. The more you can be omnipresent, the greater is the chance of higher customer comfort and therefore some brand loyalty.
Customer care for business advantage In an environment like today's, customer care could be a significant advantage and could help create an edge over competition. Customer care needs to be delivered efficiently, quickly and with flexibility that enables a one-on-one personalized experience for the customer. Customer care needs to be holistic, non-intrusive, available 24 x 7, accessible from anywhere in the world. Customer care needs to be 100% : 100% availability to the customer, 100% consistency, 100% response record and 100% fulfillment of customer's needs. Customer care must address everyone from a casual observer, to an interesting prospect, a satisfied and disgruntled customer, a past customer, a user of a competitor's product, a media person or a researcher. The customer care process must travel right through the relationship building and sustaining cycle. The customer care interface and interaction must be consistent all the time. Customer care today encompasses servicing of customer requests, pro-active feedback solicitation, listening in carefully to customer's views, needs and perceptions, looking into any grievances that the customer might have, communicating all the time through personalized and mass communication channels, offering personalized and interactive incentives and promotion programs, getting the customer to participate in the brand. Customer care is about communicating, listening and ensuring a happy experience with your product and organization. Customer care is also about educating, sharing and learning. Customer care could well be the edge for you in building stronger brand loyalties, reducing customer churn and enabling word-of-mouth to create positive brand perceptions and higher customer acquisitions. Technology can help deliver this edge.
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Technology What can technology do for customer care ? For starters it can automate and integrate your internal processes so that your organization is more efficient, responsive and flexible to addressing your customers. Technology could provide you with 24 x 7 interactive front-offices that are accessible from anywhere in the world. Technology could enable your customers to use the most convenient method to reach out and communicate with you. Technology could integrate all this into a single unified environment that brings your organization, your channel and your customers together and ensures every need of the customer is addressed to their satisfaction. Technology could enable you to scale your customer care without having to scale your costs and resources proportionately. Technology could power you to create personalized, one-on-one communications with your customers and deliver this regularly to millions of customers worldwide. Technology could help you educate, train and continuously tutor your team in better management of customer interactions and product knowledge. Technology could help you educate, guide and counsel your customers. Technology could help you monitor the performance of your organization and measure the satisfaction of customers regularly without running out of energy and time. Technology could help you identify and zero in on specific areas of deficiency in your organization. Technology could actually be the key. Technology by itself will not generate a solution. Technology will only enable the solution. Technology will need to be blended with creating of the right attitudes and skills in your team, formulating and following through of an organizational commitment to customer care, creating and maintaining good content for learning, education and customer service, defining and enforcing systems and procedures and adopting a monitoring program that measures performance and success of your customer care program all the time.
Effective customer service is a source of competitive advantage A dissatisfied customer recounts his bad experiences with a business to his friends and acquaintances and, as a result, has a negative effect on the company’s reputation and bottom line. A dissatisfied customer is also highly likely to switch to a different provider, whereas an effective complaint handling process boosts customer loyalty. • Research indicates that the cost to a business of acquiring a new customer is many times higher than the cost of retaining an existing customer • A dissatisfied customer can be turned into a satisfied customer only if he contacts the business
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Reasons why the customer service of a business may not always work well • Too much focus on execution – selling products and services – and a resultant failure to assume a customer-focused corporate culture. • The number of dissatisfied customers is estimated to be much lower than it actually is • Failure to accept criticism; feedback is seen as a personal insult • Not being conscious of the fact that a dismissive attitude towards customer dissatisfaction and inadequate complaint handling processes have a negative effect on reputation and, as a result, significant losses in market share • Customer feedback is not viewed as a positive input and it is not exploited in efforts to improve customer satisfaction Reasons why customers may not complain even when they are dissatisfied? • Not believing that complaints would lead to a positive outcome • Concern that the complaint handling process involves excessive costs in terms of time and money • The monetary value of the product is considered to be too low to make complaining worthwhile Three steps towards better customer service: 1. Make giving feedback easy 2. Handle complaints in an appropriate manner 3. Develop customer service processes
How do you know if your service is as good as your competitor's service? The best way is to begin with some research then to actually go and shop at competitors’’ store. Companies should do it a few times, using all of the contact methods available. It would be a mistake for customers to form a judgment about the company based solely on one interaction. Is it good enough? While shopping at competition's store, company should ask itself if its own service exceeds, meets, or falls short of the standards set by its competitors. Perhaps in some areas they will find that they excel while in other areas they may fall short. Why it's not enough: Using competitors as the standard to measure business will fail to differentiate the company from its competitor. If its customers get exactly the same product with exactly the same service at exactly the same price, there's no difference and they'll just go wherever it's convenient. Company may not want a clientele whose reason for shopping in store over the competition is based on convenience. Instead, it wants them to be loyal patrons who will drive past the competition to get to its store.
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What to do about it. If the competitors know their customers' names, company should know their names and their birthdays too. If the competitors know their names and their birthdays, company should know their names, their birthdays, and their children's names. If company wants to make a preemptive strike against the competition, it should make a list of the many things that it would want a good friend to know about it and start learning that about its customers. It should try to move them out of the zone of "customer" into the zone of "trusted friend." It should go above and beyond what it is expected to do and it will find that the customers will drive past the competition to come to them. It is lot of work. But the sooner the company catches it, the more likely it is that it can turn it around and take its business to the next level. If it's left too long, the customer base will erode to a state of "convenience shopping" and company will have to work doubly hard to get them back. Companies can also differentiate the services that accompany the physical product. Two companies can offer a similar physical product, but the company that offers additional services can charge a premium for the product. Mary Kay cosmetics offers skin-care and glamour cosmetics that are very similar to those offered by many other cosmetic companies; but these products are usually accompanied with an informational, instructional training session provided by the consultant. This additional service allows Mary Kay to charge more for their product than if they sold the product through more traditional channels.
In the personal computer business, Dell and Gateway claim to provide excellent technical support services to handle any glitches that may occur once a consumer has bought their product. This 24-hour-a-day tech support provides a very important advantage over other PC makers, who may be perceived as less reliable when a customer needs immediate assistance with a problem. Horrible customer service is the fastest way to drive your dreams into bankruptcy. No amount of whining, whimpering, and halfhearted excuse-making can remedy selfish behavior. The late 1990? s brought us the age of "more selling, less service". Chasing new customers is the slowest way to grow your business. It takes massive amounts of time and more times than not doesn't even work. You chase. They stay out of reach. Somehow the easiest revenue strategy - investing in the relationships you already have - seems to be the solution that we avoid at all costs.
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Custome er Servic ce, as a Ro oute to C Competiti ive Advan ntage
Custome Service and Current Happenin in Electr er a ts ngs ronic Produ Industr ucts ries: We have considered laptops, mob biles, ACs, R Refrigerators and Washi Machine for which the ing es markets a not yet matured like we have for TVs. Thoug cell phon industries have seen so are m r gh ne ome revolutio onary trends in the past 3 years the pr roblems asso ociated with it also grew manifolds. For h w this reaso we felt th need of co on he overing it in these projec though the mobile pro cts oduct industr is ry almost at the maturity level. t y About M Mobile Phon Industry and in rela nes y ation with cu ustomer ser rvice: The India telecomm an munications i industry is th world's fa he astest growin telecomm ng munications industry, with 688.38 Million telephone (land 8 dlines and m mobile) subsc cribers and 6 652.42 Million mobile phone connec ctions as of J July 2010 It is also the s t second large telecomm est munication network in the world in terms of number of w d wireless conn nections afte China. Th Indian Mo er he obile subscribe base has in er ncreased in size by a fac of more than one-hu ctor undred since 2001 when the number o subscriber in the cou of rs untry was app proximately 5 million to 652.42 Million in July o 2010. astest growin telecomm ng munications in ndustry in th world, it i projected t India wi he is that ill As the fa have 1.15 billion mobile subscr 59 ribers by 201 Furtherm 13. more, projecti ions by seve leading eral global co onsultancies indicate that the total nu t umber of sub bscribers in I India will ex xceed the total subscribe count in th China by 2013. The in er he ndustry is ex xpected to re each a size o 344,921 of crore (US S$76.23 billi ion) by 2012 at a growth rate of ove 26 per cen and genera employm 2 h er nt, ate ment opportun nities for abo 10 million people dur out ring the sam period. Ac me ccording to a analysts, the sector wo ould create direct employ d yment for 2. million pe .8 eople and for 7 million in r ndirectly. In n 2008-09 the overall telecom equi t ipments reve enue in India stood at 136,833 crore (US$30.2 a 24 billion) d during the fis scal, as again nst 115,38 crore (US$25.5 billion a year bef 82 n) fore. 1902 - First wirel telegrap station est less ph tablished bet tween Sagar Islands and Sandheads. r d 1907 - First Cent Battery o telephones introduced in Kanpur. tral of s d 1913-1914 - First Automatic Exchange in t nstalled in Shimla. 23 Ju 1927 - Ra uly adio-telegrap system be ph etween the U and India with beam stations UK a, m at Kh hadki and Da aund, inaugu urated by Lord Irwin by exchanging greetings with the King of Engla and. 1933 - Radiotelep phone system inaugurate between t UK and I m ed the India. 1953 - 12 channe carrier system introduc el ced. 1960 - First subsc criber trunk dialing route commissio e oned between Kanpur an Lucknow. n nd . 1975 - First PCM system com M mmissioned between Mu umbai City a Andheri telephone and excha anges. 1976 - First digita microwav junction in al ve ntroduced. 1979 - First optic fibre syst for local junction co cal tem l ommissioned at Pune. d 1980 - First satell earth sta lite ation for dom mestic comm munications e established at Sec cunderabad, A.P.. 1983 - First analo Stored Pr og rogram Cont exchange for trunk li trol e ines commis ssioned at Mum mbai.
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1984 - C-DOT established for indigenous development and production of digital exchanges. 1985 - First mobile telephone service started on non-commercial basis in Delhi. Privatization of telecommunications in India The Indian government was composed of many factions (parties) which had different ideologies. Some of them were willing to throw open the market to foreign players (the centrists) and others wanted the government to regulate infrastructure and restrict the involvement of foreign players. Due to this political background it was very difficult to bring about liberalization in telecommunications. When a bill was in parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the number of parties having different ideologies. After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers. Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year. As the unbranded Chinese cell phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 5–6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives were taken by regulators and licensors, the total number of mobile subscribers has increased greatly to 617 million subscribers as of May 2010. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can
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be activated with a monthly commitment of US$0.15 only. In 2005 alone additions increased to around 2 million per month in the year 2003-04 and 2004-05. In June 2009, the Government of India banned the import of several mobile phones manufactured in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in India to track the sale and use of such phones. In April 2010, the Government was also reported to be blocking Indian service providers from purchasing Chinese mobile technology citing concerns that Chinese hackers could compromise the Indian telecommunications network during times of national emergency. A series of attacks on Indian government websites and computer networks by suspected Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially sensitive equipment from China. The companies reported to be affected by this are Huawei Technologies and ZTE.
More Statistics ** - This figures represent sell-in figures that the manufacturers sold to their distributors, operators(service providers) and individual customers. Also, the total number of units sold is estimated number based on the results from the manufacturers.
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New Models: With many companies now entering into the mobile handsets industry various new models have been launched in the past one year ranging from as low as 500 Rs to as high as 40000 Rs. August 2010 Nokia C1, C2 SonyEricsson Xperia X8, Cedar, Aspen, Yendo, Spiro and Zylo HTC Wildfire™ (with Reliance) July 2010 Samsung Galaxy i899 (with Reliance CDMA) LG Cookie Zip (510) June 2010 Nokia N900 Nokia E52, 6700 slide, X3 Samsung Omnia Lite, Star nano SonyEricsson XPERIA™ May 2010 HTC HD mini Grapes CG 888 Fly Booom (MC105)
General Warranty conditions: 12 months without the battery. Six (6) months for the following consumable parts and accessories: batteries, chargers, handsfree kit, cables and any other accessories that comes in box packing with the mobile phone. Repaired part(s) will be warranted for the remainder of the original Warranty Period or for Thirty (30) days from the date of repair, whichever is longer
The Limited Warranty does not cover user manuals or any third party software, settings, content, data or links, whether included/downloaded in the Product, whether included during installment, assembly, shipping or at any other time in the delivery chain or otherwise. The Limited Warranty does not cover a) normal wear and tear (including, without limitation, wear and tear of camera lenses, batteries or displays), b) transport costs, c) defects caused by rough handling (including, without limitation, defects caused by sharp items, by bending, compressing or dropping, etc.), d) defects or damage caused by misuse of the Product. The Limited Warranty does not cover defects or alleged defects caused by the fact that the Product was used with, or connected to, a product, accessories, software and/or service not manufactured, supplied or authorized by the mobile company or was used otherwise than for its intended use. The Limited Warranty does not cover defects caused by the fact that the battery has been shortcircuited or by the fact that the seals of the battery enclosure or the cells are broken or show
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evidence of tampering or by the fact that the battery has been used in equipment other than those for which it has been specified. The Limited Warranty does not apply if the Product has been opened, modified or repaired by anyone other than an authorized service centre, if it is repaired using unauthorized spare parts or if the Product’s serial number, the mobile accessory date code or the IMEI number has been removed, erased, defaced, altered or are illegible in any way. The Limited Warranty does not apply if the Product has been exposed to moisture, to dampness or to extreme thermal or environmental conditions or to rapid changes in such conditions, to corrosion, to oxidation, to spillage of food or liquid or to influence from chemical products. General Problems Which consumers face while using phones: Audio jack of the phone is damaged soon after buying new phone... Joystick of the phone is also not working many a times. Companies take handsets for repair and if it is not repairable they give refurbished handsets instead of new ones. The color matches with the original piece. Complaints of service centers saying they do not have parts in stock to replace when there is need for doing it. Problems in the music player. Problem of phone getting hanged frequently. Charger getting damaged very fast or because of charger the phones getting damaged. Exorbitant service rates and charges for the parts that need to be replaced. Long days for which the service centers keep phones with them for repairing when customers have no spare piece to use during that period. Display problems. A display getting damaged soon after the warranty period is over. Sometimes the signal catching in the receiver fixed inside the phone is so weak that person cannot hear the person on the other side clearly. Keypads are of not so good quality and get damaged very early arising the need for replacement. Software faults and high installation charges. Service center staff not trained properly to handle the phones and parts getting damaged inside the service center which customers notice only after few days and thus have to go again to the service center to get it replaced by paying some more amount. Repairing is of so low quality that same problems resurface again and again thus requiring customers to revisit the service center. Speaker volumes are low and customers have to struggle to listen to the music or call if that is put on speaker. Heating problems in many models and also problems in connectivity to computers for data transfer. Rare but it happens that sometimes the similar looking phones with same models get swapped in the service center creating a whole lot of troubles to the customer later on. A phone automatically makes calls or connects to internet incurring usage charges. Touch screen pads getting damaged very early.
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What a company should do to solve these problems and to give excellent customer service: Companies should make sure the quality of the models of the cell phones they are bringing in the market. The phones without any problems or the mobile handset company which has least number of problems can be a competitive advantage. Service centers should be equipped well with not only sufficient tools and materials but also it should be automated and maintained by computers in the network as far as possible. This will allow users to switch the service center if they are not happy with one, and that too without the need of repeating the history of what problem has occurred in the phone. In the service center the people who represent the company though on the basis of contracts to third party dealers, should be trained and should be aware of companies values and practices. Cell phone industry is almost on verge of maturity stage and hence more and more innovations with low prices to attract the customers are happening. Moreover the average period of using mobile phones is just 2 years to 3 years. Considering this fact there lies a great opportunity for the companies in the repeat business.
Refrigerators and customer service in relation with it: General Problems Which consumers face while using refrigerator Customers generally find some common complaints when they are using the products of companies for their daily usage. 1. One of the common complaints is the leakage in the condenser, where the customer faces an issue where the refrigerator is not effectively cold so the effective use of the product does not take place; it is one basic thing on which the entire model depends and failure of which results in basic failure of the product 2. Customer also faced problems with ice makers, which resulted in lack of ice making in summer season, due to which the customer faces a lot of issues 3. Complaint also was in the control panel where the functions were not properly working which resulted in malfunctioning of the basic functions of the refrigerator 4. The customer was charged with excess amount for service even if the product was under warranty 5. A customer was given false details of the company and its service centres along with its numbers 6. Gas leakage was amongst one of the common issues which was faced by the customers 7. There was a common problem which was prominent by the gap between the customer care executives which spoke to the person having issues and the person actually responsible for repairing it. 8. Excessive noise by the product was again one of the common complaint which was seen in the consumer forums General Problems Which consumers face while using Washing Machine:
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1. The motor of the washing machine is not working properly 2. There is a basic problem of excessive noise of the washing machine which they are operating, which results in lot of noise pollution in the consumers vicinity 3. Water leakage is one of the common problems which is faced by the customer which is awfully irritating for the customer as it increases the work to be done by the customer 4. Delay in replacement of the parts which needs to be replaced is frequent 5. The spinner of the washing machine frequently gives issues to the customers 6. After the consumers have logged a complaint and they are given a time frame in which the consumer expects the executive of the company to be there where the consumer also makes some arrangement of time and space, but when the executive doesn’t turn up it is a big setback for the customer What are the companies doing currently and what should they be doing? The company are falling short in some or the other function, the technicians are not properly Dealing with Customer Complaints When a customer contacts your company to complain about a product or service received, it can be a blessing in disguise. For every person who complains, there can be hundreds who do not bother to complain but who also spread negative comments about your company. In situations where customer complaints occur, the complaint must be dealt with immediately and the cause of the complaint rectified. Some companies are not concerned with quality and often ignore complaints or deal with them dishonestly. Seeking customer satisfaction benefits a company in the long run. Dealing with complaints When the customer pays for a product or service, it is assumed that the product will work correctly or that the service received is as promised. Ideally, the customer will be satisfied, and there will be no complaints. If there is a problem and the customer complains about it, your company should quickly answer the complaint and solve the customer's problem. This is often done through your company's customer service activity. But also, you need to follow up and improve your business processes to rectify the problem. Solve the problem You need to immediately answer the complaint and solve the problem. It may be to give money back, exchange a product or do some repair. Special bonus To make sure the customer is completely satisfied, some companies will provide some special service or a reduced price on another product. This is done to assure the customer will come back for more business. Many retail stores have a generous return policy to satisfy dissatisfied customers. Dishonest customers Unfortunately, there are dishonest customers who will make false claims to get some bonus. Some people will use a product or piece of clothing and then return it, saying they weren't satisfied. High-end women's clothing stores often will have expensive gowns returned after some important event. The clothes have obviously been worn, but the customer says she is not satisfied or has changed her mind. Usually, the store will refund the money.
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Since it is often difficult to tell if the complaint is valid or not, the company will follow the adage, "The customer is always right." But since some dishonest people repeat their crimes, a better adage is, "The customer is always right... once." Price in customer service When a company sells a product or a provides a service, part of the pricing should include the cost of servicing a certain percentage of defective products or complaints. Rectify problem The second thing a company should do upon receiving a complaint is to seek to rectify the problem. Although a company hopes not to get complaints, they often can be blessing in disguise. Sometimes problems can be caught and fixed before they cause serious negative feedback or even legal problems. It is in the company's best interest to solve any problems and try to make sure that they don't happen again. It is foolish for a company not to use customer complaints to initiate a corrective action. Not dealing with complaints Businesses that don't bother about satisfying their customers usually get more customer complaints. Answering them can, of course, cost the company money. Some companies will try to mollify angry customers but many don't even bother. Making money off complaints One software company holds weekly staff meetings to build morale and allow for status reports from each department. One part of their meetings is the report on how many customer problems they rectified the past week. If the number increased, the group was given praise. When asked why they praise increased problem calls, as opposed to working to fix those problems in the software or documentation, the owner said that they charge for each call, so it is a way to increase their income. In other words, instead of making the customer completely satisfied with the product, they preferred some dissatisfaction, so they could fix the problem and make extra money from it. This software package was a high-ticket, expensive application that was mainly sold to small companies. They also charged $50 for a user manual for the software. Since the customers made a substantial investment in the software, they wanted to continue using it. But I wonder how much ill-will was created, even if the application usually performed well. Complaints that fall on deaf ears Have you ever experienced poor service or purchased a defective product and complained about it, only to have your complaints fall on deaf ears? Many companies that have plenty of business feel they don’t need to bother with complainers. These businesses become very independent, especially if they have a product or service in demand. Some continue to succeed, even though they ignore customer complaints, but many will pay the price of lost business and degraded reputation in the long run. Apology mollifies customer A company that responds and apologizes mollifies the complaining customer. But some of these companies never rectify the problem, like the hotel in the above story. The act of responding to the customer and apologizing is good business. Not fixing the problem is risky, though, and may backfire on the company. Could be sued The bug letter story originated some 30 years ago. In today’s litigation crazed society, the hotel would have been sued for millions. Perhaps that is not so bad, if it is a case of ignoring problems.
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But if it was an honest mistake, such litigation can be destructive to the business as well as to society. We all pay more for things, because businesses must insure themselves against nuisance lawsuits. Benefits of satisfying customer complaints There are numerous benefits for a company to properly deal with customer complaints. Satisfied customer First of all, it will help to satisfy the customer, so you will get repeat business or referrals. In fact, in some cases, effectively dealing with a customer complaint can lead to a more loyal customer than others who may not complain or have problems. Can rectify problems Another benefit of dealing with complaints is that you can see weaknesses in your process or products that can be rectified. This will prevent possible future complaints or problems down the line. It is an effective form of customer feedback, although one you hope to eliminate. Major concern about complaints For every formal complaint you receive, there may be 10 other customers who were dissatisfied and who felt like complaining, but who never did. Instead, they change brands and tell their friends of the dissatisfaction. It is said that an unhappy customer will tell 13 people about his or her dissatisfaction1. That is not the type of word-of-mouth advertising you want. The company goal should be to get no complaints at all. Air Conditions and Customer Service in Relation with it: Market For Air condition: The ongoing economic buoyancy in India despite global economic meltdown has offered opportunities for rapid growth of consumer durable industry, and in particularly air conditioners industry. In general, there are different types of air conditioners, but the broader classification was room air conditioners and commercial range of air conditioners. The room air conditioners category consists of both the window and split ACs for the use in residential and commercial spaces. Traditionally, air-conditioners have been considered to be “luxury” appliances, and therefore, the demand for air-conditioners have either come from the institutional segment or from affluent homes in the top metropolitan cities of India. That’s no longer the case. While easy finance options have made air-conditioners more affordable, companies are also going that extra mile to make air-conditioners a “must-have” appliance in more and more middle class India homes. Major Players:
1. 2. 3. 4.
LG Voltas Samsung Videocon
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5. 6. 7. 8. Hitachi Carrier Haier Toshiba
Problems faced by customers While most of the transaction and interactions with the customers are positive, there is some exception in where the customer has a problem and the company fails to address it, and in some rare cases these may end up in court. But before ending up there, both parties would like to have resolved it suitably, especially as they have more to lose financially; they have company integrity and image to lose. Some common problems faced by customers: Complaint 1: Hi sir/madam, This is Ramasamy from chennai we bought 2ton AC this April from the date we are facing many problem in that.It was not working properly it was switching off every 5 min automatically.. 5 to 10 times service engineer came and return but no improvement at last they told that they will replace the AC but there is no response last one month. We need to replace the AC as soon as possible Consumer Name : Ramasamy s Address : 186,Baracca Road,Nammalwarpet,chennai 12.,North Chennai,Tamil Nadu,600012 Email : [email protected] Complaint Against : Product/Air-Conditioners Product Name : BlueStar Organization : P.G Omega Enterprise Organization Address : 56B Shoppingcentre,s.s Nagar chennai-600062 Complaint Details : WE bought 2ton AC it was not working Service Engineer finally conclude to change the AC.But no response from them we need AC to be replaced
Complaint 2:
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I Have Purchesed A Window Air Conditioner On 15 May 2010.But This Ac Is Not Cooling Properly Now As It Did Earlier. Details Are ; Model No. --- Lwa5ew1df1.Ae45ym Invoice No.--- Sinluclu110/1054 Dt. 15 May 2010 Dealer Code No.--- In028478luc07891 My Address --C1/131/Sector J Railnagar Lucknow Tele No. Amit Mobile No. 9453420608 Sometimes, as mentioned earlier, some of these complaints ends up in consumer courts. Below is an actual illustration. Illustration 1 CFBP received a complaint from Mr. Jayesh Lohana in December 2009 about Voltas Airconditioner. He had annual maintenance contract for his 2 Airconditioners. The Airconditioners were pending for repairs since Sep 2009 upon intervention of CFBP the matter has been resolved by Voltas to the satisfaction of Mr. Jayesh Lohana. Voltas in their reply stated –"In reference to your letter bearing ref. No. 61/3380/09 dated 3rd Feb 2010, regarding Mr. Jayesh Lohana’s complaint, we are happy to inform you that the complaint has been satisfactorily resolved." Customers can register their dissatisfaction with the company on any of these websites below:http://www.consumercomplaints.inhttp://www.indiaconsumerforum.org/http://www.icomplaints.in/http://www.complaints-india.com/http://www.consumercourt.in/ Action taken by company: Hence the company provides direct and indirect means to get to the company, before any issue reaches the doors of the court.
Besides providing information to get in touch with the company, now a days the company itself keep is updating its existing poor systems so as to not wait for an customer to call and complaint, but act proactively and keep track of schedules for quarterly and half yearly maintenance and servicing. Also the new software’s and technology helps companies forecast and allocate it resources, be it manpower or money for satisfying the customer, so as to gain customer confidence and loyalty.
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Now since the air condition market is slowing maturing, AC now has shifted from being a luxury to a basic need, cause of cost reduction and external environmental changes, each customer wants to attract new customers and retain them. For doing so, customer service is a essential part of attracting and retaining of customers. Companies cannot now afford to lay back. Also now the customer has been more aware how to take the company to task, which makes the company more liable against poor experience of service or product offered. All companies want to avoid a legal tussle with any customer, as it not only loses its customer but in turn may lose more potential customers and have a poor image in the market as a poor servicer of its products. But based on data accumulated, these companies try to avoid any customer dissatisfaction, and service the customer within the specified period in the policy.
Insurance industry and customer service perspective: As market and business conditions change, insurance companies must cope with a variety of issues: increasing competition, radical re-alignment of markets as a result of deregulation, aging demographics, catastrophic events, corporate governance and regulatory requirements. While addressing these challenges, it has become increasingly difficult to compete on the basis of price and product. One area that can set an insurance company apart is how it provides customer service. Unlike other types of companies, insurance companies are burdened by legal and regulatory requirements that impact how they deliver customer service. Superior customer service exceeds the expectations of customers, agents, brokers and policyholders for the timely resolution of their inquiries, whether it is a simple address change, change of beneficiary or determining the status of a pending claim. The way in which insurance companies view their customers has changed over the last few years. Because of deregulation and other market factors, the opportunity presented to the insurance company by each customer has expanded from the purchase of a single product to a full suite of products over the lifetime of the customer. As a result, insurance companies are moving away from a product focus to a customer focus, with the objective to attract and retain a customer for life. For life insurance companies, there are opportunities to cross-sell each customer other products especially for life events such as starting a family. The life insurance company may cross-sell the customer higher value life policies, annuities, mutual funds, longterm care insurance and college savings plans. Perhaps even more importantly, each customer service transaction provides the instant opportunity to execute company strategies such as customer intimacy, segmentation and product persistency objectives. For Property & Casualty (P&C) companies, the battle for customers, especially in personal automobile insurance, is evident by the sheer volume of media advertising enticing customers to “switch and save.” Customer service and satisfaction become the competitive advantage that enables retaining these customers over the longer term. The ability to retain customers against price competition isn’t just limited to the obvious claim settlement scenario but also to the experiences associated with routine activities around endorsements, billing and payments, culminating in an overall level of customer satisfaction. Once loyalty is captured through service, the company can then market other products
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A key element in many insurance companies is to grow business by selling additional coverage/policies to their existing customer base, increasing the proverbial “wallet share.” This strategy satisfies the dual goals of growth and customer retention. As research studies have proven, customers who have three or more products from one insurance company are more profitable for that company and likely have a higher retention rate because of their hesitation to switch policies to another company due to the time and cost involved. However, each service interface with the customer still must improve upon or extend the relationship. Customer service becomes more than a call center or a contact center but rather an extension of the sales function allowing customer service representatives to identify and qualify those customers who present opportunities for cross-selling. The ability to mine this type of information during the course of a customer inquiry helps companies identify opportunities for cross-selling, of particular value in light of the U.S. “National Do Not Call Registry” and similar laws in other countries. Customer service is the public face of the company and impacts the value held by its brand in the marketplace. Today’s customer includes anyone who influences the purchase and retention of an account such as agents, brokers, consultants, producers, family members, providers, employers, CPAs, attorneys, financial planners, and individuals responsible for repair of an auto, home or boat. Independent of how it is delivered to the customer, companies must provide customer service accurately, quickly, responsibly and comply with legal and regulatory guidelines. And more importantly, insurance companies can deploy a variety of customer service interfaces that are individually suited to how the customer prefers to obtain customer service and to the transaction at hand. Matching the desired customer experience through the use of personalization appropriate to customer’s preference as well as the transaction type and using technology to help manage the customer experience enables insurance companies to build an advantage for their customer service over their competition.
Telecommunication Industry and a customer service perspective in relation with it: All operators are providing their customers customer assistance and advisory services. For the organization of customer service are no strict rules, but the services and prices for them is primarily by the service provider. When consumers choose their service provider, it is useful to consider what kind of customer service you need and its importance in view of the operator's services as a whole. Good customer service is a competitive advantage for the operator. Telecom operators' Internet sites and self-service Telecom operators' Internet sites provide great help for any problem. It offers information on services, prices of services and contract terms. Often there are also instructions and settings for the startup of various services. Most operators have on their internet pages of questions and answers to the most common problems. Some operators have the opportunity to chat where you can get help for their problems.
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Mobile operators in particular, offer their customers self-service. The customer can log into the service at any time by using the user name and password that allows the operator. Through selfservice pages, it is usually possible to order and terminate additional services, change the type of subscription, follow the counting problem and scroll through the call sheet. E-mail and web forms E-mail and web forms are a good means of communication with the operator, on the web pages do not provide an answer to the problem and if the matter is not urgent. Most operators provide on its Internet site the time of the speed issues that come via e-mail or web forms is answered in a normal situation. On the web form provided in the rule the information which is mandatory for the operator to answer the question. If you send an e-mail, describe the problem as accurately as possible. If the question or problem relates to a particular connection or service, it is important that you also give your contact information. Telephone Service The network services will help if you have an urgent problem. Many operators in addition to their normal customer service number are also known as. help desk for technical customer service and a separate number for error messages. Check the telephone numbers of customer and counseling services at your own operator. Also check if the calls are free or fee-based. If the number to customer service for a fee, it means in general that also queuing costs the same as a normal call charge. If the response time on customer service are no rules such as would define the maximum value for their replies. Pressure on the service depends much on the operator, and also at the time of day or day of week. Opening hours for telephone services also vary among the various telecommunications companies. In order to compare the different operators' telephone service has Kommunikatiosnverket required the telecommunications companies to publish quarterly, the average response times on their customer and advisory services. It is the statistical data that does not give precise information about the current situation, but they provide an opportunity to compare the quality of service among telecommunications companies. Also publishes many telecommunications companies to more recent data.
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The-Four-Phases-of-Customer-Feedback-Management Gathering customers' opinions is a crucial part of doing business. In order to survive, a company must understand its customers' motivations, gripes, and desires. Mediocre companies conduct customer satisfaction surveys. So do the greatest companies in the world. However, elite organizations gather, organize, and utilize customer feedback differently. This article will outline the four levels of customer feedback management, in order of increasing sophistication. Like a grading rubric for feedback, each level builds on the last. For the greatest impact on your bottom line, aim for the final level--mastery. Level One: Lack of Customer Feedback Management. When companies first begin conducting customer feedback research, they usually do it in-house. A sales manager may type "customer loyalty surveys" into Google, print out the results, and have employees conduct telephone surveys. The marketing department may email surveys about recent marketing campaigns. Meanwhile, the IT department might be using CRM (Customer Relationship Management) software to analyze customers' demographics and purchasing habits. Customer feedback is being gathered, but there is no organization. Customers have a difficult time answering the company's vague or poorly worded questions. Random questionnaires are followed by random analysis (also often done in-house). Because no one is tracking overall contacts, the same customer could be surveyed five times by five different departments in the same week. Like reading in a dark room, company leaders strain to understand and tie together survey results, if they see them at all. Level Two: Growing Organization in Customer Feedback Management. At this level, company leaders partner with a research company to gather statistically representative samples from customers. The market research company follows established guidelines for obtaining significant survey results. Moreover, they avoid long surveys and multiple contacts to the same customers; this is to protect the respondent pool. Customers become irritated when surveyed too often, and no one likes to complete long surveys. The market research partner also refines the questionnaire for lucidity; customers now understand what they are being asked. Finally, the research results are analyzed and put in reports for upper management. Now leaders can clearly read survey results, but they're not sure how to apply them to boost business outcomes. Furthermore, company executives find it difficult to distribute results to employees, who simply don't have the time to slog through all of the customer feedback results. Level Three: Understanding Through Customer Feedback Management. At this third level of customer feedback management, company leaders have the ability to define which employees should see which parts of survey results. The characteristics of the second level are also present; a research partner helps the company conduct statistically reliable studies, and ensures a healthy respondent pool. Now, however, leaders aren't the only ones that see survey results; the market research company provides access to a feedback management system to distribute results to employees. Sophisticated customer engagement management solutions can allow executives to assign different access levels for each employee. Front-line employees may only be able to see overall engagement levels, while managers can see more complex statistics
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related to their departments, and upper management can see everything. An increased understanding of the customer experience spreads throughout the organization as a result. Although company leaders are thrilled that all employees can now see customer feedback, they are not sure how to use survey results to increase profit and ROI; nor can the prioritize techniques for customer experience enhancement. Level Four: Masterful Customer Feedback Management. The world's top companies fall into this level; they masterfully use customer feedback to drive business decisions and increase profitability and ROI. As in level two, they use Enterprise Feedback Management solutions to centralize and distribute results. Furthermore, these elite organizations harness cutting-edge technology to respond to individual customer complaints and opportunities in real time. Companies that partner with an EFM firm that provides real-time customer alerts software, notifying key employees when an action needs to take place to address customer feedback, truly understand the importance of retaining customers and improving ROI. These companies gain a significant competitive edge by working with a boundary-pushing customer research firm.
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Customer Service, as a Route to Competitive Advantage
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Customer Service, as a Route to Competitive Advantage
Customer service is part of every product and service A customer relationship does not end when the purchase transaction is concluded. The business has a statutory responsibility to serve the customer even after the conclusion of a purchase or agreement. A business must ensure that consumers are able to exercise their basic rights effectively. In addition, customers must be provided information regarding their rights, such as how to have an invoicing mistake rectified or a defective item repaired. Customer complaints must be handled appropriately. The business is in breach of the law if the consumer is denied the opportunity to make a complaint and contact the business in defect situations. Managing the customer relationship is an integral part of the agreement concluded with the customer. The customer service model is one of the factors influencing the consumer’s purchase decision and choice of service provider. When the customer concludes an agreement with e.g. a telecommunications operator, he simultaneously accepts the service provider’s customer service policy and pricing, which are thereby considered part of the agreement entered into. Customer service is part of every product and service The consumer is entitled to expect customer service from a business after a transaction and agreement has already been concluded. Customer service includes the business • providing the customer with information on his rights, e.g. on how to rectify an invoicing defect or repair a defective product • processing complaints within a reasonable time Give feedback on customer service directly to the business Consumers should give businesses feedback on good and bad customer service. Based on this feedback, businesses can effectively improve their methods of operation. A responsible business listens to its customers. Customers may file complaints with businesses regarding inadequate customer service and demand compensation for damages for any financial costs incurred. For instance, if a business does not provide a free-of-charge channel for filing complaints, the consumer may demand compensation for the costs of filing a justified complaint afterwards. Complaints can be filed and feedback can be provided to businesses by calling their customer service number, by filling out a form on their Internet website or by sending them a free-form email or letter.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Customer Service, as a Route to Competitive Advantage
What is a Customer Charter/Code of Practice? The main purpose of a Customer Charter/Code of Practice is to improve access to an organization’s services and promote quality. It does this by telling customers the standards of service to expect, what to do if something goes wrong, and how to make contact. A Customer Charter/Code of Practice helps employees too, by setting out clearly the services their organization provides. Should an organization have one? A Customer Charter/Code of Practice is an ideal way of helping organizations define with their customers, and others, what that service should be and the standard that should be expected. They also help customers get the most from an organization’s services, including how to make a complaint if they are dissatisfied with any aspect or have ideas for improvement. Developing a Customer Charter/Code of Practice will: • help an organization clarify what people want from their services and target resources accordingly • help an organization and its employees look at the aims of that organization, and whether it provides value for money • focus an organization’s employees on the work to improve services and promote quality, and ensure that their knowledge and experience is put to good use • encourage customers to provide feedback on how an organization’s service is delivered • explain to customers how they can help an organization deliver the services they want • help drive and sustain a process of continuous improvement in service quality • help foster good relations with customers generally, most of whom will welcome an organization’s efforts to take account of their views What should it include? A Customer Charter/Code of Practice should clearly set out the purposes and priorities of an organization. In particular, it should: • spell out the standards of service customers can expect • tell customers how to complain if something goes wrong, or service is not met, or how to offer a suggestion for improvement • make clear how customers can contact an organization and get further information • make sure the information is accessible and easy to understand • fully involve customers and employees in its preparation • explain how an organization is planning for further improvement • assure customers that they will receive a fair service • say if there is any relevant legislation • make sure that the publication date is clearly visible, and ensure the content remains current Other points to consider A Customer Charter/Code of Practice should be written in a clear and user-friendly way. Although not mandatory, a Crystal Mark endorsement by the Plain English Campaign would enhance its status.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 40
Customer Service, as a Route to Competitive Advantage
It is vital that a Customer Charter/Code of Practice is available in different formats, such as large print and audio, so that customers with particular needs can access it. If an organization is part of an industry where a regulator has been appointed, details of how to contact the regulator should be included.
Handling Customer Complaints: Complaints are good if at all there are going to be there: Britons are shedding their reserved natures and turning into hot-blooded consumers - willing to argue at the drop of a hat and stand up for their rights, according to a new survey. Whether it is too much pasta, the Channel tunnel rail link or too much chilli, who knows? We are becoming more "passionate". More than half of people now complain all or most of the time if they are unhappy with a product - an increase of 18% in 5 years. Complaining has become so prevalent, that two thirds of people now believe that we are better at it than before. But it is age over youth and inexperience, which increases the chances of making a complaint according to this year's National Complaints Culture Survey (NCCS). Two thirds of those over 50 complain all or most of the time if they are dissatisfied, while the under 21s are the least likely to complain.” – BBC News 2009 Real Benefits in Prioritising and Improving Complaints Handling • Nearly all customers would recommend a company to their friends if a complaint had been resolved efficiently. • Four out of five customers would spread the word if a complaint had been handled badly. • Still not many companies seem to be listening to this key customer service point, so there are advantages to starting now. • Despite the rise in complaints, only one in four employees feel qualified to deal with them. • Only one in three customer-facing staff are actually trained to deal with angry customers • Most customers would pay more for excellent service. Definition Of A Complaint “An expression of dissatisfaction whether justified or not” – BS8600 Golden Rules Of Complaints Handling For Organizations Strategic Plan: Have a clear, flexible welcoming and open policy on complaints. A complaint is a gift and you should consider yourself lucky that a customer is prepared to give up valuable time to help you improve your organization. Train your staff and management in complaints handling Give them confidence to tackle the difficult customers and support in their actions. Excellent complaint handling isn’t easy and can sometimes be stressful and feel unrewarding. Confirm its importance in providing great customer service. Give complaining enough priority and authority. Staff should be aware that complaints are a top priority item for your operation, and ANYONE who deals with them must have sufficient authority to resolve them completely.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 41
Customer Service, as a Route to Competitive Advantage
Ensure that you can process complaints from all sources: Nowadays there are 4 main ways to complain – in person, by telephone, by mail, by email/internet – and your organisation must be able to handle all of these efficiently. Set up process to log and analyze all complaints and share with everyone: One can learn so much about problems with internal processes, training, specific employees/managers, and product – free. PROCESS & ACTIONS: Thank the customer for complaining. You should consider yourself lucky that the customer is prepared to give up their time and money to let you know they have a problem, instead of just walking away – a complaint is a gift. Say that you are sorry that the problem has happened. This is NOT an admission of guilt on your part, it’s just good manners. Put yourself in the place of the customer. This will instantly give you an advantage, as you not only will have more empathy with the customer, but also you know your business better than them and so can hopefully see the solution quicker. Start with the view that the customer has a valid point, not that he/she are trying to rip you off It is true that there are some professional complainers out there, but they are in the minority, and, if you are a local store, you probably know them anyway. Accepting that the customer may well have a point, even internally, may well trigger off ideas for an acceptable resolution. Get all the facts first: Letting the customer give you all of the information helps you fully understand the situation AND, if they are emotional, will give them time to calm down. Don’t leap straight to the “free gift route” It’s very tempting to give the customer a gift, or vouchers, and in many cases, done properly, it is good service. However, too often it is done INSTEAD of solving the problem, which can lead to more complaints about the same thing because it hasn’t been fixed, and also to the “training “ of more professional complainers. Correct the mistake All of the other points are not really valid if you don’t fix the problem! Make sure that your definition of the right fix is the same as the customers. Learn from every complaint Do something! Fix the process; train staff in the issue; eliminate the fault. Wherever possible let the complaining customer know that they have helped you resolve a problem – they’ll feel great and come back again and again (and will probably tell their friends!). Minimise reasons for complaints Do you have a continuous improvement culture? Do you check customer (and employee) satisfaction regularly? Do you check the quality of the goods sold in your organisation?
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 42
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Remember it cost at least 5 times as much to gain a new customer than keep an existing one Keeping this complaining customer should be the top priority, and at these cost ratios you can afford to be generous in your time and effort. ALWAYS respond In person complainers hopefully always get dealt with, but make sure that EVERYONE who complains on the telephone, by letter, or by E-mail gets a rapid and appropriate response. Listen to your staff They nearly always care about your company and doing a good job and are much closer to the customers than you are. Ask their views regularly and make changes when they are sensible. Make sure THEIR complaints are handled too. Lead by example It’s not that your staff DON’T listen to what you say, it’s that they DO listen, so make sure that you are always setting the right example, and giving complaints your personal priority. Reward good complaints handling.
Defining service standards : Service standards are usually defined in terms of: • Timeliness • Accuracy • Appropriateness Timeliness 'Delivery in three days' or 'calls answered in 20 seconds' are phrases that give the essence of a service standard that involves a timeline. These statements need to be defined precisely before they can be considered as true service standards. 'When does the clock start?’, 'Are we expecting 100% success in the timeframe?', 'Is measurement based on working days or calendar days?', 'Does this apply to all locations worldwide?' and 'Does this apply 24 hours/day, 7 days/week?' are some of the questions that have to be asked in the process of defining the standard. So an initial definition of 'answer the phone within three rings' may be implemented as 'Between 8am and 6pm on workdays, 95% of calls will be answered by a human in 15 seconds and 100% in 40 seconds'. Similarly, an initial definition of 'delivery within two days' could become 'For addresses in the UK mainland, parcels will be delivered two working days after receipt of the order'. Accuracy Customers expect accurate information and accurate deliveries - only 100% is acceptable as a standard under this heading. 'We got most of your order right' is a response that is not appreciated by a customer!
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 43
Customer Service, as a Route to Competitive Advantage
Examples of service standards reflecting the accuracy of a service are 'the information quoted in a telephone conversation is 100% accurate' or 'the parcel received by the customer contained all the goods ordered by the customer'. Appropriateness How often do you hear the exclamation 'they didn't answer the question!' It happens often when politicians are being interviewed on TV but it shouldn't happen in the commercial world. Appropriateness is about ensuring that the customers' expectations have been met, particularly in an enquiry situation. e.g. A customer writes to an organisation with a three-part enquiry. The customer receives a response that is on time, totally correct in what it says - but fails to address one of the three topics in the original enquiry. Such a response would fail the appropriateness standard - again based on a 100% expectation. '100% of the customer's questions were addressed' would be a good starting point for such a standard. How do you create a set of service standards? There are at least seven potential sources of information to help define the service standards for an organisation: • Management • Employees • Existing customers • Potential customers • Lost or former customers • Competitors • Regulatory authorities Management – you should seek information from different levels of management. However do not rely solely on management input - existing customers are a better source. Employees- this group is too often overlooked - 'what do they know' is a view that has been expressed. In fact, they interact with customers every day, so employees are a really valuable source of information and will be expecting to contribute to the process. Existing customers - are rich sources of information. A few focus groups will usually generate an excellent set of customer expectations. Lost or former customers - why did customers not return? They will probably be pleased to tell you! Potential customers- what can you learn from people who are choosing an alternative supplier? The sales team may give you some input but there is no substitute for direct input from prospects Competitive information - mystery shopping and monitoring competitors web sites and literature can reveal useful input. Regulatory authorities – the activities of some types of business are governed by a regulator who sets service standards that must used.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 44
Customer Service, as a Route to Competitive Advantage
How many standards should we have? You should have standards that are appropriate to the size, diversity and complexity of the business. Initially, we suggest that you establish a small number of service standards that focus on the absolutely critical areas of your business. You will need a period of time for colleagues to 'buy-in' to the concept of service standards, the monitoring arrangements and the benefits of implementing an effective programme. Once they have become a way of life, consider expanding the range of measures on a 'need to have' not nice to have' basis. You should only have service standards that can be monitored accurately and with an appropriate degree of effort. Planning the Implementation Having defined the ideal set of standards, management is then faced with the challenge of working out how to measure performance against the standard. The standard is of no use if performance against it cannot be measured. Technology often has a role to play in monitoring performance against timeliness standards - particularly in-coming telephone calls. Correspondence management systems also help monitor the timely answering of written communications. Use of technology as part of the process may allow performance results to be based on 100% of all transactions, rather than on a sample. Feedback forms or follow-up calls/questionnaires can be used to check customer feedback. It is important to get expert advice on sampling. At this stage, all ambiguity must be eliminated from the wording of standards so that the whole organisation understands the measure. Suppose that '95% of calls to be answered in three rings' is a draft standard. It leads to the following questions: • What happens to the other 5% of calls? Do we care how long the customer has to wait? • Do we mean answered by a computerised voice or by a real human being? • Does the standard apply 24 hours/day, 7 days/week?
Development of the final wording and the associated data gathering process is likely to require a couple of iterations. Some compromises may be required as the cost of data collection is balanced against the ideal service definition. Accuracy and responsiveness standards are more challenging to monitor. Listening to calls, speaking to customers and independent assessment of written/ email communications against the original enquiry on a sample basis usually provide reliable results. Statisticians should be asked to give advice on sample sizes and data gathering techniques.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44)
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Customer Service, as a Route to Competitive Advantage
Implementation of Service Standards Ownership, Visibility and Commitment are the key words. Ownership It starts at the top. The Chief Executive and top management team must be sponsors and champions. They must 'walk the talk', own the communication process and ensure initial and on-going focus on standards in every employee briefing. Each service standard must have a management owner, who is accountable for the delivery of the service. Performance against standard will normally be a feature of that individual's annual review. The management owner will also have the authority to implement process and other changes to improve operational performance. But there is no copyright on ideas, so all colleagues should be encouraged to make suggestions for performance improvement. Visibility 'How well are we doing?' should be a question that employees don't have to ask! Customer service standards and the current performance against those standards should be communicated to all employees on a timely basis. Notice boards, memos, email, team briefings, newsletters and the organisation's intranet are appropriate methods. Employees really appreciate the opportunity for discussion. Employees who are based out of the office are frequently overlooked, so they should get special consideration. Commitment The mission or values of an organisation are a good place to 'anchor' the commitment to customer service. The Chief Executive, all levels of management and all employees must be committed to delivering the promise to customers regardless of external or internal influences. It's not easy but remember 'service is your best salesman'. How are service standards used? The main use of service standards is as a tool to confirm to management that customers are receiving what they have been promised. Sales and marketing colleagues will want to take the operational standards and develop them into the sales pitch for the organisation. Whilst the enthusiasm is to be applauded, this approach should be resisted until consistent performance has been achieved and sustained. Service standards, and performance against those standards, should be reviewed regularly with employees. It is important that they know how the organisation is performing. Discussions about service standards can often generate ideas for process improvement to further enhance service delivery. Review of Service Standards Business economics, external factors and changes in the market place all have an influence on service standards. Just as these factors change, so should an organisation regularly review its service standards, probably every 12 -18 months.
Cyrus Carvalo (07), Sahil Gupte (22), Saurabh Pant (41), Hitesh Ramdasani (44) Page 46
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