Courting Customer Service

Every business, large or small, depends on customers for revenue. Surprisingly, a great many fail to honor this common-sense principle. Chief executives and business owners don't always grasp the basic fact that all business processes — from accounting to the assembly line, from personnel to information technology — affect the quality of customer service.

Far too often, companies overlook the fundamentals and end up losing customers they need in order to thrive. We've all heard that the most expensive sales call is the first. In fact, most companies don't generate a profit from an individual account until the sixth or seventh sale. This makes customer retention a necessity.

Whether you're a manufacturer, a distributor, or a sales rep, you're in the business of serving customers. How can you do that? Start by identifying different types of "customer-friendly" companies. First, which best describes your organization's policies?

• Company A views employee training in customer service as an unnecessary expense. Training takes place sporadically, and is usually done by unqualified managers.
• Company B strives intermittently to project the image of a service-oriented, customer-friendly operation. It offers some training in customer awareness, but sets it aside whenever a new trend comes along.
• Company C knows that providing quality customer service generates sales opportunities. It regards customer service as a "value-added" component — something special they can offer to their customers.
• Even with a long track record of providing top-notch customer service, Company D continually seeks to do better. It has established high standards, achievable goals, and effective communication between management and employees — all dedicated to enhancing customer service.

The only way Company A can stay in business is by attracting a high number of first time customers. In the long run, its lack of customer focus will result in minimal growth, declining profits, and a loss of market share. The outlook is bleak.

Company B's prospects are somewhat better, but its halfhearted commitment to customer service doesn't bode well. It seems to place little value on long-term customer retention. This business just doesn't get it.

Company C has the right idea, but mistakenly believes that "good" is good enough. It's not. Modern consumers are more educated and more demanding than ever before. This makes delivery of superior service absolutely essential.

Nearly everything Company D does is based on meeting customers' needs now and in the future. Senior management works with employees to create a superior buying experience, making customers come back again and again. Customer-focused training for managers and front-line staff is an ongoing process.

Serving customer needs doesn't begin and end with front-line staff. Vision and focus must start at the top. A leader must create an atmosphere where employees are motivated to provide superior customer care. Employee pride, confidence, and self-esteem are directly linked to customer satisfaction.

There are three essential principles that a CEO must transmit to all employees in his/her organization.

1. The company must see the business through the customer's eyes.
2. Each person in the company must add value on top of the product.
3. The customer determines value.

Bureaucracy often frustrates the goals of customer service. Processes are fragmented and compartmentalized. As a result, valuable information seldom reaches deep enough to generate meaningful change. Many businesses adopt a "one-size-fits-all" approach to customer care. This approach simply doesn't work.

A more effective system integrates company operations with customer service as the primary goal. Feedback on customer satisfaction drives changes, resulting in a business that's flexible enough to respond to changes in customer preferences.

There are six customer types.

• Endorsers (make up 5 percent of customer base). Endorsers are customers who tell others about your company. Typically, the new customer comes in as an endorser, which you should capitalize on. They tell their customers and they tell their circle of retailer peers.
• Buyers (15 percent). A buyer will continue to buy from you, but no longer aggressively endorses your company. One negative incident can move a customer from endorser to buyer, and it may take 15 positive ones to get them back as an endorser.
• Satisfied Mutes (30 percent). These customers don't talk to you and you don't talk to them. If you ask them how the business is doing they answer, "Fine." That's all you know.
• Dissatisfied Mutes (30 percent). They've migrated from the ranks of satisfied mutes, but you don't know it because no one's talking.
• Grumblers (15 percent). No matter what happens, you can't do anything right for these customers. Too many negative incidents have made them into "martyrs."
• Complainers (5 percent). Though small in number, this type of customer can be deadly. They make a point of telling everyone how badly your company has treated them. They're not your friends — and they know you know it!

According to some sources, for every dollar spent retaining an account, it takes six dollars to close a new one. So it's much more profitable to retain customers. If you resolve problems to their satisfaction, they'll stick with you 75 percent of the time. If you resolve the problem immediately, that figure rises to 96 percent.