Coddling customers Featured

9:48am EDT July 22, 2002
Southwest Airlines. Levi Strauss. Walt Disney Co. Nordstrom. Procter & Gamble. Heinz. These are among the strongest brands in America today.

Not surprisingly, they’re also consistently rated the best in their class for customer service.

Superior customer service differentiates the superior product or service from an average product or service — and an excellent company/customer relationship from one that is marginal and easily severed.

In today’s sometimes jaded world of business, you have to exceed customers’ expectations, satisfying them in a way that captures and maintains their loyalty and creates a bond strong enough to withstand the efforts of competitors who will try to woo them away.

The strong customer service program begins internally, with a knowledgeable and loyal employee base. Companies that are consistently rated top in their class share six basic characteristics:

1. Top management’s commitment to focus its organization on the customer.

2. Decision making that answers the question, “What is best for our customers?”

3. Many two-way channels to exchange information with customers and gauge their satisfaction.

4. Having processes, systems and procedures for making decisions — sometimes on the spot.

5. Employees who are not only understanding, but also accountable for serving customers externally and internally.

6. A compensation and incentive program linked to measured customer satisfaction.

Customer service and profitability

The Public Affairs Group Inc. (PAG), a national marketing research firm based in Washington, D.C., has researched many Fortune 500 companies on customer service and has found a strong connection between loyal employees and loyal customers.

That means customer loyalty is ingrained into the culture of the best companies. The connection flows from employee training and retention to customer loyalty and retention.

The PAG also found that companies driven by customer service and customer loyalty are focused on the long-term view of profitability. The typical business experiences a customer turnover rate of between 20 and 25 percent.

If a company can retain just 5 percent of the customers that it might lose, the PAG has determined, profitability can increase 30 percent or more, depending on the industry. The PAG data show repeatedly that customer retention and growth are aligned. Good customer service increases corporate profitability.

Communication also is critical to the customer service process. Superior customer satisfaction requires frequent communication with customers, employees, investors and suppliers.

It begins with top management visibly articulating customer service messages and actions, and extends through every level of the organization. It includes frequent training of employees and vendors. And it means employing technology to gather information and manage from the knowledge gained — especially for customer personalization of message and product/service.

Customer service building blocks

Some steps to consider when building a customer service program include:

  • Send sales people to work for a while at the offices of your best customers.

  • Reward business generated from existing customers.

  • Participate with customers on their turf. Use meetings and events to demonstrate your desire to make a positive impact on them with your product or service.

  • Invite customer input. Include customers in planning retreats to share their perspective. Encourage them to brief you and your staff about their industries.

  • Build a reward system for customers who refer new business

  • Use customer service councils as a medium for receiving feedback.

Superior customer service is an integral element in retaining customers and generating a new, higher level of loyalty. Ultimately, improving customer service and communicating its effects will help you become a more profitable organization.

Jeff Krakoff is president of Krakoff Communications Inc., a Pittsburgh-based marketing communications firm. Send your questions or comments to jkrakoff@krakoff.com. Reach him by phone at (412) 434-7718.