Customer Relationship
Customer
Satisfaction: Most business fail or succeed based on their relationship with
customers. Outside of
profitability, productivity, and market share, customer satisfaction is the real
measure of your business’s performance. In
a market where your product is equal to your competitors’ in quality, customer
satisfaction will make all the difference.
Customers
perceive poor service as either not getting what they want from a company or
they sense that the company doesn’t care about them.
Unfortunately, you may never know how customers really feel about your
business. Only one in five
customers with problems ever says anything about it.
While some irate customers might explode in your face, silent, unhappy
customers with slow-burning fuses will quietly disappear.
Loyal
customers are the key to a thriving business.
In fact, repeat customers generally provide 95 percent of a company’s
revenues. Keeping your customers
satisfied means keeping your business in the money.
So, it’s important that you identify your best customers or clients.
Look at how long they have been with you, how much they spend during the
year, how much support service they require, and how much money they are likely
to spend with you in the near future. Also,
figure out how much it actually costs you to serve them.
Albeit,
trying to provide service to customers who are forever dissatisfied,
unreasonably demanding, and rude toward your staff isn’t worth it.
But spending money on evaluating and improving customer service is a
smart move, given the cost of keeping a customer is 20 percent of the cost of
getting a new one. It is critical
to your business to resolve customer problems quickly and efficiently, knowing
that your window of opportunity is only 15 seconds.
That’s the time frame during which a small issue can escalate into a
major crisis and result in your losing customers.
What
do you do when your company makes a mistake?
First, own up to it. Second,
make up for it. If you don’t have
a customer service department, assign someone to specifically address
customers’ concerns. Set
guidelines for what is and is not acceptable.
For instance, allowing a customer to stand in line or wait on the
telephone for 15 minutes before a sales rep ever acknowledges his or her
presence is unacceptable.
In
order to keep your customers satisfied, you must train your employees to be both
product- and customer-driven. And,
you must formally measure the effectiveness of your company’s customer
service, which means soliciting feedback. Conduct
a customer-satisfaction survey using telephone polls, focus groups, product
sampling, or questionnaires. Among
the things you want to find out are: What do they like about your products or
services? What don’t they like?
Do they buy from your competitors, if so, which ones?
How do they feel about your prices?
How helpful are your employees? Are
they regular customers: Why or why
not?
Your
goal is to find out what they think of your business, so you have a better idea
about how to improve it. In time
everything changes, including customers’ demands.
You need to do ongoing market research to find out what your customers
really want, so that you can give it to them.
Set up a computerized database of customer profiles and demographics.
This way you can keep track of customers’ buying habits and
preferences—what they buy, how much, and how often.
Don’t
wait until a problem arises. Stay
in touch with your customers through phone calls, letters, newsletters, note
cards, or anything else that lets them know you value their patronage.
This will also help you determine whether customers will pay a premium
for special services or features (e.g., the
airlines provide first-class and coach service and charge accordingly).
Brand-loyal consumers who were once interested in mainly getting the best
quality for the lowest price have shown they are willing to pay a premium for
perceived value.
Industry
experts contend that most business failures occur because companies don’t
conduct proper customer and market research.
Customers like to believe that your goal is to help them, not merely to
take their money. They want you to
care about their welfare, and to truly go out of your way to satisfy their
needs. Adding a toll-free telephone
number or posting a Website may not be enough.
You must relate to their problems.
A
prime example is Nike, which was unheard of 25 years ago.
Adidas and Puma were the sports shoes everyone was wearing.
But those shoes didn’t really give runners what they were looking for
and the two companies weren’t interested in the feedback they received from an
Oregon runner named Bill Bowerman. So,
Bowerman went out and started his own company, called Nike.
He knew which features to include because he knew what his fellow runners
wanted.
Distribution:
How difficult is it to purchase your product or service?
When people feel inconvenienced, they don’t see the product as
satisfying their needs. They
won’t waste any time and money to acquire it.
Review which channel of distribution works best: mail-order, wholesale,
retail, independent sales reps, chain stores, specialty stores, etc.
You
can gain a competitive edge through distribution.
Take L’eggs for example, the maker of pantyhose that are packaged in
egg-shaped containers. Part of
L’eggs success was due to the product-pantyhose were much more practical than
stockings for women who wore short skirts.
Another part of its success was due to packaging—the egg-shaped
container was far different from the undistinguished flat packages of stockings
and other pantyhose brands. Moreover,
L’eggs provided point-of-purchase displays and shelf racks for its egg-shaped
containers. And it sold its
products through mass merchandisers rather than the lingerie departments of
women’s clothing stores or women’s departments of large department stores.
Also,
examine how you package or present your product or service.
Packing is about more than appearance:
It conveys the products’ features and benefits—all of which will
influence whether someone will buy your product and how much they are willing to
pay for it.
In
evaluating your company’s distribution strategy ask the following questions:
Are there any ways I can improve the quality of my sales force?
Are there any unique ways, or places, I can use to more effectively sell
the product? How can I add to or
modify my product line to maintain market share?
What can I do differently in the way of promotions—advertising, special
events, and publicity—to draw attention to my product or service and raise
credibility?
Needless
to say, you need to be able to afford your distribution strategy.
Look at the costs of the measures you chose and their ability to increase
sales. You need enough money to
carry out each strategy and still preserve capital to run the business.
To save on cost, employ tactics like:
1.
Co-sponsoring events—seminars, classes, contests, demonstrations, and
the like; participate in co-op advertising programs.
2.
Partnering or forming strategic alliances with similar but nonocompeting
businesses.
Examine
your product features and support services, and look for ways in which you can
develop a specialized niche. Position
your product or service in the minds of your customers and develop a unique
sales approach. There are a number
of ways you can position your company in the way of product benefits, technical
support, personalized service, or proprietary features (i.e., trademarks,
patents, copyrights, and unique manufacturing capabilities).
Obviously growth becomes an important issue once your business is established. Diversifying allows your company to penetrate a different market. However, don’t make the mistake of venturing beyond your niche until you have mastered it.
To
grow their businesses, many entrepreneurs create offshoot ventures—you know, a
restaurant adds a home-delivery service, a financial planner sells money
management books, or a magazine publisher creates a television show.
This enables those entrepreneurs to reach more customers and increase
sales.
But
branching out is risky business. Before
adding a sideline venture, analyze your company’s strengths and weaknesses in
the marketplace. As with any new
venture, you must first examine if adding an offshoot business will help
increase profits. Sit revenue goals
and profit projections. Also, your
primary business should show a pattern of solid growth before you develop a
sideline venture. Take into
consideration the cost of new equipment, employees, and other expenses.
Devise a financial strategy: Will
you finance your ancillary business from the company’s cash coffers?
Or
will you have to seek additional funds from outside sources?
A
potential hazard of starting a sideline business is neglecting your core
business. You don’t want to lose
the momentum you have with your primary enterprise because it is competing with
your secondary business. The two
should complement and feed into each other.
Your
best bet is to follow a steady pattern of growth and develop your market in
stages:
1.
Increase sales of your present product or service by using promotions and
advertising to convince customers to buy more.
2.
Enter new markets within a geographic region (i.e., city, state, or
country).
3.
Create new and related products or services you can offer your existing
customers to keep them coming back.
As
you develop your company’s strategy for growth, keep in mind that customers
will continue to do business with you as long as you can deliver a quality
product at a great price; don’t promote something you can’t deliver; thank
them for their business; deal with them fairly and respectfully; ask if there is
anything you can do to make their life easier; and finally, go out of your way
to find out about their ever changing needs.
