As the business environment becomes more competitive, which companies will prosper and which ones will fail? When many businesses think of competition, they think of price — the one with the lowest price wins.
Price is a major factor in consumer choice, though it is not the only factor in determining the success or failure of a business. Management expert Peter Drucker, for example, once wrote that in a competitive environment the deciding factor determining winners and losers will be management. That is still true today.
Good management means adopting a broader perspective than price alone. There are several reasons for this, the most important being that when you compete on price you are most often fighting out of your weight class. For many products, especially those with name brands, the giant corporations dominate the price schedule and the rest of us cannot successfully undercut them. It is much smarter to compete in the areas in which you can win.
What that starts with is understanding your own capabilities as well as the nature of the competition you face.
The reason that price is not always the deciding strategic factor is that for most businesses in any given sector of the economy, the price options are limited. This limitation is most visible in the retail sector, where businesses sell directly to the public, especially so when it involves name-brand products.
A strong case can be made that for businesses not large enough to compete successfully on price with big-box or huge online sellers, the differential between winners and losers will be customer service. Forging a solid, winning customer service team, though, requires effort and energy from top management no matter how large or small the business is. And the first step is to adopt a new mindset.
To many business managers, CEOs and entrepreneurs, customer service is viewed as necessary, but a cost center. Significantly, it is also viewed as a product in the sense that it is subject to the same cost minimizing techniques. That is how customers find themselves lost in a confounding website maze of cryptic instructions or talking to a robot on an automated phone system.
The winning strategy takes a different approach. It recognizes that, on average, gaining a new customer costs considerably more than keeping an existing one. The difference between these two costs is already substantial and will almost undoubtedly grow as today’s markets morph into tomorrow’s.
The economic reality of the acquisition cost of your customer base doesn’t mean that there is no place for computerized information systems and automation — as long as they don’t get in the way of a good customer experience. Think, for example, of the number of customers you can claim from the big sellers by simply providing a toll-free number they can call for assistance with an order or advice on a product.
While a toll-free number is a very useful element of customer service, your website should be thoroughly and frequently tested for new-user friendliness — by non-IT individuals from outside your company. Without this kind of testing a website can become difficult for new customers before you realize it, many of whom will drop out in frustration … and you will likely have lost them forever.
Assembling a winning customer service team requires attention to four fundamentals: (1) management’s visible commitment; (2) systematic training; (3) genuine performance measuring; (4) no unanswered phone calls, emails, or letters.
Top management’s commitment must go beyond a mission statement and the occasional pep talk to the customer service staff — or individual if you are just starting out. It means reminding the entire organization that when the customer service representative picks up the phone, he or she is the company as far as the customer is concerned — and everyone’s job is on the line.
Customer service must be more than good intentions. It requires training in conversational skills as well as product knowledge, shipping details and IT system capabilities. Helpful monitoring and mentoring should be continuous.
Dedication to genuine performance requires real evaluation. Management should generally downplay or ignore metrics such as call volume and duration. These provide no information on quality and can lead to obsessive emphasis on the wrong elements of customer service.
Failure to respond to telephone calls, emails or letters can be the cause of lost customers and potential customers. As one manager put it, “The unanswered phone call sends a message of its own.” It is a largely undetected silent killer of relationships. Existing and potential customers simply disappear quietly, and management will never realize what is happening. But the bottom line will.
A winning customer service team is a key part of being a winner as a company in these turbulent times.
James McCusker is a Bothell economist, educator and consultant.
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