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Is customer the king?

Oct 14 2013, 09:39 IST
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Customer-centricity is clearly a corporate buzzword. Customer-centricity is clearly a corporate buzzword.
SummaryManagement students need to understand why customer-centricity is becoming a corporate buzzword

Recently, ICICI bank added customer-centricity as the fifth ‘C’ to its business strategy. The 2012 London Olympics Organising Committee put the customer at the centre of its strategy for organising the games. This was reflected in the meticulousness with which they studied and addressed the needs of different customer segments, from meaningful names to pathways and bridges to providing personalised information to the visitors.

Customer-centricity is clearly a corporate buzzword. But what is the reason for this focus? Management students, in particular, need to understand this.

“The consumer isn’t a moron; she is your wife … she wants all the information you can give her.” David Ogilvy famously said in his marketing classic Confessions of an Advertising Man. The customer today is more demanding and far better informed than ever before. Michael LeBoeuf has quoted some insightful statistics in this context in his book How to Win Customers and Keep Them for Life:

*A company spends six times more on attracting new customers than on keeping old ones.

*As many as 68% customers quit because of the indifference of people serving them.

*A satisfied customer is likely to tell 9 to 12 people, while a dissatisfied customer will reach out to 20.

In today’s internet-driven world the number may well run into millions. A case in point is Dave Carroll, the Canadian musician, who had landed with a badly damaged guitar while travelling on a United Airlines flight in 2008. His damage claim was held ineligible by the airlines in view of its 24-hour policy for receiving such claims. Carroll’s pleas fell on deaf ears and, frustrated, he wrote a song capturing his experience. The song went viral on YouTube, bringing the airlines to its knees, and spurring it to take immediate action in the shadow of its tarnished image.

Clearly, in today’s highly competitive environment, an organisation derives its cutting-edge not from superior processes, systems or technology, which can easily be replicated, but from the way it engages with its customers. Customer retention is the key to business success. It is no wonder that the founder of Walmart, Sam Walton, had claimed, “Our goal is to have customer service that is not just the best, but legendary.”

So, what are the dimensions of outstanding customer service?

After scrutinising hundreds of chairs at a leading furniture store, I had selected one that agreed with my not-so-prefect back. Unfortunately, the chair that was delivered matched the specifications perfectly, but did not have quite the same feel. I contacted the store bracing myself for an extended and possibly unsavoury engagement. But I was pleasantly shocked when the store-owner personally came over, along with his technician, not once but twice, and provided me with the perfect solution. This experience was the epitome of exemplary customer service, embodying its multifarious dimensions, viz. listen and understand the customer’s needs, empathise, and go the extra mile to provide a quick and convenient solution. Research shows there’s an 82% chance of a disgruntled customer returning if the complaint is handled quickly and pleasantly.

Conversely, most of us have abundant anecdotes of encounters at banks, airlines and restaurants pointing to inordinate delays, sloppy service and incorrect or lack of information borne out of either indifference or incompetence of the service provider. PH Ravikumar, managing director, Money Matters, relates several experiences where the accomplishment of routine tasks like transitioning from one telecom service provider to another or timely delivery of a subscribed magazine entailed an escalation to a higher authority. Pratap G, senior director, Human Resources at Maersk Global Service Centres India, cites situations like HR adopting a rulebook approach instead of responding to the pain points of stakeholders, and training vendors selling standard solutions through a prescriptive rather than a diagnostic approach, being indicative of the lack of customer-centricity.

So, what is the reason for this indifference?

Lack of training: Conducting a training programme at one of the finest clubs in Pune, I was bowled over by its impressive infrastructure and ambience. However, the lacklustre and unimaginative service at a sit-down lunch during the break led to an inordinate time overrun, upsetting our entire schedule for the day. The root cause evidently lay not in a shortage of staff but in a flawed process and ineffective training. Ravikumar attributes the deficit in service standards to a shortfall in training investment, inadequate customer segmentation and the absence of an indepth analysis of the pattern of customer grievances.

Staff turnover: The big churn of staff negates the investment in training. Ravikumar ascribes the ability of public sector banks to provide better service in non-routine areas to the greater depth of knowledge of the staff. This, he feels, is more as a fallout of lower staff turnover than better training.

Lack of empowerment: Isadore Sharp, the chairman of Four Seasons Hotels, made an interesting point in his keynote address at the 2010 annual Stanford Graduate School of Business Entrepreneurship Conference. He said that their customers defined luxury not just in terms of elegant surroundings but also time. The management was astute enough to understand this and sought to provide their clients the luxury of time through their timely and impeccable service. This required people at the front-line—doormen, bellmen, waiters—to be empowered to make decisions that they felt were necessary to satisfy their guests. At Starbucks, the front-line staff is authorised to give ‘care tokens’ in the form of free coupons to customers who have had to wait or those who might otherwise be disgruntled.

Lack of focus: The success of any initiative hinges on the drive and support of the senior leadership. Ravikumar attributes the deficit in service levels to the lower shades of focus accorded to customer service by the top management. This, he says, is borne out of the fact that customer service heads are frequently placed a couple of notches below marketing heads in organisational structure charts.

Customer service, a team game: Customer orientation cannot be the responsibility of a single department as it does not work as a standalone project. It requires a change in mindset and an integrated approach that is ingrained in the organisation’s DNA. Pratap points out that Maersk is seeking to promote this through training and the dissemination of its cultural amplifiers—focus, simplicity, team work—which inherently embody the essence of customer orientation. Chandrashekhar Mukherjee, vice-president, Human Resources, National Stock Exchange, cites the example of an FMCG company he has worked with earlier, where everyone, irrespective of function or role, is expected to visit customers to gather feedback and participate in on-shelf quality audits of products. This not only helps establish a closer rapport with the customers, but also generates greater interdepartmental understanding.

The author is director of Delta Learning, a human resources consulting and training company

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