Your core values are competitive strengths that you may be taking for granted. The way you do business is a fundamental part of your real value proposition that is frequently overlooked. So, if you want customers to understand why they should do business with you, if you want potential recruits to understand why they should come and work for you, you need to understand the value of you.Read More
How do you keep customers coming back? An HBR article suggests that the customer relationship is more important than value proposition. This blog-post suggests 6 ways to use customer communications to build that relationship and boost retention.Read More
We all know customer satisfaction is important, for internal customers as well as corporate clients. But in the dash to set about satisfying customer needs, there is a point that may get overlooked: who exactly is the customer you need to be impressing?
Traditionally the customer was considered to be the individual with the term ‘purchasing’ somewhere in his job title. However, it has long been recognized that organizational buying is a process involving several individuals. A much referenced paper from the 1970’s by Webster & Wind (Webster Frederick E. Jr. and Yoram Wind, “A General Model for Understanding Organizational Buying Behavior”) focuses attention on the buying centre: “those individuals and groups who participate in the purchasing decision-making process”.
The problem with the ‘buying centre’ is that it doesn’t necessarily include a key customer – the end user. The end user may not have direct involvement in the decision to buy from one vendor or another, but he/she potentially has significant influence. Consider a processed food manufacturer. The decision of which packaging supplier to use will be driven by senior managers in marketing, operations, finance and the MD. The guy in the warehouse who has to deal with the packaging deliveries coming in on the lorries won’t be involved in the decision. But he does have indirect influence. Issues and grumbles about late loads, early deliveries, incomplete loads or loads stacked in the wrong order will filter through to the factory manager and thus on to the ‘buying centre’, impacting future buying decisions. So, who is ‘marking’ the guy in the warehouse to check that he’s happy? To achieve our objective for customer satisfaction, we need a wider definition of who the customer is.
An excellent book, “Raving Fans: A Revolutionary Approach to Customer Service” by Ken Blanchard has this definition of the customer: “everyone touched by the product or service”. This acknowledges that every employee involved with the product and the process of dealing with the vendor, from the warehouse through the accounts department to the managing director, should be on our list of “customers”. The buyer-seller relationship goes beyond the interaction between the salesperson and the purchasing agent. By implication, the opportunities to influence customer satisfaction involve a wide range of employees in the customer’s organisation, and a correspondingly wide range of employees in the vendor’s organisation – wherever the two organisations interact.
“Customer satisfaction” will depend on what is important to each ‘customer’. Achieving customer satisfaction therefore requires a good understanding of the individuals involved, their issues, prejudices, job requirements and goals, what it would take to create ‘Wow!” experiences. And of course the customer is continuously changing – people leave or move jobs. A customer satisfaction strategy needs to be flexible and continuously reviewed, requiring good, cross-functional, internal sharing and collaboration. This is beginning to feel like we’re trying to hit a continually shifting target. In this situation, information is king, and your best sources of information are the people at the coal-face by which I mean not only your employees, but also partners, associates and suppliers who are interacting with customers on your behalf. They understand how the customer’s business operates, who the individuals are, their day to day needs and gripes, and they probably know the customer’s perceptions of your competitors.
So the challenge is how to create a customer satisfaction strategy that addresses everything that you do for the client organisation, enabling your team (internal and external) to be responsive and relevant even as the client changes and evolves. Perhaps we can learn from the principles of Agile Software Development? The concept of Agile Marketing is catching on. I would be interested to know your thoughts if you have any experience in this area. I look forward to your comments.
Meeting customers' needs is central to achieving customer satisfaction. But beware mistaking "want" for "need". Your customers will say they 'want' lower prices. The problem is that many suppliers assume that they must compete on price to keep the business. They drop the price and cut their own margins but don't necessarily keep the customer. If you actually ask customers why they choose you as a supplier and how your company helps them to achieve their objectives, then you may be surprised to learn that there are other factors at play, and that you have other options.
Here are two examples of organisations that cottoned-on to the fact that customers weren't necessarily driven by price.
In the early days, Amazon offered the lowest price. Then they changed strategy. They raised their prices across the board but included free post & packing. So, they went from being a lowest-price provider to most convenient provider. Has it affected sales? Yes - upwards.
The second example is from personal experience from the days of manufacturing cans for the food industry. Supermarket price wars were putting pressure on all players in the supply chain to cut prices. Competition to supply the likes of Heinz and Campbells was fierce. We were not the cheapest supplier on the block so it was potentially bad news if price had become the main differentiator in the market. So we asked our customers why they chose us – what was the most important factor in their buying decision: price, quality, innovation, logistics, choice, service? The answer surprised us. One of the most important factors was dependability. Delivering orders on-time-in-full to the quality spec meant no production hiccups at the factory and no additional costs of stopping the line. And it meant the production manager could focus on solving all the other issues because he could depend on us to do our bit. Dependability was a key differentiator for our organisation.
According to a recent study by IT research and advisory company Gartner technology providers are failing to communicate what differentiates their market offerings. 52% of vendors had trouble working out what made one product better or worse than others on the market. “In the face of sameness, buyers often turn to brand familiarity and reputation.” i.e. no-one ever got fired for buying from IBM.
Vendors may be failing to win new business because they are not communicating what makes them different, or because they don’t know their real value proposition.
Michael Skok has some good advice about creating a compelling value proposition. One of the key points is to actually ask your customers why they buy from you. You know all the features of your product or service but do you know how customers actually benefit from your expertise?
Product differentiation will help you get your foot in door, but may not be the complete answer. Two different products may both offer equally viable solutions for the customer. At that point, buyers will look for the extra clues on which to make their decision. Brand reputation is a subject for another day, but while you may not be IBM, it doesn’t mean you’re out of the running. There is a lot you can do to ensure that your business is appealing for quite different reasons.