Customer Service, Satisfaction, and Success

Abstract

The strategic benefit of customer-success initiatives is that they move the firm closer to the position of indispensability. The critical component of these efforts is a knowledge of the entire supply chain, which can be used to help key customers improve their competitive position. For example, one manager pointed out that a particular supplier was practically indispensable because of the tremendous value provided by the supplier. The manager noted that the supplier knew more about the industry than his firm, and more importantly, actively shared that knowledge to help his firm be more successful. By promoting state-of-the-art strategic initiatives, sharing operational tools, and facilitating new merchandising techniques, the supplier had helped its customer compete more effectively against larger rivals. Loyalty to the supplier was a natural result. Customer-success strategies recognize the importance of knowledge, and they use knowledge to increase switching costs through unique product/service offerings.

Of course, using knowledge to turn customers into winners can be a difficult process both in gaining the requisite knowledge and expertise as well as in translating that expertise into competitive advantage for the customer. The firm must obtain vital information about downstream requirements that can then be used to tailor the firm’s product/service packages to deliver exceptional value. At the same time, the firm takes on the role of consultant to its customers, educating them in areas where they lack needed skills or knowledge. When a good relationship exists between the firm and its customers, this educational role is not only natural and straightforward but also genuinely appreciated. When close relationships do not exist, informing customers that they “are not always right” is difficult and can be highly uncomfortable. It is, however, better to turn down a customer request for a product that will not meet the customer’s real needs than to deliver a product that will ultimately lead to dissatisfaction. The short-term struggle to explain how a product might be inadequate as well as what product/service package might better fulfill the customers requirements is preferable to selling a product that dissatisfies the customer later. It is very important, however, not to use customer success as an excuse to needlessly oversell customers on higher margin products.

Finally, customer-success strategies must recognize that the buyer/supplier relationship should yield competitive advantage, or profit to both firms. Mutual benefit is particularly important given the experience of many firms that adopted “customer-delight-at-any-cost” approaches to keeping customers satisfied. These firms established selective relationships with key accounts that proved to be highly unprofitable because of the expense of meeting “excessive” service requests. The fact that many such relationships are cost ineffective can be discovered only if activity-based costing systems are adopted. The bottom line is that being a of preferred supplier is only beneficial when it can be done at a reasonable profit.

Customer service practices of the following companies are discussed here: Electro; Hershey; IBM; Nuskin; Xerox.