Customer Relationship Marketing
Ernan Roman Direct Marketing guarantees double-digit response rates using consensual opt-in customer relationship marketing solutions, customer relationship management and creating integrated marketing solutions
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Issue No. 4   SUBSCRIBE » CONTACT US »
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IN THIS ISSUE...
Spacer The State of Customer Service Affairs

Competing by Caring: Horst H. Schulze,
former CEO of Ritz Carlton Hotels


Harvard Business Review’s
Seven Customer Service Guidelines


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THE STATE OF CUSTOMER SERVICE AFFAIRS
 


As found in ERDM’s Customer Service Call Center Research, expectations regarding customer service are very low – almost two-thirds of customers rated their most recent telephone customer service as negative or neutral!

Why is that? Well, we pump our own gas. We check the oil and squeegee the windshield. Customer service has definitely changed. . . There used to be a person on the other side of the counter; then there was a voice on the phone; and now we are pushed to an impersonal e-mail address for any customer service issue.

Poor customer service clearly alienates customers. Cutting costs in service absolutely cuts into the heart of the customer’s expectations of value! The key to creating a successful customer relationship and to enhancing and lengthening that relationship is the delivery of value over time. And the only arbiter of “value” is the customer.

Marketers must remember these three indisputable truths:

  1. We need customers more than they need us.
  2. They have many choices besides us.
  3. Loyalty and trust cannot be taken for granted; they must be earned every day.

The essence of a company’s commitment to a customer is experienced in that fleeting moment of contact with their customer service representative. We may call it a “touch,” but how do customers experience it? As a caress? An indifferent shrug of the shoulders? As a slap? As a roundhouse to the jaw?

Think about the customer’s experience when we mandate that they only access us via the Web, or when our representatives hurry the conversation along to keep their talk time average down, or when communication is stifled because of language difficulties. Does this further the relationship?

Whether we call it trust or a relationship, the onus is on the marketer to nurture the customer to achieve increased retention and Customer Lifetime Value. Creating an efficient transactional framework only brings you to zero. Customers expect that; it’s nothing special. But providing the value-add, the caring customer service, is the true competitive differentiator.

COMPETING BY CARING

Horst H. Schulze is former CEO of Ritz Carlton Hotels, and President and CEO of the West Paces Hotel Group, LLC. He is an expert on proactive customer service as a competitive differentiator. His thoughts help us to make the connection between proactive customer service and increased Customer Lifetime Value:

“The one word that I could substitute for service is ‘care.’ The customer wants three things:

  1. They want the item they are buying to be defect-free.

  2. They don’t want to wait for it.

  3. They want you to care (which we call service). ‘Care for me because I spent a lot of money for the car’ or ‘Care for me even though I only bought a bottle of water.’

The moment of interaction with the customer is the moment of truth. How do you judge the service? You judge it by the interaction with another human being.

Many companies do not have a process for the consistent delivery of customer care, for managing that moment of customer interaction. The reason seems to be that many companies do not recognize that customer care is a product unto itself, a strategic addition to whatever else they produce or offer. Just as there must be a process for the quality manufacturing and delivery of a product, companies need a repeatable, measurable process for the quality delivery of customer care.”

 
 
Harvard Business Review’s
Seven Customer Service Guidelines


ERDM advocates long-term business thinking, which embraces customer care as a strategic goal that builds corporate wealth. Immediate profits and market share cannot be ignored. But to succeed long-term in a service economy, we must add customer satisfaction and lifetime value to the list of strategic goals. These goals are potentially huge contributors to the bottom line when you consider referrals, repeat purchases, and purchases of related products and services. The consistent delivery of customer care creates the framework for compelling competitive advantage.

The Harvard Business Review (James L. Heskett et al., “Product Number 4460, Putting the Service Profit Chain to Work, March-April 1994) offers seven propositions that will help you drive the process of customer care:

  1. Customer loyalty drives profitability and growth. A 5 percent increase in customer loyalty can boost profits by 25 to 85 percent.

  2. Customer satisfaction drives customer loyalty. Xerox found that its very satisfied customers were six times more likely to repurchase company equipment than customers who were merely satisfied.

  3. Value drives customer satisfaction. An insurer’s efforts to deliver maximum value include funding a team that provides special services at the sites of major catastrophes. The company has one of the highest margins in its industry.

  4. Employee productivity drives value. Southwest Airlines deplanes and reloads two-thirds of its flights in 15 minutes or less; pilots fly an average 20 hours more per month than competitors. Fares stay low while service remains high.

  5. Employee loyalty drives productivity. One auto dealer’s annual cost of replacing a sales rep who had eight years of experience with one who had less than a year was $432,000 in lost sales.

  6. Employee satisfaction drives loyalty. In one company study, 30 percent of all dissatisfied employees expressed an intention to leave, compared to only 10 percent of all satisfied employees. Moreover, it was found that low employee turnover was closely linked to high satisfaction.

  7. Internal quality drives employee satisfaction. Service workers are happiest when they’re empowered to make things right for customers and when they have responsibilities that add depth to their work.
 
       
   
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LETTER FROM ERNAN

Last month’s newsletter and the Customer Service Call Center research (click here for a summary) generated much interest and feedback.

From blogs (see
Caroline Mayer’s washingtonpost.com entry here
) to magazine articles (see a DIRECT magazine article here) to e-mails from readers, it seems everyone was talking about the research results and our Customer Bill of Rights (click here for a copy).

Due to the high level of interest, this issue continues our focus on Customer Service with articles about the current state of affairs and how to use Customer Service as a competitive differentiator.

Please keep sending me your thoughts, questions and suggestions, at ernan@erdm.com.

Best wishes,



 
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SPEAK OUT
How has your company benefited from recognizing the importance of Customer Care? Email us your story and we’ll include it in future newsletters.

Comments about Customer Service
as a Competitive Differentiator? Let us know what you think!.
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ADDITIONAL RESOURCES
To learn more, go to Case Studies / Tips for You. Also go to Our Books to review Opt-In Marketing: Increase Sales Exponentially with Consensual Marketing.

Contact Us for a complimentary consultation to discuss your needs and how the Consensual Marketing / Opt-In Process (CMO) may satisfy them.
 

Click here for additional customer relationship management solutions case studies.

We wish you the best of luck in using the Voice-of-Customer-driven 3-Step Marketing Process to achieve double-digit response.

    To read previous newsletters, click here.
    For additional case studies, click here.

     
Ernan Roman Direct Marketing | 3 Melrose Lane | Douglas Manor, NY 11363 | Phone: 718.225.4151 | Fax: 718.225.4889
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