A few months ago I called my credit card company to send me a form for a direct electronic transfer from my account so that I would not have to waste time and energy writing out a cheque every month. When I did not receive the requisite forms in spite of a subsequent follow-up call on my request, I decided to switch the credit card firm opting for someone who would understand my needs better and provide me the service even if it were at a slightly higher charge.
This raises a pertinent question, ‘How many companies are losing high net-worth individuals as potential customers?’ Every marketing manager worth his salt knows that it is more expensive to find a new customer than to retain an existing one and yet, companies are so callously ignoring existing customers in their pursuit of new customers.
In this particular situation, the company did not even have to identify the need, I as a customer had approached them with my need and all they had to do was service this need, for which they already had the facility. But, somewhere in the line someone probably thought it was not worth the trouble. It is frightening to think of having such lacunae in your service process that would eventually drive you out of business. The service staff probably did not receive sufficient training on the significance of retaining an existing customer or there was a system failure that lost my request or there was no motivation in the service staff to provide the service. Any of these situations spell doom for the company. It is unfortunate that companies spend a large proportion of the advertising budget in getting clients and then, are oblivious to individual needs and circumstances, in the process losing valuable customers for life.
It is not surprising that although I discontinued using the card for more than four months, and being an entrepreneurial consultant I was a frequent user, I haven’t received a single call from the customer services department inquiring the reason for not utilising the services. The company probably does not have a management information system that would trigger a warning signal when a good customer (with all my statements settled promptly) is getting out of the system. In London, if my account did not show movement for two months, I would immediately receive a letter and a follow-up call from the company inquiring if there was a service slip up or if I was dissatisfied with their service. And then asked whether there was anything they could do to make things better for me. This service attitude is sorely lacking in our Indian firms.
Everyone seems to be aware of the fact that ‘Customer is King’ but most companies are just paying lip service to this philosophy. No attempts are made to understand the needs of the customer and cater to those needs. If you ask any marketing manager a basic questions, “Who are your customers?" you invariably get a generic response. Marketing managers do not make the effort to understand who the customer really is. It is surprising to find that most of them are functioning under the assumption that the customer is not intelligent and does not know what he wants.
So, let’s give him what we have designed, rather than asking him what he desires. But, companies that realise this are expanding their customer base and making profits. Mass-customisation is the need of the hour. What better example than Sabeer Bhatia who identified a need for people to communicate with each other and offered to act as a link, providing a free service that has become his most valuable asset, the Hotmail database.
Managers need to make a greater effort in understanding the needs of the customer and servicing those needs promptly or else in a fiercely competitive market place risk losing out to competition. Some managers may argue that they often receive unreasonable requests from customers and they possibly cannot satisfy them all. This is where a manager needs to use his business acumen along with his analytical skills to determine the opportunity cost of losing a customer, the replacement costs in finding another customer and the business cost of a dissatisfied customer.
Bringing all this factors in perspective, managers will be able to effectively take business decisions that will grow the business.
Balancing the risks associated with different types of customers with the potential revenues that could be earned through them will give managers a clearer picture. Developing a risk-service matrix to determine the service levels that could be provided to customers will help managers gain business insights and avoid service glitches. In any such modelling exercise, care needs to be taken to link the present situation to the future possibilities where a positive change in customer circumstances will benefit the company. For example, the needs of an entrepreneurial consultant would be different from the needs of a salaried accounts-clerk in a manufacturing organisation. If you can identify and differentiate these needs, you can offer mass-customisation. Of course, but credit card firms do offer Silver, Gold and Platinum cards. Within these broad categorisation as well, there will be ample opportunity to customise the service offer. For example, in my case, the service officer should have asked me at the time of application of the card whether I would want an electronic transfer facility. That was a lost service opportunity. Such lapses in identifying service opportunities could prove costly to the firm in the long run.
Companies have to learn not to penalise Poonam for Pallavi’s mistakes. Just because there is one bad apple in a basket, you do not throw away the entire basket. That is foolishness and wasteful. Managers have to combine analytical skills with commercial acumen and common sense to understand the different customer profiles, segmenting them by the needs as well as risk profiles. This will enable companies to gain a higher market share in a fiercely competitive market place.