CUSTOMER FOCUS

 

BUILDING CUSTOMER LOYALTY.

(The article below I published in my fortnightly column in Hyderabad based Deccan Chronicle in 1996. I am reproducing below a part of it to relate it to what is happening today in the e commerce environment)

Recently (in 1996) a friend of mine who travels regularly abroad gave me instances of how businesses abroad work overtime to build customer loyalty. Research studies have shown that it requires ten times more effort to get a new customer than to retain an existing customer. In one interesting paper I came across, the author puts forth the idea that customers can be your apostles or terrorists. A satisfied customer will be your apostle who will inform three others favourably. But a dissatisfied customer will be your terrorist who will dissuade ten prospects from coming near you.

So how do we convert every customer into an apostle. Some of the instances I shall narrate below may throw some light on this subject. It is natural for many a businessman to turn around and say that such ideas will not work here in India. So I shall also give you instances of similar experiences in India to drive home the point I am making.

Sony Experience.

This is a true story narrated by my friend. His nephew, living in New York, USA gifted a Sony Diskman to his brother in India. It worked well alright but only when it is placed horizontally. As per the Sony catalogue it is supposed to work quite well when kept vertically too. But true to his Indian experience he did not worry too much about this. However during one of his calls to his brother in USA, he casually mentioned this problem while telling him not to bother about it very much. However my friend's nephew in USA insisted that he return the unit back to him when their parents were visiting USA shortly.

By the time the parents did visit USA six months later the nephew in USA had shifted from New York to Pennsylvania which is like shifting from Bombay to Hyderabad. However he immediately took the defective Diskman to the nearest Sony dealer in Pennsylvania and mentioned the problem. The salesman at the counter promptly took back the unit, located an alternate unit for replacement. Then he went to the cash counter and took out a ten dollar bill. He came back to the customer and apologetically informed him that due to continuous technical improvement, the original model has been discontinued but the latest model equivalent to the old model is available for replacement. Further since the new model is cheaper than the six month old model by ten dollar here is a refund of ten dollars.

Kindly note that the salesman did not ask for the original bill of purchase. He did not question the customer to establish whether the customer did anything to damage the unit. He did not even test it to verify the customer complaint. He was simply empowered to accept the customer's word and give a free replacement with appropriate refund.

The Kodak Experience.

This is the story of another cousin of my friend living near Niagara falls. Quite a few tourist visit Niagara Falls area from all over the world including USA. Whenever tourists travel the ubiquitous camera follows. However it is always a problem for him to decide how many rolls of films to carry. Either he may take a few rolls more and suffer the cost of underutilized rolls or a few rolls less and suffer the disappointment of missing shooting opportunity. So Kodak shops in many places across USA have a policy where they offer you to buy as many rolls you want to with the proviso that you can return the underutilized rolls before the expiry period after your vacation. This way they ensure that their films are preferred over their competitor while ensuring that the tourist doesn't suffer the inconvenience of having inadequate films or excess films.

However recently when my own nephew returned from USA for a short Holiday he showed me a new camera along with large number of films in his bag. When enquired about the price of the camera he said that this camera was given on hire for the duration of his visit from the very shop he bought his films.

The Cardigan Story.

When this story was narrated to me by my friend I was really floored. One of his cousins had bought an expensive cardigan for his wife on her birthday from a neighborhood supermarket in Chicago where they were staying. The washing instructions for the cardigan very clearly said that it should be washed only in cold water and under no circumstance should hot or warm water be used. However, as things happen, one day the wife duly washed, by mistake, the cardigan in hot water along with other clothes. As warned by the manufacturer it came out of the washing in complete tatters.

Like any Indian housewife living abroad she asked her husband to take it to the supermarket for replacement. The husband promptly refused saying that it was her fault. Not giving up the wife decided next day to go herself and get a replacement. Next evening when her husband returned from work she showed him a brand new cardigan in replacement for the old. While narrating the incident she passingly mentioned how nice the sales girl was towards her.

The husband immediately pointed out that there was no girl working in the shop where he had bought the original cardigan. So he probed his wife deeper about the shop and discovered that she had got a free replacement from a totally different shop. Being a true honest Indian he decided to go back to this shop next day to return the "unfair" replacement. As he entered the second store, he met the sales girl described by his wife soon and hesitatingly explained to her how his wife had made a mistake and he had not bought the material originally from this store etc. and said he would like to return the cardigan. The salesgirl promptly stopped him in his track by saying that she all along knew that the cardigan was not sold in her store and still she gave a free replacement. Our friend promptly queried her why she did so. Her instant reply was "Now I have a delighted customer who will come back to me again".

Looks more like a fairy tale than a true customer account indeed!! Having been used to rude shopkeepers and unfriendly manufacturers who loudly proclaim in their bill that goods once sold will not be taken back, it is very difficult to visualise how such customer friendly attitudes can be inculcated in our business environment. But then I have personal experience in the recent past when in India I came across similar "Horror" stories. I use the word "Horror" in a metaphoric sense because they apparently look horrific in the Indian context.

The Hotel Experience.

In my regular travel to Bombay on work I used to stay in a particular hotel in south Bombay which is part of the well known Taj Group. Two incidents struck me as unique in this place.

In one instance I was checking out in the morning after breakfast at 8.30 AM. I went to the cash counter on my way down. I had not intimated in advance my plans to check out. Normally I am used to waiting anywhere between 15 to 30 minutes for a ckeck out process to be completed. The first surprise was when I found there was no queue of people waiting to check out before me. Second when I indicated my desire to settle the bill using the Citicard credit card, the cashier took my card and passed it through a magnetic card reader, entered a few strokes of Keys on his computer and presto within thirty seconds my bill along with the citicard credit slip was handed over to me for my signature. I was out of the hotel in 60 seconds on my way to the airport. And to my surprise I found that all the room service bills, telephone call charges were correctly accounted.

In the second instance, in the same hotel, on another occassion another customer was checking out before me and he had a small problem with his bill. He pointed out to the cashier that there were two room service bills charged to his account where as he had ordered only once. One amount was for Rs. 350/- and another was for Rs. 460/-. The cashier asked him whether he could remember which one was his. The customer could not help. The cashier promptly agreed to delete the higher of the two amount and asked him to settle the bill.

I had always emphasised that there is a need to design organisations focused on the customer. The above examples are typical of the customer focused organisation. In all these examples some simple principles come out loud and clear. Every business man can benefit from these principles and build longterm customer loyalty.

What are these principles?

First and foremost is the principle "Trust Your Customer". Here keep in mind that majority of customers are basically honest and would come back to you for a redress only when they have a genuine problem. By treating them with respect and meeting their problem promptly you convert their sense of frustration into a sense of permanent gratitude and thus long term loyalty.

The next principle is "Resolve the Problem Immediately". In all the cases I have narrated the salesman or cashier resolved the problem immediately with total satisfaction to the customer. They did not ask the customer to come back later or made them wait while they sought the permission of their bosses.

The next principle is "Empower Your Employees" to please the customer. As can be seen from all the above cases with out such an empowerment it would have been impossible for the employees to do what they did.

The next principle is a corollory to the above principle which says "Trust Your Employees". I think this is very obvious.

The next principle is "Use Information Technology creatively". Except for the last example I did not highlight the role played by IT in facilitating the above principles. But in all these cases a statistical record of transactions are maintained using IT with respect to customers and the employees which identifies possible misuse of the system. Thus management now control after the event rather than during the event recognising that the cost of sending back a dissatisfied customer is much more than the loss arising out of occasional misuse.

During my consulting assignments with my clients I tell them these stories as prelude to make them recognise the daunting task ahead to change them from their old way of working to the requirement of the new ways of a liberalised and globalised world. It is interesting to note that these principles are applicable to all types of businesses be they small or big, dealing with Industrial or consumer product, services or ideas.

What is important to recognise is that if you want to build customer loyalty it is not enough that you have a good product and a good advertisement campaign but every part of your operations must be fine tuned to delight the customer.

When I wrote this in 1996 the stories narrated and the insights shared were very different from the prevailing norms across industries and businesses. Over the years technology continued to evolve and the Diskman and colour film rolls have become museum pieces or someones personal collections to cherish past memories. Even Kodak has disappered from the market which they dominated. And the very concept of buying from a store has shifted to online for most of the items. So the question we must ask is are these concept of getting customer loyalty still relevant when there is no face to face interaction and in many cases the relationship is purely transactional and through a bot. The question I pose to my readers is how do we make sure the customer focus is not lost sight off in a world of e commerce where you dont get the kind of feedback which comes from personal interaction. If they are still valid how do we ensure customer loyalty is not forgotten as an archaic concept of the brick and mortar world. I ask my readers to share their own experiences today which addresses this issue.

R. Srinivasan