Customer Service is more important than Price.
Recently a Acenture Report into customer experience was released. One of the interesting things that this survey of over 120,000 people showed was that 69% of people left at least one supplier because of poor customer service in the preceding 12 months. This was up from 59% when the survey was conducted last in 2007. Also another aspect of their survey was the fact that more people changed suppliers because of customer service than because of price.
I’ve always believed that customer experience is what really matters in a relationship with the customer, rather than price and this survey reiterates this point. But this survey is during the midst the toughest recession that the Western world has seen since the great depression. United Kingdom and the United States where this survey is principally based have had an extremely tough economic climate.
Despite this the survey results still show that customer experience and customer service is still far more important than price.
This highlights the fatal assumption often held is that price is what drives the sale. If a customer has nothing else to compare to between two particular suppliers then price will drive the product sale. It is the little things that surround the product or service that make the customer experience difference.
Businesses focus on price and ignore the evidence from this and previous surveys. Therefore they enter in price orientated competition.
Be careful of the assumptions you are making in what attracts people to your service or product, and realise that every survey, even those done in the midst of some of the hardest economic times we’ve had, continue to highlight the fact that customer service is more important than price.
Focus on the Wins – Collect Data on why.
Recently I was listening to a podcast by John Jantsch where he was interviewing Chip Heath on his new book, ‘Change’.
Chip and his brother Dan wrote a fantastic book previously called ‘Made to Stick’ which was about how to make ideas stick. It is a fantastic book and I would recommend it to anybody.
During this podcast they bought up a point that people need to focus on their wins if they wish to make change stick. This is an excellent point and I want to develop it a little further.
To often business owners / manager want to strive to obtain new business with a new product, a new service, a new market or sub-market. But this not always successful and there is a constant effort to look at what they are doing to improve their success on this front.
Developing Chip’s point further it may be more important to focus on the products and services markets that are successful, determine what it is that is creating that success and develop that further. So don’t get hung up about collecting data and analysing data on the areas on the products or services or markets where the business is not successful, but rather look at the areas where the customers are more than happy to pay for the goods and services and analyse why this is the case, what value is being provided here and what is it that is leading to this success. It is with the insights from this data that can lead to business growth.
For instance, my father had a commercial cleaning business for about 30 years, so I grew up in the game. My father shied away from the big office tower buildings and the large commercial shopping centres. His focus was always on the smaller centres, small office buildings, because he could develop a service that was valuable to these type of clients. He felt that if he tried to get business in these other areas it would take away from his focus and he may not be able to deliver a quality service. In these other markets there was far greater competition, but dad continued to focus on the type of client, and type of commerical cleaning to which he had developed a competitive advantage.
So to extrapolate from Chips’s point, concentrate on your wins, collect data to give you an insight on why the business is winning in these areas, and use that to develop your business.
Photo: – by Wonderlane
Look Ahead Rather than Behind – What data are you using.
A lot of the data that is collected in companies tells the owners and managers how they have performed in the past; whether it’s the past month, 6 months, or 12 months. The financial statement that we prepare are only a record of the past. The profit that is revealed in these financial statements is only revealing customers decisions made in the past.
This is not to say that financial statements don’t have a place, and I’ll do a blog post in the next few days on what we do need to use them for. We cannot lead a business or even effectively manage a business when we’re only looking behind us rather than ahead.
We need to therefore ask what data is necessary that will help us get ahead of the curve, instead of just reacting. This is where we focus on non-financial metrics to give us an insight into customer’s decisions right now, or potential future customer decisions. It is these insights that then can lead us to better decision making.
Does your data help you look ahead rather than behind?
Photo: – By John Poplett
Are We Asking the Right Questions?
Often in business we are questioning how we undertake the operations of the business, we question the available financial data, we put questions around the efficiency of the team and the processes, but are these the right questions?
The questions that we need to be asking are those that are focused on the value being provided to the customer.
We need to be determining what the customer see’s as important, how the customer defines success, what the customer thinks of our business. From this information we can then ask the questions of what data or metrics do we need to have to ensure that we are able to provide this value to the customer.
Just because the data is available, just because the financial information is being compiled on a regular basis, does not mean that that is useful information. We need to have the one focus measure and the various support measures that are answering the questions about what value is being provided to the customer.
This usually means that the financial data that we are compiling for monthly accounts etc is not the main focus area. This is useful information, but it’s telling us what has gone on in the past. We need to be asking the questions about what the customer is doing in the future, and having the data that gives us an insight into this.
Are you asking the right questions? Do you have the one measure clearly identified that will drive the future value of the business.
Photo: – by fontplay.com
Good Management Information is the Key to Better Business Performance
Can you answer any of the following questions about your business?
1. What single item in your business has the biggest impact on your cash flow?
2. Which one of your products or services contributes the most to the bottom line?
3. What is the value of your business?
4. What is the maximum sales growth that your business can realistically sustain in the coming 12 months?
It is important that fundamental questions like these can be readily answered. If you are confident you can answer these questions then you have an appreciation of the critical financial relationships that impact on your business. As a consequence you are in a much better position to make proactive decisions which can improve your business performance and lead to better cash flows, increased profits, increased business value and a better return on your money.
Because of economic pressures and time constraints, many business owners and managers are forced to think in the autopilot and often resort to running on gut feel. They don’t take the time to undertake detailed analysis of their businesses financial performance. Inevitably this can lead to poor decision making. You need to be able to answer the questions above and understand what the consequences of the answers mean to your business.
Photo: – Brenda Starr
Winter Olympics Vancouver – What is the Best Measure of Success?
We’re all familiar with the medal tally that comes out of any Olympics, summer or winter and there’s much conjecture about the relevance of the medal tally. From the recent Winter games that were completed in Vancouver, the overall medal tally (i.e summation of gold, silver & bronze medals) was as follows:-
United States 37
Germany 30
Canada 26.
Based on the overall tally Australia came in 18th with 3 medals.
However, if success is ranked by gold medals then the leaderboard is
1. Canada
2. Germany
3 United States and Norway.
Australia comes in at 14th.
Recently though there was an article referenced on the Freakonomics website, where they recast the medal count by market value. The gold and the silver medals are actually 92.5% silver, while the bronze medals are mostly copper. So the gold medal, which is really just gold plated, is valued at $537, the Silver medal is valued at about $300 and the bronze medals are valued at about $3.40.
When the medal tally is ranked by market value then it is as follows:-
1. Canada $9,635,
2. United States 2nd $9,377
Australia was 14th with $1,374.
However, if you count every medal won by a country, i.e. one for each player, on the hockey team and the bobsled and so forth, then Canada was very much clearly out in front with $41,000 of value and 68 gold medals. The USA with 12 gold medals and had a market value of $25, 719 in value and based on this measure Australia was 15th with $1,374.
Now these are an interesting aside, but the interesting question is “What is the best measure of success that we should be looking at from an Olympics?” As you know, I always try to boil it down to the one main number, the one main thing we focus on and I’ve been trying to consider in my mind, what is the important measure for the Olympics.
Now as a little context, some years ago I had some involvement with the New Zealand men’s kayak team for the Athen Summer Olympics. I assisted in taking some video, during their training and providing other support roles as they were training on the Maroochy river here in Queensland (yes it was the New Zealand team).
The conversation with these people in thea New Zealand team was purely focused on the Gold Medal. Two of them went on to win silver medals, and they were happy to have won a medal, but there was no doubt that they believed that they’d lost gold, rather than won silver. Also the athletes looked at what their personal best times were, and they looked at how that compared to where they’d been.
I’m not going to conclude or give an answer on this post. I am going to ask for comments but, I believe that the athletes would say its gold medals, or personal best times.
It’s interesting to think that the media focus has been significantly on the gold medal tally, but I would like to see what the tally of personal best achievements was. When we think of the motto of the Olympics, ‘Swifter, Higher, Stronger’, I think it’s probably in the spirit of the Olympics to look at the personal best times.
But of course, if I was a Canadian I would be looking at value based on market value and counting every gold medal awarded to every player, because this places them with 68 gold, 15 silver and 8 bronze to a value of $41,043. A clear winner, go Canada!
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