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.
Are Putting Your Customers Through Unnecessary Processes?
In the last post I covered the issue of the unnecessary fees and charges that are being imposed by businesses small and large. Further on this line of thinking, too often businesses are making their customers or clients go through processes which may make sense from the internal operation of the business, but in no way make sense to the customer.
Recently I had to get a washing machine serviced and also an air conditioner fixed. I had a look at a website of a particular company (a small Brisbane company) that stated that they had a division for washing machine repairs and also air conditioning repairs.
So I contacted them and mentioned that I had these repairs and I was put through to the air conditioning division, where I then spoke to a person about the air conditioner and then I said “I need to also book in somebody to come and have a look at the washing machine repair.” To which my reply was “That’s not my division, I will need to transfer you back to the main switch.”
So back to the main switch I went and it was like calling for the first time. I then got transfered to the washing machine division and I go to go through all my information again because this was the washing machine division.
I had given all my personal contact address details, phone numbers and everything to the first person, but I was asked to go through the process again because their internal operations were obviously separate and they couldn’t, in any way, merge the two. It was an unnecessary process and this just happened to me very recently so I am highlighting it. However, there are many examples that I could utilise.
We need to think of business from the customer’s perspective. We need to understand what is success as judged in the eyes of the customer; how are they experiencing our business?
It is only through a deep understanding of the customer that is both understanding of the behaviour of the customer, through observation, but also understanding the numbers that come out of dealing with our customer base. We need to understand exactly what they don’t like about our processes and redesign it to remove the unnecessary processes. The end result of unnecessary processes is customers who are not completely satisfied.
The repairs to my washing machine and air-conditioner have been completed successfully. But what is the story I am telling people – it is the story of the first contact.
Unnecessary Fees And Processes
Invoice
Recently I have been noticing a rise in fees that have been added to various accounts with some amusing names (handling or processing fee). Telstra last year tried to implement a fee where you had to pay extra to pay over the counter your bill. This fortunately was removed by the public pressure.
Some banks charge you more to use the over the counter services than the electronic services. Other organisations also have fees and charges that appear on the bill and they don’t have to be the large public companies that are mentioned earlier.
These fees and charges are possibly being seen by some of the internal accountants and financial officers as ways of raising additional revenue without increasing the price of the good or the service.
But the impact from the customer point of view, far out weighs any benefit that these unnecessary fees and charges incur. It is not just the large companies that are doing this practice. Many small businesses seem to be adopting the practice but be careful.
Recently I had my car serviced and when you look through the bill there was four separate little fees, none of which exceeded $5, that were added on after the labour component and the parts component, etc. It leaves a sour taste in your mouth as a customer. The additional revenue that the business has charged adds up across all customers, but what is the impact on the customer.
Instead of the service or the experience being remembered, the little fees and charges take a bigger significance. It is always the little things in business that have a big impact and unfortunately these little fees are having a far bigger impact than most businesses are crediting.
So have you gone down the path of imposing some little fees, service charges or levies on your clients? If so I would seriously reconsider these and just consider increasing the price and accordingly, increasing the experience the customer has.
Price is Not based on Cost.
Recently a graph of relative prices of various liquids was posted on ReflectionOf.me blog. The graph shows that HP Black Ink is the highest relative price with oil being the lowest. The comments people are leaving are also interesting. A lot are railing against Hewlett Packard and there is a discussion of the cost of the various liquids.
But PRICE is NOT based on COST.
Price is set by the value the consumers perceive. Price is affected by the competition and sometimes by the heavy hand of regulation.
So why would HP Black Ink so higher relative to other the liquids?
Remember price is a marketing tool. The price of the ink needs to be taken with the price of the underlying printer. For the consumer level printer HP make nothing. They have set the price low to get the printer into your house or office and then they can sell you the ink and make the profit.
But please price is not set by the cost of the item.
How are you setting your prices? If you are not differentiating your product or service from everybody else then you will be lead down the both of lower price. HP are differentiating their printers from the competitors which then leads to the ink sales.
Price is a marketing tool
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