A Need for Survival

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Authors: Sanjib Dutta & Anil Kumar Kartham,
Senior Faculty Member, Faculty Associate,
ICMR (IBS Center for Management Research).

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Challenges from loyal customers

Gone are the days when low price, good service and fairly good quality did the trick for the companies. But, now things/priorities have changed a lot. According to Tucker, 'there has been a sea change from the very root in the relationship between the buyers and sellers, globally irrespective of all industries and economy'. Buyers have become much more demanding and much less loyal than ever before. What you did for your customer last year is of no importance today. Also, it is not enough even if you make timely deliveries, maintain top quality standards and things like that.

Michael Leboeuf in How to win customers and keep them for life demonstrates in cold mathematical terms, the importance of concentrating on winning customers rather than winning sales as a satisfied customer is worth many sales in terms of repeat business and referrals. According to Laura, '40% of your satisfied customers will go to your competitor - even though they are happy with you. Competitors entice your clients with coupons, discounts and promises" What today's customer want is more for less price.

How to Retain Customers and Provide the Better Service

Customers are the backbone of your business. If you look after them and they experience the benefits of your products, they will continue to buy from you and will be happy to recommend you to their friends. Retention of customers is a major goal after customer service. Laura further adds "In today's game and yesterday's it is of utmost importance to retain your customers. Costs are four times higher to gain a new customer than to keep an old. An important means of customer retention is the development, communication and delivery of value propositions which meet or exceed customer expectations. Value propositions are those multi-faceted bundles of product, service, process, price, communication, interaction which customers experience in their relationship with a supplier. It is the customer's perception of the proposition that is important, not the supplier's.

A supplier may believe it has a service advantage; if the customer fails to agree, then this is not a source of value. In order to create, communicate and deliver the right sort of value to customers it is essential to understand customer's requirements and expectations. Most companies possess abundant data about customers, which they obtain from sources such as sales records, complaint logs, warranty cards, credit data, returns, guarantee invocations, scanner data, market research, quality conformance reports, mystery shopping, loyalty schemes, transactional research, customer service reports and so on. These data may or may not shed light on the question of what customers expect. What is clear is that the company must be close to the customer if it is to stay in the market.

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