Building Customer Satisfaction, Value and Retention - Research Paper Example

Building Customer Satisfaction, Value and Retention Introduction In today’s world of business, customers are growing progressively more intolerant of poor service, more willing to swap providers in addition to having rising expectation levels. Against these conditions and in an ever-increasing competitive environment, meeting expectations of a customer is both more imperative than ever and harder to achieve. For a company/business to achieve sustainable competitive advantage; there is need to top up strong foundational customer service with customer experience management that is detail-oriented. The focus ought to be deeply on making the flawless combination of unremittingly managing customer experience as well as delivering great customer service to be their competitive advantage. There is need for companies to recognize customer value and satisfaction determinants. This paper delves into building customer satisfaction, value and retention. As the Center for the Study of Social Policy (2007) documents, there has been a wide debate over the definition of customer satisfaction as organizations progressively endeavor to measure it. Customer satisfaction can be felt in assorted situations and linked to both goods and services. It is a very personal assessment that customer expectations greatly influence, and is based on the experience of a customer of both contact with the organization, known in business literature as the ‘moment of truth’, and personal outcomes. As Goodman (2003) asserts, if not carefully defined, customer satisfaction, value and retention may become hard to monitor and measure, leave alone attaining them on a steady/reliable basis. Who is a Customer? In order to define customer satisfaction, value and retention, there is need to ascertain who is a customer. A customer is the unit or person receiving the product of a process on the system, and can be the immediate, intermediate, or even ultimate customer. A customer may as well be persons/a person, or processes/a process (Voltaire, 2003). Ashwin (2007) defines a customer as someone willing to pay a price in exchange of a good or service from the company. She further explains that customers are usually much more than individual persons in business premise. Actually, some companies never meet their customers in person while other customers are not individuals; instead, they are other organizations or businesses. Moreover, while some customers are just simple, others are intricate with many diverse needs and wants. One can as well view customers as the individuals that a company tries to attract, serve, communicate with, satisfy or hand its products, services or even work off to, and whom are usually immediate to receive its efforts. It is therefore of paramount importance that every business empower and satisfy these people in addition to retaining them as long as possible. Customer Satisfaction, Value and Retention Customer satisfaction is the outcome that buyers get after experiencing a company’s performance that has met a particular expectation. BusinessDictionary (2010) defines customer satisfaction as the degree of satisfaction that a firm’s goods or services provide as measured by the quantity of repeat customers. Chaffey (2008) defines it as the extent to which the expectations of a customer regarding the price and the product or service’s quality are met. It is the act of simply meeting basic customer expectations – just doing sufficient to be acceptable to a customer. Apparently, customers get satisfied when their expectations are met, and when exceeded, they get delighted – these make them remain loyal for a longer time, less sensitive to price, buy more and talk in favor of the company. Customer value is the disparity between the gains that a customer is obtaining from the purchased products and services as well as the effort plus cost that he/she has to invest to obtain the product – it is the difference between what the customer gives in order to get a product, and what he or she gets from it. Customer retention on the other hand is the measure of how long and well the customer remains and remains engaged with a specific company or with particular products and services (BusinessDictionary, 2010). Building Customer Satisfaction Customer satisfaction varies conditional on the situation as well as the product or service – a customer may be satisfied with a salesperson, a product or service, a purchase decision, an experience, service provider, or an attribute of any of these. Some researchers describe a satisfied customer as one who receives considerable added value to his/her lowest expectation (Center for the Study of Social Policy, 2007). It is important to note the fact that customers choose the offer that capitalizes on the delivered value – this is the difference between the total customer value and the total customer cost. For a company to build its customer satisfaction, a strategy for service quality is imperative mainly as it sets the tone for the suitable behavior, training as well as delivery of the particular service. The strategy for service quality should address four items namely, customer service attributes; approach for improvement of service quality, developing customer service quality-feedback systems; and implementation, which is perhaps the most important of the four strategies. The company must ensure that service delivery is accurate, timely, with courtesy and with concern. This is because all services are intangible, are a function of perception, and as such depend on interpretation. In addition, service is perishable and can spoil on the organization if left unattended. Customer service and satisfaction is responsive to both the company/organization and the customers for most favorable satisfaction (Voltaire 2003). As the Center for the Study of Social Policy (2007) advocates, it is imperative that companies involve and consult the consumers of their products and/or services when designing customer satisfaction approaches. This is considering the fact that customer satisfaction is a greatly variable assessment that each individual makes founded on his/her own expectations, information, interaction and direct contact, as well as impact. The customer service-quality feedback system therefore ought to focus on customer satisfaction and not on marketing – it should be responsive to the wants, expectations and needs of the customer. The information value must have its focus on at least these areas: knowing what customers think about the company/business, its service, and its competitors; turning the strongest areas of the company/business into market differentiators; measuring and improving the performance of the business; and turning weaknesses into opportunities for development. The information value should also focus on demonstrating the company’s commitment to quality as well as to its customers; and developing internal tools for communications that would allow everyone to know how the company is doing. In general, companies should conduct customer satisfaction research with the intention that this kind of research would help them remain as close to their customers as humanly possible (Center for the Study of Social Policy, 2007). Majority of leading edge firms focus on gathering useful feedback from clients and customers and transforming it into actionable steps geared towards improving their performance. This aids them in targeting their resources on issues that are of concern to customers, for instance when there are issues to do with product quality such as durability or to do with service quality such as bad employee’s practices. Some do this with the intention of demonstrating a commitment to giving an ear to their customers. The management in addition, as part of the implementation process, must define the level of customer service plus the service quality scope as part of the organization’s policy. Moreover, they must define the implementation plan, which should include the task assignment, time schedule and reporting cycle Voltaire (2003). While addressing service quality as a key factor in building customer satisfaction, business researchers Schneider and Bowen (2008) affirm that in order to deliver service excellence, service-providing organizations must meet three critical customer’s needs including security, justice and esteem. In their research, they identify several features associated with service quality/an assortment of service quality factors significant for customer satisfaction including outcomes and assurance; reliability and dependability; fairness and personal attention, convenience and timeliness; employee professionalism and competence; empathy and responsiveness; availability; tangibles like equipment and physical facilities as well as the general personnel appearance. Building Customer Value For the success of any given company, customer value is instrumental. Actually, an understanding of the customer’s value chain is fundamental in building customer value. The customers’ value chain entails a set of customers’ value consumption activities. If the value that the immediate customer creates in turn creates value for a subsequent customer, it follows therefore that that ‘subsequent’ customer is a firm’s indirect customer as well. Therefore, in order to comprehend the customer value that a firm is providing, there is need for the management to identify the customer as the first step (John, 2003). This would aid in building customer value. The following is a discussion of several attributes through which companies can build customer value: Solving the customer’s problem completely – there is need for the company to define exactly what customer’s opportunities or challenges the company’s product/service or solution addresses, the measure to which it does, the way in which it does it in addition to the way in which it works with other solutions. The company should not leave the customer in distrust or searching for additional information. Providing exactly what the customer asks for – the product or service/solution ought to have packaging flexibility depending on how customers want to buy, rather than how the company intends to sell. It should make it easy for customers to buy just what they would want at a particular time and by so doing, they would be more inclined to purchase more subsequently. Refraining from wasting customer’s time – it is important that the company/its representative goes directly to the point without arm-twisting the customer to fulfill certain conditions in order to get the information they want. It is also important to have it in mind that customers’ buying process takes preference over the company’s sales or marketing process – wasting customer’s precious time by making them jump via hoops to get information implies that they will simply go elsewhere if you waste their time (Womack and Jones, 2005). Delivering value where a customer wants it – a clear definition of the exact point(s) in the customer’s business value stream your product/service/solution delivers value is also vital. Excessively vague or broad claims of functionality and applicability do not connect with specific requirements of the customer or the way in which the customer foresees a solution that would promote their business. Supplying value immediately the customers want it – it is important to consider the fact that not all of a company’s prospective customers are prepared to purchase at that time and unquestionably not instantly. The critical issue here is gearing one’s marketing programs to the assorted periods that one’s potential customers have for purchasing as well as aiding them get to that point. Reducing the number of decisions that the customer must make to solve their problems – the sole reason behind business customers’ purchase of a good or service is solving a problem or pursuing an opportunity. Offering numerous choices, alternatives and options therefore only makes things more intricate for customers to make a decision to buy. One should therefore communicate with soon-to-be buyers in their context, avoiding needless intricacies or decisions they need to make (Womack and Jones, 2005). Building Customer Retention As aforementioned, customers develop loyalty towards a company when it meets and even exceeds their expectations. Companies can build their customer retention by improving their relationship with the customers through ensuring delivery of an emotionally engaging customer experience. This would boost customer loyalty thus customer retention, and would make the business/company less vulnerable to new players as well as competitive offers in the market. Once a company manages to influence its customers to be loyal to it, then, it retains them, which in turn influences profitability. The elemental assumption of all loyalty models is that acquiring new customers is more expensive than retaining existing ones. Still, great customer experiences increase customer lifetime value in addition to reducing costs. Long-term customers have a tendency of being less price sensitive as well as being less inclined to switch, which results in increases in sales volume along with stable unit sales volume (Beyondphilosophy.com, 2010). Goodman (2003) holds the view that although retention-satisfaction is significant particularly owing to the fact that it can be easy to monitor and that it assessable in cents and dollars, it is not foolproof. In other words, the fact that customers buy again does not mean that they are satisfied – clients might be faced with the challenge of having no other viable choice apart from buying from a particular seller. Unfortunately, departments of customer service, which are known to have the tendency of tracking dissatisfaction more than satisfaction, usually suppose that the absence of dissatisfaction letters denote the presence of satisfied customers. In effect, there is no need of waiting for weeks or months to receive dissatisfaction letter, which may be only one in ten thousand might write. Companies should monitor and measure actual transactions in at least three customer behaviors such as their voice inflections; the language with which they express gratitude; and their pledges to do extra business after subtly prompting them to show this intention. Customer service and/or satisfaction, as Voltaire (2003) asserts, entail creativity that allows a business to diffuse or handle problems in the process of conducting its daily undertakings. He believes that every business should work towards gaining not only the sale but also its customers’ loyalty by ensuring that whatever it delivers to a customer meets the customer’s approval – that is, satisfaction. He insists that whenever customers are delighted, they are always willing to return to the business and to be associated with it. Voltaire (2003) goes further to point out some of the issues that guarantees failure in customer satisfaction, value and retention, which include employees being under an obligation to adhere to an inflexible chain of command; close supervision of employees; basing rewards on carrot-and-stick principles; disallowing conflicts of whatever forms in addition to measuring wrong objectives. He argues that permitting employees to take individual responsibility for their own actions in the areas of performance, communication and customer satisfaction increases chance of success in building customer satisfaction, value and retention. In order to sensitize employees to these issues, there is need to do the following: first identify how the business defines the customer; second, understand the levels of customer expectations regarding quality; third, understand the customer service-quality strategy; and fourth, understand the size as well as feedback cycles of customer satisfaction. Conclusion Customers to any organization/company hold the key to its success and thus, it is only by understanding them better that it would be in a position to unlock its potential. The first step to this is measuring customer satisfaction, while what the company/business would do with the findings makes the real difference. By acting upon the insight/by making the essential changes that would improve customers’ satisfaction, the company would benefit from improved customer retention; increased control over its customers since it would understand them better; and improved customer value. In addition, it would enjoy increased sales as satisfied customers have a tendency of buying more frequently and a wider range – purchasing ancillary products as well as supplemental products with high margins. It would also profit from valuable references/more referrals being generated from the current customers – customer loyalty marketing kicks in following the long-term customers’ free word of mouth promotions as well as referrals. Again, a satisfied customer adds to his/her current value, but more importantly, the organization will gain the lifetime value. Long-term customers have a tendency of being satisfied with their association with the company/business and are less likely to shift their loyalty to competitors – this makes market entry or market share gains of the competitors difficult. In addition, it less expensive to service regular customers owing to the fact that they are familiar with all the processes involved, needs less orientation and are consistent in their placement of orders. It is important to note that every company/business exists with an intention of satisfying the customer. In fact, devoid of the customer’s need, both the business/organization and the employees have neither a product nor a service to provide. The customer has an option and, per se, if the employees or the organization/business fails to recognize the sensitivity, urgency, expectations, uniqueness, and influence that the customer has, they would as well be unsuccessful in satisfying the customer. References Aswan, A., (2007). Who are customers? Knowing your customers. Retrieved from http://www.bized.co.uk/educators/level2/competition/activity/customers12.htm Beyondphilosophy.com, (2010). Customer loyalty. Retrieved from http://www.beyondphilosophy.com/customer-experience/customer-loyalty.php BusinessDictionary, (2010). Customer Satisfaction. Retrieved from http://www.businessdictionary.com/definition/customer-satisfaction.html#ixzz0g0E6YHCj Center for the Study of Social Policy, (2007).Customer Satisfaction: Improving Quality and Access to Services and Supports in Vulnerable Neighborhoods. Retrieved from http://www.cssp.org/uploadFiles/Customer%20Satisfaction%20-%20What%20Research%20Tells%20Us.pdf Chaffey, D. (2008). Customer Satisfaction. Retrieved from http://www.davechaffey.com/E-marketing-Glossary/Customer-satisfaction.htm Goodman, G. S. (2003). Defining Customer Satisfaction Is Half The Battle. Retrieved from http://www.customersatisfaction.com/articles/battle.html John, J. (2003). Fundamentals of Customer-Focused Management: Competing Through Service. New York: Greenwood Publishing Group. Schneider, B. & Bowen, D. (1995). Winning the Service Game. Boston: Harvard Business School Press. Strativity Group Inc., (2008). Customer Experience Management. Strativity Group, Inc., Rochelle Park, NJ Voltaire, (2003). Customer Service and Satisfaction. Retrieved from http://media.wiley.com/product_data/excerpt/18/04714595/0471459518.pdf. Womack, J.P. & Jones, D.T. (2005). Lean Thinking. New York: Simon & Schuster. Read More