As we suggested earlier, the quality of customer service after the sale is often as important as the quality of the product itself. Of course, excellent customer service can rarely compensate for a weak product. But poor customer service can quickly negate all the advantages associated with delivering a product of superior quality. At companies like L.L. Bean and Caterpillar, customer service is not an afterthought but an integral part of the product offering and is subject to the same quality standards as the production process. These companies realize that a top-notch customer service operation can be an effective means of accomplishing the following three objectives:
1. Differentiating a company from competitors. As more customers seek to extend the lives of their durable goods, the perceived quality of customer service becomes an increasingly important factor in the purchase decision. Whirlpool Corporation promises to stand by its products rather than hide behind its distribution channels; it has parlayed a reputation for effective customer service into a distinct competitive advantage that reinforces its image of quality.
2. Generating new sales leads and discouraging switches to alternative suppliers. Keeping in regular contact with customers so as to deliver new information to them and gather suggestions for product improvements can ensure the continued satisfaction of existing customers and improve the chances of meeting the needs of potential purchasers.
3. Reinforcing dealer loyalty. Companies with strong customer service programs can also broaden their distribution channels more easily to include outlets that may not be able to deliver high levels of postpurchase customer service on their own.
The customer service audit
To be effective, a customer service operation requires a marketing plan. Customer services should be viewed as a product line that must be packaged, priced, communicated, and delivered to customers. An evaluation of a company’s current customer service operation—a customer service audit—is essential to the development of such a plan.
A customer service audit asks managers the following questions:
What are your customer service objectives?
Many companies have not established objectives for their customer service operations and have no concept of the role customer service should play in their business and marketing strategies. Every company should know what percentage of its revenue stream it expects to derive from service sales and whether the goal is to make a profit, break even, or—for reasons of competitive advantage—sustain a loss.
What services do you provide?
It is useful to develop a grid showing which services your company provides or could provide for each of the products in your line. These might include customer education, financing arrangements, order confirmation and tracing, predelivery preparation, spare-parts inventory, repair service, and claims and complaints handling.
How do you compare with the competition?
A similar grid can be used to chart the customer services your competitors provide. Through customer surveys, you can identify those areas of customer service in which your company rates higher or lower than the competition. In areas where your company is weak, can you invest to improve your performance? Where you are strong, how easy is it for competitors to match or exceed your performance?
What services do your customers want?
There is little value in developing superior performance in areas of customer service most customers consider only marginally important. An essential ingredient of the audit is, therefore, to understand the relative importance of various customer services to current and potential customers. Distinct customer segments can often be identified according to the priorities they attach to particular services.
What are your customers’ service demand patterns?
The level and nature of customer service needed often change over the product’s life. Services that are top priority at the time of sale may be less important five years later. Companies must understand the patterns and timing of demand for customer services on each of their products. These they can graph, as Exhibit III shows.