Reduce overheads! Increase prices! Come up with special promotions! Squeeze the supplier! How many times have you heard these answers to the question "How can we increase our profits?"
These tactics can provide a temporary solution -- especially when cash is tight. But temporary is hardly good enough. What you are really after is long-term sustainable growth. So you need to shift your thinking from tactical to strategic, from short-term to long-term.
And this is where service quality comes in.
The Achilles' heel of most businesses today, service quality is also the most effective competitive strategy available, leading to a loyal customer base, growth in profits and motivated employees.
It is also one of the most misunderstood concepts of business; and for two main reasons.
First of all, a lot of entrepreneurs and managers take a very short-term view of their business -- their biggest preoccupation is to conclude a transaction as fast as possible, and move on to the next. Only when you change your mindset, and start thinking in terms of building long-term customer relationships based on trust and mutual-benefit, rather than quick'n'easy transactions, can you really start appreciating the importance of delivering a good service, and its potential impact on the bottom-line. The second reason is that service quality is many times treated as an after-thought. Good service, however, requires good planning, with clearly defined objectives and targets.
Benefits of delivering a good service
The link between service quality and profitability is clear, and has been documented through various empirical research. It affects different areas of your business which in turn create the ideal platform for enhancing your profitability.
Energise your people
When your customer-facing staff know they are delivering a service which is valued by the customer, they are motivated to continue improving and go the extra mile in satisfying clients' requests. Part of planning for a good service delivery involves the development of the right HR policies, especially recruitment, training and compensation. Think of linking compensation and with the level of customer satisfaction achieved!
Profitability
Satisfied and loyal customers translate into lower administrative and sales costs. This because the cost associated with acquiring new customers (in terms of promotion, marketing, etc) is many times higher than keeping current customers delighted. Teach your sales people to think in terms of customer lifetime value (that is, the value that can be obtained from a specific customer over a lifetime of business) rather than the immediate sale. You will see your costs going down and your profits going up!
Surround your business with a positive buzz
Word-of-mouth marketing is the most effective marketing tool available, but it's difficult to obtain. The best way to achieve this is by having delighted customers, customers whose expectations where exceeded with your excellent service and product. Word-of-mouth is more effective and powerful than any advertising and promotion you can do, for a simple reason -- whose opinion you think your customers will trust the most? That of a paid advert in a magazine and the one coming from trusted family members and friends? So don't just create customers - create brand ambassadors!
Lead the pack
Creating a sustainable competitive advantage is of utmost importance into today's highly competitive business environment. Excellent service quality is one such competitive advantage, which not only allows you to lead your industry but is extremely difficult for your competitors to imitate.
Difficulties encountered in delivering an excellent service
So if delivering an excellent service and having delighted customers is so beneficial for business, what stops us from doing it right? Why is it that, as customers, we are continuously exposed to abysmal standards of service?
Firstly, reaching such a relatively superior level of service quality is not easy. There are various tangible and intangible variables that have to come together in a seamless manner. Furthermore, the choice of similar and competing products available to your customers is phenomenal, and continues to increase. The benchmark is being continuously raised and you have no alternative choice but to go along for the ride! Secondly, much of what stops us from delivering the level of service we know is expected by our customers is psychological, myths about what it takes. So let's try to unveil some of these persistent myths and prove them wrong!
You can't measure service!
YES, you can. In business, EVERYTHING is measurable. And I do mean, everything; including the level of service you are delivering to your customers and how it compares to their expectations. There are various research tools that can be implemented including surveys and focus groups which can give you an in depth analysis of your service performance, but there are also more basic tools that can be used in your day-to-day management. Says Joe Meilak, Managing Director of CSQM International Ltd, a specialist in customer service certification and training, "Make sure you have a feedback loop and get your clients to talk about your service - such as through a post-service phone call. This knowledge is worth its weight in gold and is free of market research fees!" Allow me to add something: Include your customer-facing staff in this feedback loop. They are the ones dealing directly with customers. Exploit their proximity to the customer touch point, capitalise on that feedback and allow them to participate in the decision-making process. Not only you will have more satisfied customers, but also more motivated and involved employees!
Who can understand what customers want!
The individual service criteria that make up the whole customer experience have to, and can, be identified and measured. In the case of a restaurant, for example, service criteria could include waiting time to be seated, choice of items on the menu, cleanliness, etc. In the case of a b2b service provider it could be the cleanliness of your delivery trucks, attitude of sales personnel, response time to customer queries, etc. The best place to start to identify these service criteria components? Ask your customers. They know exactly what they want. And make sure to not only deliver on those criteria, but exceed their expectations! This is what leads to a sustainable competitive advantage.
I'm a small business. It's too expensive for me.
If there is one thing that I really hope you take away with you from reading this article, is that delivering an excellent service doesn't have to mean huge financial investments. Of course, if you have the financial capability of investing in focus groups and customer surveys, so much the better. The information gleaned would really give you an edge. But it doesn't have to be so. Listen to your customers, ask them for their feedback and expectations, monitor what your competitors are doing, involve your customer facing staff in the process ... all this is free! This is confirmed by Joe Meilak: "Quality service is a question of dedication to the needs of customers. Quality service can be delivered on a budget. Have a look around you and the service being delivered to you depends on the attitude of the person attending to your needs and how happy s/he is working in the place he is right now."
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