Thursday, March 19, 2009

When It's Time to Say Goodbye

There are those companies that think they should never lose a customer. They believe that customers are so important to their business that they should do whatever it takes to keep every one. There are management plaques that remind employees that “customers are what make paydays possible.”

While the general concept is true, the ultimate extension that all customers are important and that the company must do all in its power to keep every customer misses a significant point. The point has two components. The first is that not all customers are equal. The second is that customers change in value as their business changes and as your business changes.

The reality is that there are some customers that may need to be eliminated from the customer base. They will generally fall into one of the following categories:
1. Their business has changed and no longer fits your current product or service offerings.
2. The cost of doing business with them is greater than the margin you receive from products and/or services sold to them (it costs you money to keep them).
3. Your business has changed and no longer fits their business requirements.

The bottom line is that companies should be taking customer inventories on a regular basis. When the companies and customers change strategies, products, services, location or some other aspect of the business relationship, it should ring a bell that it is time to re-assess the relationship. Sometimes it will become clear that the customer is becoming more important and more resource should be directed to that customer. Other times, it just might be time to say goodbye.

Thursday, March 12, 2009

Globalization of Customer Satisfaction.

Sometimes you just have to take a break and look around. I found a short but interesting article in the news about customer satisfaction in the Baltic countries.
It seems that customer satisfaction is reaching record lows in Estonia, Latvia and Lithuania. A survey of 750,000 respondents throughout Northern Europe and a few other countries including Russia, U.K., the Czech Republic and Greece. The survey was published by EPSI (Extended Performance Satisfaction Index and took place from September to December, 2008.

Here are some of the findings.
1. Estonia had satisfaction near the bottom of the list and was only better than Iceland. Its score was 65.1 on a scale of 1 to 100. The score was down more than 7 points from when the survey was begun 5 years ago.
2. Lithuania had a score of 74.9 even though its score was more than 6 points higher 5 years ago.
3. Latvia was in the middle with a score of 69.5.
4. One of the three Baltic states ranked either near the top or the bottom of the list for nearly every category.
5. The report made the following comment, "This year customer satisfaction reached its historical minimum for the last five years in Estonia, Latvia and Lithuania."

It would appear that customer service and poor products are the standard for these countries, at least for the moment. If this continues, it will ultimately lead to mistrust by the shoppers. They will begin to expect poor customer service and sub-standard products.

The bottom line is that customer service and quality products seem to be expected around the world. No longer are people willing to accept poor service and sub-standard products without letting people know. This may be one of the best aspects of globalization.

Wednesday, March 11, 2009

Satisfaction with e-Commerce Dropped

In recent blogs I have been focused on e-Commerce and the associated e-loyalty. Foresee Results which is associated with the American Customer Satisfaction Institute (ACSI) has reported that satisfaction with e-commerce has dropped 2 points to 80 (on a 100 point scale). One of the key contributors to the drop was a 6.3 percent drop in customer satisfaction with online brokerages. Some of the other results are:
1. Online travel satisfaction remains flat.
2. Online retail has also dropped 1.2 percent to a score of 82 with EBay showing a decline of 4 percent to 78 points which is the lowest that EBay has ever recorded for ACSI.
3. The three largest drops were E*Trade, EBay, and (online travel sector).

There is some logic that retailers are giving such great deals off line that consumers do not have to shop on line to get the bargains. The other logic is that the financial crisis is hitting e-Commerce. e-Commerce is not immune to the economic conditions in the market.

The bottom line is the e-Commerce may be losing some steam but the cost of maintaining a web site is not the same as keeping a bricks and mortar business running. The companies that use the web must focus on the characteristics that I have mentioned in the past; namely, excellent customer service, a web site that is easy to navigate and is secure.

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