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 19, 2009
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.
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 Priceline.com. (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.
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 Priceline.com. (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.
Monday, February 23, 2009
Permission-based Email
Epsilon Research has completed a nationwide survey of consumers regarding the use of permission-based email. While the sample size was not given, the results appear to make sense. Permission-based emails are sent to customers who have given permission to receive emails from the retailer. The emails appear to have generated a favorable opinion of the retailer and increased the sense of loyalty. Some of the statistics from the study are:
1. 56 percent of the email recipients said they are more likely to make purchases from sending retailers.
2. 52 percent said they have a more favorable opinion of the retail companies that send them permission-based emails.
3. 48 percent feel more loyal towards the retailers and their products as a result of receiving the permission-based emails.
4. 63 percent of those who receive permission-based emails from retail companies want to receive personalized content based on their website activity and past purchases.
The bottom line is that we have seen once again that a positive contact with the customer builds loyalty. The customer has given permission to the retailer to send emails regarding purchase opportunities and the reaction by the customer has a similar result, but most likely a lesser extent, as talking with them. Personal contact between the retailer and the customer is one of the three components of loyalty that has been mentioned in previous blogs. The three are product, service and relationship. Research continues to support the notion that relationship may be the most influential component of loyalty.
1. 56 percent of the email recipients said they are more likely to make purchases from sending retailers.
2. 52 percent said they have a more favorable opinion of the retail companies that send them permission-based emails.
3. 48 percent feel more loyal towards the retailers and their products as a result of receiving the permission-based emails.
4. 63 percent of those who receive permission-based emails from retail companies want to receive personalized content based on their website activity and past purchases.
The bottom line is that we have seen once again that a positive contact with the customer builds loyalty. The customer has given permission to the retailer to send emails regarding purchase opportunities and the reaction by the customer has a similar result, but most likely a lesser extent, as talking with them. Personal contact between the retailer and the customer is one of the three components of loyalty that has been mentioned in previous blogs. The three are product, service and relationship. Research continues to support the notion that relationship may be the most influential component of loyalty.
Saturday, February 21, 2009
Trust and e-loyalty
Trust has always been thought to have a significant role in building and maintaining loyalty. Many of the ideas for this blog came from an article in the Journal of Economic and Social Research titled "From Brand Loyalty to E-Loyalty: A conceptual framework" by Gommans, Krishnan and Scheffold. Some marketing gurus will tell you that trust can influence market share maintenance and price elasticity. In fact trust is one of seven components that have been suggested to model e-loyalty. While all seven of the following components are important, the concept of trust needs to be given a closer look since it is so often overlooked. The seven components are:
1. Value proposition - in e-markets price comparing among shoppers is only one click away. Thus, it would appear that having a competitive price is probably more important than customer loyalty.
2. Brand building - Brand names have become very important on the internet. The use of domain names as a possible extension of the brand becomes an obvious move for the saavy marketeer. Customers seem to remember website names that are well known. The website content is also significant (as I have noted in previous blogs) for enhancing the company image.
3. Trust - Many customers today are wary of entering data on a website for fear of identification theft. There are several ways to build trust in the website. Some of the terms that are used to describe the steps toward trust are encryption, authentication and non-repudiation strategies. Most websites use passwords for authentication. Consumers are wary of websites and hence trust plays a significant role in the buying process. There is often a level of trust that is associated with certain brands. These brands have a history and with that history comes trust. Brands like IBM, Apple, Heinz, Proctor and Gamble. Since trust is a component of an attitudinal part of loyalty, the brand trust will often overcome the concern with the Internet.
4. Website friendliness - First impressions of a website have a significant effect on e-loyalty. This coupled with easy navigation, server reliability, quick shopping and checkout, fast page loads, ease of use and a personal interface will build e-loyalty. Studies by Szymanski and Hise noted that convenience and site design are tow of the major factors of customer satisfaction.
5. Technology - Tests have shown that 58% of users make two or more navigational errors while searching for information. There are two additional major contributors to website loyalty; namely, server reliability and fast response times. Navigation through a website should be easy. Any search should be complete in a reasonable amount of time.
6. Security - Some users of the internet see it as unsafe, dishonest, and unreliable. There are now third party companies that assure customers that a company meets specific standard of consumer privacy and transactional security. One such company is TRUSTe.com.
7. Customer service - Internet customers cannot touch, smell, or experience the product before they buy. If a shopper has not physically seen the product before seeing it on the web, there is a built-in feeling of insecurity. Thus, a company doing business on the web needs to have a well organized customer service system. This system should include links to FAQs, a toll-free number to answer questions along with an excellent logistics system to process orders and shipments accurately and carefully since these are also key elements of customer satisfaction. One of the best ways to reduce insecurity for purchasing on the web, the company should offer products that are well-known, have excellent quality and a meaningful guarantees.
The bottom line is that e-loyalty is complicated. It has many components and unlike the brick and mortar store, it is always just a click away from losing a customer. Whereas the brick and mortar establishment can miss a few of these factors and still keep the customer, the internet is not as forgiving. One of the areas that is most often overlooked is trust. Since I believe that trust is both important and not well measured, I will write more on trust in a later blog.
1. Value proposition - in e-markets price comparing among shoppers is only one click away. Thus, it would appear that having a competitive price is probably more important than customer loyalty.
2. Brand building - Brand names have become very important on the internet. The use of domain names as a possible extension of the brand becomes an obvious move for the saavy marketeer. Customers seem to remember website names that are well known. The website content is also significant (as I have noted in previous blogs) for enhancing the company image.
3. Trust - Many customers today are wary of entering data on a website for fear of identification theft. There are several ways to build trust in the website. Some of the terms that are used to describe the steps toward trust are encryption, authentication and non-repudiation strategies. Most websites use passwords for authentication. Consumers are wary of websites and hence trust plays a significant role in the buying process. There is often a level of trust that is associated with certain brands. These brands have a history and with that history comes trust. Brands like IBM, Apple, Heinz, Proctor and Gamble. Since trust is a component of an attitudinal part of loyalty, the brand trust will often overcome the concern with the Internet.
4. Website friendliness - First impressions of a website have a significant effect on e-loyalty. This coupled with easy navigation, server reliability, quick shopping and checkout, fast page loads, ease of use and a personal interface will build e-loyalty. Studies by Szymanski and Hise noted that convenience and site design are tow of the major factors of customer satisfaction.
5. Technology - Tests have shown that 58% of users make two or more navigational errors while searching for information. There are two additional major contributors to website loyalty; namely, server reliability and fast response times. Navigation through a website should be easy. Any search should be complete in a reasonable amount of time.
6. Security - Some users of the internet see it as unsafe, dishonest, and unreliable. There are now third party companies that assure customers that a company meets specific standard of consumer privacy and transactional security. One such company is TRUSTe.com.
7. Customer service - Internet customers cannot touch, smell, or experience the product before they buy. If a shopper has not physically seen the product before seeing it on the web, there is a built-in feeling of insecurity. Thus, a company doing business on the web needs to have a well organized customer service system. This system should include links to FAQs, a toll-free number to answer questions along with an excellent logistics system to process orders and shipments accurately and carefully since these are also key elements of customer satisfaction. One of the best ways to reduce insecurity for purchasing on the web, the company should offer products that are well-known, have excellent quality and a meaningful guarantees.
The bottom line is that e-loyalty is complicated. It has many components and unlike the brick and mortar store, it is always just a click away from losing a customer. Whereas the brick and mortar establishment can miss a few of these factors and still keep the customer, the internet is not as forgiving. One of the areas that is most often overlooked is trust. Since I believe that trust is both important and not well measured, I will write more on trust in a later blog.
Saturday, January 31, 2009
Retailers Strategies to Meet the New Economy and Internet
The results from the National Retail Federation's 7th annual State of the Industry Report provides some idea what the retailers are planning. while many of the retailers see the industry outlook as bleak, the ideas and strategies they are considering should benefit those who follow them.
Some of the defensive strategies include:
1. Managing inventories more closely
2. Increase supply-chain effectiveness
3. Increase labor productivity
4. Control operating costs.
Some of the steps they can take to control costs are:
1. Decrease store expansions or postpone the expansions to a later date
2. Decrease spending on information technology
3. Focus on activities that give an immediate return on investment (ROI)
According to the survey the top priorities, in order of importance are:
1. CUSTOMER SATISFACTION/RETENTION
2. Cost reduction/containment
3. Employee retention and development
4. Product differentiation
5. Supply chain optimization
Some of the statistics that came out of the report include:
1. 69% of retailers said customer satisfaction/retention is a top priority for 2009
2. 12% report headcount decreases in the technology department compared with 3% last year.
3. 22% plan to increase technology headcount this year compared with 33% last year.
4. 90% of respondents to the survey sell products online
5. 60% have 80% of their assortment represented on the Web.
6. 30% report having over 20 million Web site visitors in 2008 compared with 14% that saw that level in 2007.
7. Some retailers have seen 20% of their volume coming from the Web.
The bottom line is retailers are taking immediate steps to survive in this market. Those who have invested their resources into customer-centric practices should have a more hopeful outlook than those who have focused on price and volume. All retailers should seriously review their strategy for using the internet. It is clear that even though the internet has only penetrated the retail market by about 16%, that percentage will grow and those customers who use the internet may become loyal through the internet.
Some of the defensive strategies include:
1. Managing inventories more closely
2. Increase supply-chain effectiveness
3. Increase labor productivity
4. Control operating costs.
Some of the steps they can take to control costs are:
1. Decrease store expansions or postpone the expansions to a later date
2. Decrease spending on information technology
3. Focus on activities that give an immediate return on investment (ROI)
According to the survey the top priorities, in order of importance are:
1. CUSTOMER SATISFACTION/RETENTION
2. Cost reduction/containment
3. Employee retention and development
4. Product differentiation
5. Supply chain optimization
Some of the statistics that came out of the report include:
1. 69% of retailers said customer satisfaction/retention is a top priority for 2009
2. 12% report headcount decreases in the technology department compared with 3% last year.
3. 22% plan to increase technology headcount this year compared with 33% last year.
4. 90% of respondents to the survey sell products online
5. 60% have 80% of their assortment represented on the Web.
6. 30% report having over 20 million Web site visitors in 2008 compared with 14% that saw that level in 2007.
7. Some retailers have seen 20% of their volume coming from the Web.
The bottom line is retailers are taking immediate steps to survive in this market. Those who have invested their resources into customer-centric practices should have a more hopeful outlook than those who have focused on price and volume. All retailers should seriously review their strategy for using the internet. It is clear that even though the internet has only penetrated the retail market by about 16%, that percentage will grow and those customers who use the internet may become loyal through the internet.
Impact of the internet on Retail
Robert Howard has offered some interesting statistics in an article concerning purchasing on the internet. It appears the source of his statistics is the Pew Internet Project, Forrester Research, Jupiter Research and a Sterling Commerce survey.
Some of the key points in his article are:
1. More customers are going to the internet.
1a. 73% of adult Americans and 87% of teenagers are online today.
1b. 47% of adult Americans have a broadband internet connection at home.
2. More Americans are using the internet to research and shop.
2a. 70% of all online consumers use the internet to research products which translates into 16% of total retail sales.
2b. The trend is forecast to grow at a compounded annual rate of 17% through 2012.
2c. By the end of 2009 41% of all US retail transactions will be influenced by online experiences.
3. Customers' expectations for shopping across multiple channels is increasing.
3a. 85% of adults expect their online service levels to be the same as offline.
3b. 43% Americans identified online information a s the most powerful influencer of their purchase decision.
3c. 80% feel it is important to have a choice of shopping across multiple channels when choosing a retailer.
3d. 90% said it was important to be able to return an item purchased online in a physical store.
The bottom line is the impact of the internet in retail is continuing to grow and retailers must start to see the internet site the same way they see their brick and mortar site. It must be attractive to get the customer inside the site and then it must provide a great customer experience.
Some of the key points in his article are:
1. More customers are going to the internet.
1a. 73% of adult Americans and 87% of teenagers are online today.
1b. 47% of adult Americans have a broadband internet connection at home.
2. More Americans are using the internet to research and shop.
2a. 70% of all online consumers use the internet to research products which translates into 16% of total retail sales.
2b. The trend is forecast to grow at a compounded annual rate of 17% through 2012.
2c. By the end of 2009 41% of all US retail transactions will be influenced by online experiences.
3. Customers' expectations for shopping across multiple channels is increasing.
3a. 85% of adults expect their online service levels to be the same as offline.
3b. 43% Americans identified online information a s the most powerful influencer of their purchase decision.
3c. 80% feel it is important to have a choice of shopping across multiple channels when choosing a retailer.
3d. 90% said it was important to be able to return an item purchased online in a physical store.
The bottom line is the impact of the internet in retail is continuing to grow and retailers must start to see the internet site the same way they see their brick and mortar site. It must be attractive to get the customer inside the site and then it must provide a great customer experience.
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