The service equation

TALKING POINT

Catherine De Vrye

Take care of the customer and everything else will take care of itself, says Australian author and motivational speaker Catherine De Vrye to Business Standard

Every market is price sensitive. But research proves that price is not always the issue. If you are giving great service to your customers you can actually charge 9 to 10 per cent more for the same service than your competitors. But if you add value without adding cost, it's always a better deal.

Add value, not costs

Many times, organisations do not really understand the difference between value-add and cost-add. But a few companies have done that successfully. Delta Airlines was looking at ways to improve its bottomline.

There were two ways to do this "" either increase price to clients or reduce cost to the organisation. It began by asking staff for suggestions. One of the biggest issues today is that management does not know all the answers.

So it should use the knowledge and resources of everybody in the organisation. A young man in the garbage department noticed that a common leftover from food was the lettuce used to decorate sandwiches. He suggested that since customers never ate the lettuce there was no point in having it on the food tray.

Now, it's second nature for management to say that it's always done this way. I believe the seven most damaging words to your business are "we have always done it that way". New people in organisations always have different ideas "" companies should encourage them to pursue these ideas.

But Delta was desperate to save money. So it decided to try serving sandwiches without the lettuce for a trial three months.

That was extended to a year. The passengers never complained "" clearly, the lettuce had been adding cost and not value. Delta thought doing away with the salad leaves would save it a couple of thousand dollars "" it saved $ 1.5 million.

Another example is annual reports. In Australia, organisations give you a choice of delivering annual reports through e-mail rather than the conventional printed format. This reduces cost, is seen as environment friendly and is a win-win situation for everybody.

Time is the one luxury we all want. Across the world companies are believing, that anything which saves customer time adds value "" which is why you can get chopped vegetables in supermarkets. Organisations that save customer's time are passing on a benefit, but remember that customers are different.

For some customers, time is essential and for others, costs are important. Consider airlines. Everyone knows that you can get cheaper air tickets if you book online. But a time-conscious customer will get his tickets booked by a travel agent, even if it costs more.

Remember, if you can add value, so can your competitors. So, how do you ensure a clear difference in service levels? First, you need to have a good core product.

Then, you should provide customers consistency "" service is all about consistently delivering high standards. A lot also depends on how you treat customers. In Japan, "customer" translates to "honoured guest". That's how companies need to make you feel.

High touch, not high tech

One of the challenges for companies to be really cutting edge is that they should combine high technology with high touch. High touch is the old-fashioned, personal way. Companies should not just connect with the head, but with the heart. Too often, the focus is on closing the sale "" it should be on opening a relationship.

Attitude is the biggest problem with most service companies. Too often, service representatives forget that it is the customer who pays their salaries. That means they need to treat all customers well: after all, can they say they will survive without a single customer for 90 days?

But what if you face customer complaints? These are actually opportunities, if the company makes the effort of fixing them. Research shows that 96.7 per cent of unhappy customers never bother to complain.

It also shows that the most loyal customers take the time out to complain, especially if it is in writing. If loyal customers are taking the time to complain, you must spend an equal effort in listening to them.

Companies must see each complaint as free consulting because they point out problems in your business without being paid to do so. Customers will not fill in surveys unless they are really happy or really unhappy. So companies need to consistently find newer ways to generate responses. No news is not good news if you are in customer service.

On a recent visit to a hotel, I saw a different way of generating customer response. Normally, customers do not bother with feedback about their stay at hotels. This hotel displayed a briefcase and announced a weekly draw of respondents who filled in the customer survey. One lucky respondent would win the briefcase.

Putting people first

Of course, generating complaints is not enough. Companies must empower their employees to deal with complaints or else, be bold enough to listen to feedback from employees. And organisations must learn to be thankful for and to the staff who give consistent feedback.

One of the most underutilised words in management at present is "thank you". Employees are happy when they feel that they are not just making a living, but also making a difference.

An organisation cannot take care of its customers unless its employees are allowed to take care of themselves. We recharge our cellphones and laptops. But we also need to recharge ourselves. We are human beings first, and professionals afterwards.

All organisations say that people are their most valuable asset. But how many of them truly believe it? If CEOs are great leaders they will follow their people. And leaders bring out the best in people.