The Final Three Feet!

The term Customer historically derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future.

In a 2005 survey of several thousand customers in the US and UK 49% of respondents claimed that poor service had led them to change service provider in at least one industry during the previous year. A more recent UK survey in 2006 identified that 65% had taken their business elsewhere after a bad service experience. 25% of those movers expressed intent to never return to the previous service provider!

The stats are pretty shocking when you take into account that it probably works out at 7-10x more expensive to acquire new customers than retain existing. I guess it is also worth bearing in mind that a customer is far more likely to invest in a big purchase with an existing trusted supplier than a new one.

The importance of great customer relationships is recognised industry wide but we tend to emphasise the wrong approaches and look for a silver bullet in technology instead of people. The CRM technology market place grew from $23 billion in 2000 to $76 billion by 2005 and forecasts 11% pa annual growth thru to 2014!

Ironically much of the investment has been focused on reducing the costs of servicing customers, not building new or deeper relationships. Before managing a customer relationship you need to first build that relationship and that is not where data-mining or behavioural tracking technologies offer much help.

Jan Carlzon who led the turnaround of the Scandinavian airline SAS commented that customer’s feelings about a company originate in the many small interactions including reservations, checking-in, boarding and the way they are served a drink or meal.

It’s useful to look to the retailing industry where the client interaction is at it’s most important to start to understand how the successful businesses create a great customer relationship. A particularly good example here is Starbucks. Things have been rough in this sector recently but it is worth bearing in mind that since 1992 Starbucks stock has risen a staggering 5,000%. One of its key differentiators in a heavily saturated and competitive marketplace is its ability to create a highly personalized and satisfying customer experience.

Starbucks recognizes that its customers expect any business to respond to routine requests but that when a business “colours outside the lines”, customers respond with loyalty and increased sales. One customer recalls calling into a local Starbucks an hour before opening time by mistake and resigned to a long wait in the car park. The door then opened and he was offered a coffee, as he put it, “Starbucks gets it”.

In an industry where we focus on high technology products it’s important to look a bit deeper. Unified Communication solutions are there to catalyse those human interactions, why else do we invest so much money into creating AV solutions that so closely simulate a face to face discussion and phone systems with a high quality service. The “final 3 feet” as one consultant referred to it is the most important area for us to focus on!