The purpose of all businesses is to make money in the form of profits. Even so-called “not for profit” organisations have to make money, which is re-invested. Profits are derived from income and income originates from the sales of goods and services to customers.
Customers buy products that give them benefits. But the way that businesses react with customers often guides customers into how they make their purchasing decisions.
All products, whether goods or services, have an element of support from the provider which facilitates the sale of the product to the customer. The size and importance of the support element varies according to the requirement of the customer and the nature of the product provided.
The quality of the customer support is dependent on sales people and account managers, as well as a host of others involved in call centres, delivery and credit control, who collectively both directly and indirectly support total package that the customer purchases.
People cost money, so when organisations are looking for efficiencies and cost reduction, manpower is often the first target to be cut.
The contribution of those people who indirectly help satisfy customer requirements is often undervalued because its importance in the satisfaction of customer requirements is often not understood. Unfortunately, because their contribution is under appreciated they can often be seen as an easy target for cost reduction through reduced manning. But while it is often easy to make a case for reducing the costs, reductions in experienced manpower can have a profound and negative effect on the quality of service as perceived by the customer.
When it comes to reducing manpower as a cost reduction exercise, commercial organisations and public bodies frequently retain or even increase the numbers of managers and administrators at the expense of those who supply and support the service. This is not only a false economy, but tends to perpetuate “little empires”, and encourage bureaucratic inefficiencies. Frequently it is those personnel involved in providing direct and indirect product support to the customer, who retain the corporate knowledge and experience which is essential in maintaining customer satisfaction. Where competition amongst suppliers is high and where product differentiation is low, the quality of customer support can be the principle deciding factor that maintains customer loyalty to the product and supplier.
Organisations often under appreciate the importance of the unseen but essential part, played by those elements that provide the product support package that the customer buys. If, in an effort to reduce its manpower costs, a business loses its knowledgeable sales people and specialists, the quality of the customer support may be reduced, thus undermining the customer’s confidence, to the detriment of sales and income. It is essential, therefore, that the wide nature of what constitutes the product support that the customer seeks is fully understood. If that network of support is damaged or reduced the client may go elsewhere.
There are many elements which go to make up support to the product, which may include:
- Ease of access to the website, especially in finding named contacts, the ability to file questions and complaints, and the speed and accuracy of response.
- The ability for customers to access sales contacts, and account managers who understand their business and requirements can be of major importance to them.
- Dehumanising customer contact by the use of automated telephone systems, or referral to web-sites may be cost efficient, but it can be counter-productive if it starts to alienate customers, by making direct contact difficult.
Commercial managers responsible for producing profitable income need to able to:
- Identify all those activities that are directly and indirectly related to customer support
E.g. sales personnel, technicians, consultants, customer advisors, credit controllers, delivery systems, etc.
- Assess the efficiency and effectiveness of these elements through performance measurement, and understand their contribution to the overall customer service.
- Understand why the customer comes to them, what makes them return, as well as the customer’s perception and value that the business or organisation provides to them.
Every business organisation requires a minimum number of sales people and specialist providers who collectively provide the service support for the product/service package. Below that number the product/service package that the customer buys is compromised and altered from that which the customer bought. It then becomes something different that the customer may not accept.
Commercial managers need to remember that while they have overall responsibility for producing profitable income efficiently, it is those people who directly and indirectly have customer contact, that have the experience, corporate and customer knowledge, that collectively gains and maintains customer loyalty that secures the flow of income. If you cut the support, you may lose the sale.
Nicholas Watkis is the founder of Contract Marketing Service, established in 1981. He is a fellow of the Chartered Institute of Marketing and a certified management consultant of the Institute of Business Consultancy. For more articles from Nicholas, click here.
About Neil Davey
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.