Your business does not stop when the customer leaves after making a purchase or when a product leaves the factory. Business revolves around continuous relationships and links with customers, suppliers, stakeholders and employees wherever they may be.
Most companies assume that they know what their customers want. Few bother to ask more than the most basic questions about customer satisfaction. If and when they do, they are often surprised. Customers frequently have a unique and detailed insight into how their supplier works and organizes itself.
South London plastics company Hunter Plastics found that its customers emphasized service and profits rather than, as Hunter assumed, price and quality. The market research prompted Hunter to develop closer relationships with its customers. Buyers from customers' organizations have subsequently visited the company's factory to discuss issues that concern them, and products have been developed to meet their requirements more accurately and consistently. The end result is that Hunter Plastics is now the single source of supply for some customers in particular product ranges.
It is easy to overlook the fact that in many businesses your customer is not the final consumer. If you make vases for shops, your ultimate customer is the person who buys a vase from the shop. So, remember your customer's customer.
The customer is king, but...
To the traditionalist, talk of customers being king might be difficult to take. If you are a specialist, highly trained and knowledgeable about what you do, what right has the customer to tell you what he or she wants? Such attitudes are common but ignore the fundamental truth that customers are not reliant on you; you are reliant on them.
But the customer is not always right. Even kings are allowed the occasional error. If you run a book shop and a customer requires a limited edition issue of a Slovak book which has to be imported and which would actually lose you money, you are unlikely to accept the order. The customer might suggest that you build up your selection of Slovak folk stories. As you are a specialist sports book shop this would be inappropriate. You might like to point to your one remaining copy of Slovak sporting heroes as evidence of your willingness to stock the best of Slovakia.
The customer is not always right, but you still have to listen to them and explain why you don't think they are right. They need to understand you as well as you understanding them.
Use technology to get close to customers
Increasingly technology is the key to sustaining the competitiveness of products and services. Small businesses often have poor access to modern /flexible technologies and, even if they have access, they are often incapable of making full use of the technology. This is caused by a variety of factors, including cost (high capital investment), the restrictions posed by premises and an anti-technology bias among business owners. But technology can be a vital weapon in forming partnerships with customers and in learning more about them. Databases, for example, enable marketing to be tailored and targeted to highly specific groups and market niches.
Retailers are particularly adept at making the most of all the information at their disposal and of rigorously collecting information continuously. The US mail-order company LL Bean has customer records which go back decades.
You can build a database by:
- asking people to write in for free products (a technique used by American cigarette companies)
- asking customers to fill out details so they can be kept informed of future promotions and sales
- membership cards - stores such as Office World and DIY chains now have membership cards which offer discounts and enable the company to track the purchasing habits of customers
- link up with other organizations - it is often worthwhile to share information with companies in related businesses or areas.
Turn customers into advocates
Many companies remain studiously insensitive to the needs of their customers. We have all received poor service and, given the choice, usually try to avoid repeating the experience. If we go to a restaurant with poor food and slow service we are unlikely to return. Businesses often don't appreciate that their future existence depends on having the same customer come back again and again.
Indeed, it is only in recent years that significant research has been carried out into the commercial advantages of transforming customers into advocates. The economic benefits of high customer loyalty are considerable and, in many industries, explain the differences in profitability among competitors,' concluded Frederick Reichheld of Bain & Company in a 1993 Harvard Business Review article. He pointed to the example of credit card company MBNA, which calculates that a 5 per cent increase in customer retention grows the company's profits by 60 per cent by the fifth year. 'Building a highly loyal customer base cannot be done as an add-on. It must be integral to a company's basic business strategy,' argues Reichheld. 'Creating a loyalty-based system in any company requires a radical departure from traditional business thinking. It puts creating customer value - not maximizing profits and shareholder value - at the center of business strategy, and it demands significant changes in business practice - redefining target customers, revising employment policies and re-designing incentives.'
