Are “Nice Customers” Really Nice To Your Business?

Introduction: The story presented below was a part of an invitation mail to attend one day training on “Complaints Handling/Customer Retention” that hit my inbox years back, in Jan’2007. Due to some functional limitations, I did not respond to the mail, but the story was continually spinning in my mind. I started blogging nowadays, therefore, sharing my thoughts here. Author of the story was not mentioned in the mail so I am also unable name the author.

Are “Nice Customers” Ruining Your Business?

I’m a nice customer. You all know me. I’m the one who never complains, no matter what kind of service I get.

I’ll go into a restaurant and sit quietly while the waiters and waitresses gossip and never bother to ask if anyone has taken my order. Sometimes a party that came in after I did gets my order, but I don’t complain. I just wait.

And when I go to a store to buy something. I don’t throw my weight around. I try to be thoughtful of the other person. If a snooty salesperson gets upset because I want to look at several things before making up my mind, I’m just as polite as can be. I don’t believe rudeness in return is the answer.

The other day I stopped at a full service gas station and waited for almost five minutes before the attendant took care of me. And when he did, he spilled gas and wiped the windshield with an oily rag. But did I complain about the service? Of course not!

I never kick. I never nag. I never criticize. And I wouldn’t dream of making a scene, as I’ve seen some people do in public places. I think that’s uncalled for. No, I’m the nice customer. And I’ll tell you who else I am.  

I’m the customer who never comes back!

Author: Unknown

The story was astounding and seriously drew my attention. This is contrary to the general perception about a “nice customer” who helps keep the complaint register neat as he never complains. For sales persons what else would be better than presenting a blank complaint register during the annual sales and service review! Agree? Are they really “nice customers”? Are they really nice for the business?

The Present Situation: Today each business desperately wants to keep it’s existing customers. Few surveys, as mentioned below, portray the benefit of customer retention:

“Attracting a new customer costs 5 times as much as keeping an existing one.” • Source: Lee Resource Inc.

“A 2% increase in customer retention has the same effect as decreasing costs by 10%.” • Source: Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy.

If a customer is unhappy, he may quit. A tentative list of what makes a customer unhappy is mentioned below:

  • He has to wait too long for the product (Physical Inadequacies)
  • He is given defective or inferior quality product (Physical Inadequacies)
  • He has to wait too long in queue for service (Physical Inadequacies)
  • Quality of service is not up to the mark (Physical Inadequacies)
  • He feels cheated over guarantee/warranty issue (Physical Inadequacies)
  • He is over promised (Behavioural Inadequacies)
  • He feels his expectations are not met (Behavioural Inadequacies)
  • Negligent behaviour and careless attitude of the employees (Behavioural Inadequacies)
  • He Is treated impolitely (Behavioural Inadequacies)
  • Lack of information on status of his complaint (Behavioural Inadequacies)

If physical inadequacies of the product or service make a customer unhappy, he may complain about it and can quit if his complaint is not resolved appropriately. If he is upset with behavioural inadequacies, viz., careless attitude and negligent behaviour of the employees, he may quit forever without making any complaint. Businesses give priority to the complaints that it receives officially because of some legal consequences. Most of the times, a customer is unable to prove or produce evidence of misbehavior or negative attitude of the employees, thus, he prefers to keep quiet. Businesses do not bother much about them. In fact they mistake them as “nice customers.”  Most of the businesses have adapted a specific “Complaint Management System (CMS)” to redress customer’s complaints and grievances and to estimate the level of customer satisfaction. Getting “Post Sales/Service Feedback (PSF)” from the customers have become a ritual today. A dedicated PSF team is seamlessly engaged in collecting customer’s opinion on the products or services offered or delivered. The analytics team classifies, analyze and interpret the PSF data in a statistical form to get an idea of customer’s satisfaction level. The outcome is popularly known as “Customer Satisfaction Index (CSI)” being used without a glitch across the industry. Businesses use the CSI facts to work out right retention tactics and loyalty programs to lure existing customers and to broaden the customer base to take an edge over competition. A high CSI score indicates higher level of customer satisfaction and vice-versa. To maintain high CSI score, some big businesses often run CSI improvement campaigns, which, inter-alia, involve employees, dealers, distributors, and other channel partners.

The Hitch & The Glitch: No doubt businesses are striving to keep CSI score high and periodically monitoring it to make necessary change (if required) in the business processes to get rid of any glitch that affects customers adversely. In most of the businesses, a CMS is put in place. But the approach is a bit mechanistic and static. It helps a customer raise complaints about physical inadequacies of the product or service, but fails to capture data on behavioural inadequacies viz., pains, sufferings, feelings, emotions and sentiments of the customers, careless attitude and negligent behaviour of the employees, etc. This shortcoming of the CMS makes the entire exercise redundant. To overcome the shortcoming, during PSF process, some businesses ask customers whether behaviour of the employees was good. Though it sounds well but most businesses are hesitant of inciting them on bitter customer experience and just overlook because, in their opinion, they are “nice customers.”

The Truth: The fact is something else. The businesses boast of logical way out of each complaint they receive and proudly flash their CSI score revolving around, e.g., 94 96%. But this doesn’t seem true. The following survey report says aloud that most of the customers quit because of the bad customer experience (Behavioural Inadequacies) which the CMS captures rarely.

“86% of consumers quit doing business with a company because of a bad customer experience, up from 59% four years ago.” • Source: Harris Interactive, Customer Experience Impact Report.

Thus the CSI score doesn’t stand for 94 – 96% satisfied customers. Following survey reports through light on the truth:

A typical business hears from only about 4% of its dissatisfied customers. 96% just go away and 91% will never come back.” • Source: “Understanding Customers” by Ruby Newell-Legner

“For every customer complaint, there are 26 other customers who have remained silent. *Source: Lee Resource Inc.”

In the process of redressing the customer’s complaint, albeit the businesses offer a new product in lieu of defective one or offer more service in lieu of improper service delivery or refund the money the customer spent, the customer doesn’t come to ease. According to a survey:

“A dissatisfied consumer will tell between 9 and 15 people about their experience. About 13% of dissatisfied customers tell more than 20 people.” • Source: White House Office of Consumer Affairs, Washington, DC.

The following survey reveals that if we assure better customer experience to the customer, he would eagerly spend more on our product or services:

“Even in a negative economy, customer experience is a high priority for consumers, with 60% often or always paying more for a better experience.” • Source: Harris Interactive, Customer Experience Impact Report.

One can easily foresee the level of frustration if customer’s expectations are not met.

The key: A survey on “Why customers quit” found the following:

  • 1% die
  • 3% move away
  • 68% quit because of an attitude of indifference towards the customer by the staff
  • 14% are dissatisfied with the product
  • 9% leave because of competitive reasons

     • Source: How to win customers and keep them for life – Michael Leboeuf.

Another independent survey also shows:

“68% of customer defection takes place because customers feel poorly treated.” • Source: TARP.

It is exciting to see the above two surveys, which are showing similar findings. The CMS is able to take care of only up to 14% customers. Even if the businesses redress 100% product or service related complaints, a major fraction (68%) of the customers would remain unhappy and very much likely to quit because of negative attitude and negligent behaviour of the employee. It is, therefore, imperative for the businesses to do something concrete to streamline the employee’s attitude of indifference towards the customer.

“This is the time to contemplate: Are nice customers really nice for your business?”

Given below is a tentative list of doable actions, which if put into practice, would help create an environment where customers could have better and positive experiences:

  • Create a customer profile
  • Prepare customer experience or journey map
  • Arrange soft skills and behavioural training for the employees
  • Caution employees for over promises and making up unrealistic expectations
  • Make the employees accountable for proper customer handling
  • Inculcate culture of management by criticism
  • Welcome customer complaints
  • Share escalation matrix
  • Assure them of quick and logical resolution to their complaints
  • Get in touch with the customer and keep him updated
  • Make them think that their complaints are important as this shall help us develop even better product or service
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Does Your Business Keep Up Ethical Behaviour Whilst Making Profits?

Business ethics is the behaviour, coupled with moral principles and values that administer all the measures and decision of a business and persuade them to stick on it in its day-to-day interaction with the people. The day-to-day action of the company and it’s dealing with the people leave an imprint, which determines whether the actions and decision of the company are ethical. Sometimes businesses confuse ethics with policies or law. We can’t say a company ethical just because it follows all the policies and is completely lawful. There is something beyond the policy matters and legal aspects of a business. This is something like being social and being socially responsible is two different things. It is, therefore, imperative for the businesses to distinguish measures, which are legal but not moral, ethical but against the law, and legal as well as ethical.

The sole motive of any business is to make the profit. This is not wrong. What matters is the way it makes the profit. Ever since the start, businesses are ardent in capturing consumer’s discretionary income and strive to persuade on what they buy. The modus-operandi to take hold of consumer’s money broaches ethical or unethical behaviour, which further makes the businesses gain good or bad reputation.

Just to cite an example, a customer of a reputed telecom operator receives an SMS, “Thanks for downloading 3DBigfootRacing game. A charge of Rs 50 would deduct from the available account balance.” The customer hadn’t downloaded the game so lodged a complaint with customer care section of the telecom operator. After a lot of frustrating arguments, the company apologized and reinstated his mobile balance. This act of the company raises a few questions, viz. Why the customer’s account balance would deduct for a single penny when he has not downloaded the game? Or how the company would reinstate customer’s account balance if the customer had downloaded the game or availed the service? Answer to both questions would show shoddy, immoral, and unethical behaviour of the telecom operator.

In a similar incident, a customer of another telecom operator receives an SMS, “GamesClub subscription Service is activated on your mobile and Rs.5 would deduct from your account. To deactivate the service, dial xxxxx from your mobile.” The customer has neither requested for this service nor given his consent to activate it on an automated basis. The next day he again receives the same message and Rs.5 deducted from available balance. When contacted, the customer care executive informed that this is an automated subscription; to deactivate dial xxxxx. He did so and got back Rs.5 to his account. The question is that how a company can activate a service and charge for it without customer’s consent? In both incidents, companies are doing monkey business, which would affect its reputation adversely. This is unethical as well as illegal. With this behaviour, in short run, they may make some profit, but can’t sustain in longevity.

This is not the case of one or two customers or one or two or larger or smaller companies, or global or local brands. A large number of businesses belonging to different industries, locations or groups are busy in such immoral practices with the motive of making more and more profits. Several times such unethical practices make them vulnerable to fines or penalties for breaching ethical business laws or norms. Albeit the Govt. imposes fines in millions or billions, the profit made is so big; they couldn’t just avoid becoming disreputable.

Though, there are some good and high-minded companies, general perception among the public is that the businesses making bigger profits may not pay much attention to their ethical behaviour as the profits earned outweigh the fines or penalties imposed. In the process of making profits, businesses don’t care much for people. Increased competition, inter-alia, in the marketplace coerces businesses to adapt even unethical measures to push their products to consumers. Perception of public about a product or service is the most important aspect of any business. Under no circumstances, a business can expect profits unless the customer buys the products or services.

Due to the emergence and spread of Television, the Internet, Radio, Print Media and enactment of several acts to protect consumer’s right and to control unethical business practices, public expectations for ethical business behaviour have also increased. Businesses must contemplate whether they are making profits ethically and legally. They also strive to make sure to uphold ethical behaviour at all levels – be it management or functional. They must realize that it just takes one slip for a business to lose customers, but it is time-consuming to gain a new customer and a bit expensive compare to retain the current one.

Do We Really Understand Sales, Marketing & Business Development?

One trending discussion on www.linkedin.com “Business Development – The Missing Link Between Marketing & Sales” drew my attention and forced me to compose this post.

For a long time, most of the people are into the misconception that sales and business development are the same and can be applied interchangeably. Even the function of marketing is also not spared and included in the same stratum. There are instances where one is inducted as Marketing Manager, trained as Sales Manager and expected to work as Business Development Manager. How confused the organization, the person and the approach is. Organizations can’t accomplish its mission unless or until they draw a line of distinction between the three terminologies. It would not be an exaggeration to state that this approach will lead the organization nowhere but to compromise on both short and long-term goals.

Let’s find out what differentiates sales, marketing and business development.

Sales, as its primary function, sell directly to the end customer. It’s aim is to convert prospects into customers and retain existing customers. It bats in the pitch prepared by marketing and tends towards closing by use of requisite selling skills, viz. qualification, presentation, quotations, negotiations, customization of product or services offered. It is a potent source of feedback which forms the basis for realignment of various marketing and business development activities. Figure (1) depicts the typical structure of sales in an organization.

Fig-1

Marketing is all about promotion and positioning of the brand, product or service with the intent of identifying potential customers. It is also about the furtherance of corporate communication on the brand, product or service, it’s pricing and distribution. Once the brand is established or positioned or the company’s message about the product or service is disseminated to the concerned, role of the marketing function is almost over.

Business development function stresses upon identification for strategic partnerships within or outside the company or industry and always looks for cross sales, value added sales and/or channel sales opportunities. Any opportunity, once identified, moved into sales for closing. It works as a bridge to cover-up the gap between marketing and sales. Regardless of the size and nature of the organization, business development adheres to the same structure as shown in Figure (2).

Fig-2

Figure (1) and Figure (2) also depicts how sales and business development are different and can’t be dealt with similar approaches.

In the first instance, Business development activities look like what marketing does and induce people to use the terminologies interchangeably, but there is a significant difference between the two. The fact is that business development stage comes to the fore after the consolidation of several marketing efforts. Whereas, marketing is a broader term; business development is a subset of it. Some goals of business development, viz. brand positioning, business acquisition, business or market expansion, customer awareness, etc. are also the shared goals of marketing. Hence, to some extent, business development can be perceived as an extension of the marketing function, but can’t be used interchangeably.

Fig-3

Figure (3) portrays how the three distinct functions, viz. sales, marketing and business development are looped together to work in an integrated, interrelated and interdependent manner to sell company’s products or services. To keep this loop work properly, one must refrain to deduce they are similar irrespective of the size and hierarchy of the organization. Because of the wide or tall structure, for large organizations, it is easy to define and practice the three functions distinctly. In smaller organizations the confusion creep as a single person may acts upon the three functions. Even so, the distinct characteristics of the three functions must be communicated to the concerned so that he/she could deal with the situation appropriately and firmly contribute towards accomplishment of organization’s mission and goals.

Understanding of Theory-X & Theory-Y: A Must For Prudent Management Practitioner

Understanding of Theory-X & Theory-Y: A Must For Prudent Management Practitioner.

Understanding of Theory-X & Theory-Y: A Must For Prudent Management Practitioner

For many people, work is a matter of great pride and they get great satisfaction in their work. They make whole-hearted effort to complete the task assigned to them. There are some others who may perceive it as a burden and merely work to stay alive.

So, what motivates an employee to go to work with great zeal and interest each morning and what hinder some others to do so? This question gripped the attention of management theorists and social psychologists for decades to make out successful approaches to management. Social psychologist Douglas McGregor, in 1960, in his book “The Human Side of Enterprise”, expounded his famous X-Y theory on human motivation and management.

He endorsed Theory-Y as the basis of prudent management practice which presumes that people will apply self-control and self-direction in the pursuit of accomplishment of organizational goals and objectives without external control or the threat of punishment. Delegation of authority and decentralization of decision-making are buzzwords in Y-Type Organizations.

Theory-Y manager believes that his people take pride in doing a good job. His style of management can be termed as “democratic” or “participative”. A Theory-Y manager senses that his team members:

  • are sincere, rationale and take work as a natural aspect of life.
  • use their intellect and imagination to solve work related issues.
  • feel elated in taking responsibility and motivated to accomplish goals and objectives.
  • need not to be directed or controlled much or all the times.

Contrary to it, Theory-X forms the basis to believe that most people dislike work and will avoid it whenever they get a chance. Hence, they must be forced with the threat of punishment to work towards organizational goals and objectives. Sometimes they may be lured with rewards else they don’t have any ambition or aspiration to work properly. There is no scope for delegation of authority and control remains centralized at all the times in X-Type organizations.

Theory-X manager believes that his subordinates dislike work and his style of management can be captioned as “authoritarian”. He feels his team members:

  • have an aversion to work.
  • can avoid responsibility and need to be directed and controlled at every step.
  • need to be forced, threatened and/or enticed to produce results, else they don’t have any aim, intention or inducement to work.

The theories suggest that the managers, who believe in Theory-X, usually get poor outcome and those who practice Theory-Y considered progressive or enlightened, produce better results and allow people to grow and develop.

In fact Theory-X and Theory-Y is a salutary aide-memoire of all natural rules for managing people, which are easily forgotten under pressure of routine business activities. It puts light on how a manager’s perception of what motivates and de-motivates determines whether his team member’s behavior is constructive or cynical. Hence, practicing managers, by understanding how their conjecture about team member’s motivation can persuade the outcome positively or negatively, can adapt appropriate management style.

Improve your communication to succeed

Ability to communicate is the precondition for all those who wants to succeed both in their personal and professional life. For most of them, communication skill means having command over respective language. Merriam-Webster Dictionary defines communication as “a process by which information is exchanged between individuals through a common system of symbols, signs or behavior.”

The effectiveness of the communication depends on one’s ability by which he/she can be free from difficulties or impediments during the information exchange process. This determines whether he/she is a skillful communicator. Factors like personal prejudice, stress, old habits, paucity of time, type of audience, medium of communication, physical environment, and etc. poses a hindrance to communication process, his/her communication skill and forms the ground on which one can either be introvert or extrovert or balanced.

One can be good in one-on-one communication and worst at public speaking and vice-versa. Likewise, while communicating, one can be comfortable with friend and may be nervous with strangers. One can be attentive and listen well to friends and may remain casual with strangers. Hence the communication skill is not just merely holding good command over respective language and having a vast vocabulary but way ahead of it. Possessing an understanding of the following forms of communication would be very useful in improving communication skill:

  1. Verbal or oral communication, Listening
  2. Non-Verbal Communication
    1. Kinesics
    2. Proxemics
    3. Chronologic
    4. Haptic
    5. Artifacts
  3. Written communication
  4. Public speaking
  5. Grapevine

Each form of communication has a specific set of attributes which if combined and used intelligently, will improve value or quality of one’s communication significantly.

Nurture Excellence in Business by Managing Creativity

Nurture Excellence in Business by Managing Creativity.

Nurture Excellence in Business by Managing Creativity

Creativity and innovation are typical examples of conceptions that the whole world talks about, but few can truly define or distinguish. Most of the time, the two terms are used interchangeably which is not correct. If we want to know how well we are performing with reference to creativity and innovation, we need to understand them well and must be able to draw a line of distinction between them.

Creativity has been described as the process of generating new ideas by the use of imagination which leads to a different understanding or outcome, whereas innovation is affianced with planning and implementation to realize the ideas so that a new product could be produced, a new service could be rendered or a new method could be devised.

Some managers are creative and some may not. It is easy being creative oneself and a challenge to develop creativity in others by encouraging, listening, discussing the team to come up with out-of-box ideas and thoughts. Some managers may not have creative ideas in their mind but will be competent enough in managing, encouraging and supporting team member’s creativity.

To manage creativity effectively, we need to:

  • Create an atmosphere where creativity could embellish
  • Build a physical environment where it will be encouraged
  • Encourage team members who are creative indeed
  • Develop less creative team members and help boost-up their confidence
  • Organize brainstorming sessions, to produce out-of-box ideas
  • Welcome ideas from anybody who are directly or indirectly associated with the product or service or process
  • Debate and encounter ideas to assess its feasibility and practicability
  • Optimize or realign team’s assignment so that they could spare some time to think
  • Correlate creativity with rewards

Lack of contemplation can hurt your goals

Lack of contemplation can hurt your goals.

Lack of contemplation can hurt your goals

It was last month of the financial year. As like other corporate entities, the company I was working in, was also desperate to close the books with a considerable percentage of growth in terms of revenue generation and profit making. Year-to-date accomplishments were far behind the target. Management started taking business commitment from everybody as how much business one can close with and started monitoring morning and evening every day. Nevertheless, it was too late to be of any use. A task to be done in a year can’t be done in a month. Frustrated management opened fire on employees with abusive suffixes and prefixes and reprimanded them of severe consequences against non-performance. They asked everybody to get ready for the disastrous action if target is unachieved. Non-performance will have a bearing on annual appraisals. Management was working with “punishment lifts performance” attitude in anticipation of damage control. This made the situation worse. I was downloading the communication to the team. People have lost sheen of their faces. Due to fear, instead of going ahead to tame the situation, some people resigned and some engaged themselves more in attending interviews to get a new job.

At last, the financial year ended. Despite of team’s hard efforts, target remained unaccomplished. Merely sixty percent of the annual target achieved. Nobody was happy in the system. Who was responsible for this debacle? Management was pointing towards employees with “you-attitude” and employee towards management the same way. No matter who was responsible, the company has lost the opportunity to meet its goal. However, plans for the new financial year devised, targets set and execution process rolled out with a warning note to the employees that this should have not happen again. Within a fortnight, the situation is back to normal. Both management and employees forgotten the fiasco recently happened.

This is the story of most of the companies particularly those operating in India. Neither management, nor employees bothered to avoid repetition of the same story again. All these have happened due to poor planning, lack of contemplation, long term vision and inward looking approach. Instead of getting activated at the verge of chaos, micro management and periodic monitoring would have been a better option.