Where Is Your Business On the Insistence Scale?
Integral for fiscal survival, few can ignore customer satisfaction. Consumers always have had, and always will have choices. Dissatisfaction with goods and services results in spending migration, compounded by ease of access to competition. In the '70s, we learned about a service economy upon which we built a compelling case for customer satisfaction. Now, at the dawn of a true digital economy, with previously unseen levels of customer education, empowerment, selectivity and spending prowess, the validity of service as business gospel warrants assessment.
It's a fact that consumers will tolerate less than perfect service, and possibly compromised goods, for some personal reason or other mitigating circumstance. The uncertainty and efforts expended in changing providers is a key deterrent. Certain advantages -- perceived or real -- often provide an impetus for consumer decisions, as well. For instance, some people choose an airline based on the number of frequent-flyer miles they'll receive, rather than the quality of service. A poorly drafted service-level agreement could also force individuals and companies to accept inferior service.
With that said, is customer satisfaction truly a differentiating factor for service providers in the current marketplace? Is it enough? The tenets of customer satisfaction, when bound by the broad constraints of a digital economy, must evolve in depth and scope. A number of authors have addressed this evolution, most notably B. Joseph Pine II and James H. Gilmore, in The Experience Economy. The goal here is not merely to offer another interpretation of what the customer experience is, but rather to explain how an enterprise might employ a customer-experience strategy as a means of fostering fierce consumer loyalty.
Pine and Gilmore's treatise on an economy driven by customer experience sets forth a number of questions. What is of paramount value to customers: price, quality, service, or atmosphere? More importantly, for which of these factors (alone or in concert) will consumers pay a premium -- and do so happily? Careful attention to the aforementioned can yield surprising answers from which valuable sales and marketing cues can be drawn.
Consumer behavior has been studied and researched beyond the point of excess. Identified as cyclical by some, and linear by others, the fundamental truth is that customers have a lifecycle through which they progress. This lifecycle is multifaceted, comprised of purchasing patterns and purchasing preferences. The former involves investigation, selection, acquisition, remorse and acceptance, the mechanics of purchasing. Of more importance is the latter: Why does a customer purchase from a certain provider?
Within these purchasing preferences rests the vendor relationship, always in flux, yet constantly maturing. The vendor relationship will fit into one of the following four categories:
Insistence. The highest level of the scale, this is where all vendors should strive to be with their Most Valuable Customers. The customer will only do business with a particular vendor and will go to great lengths and expense to acquire said vendor's goods or services. Competition levels are low to non-existent, as long as this situation remains constant. Apple Computer, Inc. is frequently noted for its fiercely loyal and insistent customer base. The response of David Tuma, an active and repeat Apple customer since 1988, is typical: "Someone would have to give me a PC before I would even think of owning one."
Favored. A company is the preferred vendor and is usually awarded any purchases. However, strong competition can unseat this provider. Customers at this juncture of their vendor relationship represent prime acquisition targets as they are nearing insistence. If another enterprise could lure and retain them even for a short time, it could easily become the provider of choice.
Acceptance. In this stage of the vendor relationship, consumers have no preference. Most factors affecting purchasing patterns are equal. A high degree of attention and maintenance is required to attract and retain potential accounts, resulting in slim profit margins. A comforting thought, though: the vast majority of favored and insistence relationships emerge from customer engagement at this level.
Resistance. Customers do not wish to buy from a vendor at any price. Only through deep discounts or corporate/contractual mandates will a purchase occur. The North American automotive market of the late '70s provides a poignant example. Identified as purveyors of lesser quality gas-guzzlers, many consumers refused to purchase cars manufactured in the United States. More fuel efficient, higher quality imported vehicles gained customer acceptance, favor and in some cases, insistence. Since then, American automakers have done a good job of turning that view around.
The good news: the vendor relationship is not static. Businesses can and do incur movement between these different stages of consumer purchasing preferences. The quality of goods or services, a vendor's ability to properly administer and support an account, the level of personal interactivity, the environment in which the customer is placed and, of course, price, must all be in accord. In short, staging a complete and pleasant customer experience alleviates consumer indifference. This represents an ideal means of migration from an accepted vendor to the entrenched favorite.
There are a number of businesses operating at or near this customer insistence level, having evolved into insistence partners over time. Again drawing from the automobile industry, consider Mercedes. Quality assurance and superior German engineering represented the original impetus for many initial purchases. During the 1980s, the company shifted the focus of its message to signature service. Today, consumers are implored to experience Mercedes. And while the Mercedes experience is unique to each individual customer, all Mercedes owners have insisted on paying premium costs, deeming the Mercedes package worthy.
Success stories have also emerged from the service sector. Whereas 10 years ago, the convenience-store market was dominated by 7 Eleven and Circle-K, newer entrants have established themselves as potent competition. By offering modern facilities, gourmet coffees, freshly prepared foods and automated fuel pumps, Texaco Star Marts and BP Connect have aligned themselves as more attuned to the needs of contemporary travelers. In many instances these stores have further enhanced the customer experience by adding in-house fast food chains and cash machines.
Creating the insistence experience
Commitment to developing the customer experience is assessed in terms of money and activity dedicated to the effort. Are programs in place within the department or organization designed to foster an experience so exquisite that customers will demand a repeat performance? If there is no answer to this question, or worse, the answer is no, take action. Crafting the insistence experience requires a combination of common sense, empathy and persistence.
Given the rapid pace of product and service life cycles, the impact of a customer-insistence strategy could be noticeable within four to six months. The question that must ultimately be answered is, does the effort required to create and sustain consumer insistence benefit an organization in concrete, fiscally profitable ways?
Consider the example of Kathleen Towles in Duluth, Ga. A Saturn driver, Ms. Towles needed a new automobile battery. Rather than select a lesser-priced product and installation from a retail outlet, she insisted on visiting the Saturn dealership. When asked to identify the reasons for such insistence and willingness to pay a premium for like services and products, she indicated her treatment as a guest by the Saturn staff combined with complimentary doughnuts and a car wash. In other words, $5.75 spent to create customer insistence resulted in a $135 revenue opportunity -- a fairly concrete and fiscally profitable outcome.
© 2002 Peppers and Rogers Group. Do not duplicate. Copyright strictly enforced.
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