As A Long-run Strategy, Will Goltzã¢â‚¬â„¢s Approach To Superior Customer Service Quality Be Successful?
Corporate executives and consumers have in recent years adopted divergent views of production quality. Several recent surveys indicate how broad the quality perception gap is:
- Iii out of five main executives of the state's largest 1,300 companies said in a 1981 survey that quality is improving; just 13% said information technology is failing.i However 49% of 7,000 consumers surveyed in a divide 1981 study said that the quality of U.S. products had declined in the by five years. In add-on, 59% expected quality to stay down or pass up farther in the upcoming five years.2
- Half the executives of major American appliance manufacturers said in a 1981 survey that the reliability of their products had improved in recent years. Merely 21% of U.Southward. consumers expressed that conventionalities.3
- Executives of U.Southward. auto manufacturers cite internal records that show quality to be improving each year. "Ford quality improved by 27% in our 1981 models over 1980 models," said a Ford executive.4 But surveys testify that consumers perceive the quality of U.S. cars to be declining in comparison with imported cars, particularly those from Japan.
Mindful of this gap, many U.Southward. companies have turned to promotional tactics to meliorate their quality image. Such efforts are evident in ii trends. The first is the greater emphasis advertisements place on the word quality and on such themes as reliability, immovability, and workmanship. Ford, for instance, advertises that "quality is task 1," and Levi Strauss proffers the notion that "quality never goes out of manner." And many ads at present claim that products are "the best" or "better than" competitors'.
The second tendency is the movement to quality balls and extended service programs. Chrysler offers a 5-year, 50,000 mile warranty; Whirlpool Corporation promises that parts for all models volition be available for 15 years; Hewlett-Packard gives customers a 99% uptime service guarantee on its computers; and Mercedes-Benz makes technicians available for roadside assistance after normal dealer service hours.
While these attempts to change customer perceptions are a pace in the right management, a visitor's or a product's quality image obviously cannot be improved overnight. Information technology takes time to cultivate customer conviction, and promotional tactics lone will non do the chore. In fact, they can backfire if the claims and promises do not hold up and customers perceive them as gimmicks.
To ensure delivery of advertising claims, companies must build quality into their products or services. From a production perspective, this means a companywide delivery to eliminate errors at every stage of the product development process—product design, process design, and manufacturing. It also means working closely with suppliers to eliminate defects from all incoming parts.
As of import yet often overlooked are the marketing aspects of quality-improvement programs. Companies must be sure they are offer the benefits customers seek. Quality should be primarily client-driven, not engineering-driven, product-driven, or competitor-driven.
In developing product quality programs, companies often fail to take into account ii basic sets of questions. Showtime, how do customers define quality, and why are they suddenly demanding higher quality than in the past? Second, how important is high quality in client service, and how can it exist ensured after the sale?
As mundane every bit these questions may sound, the answers provide essential information on how to build an effective client-driven quality program. We should not forget that customers, after all, serve as the ultimate gauge of quality in the marketplace.
The Production-Service Connection
Production performance and customer service are closely linked in any quality program; the greater the attending to production quality in production, the fewer the demands on the customer service operation to correct subsequent problems. Function equipment manufacturers, for example, are designing products to have fewer manual and more automatic controls. Non but are the products easier to operate and less susceptible to misuse but they too require little maintenance and have internal troubleshooting systems to aid in trouble identification. The up-front end investment in quality minimizes the need for customer service.
Besides its usual functions, client service tin deed as an early on warning system to find product quality problems. Customer surveys measuring production performance can too assistance spot quality control or design difficulties. And of course detecting defects early spares after embarrassment and headaches.
Quality-improvement successes
It is relevant at this bespeak to consider ii companies that have developed successful customer-driven quality programs: L.50. Bean, Inc. and Caterpillar Tractor Visitor. Although these ii companies are in different businesses—Fifty.L. Bean sells outdoor wearing apparel and equipment primarily through mail service-society while Caterpillar articles earth-moving equipment, diesel engines, and materials-handling devices, which it sells through dealers—both enjoy an enviable reputation for high quality.
Some 96.seven% of three,000 customers 50.Fifty. Bean recently surveyed said that quality is the attribute they like most most the visitor. Bean executes a customer-driven quality program past:
Conducting regular client satisfaction surveys and sample group interviews to track client and noncustomer perceptions of the quality of its ain and its competitors' products and services.
Tracking on its computer all customer inquiries and complaints and updating the file daily.
Guaranteeing all its products to be 100% satisfactory and providing a full greenbacks refund, if requested, on whatever returns.
Asking customers to make full out a brusk, coded questionnaire and explain their reasons for returning the merchandise.
Performing extensive field tests on any new outdoor equipment earlier listing it in the company's catalogs.
Fifty-fifty stocking actress buttons for most of the wearing apparel items carried years ago, simply in instance a customer needs one.
Despite recent fiscal setbacks, Caterpillar continues to be fully committed to sticking with its quality program, which includes:
Conducting two customer satisfaction surveys following each purchase, ane after 300 hours of production use and the 2d after 500 hours of use.
Maintaining a centrally managed list of product problems as identified by customers from around the world.
Analyzing warranty and service reports submitted by dealers, as part of a product improvement program.
Asking dealers to conduct a quality audit as soon every bit the products are received and to aspect defects to either associates errors or shipping damages.
Guaranteeing 48—hour delivery of whatever part to whatsoever client in the earth.
Encouraging dealers to establish side businesses in rebuilding parts to reduce costs and increment the speed of repairs.
How Do Customers Ascertain Quality?
To understand how customers perceive quality, both Fifty.L. Bean and Caterpillar collect much information directly from them. Even with such information, though, pinpointing what consumers really desire is no uncomplicated task. For one thing, consumers cannot always articulate their quality requirements. They oft speak in generalities, lament, for instance, that they bought "a lemon" or that manufacturers "don't make 'em like they used to."
Consumers' priorities and perceptions also change over time. Taking automobiles every bit an case, market data compiled past SRI International advise that consumer priorities shifted from styling in 1970 to fuel economy in 1975 then to quality of design and performance in 1980.five (See Showroom I.)
Changes in the importance to customers of U.S. automobile characteristics
In improver, consumers perceive a production'south quality relative to competing products. Every bit John F. Welch, chairman and chief executive of Full general Electric Company, observed, "The customer…rates united states ameliorate or worse than somebody else. Information technology'south not very scientific, merely information technology's disastrous if y'all score low."half dozen
One of the major problems facing U.S. automobile manufacturers is the public perception that imported cars, particularly those from Nihon, are of higher quality. When a 1981 New York Times-CBS News poll asked consumers if they thought that Japanese-fabricated cars are ordinarily meliorate quality than those made hither, about the same, or not as practiced, 34% answered better, thirty% said the same, 22% said not as good, and 14% did not know. When the Roper Organization asked the aforementioned question in 1977, only 18% said better, 30% said the same, 32% said not as proficient, and 20% did not know.vii
Farther, consumers are demanding high quality at depression prices. When a national console of shoppers was asked where information technology would like to run across nutrient manufacturers invest more, the highest-rated response was "better quality for the same price."viii In search of such value, some consumers are even chartering buses to Cohoes Manufacturing Company, an clothes specialty store located in Cohoes, New York that has a reputation for offering high-quality, designer-label merchandise at disbelieve prices.
Consumers' perceptions of product quality are influenced by diverse factors at each stage of the buying process. Some of the major influences are listed in Exhibit II.
Showroom Ii Factors influencing consumer perception of quality* *Non necessarily in order of importance.
Watching for cardinal trends
What should companies do to improve their agreement of customers' perspectives on quality? We know of no other style than to collect and analyze internal data and to monitor publicly available data.
Internally generated data is obtained principally through customer surveys, interviews of potential customers (such as focus grouping interviews), reports from salespeople, and field experiments. Recall how Fifty.L. Bean and Caterpillar employ these approaches to obtain data on how their current and potential customers charge per unit their products' quality versus those of competitors'.
Publicly available information of a more general nature can be obtained through pollsters, independent research organizations, regime agencies, and the news media. Such sources are oftentimes helpful in identifying shifts in societal attitudes.
Companies that attempt to define their customers' attitudes on production and service quality often focus too narrowly on the meaning of quality for their products and services; an understanding of irresolute attitudes in the broader marketplace tin can be equally valuable.
Toward the end of the last decade, too many U.S. companies failed to observe that the optimism of the mid-1970s was increasingly giving way to a mood of pessimism and restraint because of deteriorating economical conditions. Several polls taken during the 1970s indicated the nature and extent of this shift;ix for instance, Gallup polls showed that while only 21% of Americans in the early 1970s believed "next twelvemonth will be worse than this year," 55% held this pessimistic outlook by the end of the 1970s.
Pessimistic about what the hereafter held, consumers began adjusting their life-styles. The unrestrained want during the mid-1970s to buy and own more gave way to more restrained behavior, such every bit "integrity" buying, "investment" buying, and "life-bicycle" buying.
Integrity purchases are those made for their perceived importance to society rather than solely for personal status. Buying a pocket-sized, energy-efficient machine, for instance, tin can be a sign of personal integrity. Investment buying is geared toward long-lasting products, even if that ways paying a little more. The emphasis is on such values every bit durability, reliability, adroitness, and longevity. In the apparel business, for example, more manufacturers have begun stressing the investment value of clothing. And life-bicycle ownership entails comparing the price of buying with the price of owning. For instance, some might encounter a $10 light bulb, which uses one-3rd equally much electricity and lasts four times as long as a $1 conventional calorie-free bulb, as the better deal.
These changes in ownership behavior reflect the pessimistic outlook of consumers and their growing emphasis on quality rather than quantity: "If nosotros're going to buy less, allow it be improve."
By overlooking this cardinal shift in consumer attitudes, companies missed the opportunity to capitalize on it. If they had monitored the information available, managers could have identified and responded to the trends earlier.
Ensuring Quality After the Sale
As we suggested earlier, the quality of client service later the sale is oft equally of import as the quality of the product itself. Of course, excellent customer service can rarely recoup for a weak product. But poor client service can speedily negate all the advantages associated with delivering a product of superior quality. At companies like L.Fifty. Edible bean and Caterpillar, client service is non an reconsideration simply an integral part of the product offering and is discipline to the same quality standards as the product procedure. These companies realize that a top-notch customer service operation tin can exist an effective means of accomplishing the post-obit three objectives:
ane. Differentiating a visitor from competitors. As more customers seek to extend the lives of their durable appurtenances, the perceived quality of customer service becomes an increasingly of import factor in the purchase conclusion. Whirlpool Corporation promises to stand up by its products rather than hide behind its distribution channels; it has parlayed a reputation for effective customer service into a singled-out competitive advantage that reinforces its prototype of quality.
2. Generating new sales leads and discouraging switches to alternative suppliers. Keeping in regular contact with customers so as to deliver new information to them and gather suggestions for production improvements can ensure the connected satisfaction of existing customers and improve the chances of meeting the needs of potential purchasers.
3. Reinforcing dealer loyalty. Companies with stiff client service programs can also broaden their distribution channels more easily to include outlets that may non be able to evangelize high levels of postpurchase client service on their own.
The customer service audit
To be constructive, a customer service performance requires a marketing plan. Customer services should be viewed every bit a product line that must be packaged, priced, communicated, and delivered to customers. An evaluation of a company's electric current client service operation—a customer service audit—is essential to the development of such a plan.
A customer service audit asks managers the following questions:
What are your customer service objectives?
Many companies have not established objectives for their customer service operations and have no concept of the role customer service should play in their business and marketing strategies. Every company should know what percentage of its revenue stream it expects to derive from service sales and whether the goal is to brand a profit, suspension even, or—for reasons of competitive advantage—sustain a loss.
What services do you provide?
It is useful to develop a filigree showing which services your company provides or could provide for each of the products in your line. These might include client teaching, financing arrangements, lodge confirmation and tracing, predelivery preparation, spare-parts inventory, repair service, and claims and complaints handling.
How do you compare with the competition?
A similar grid can be used to nautical chart the customer services your competitors provide. Through customer surveys, you can identify those areas of customer service in which your company rates higher or lower than the competition. In areas where your company is weak, can y'all invest to improve your performance? Where yous are strong, how piece of cake is it for competitors to match or exceed your functioning?
What services exercise your customers want?
At that place is petty value in developing superior performance in areas of customer service most customers consider just marginally important. An essential ingredient of the audit is, therefore, to understand the relative importance of various customer services to current and potential customers. Distinct customer segments can frequently be identified according to the priorities they adhere to particular services.
What are your customers' service demand patterns?
The level and nature of client service needed ofttimes change over the product's life. Services that are top priority at the time of sale may be less important 5 years later. Companies must understand the patterns and timing of need for customer services on each of their products. These they tin graph, equally Exhibit 3 shows.
Exhibit III Postpurchase service demands for two products
Product A in the exhibit is a security control system, an electronics product with few moving parts. A high level of service is needed immediately following installation to railroad train operators and debug the system. Thereafter, the need for service quickly drops to only periodic replacement of mechanical parts, such every bit often used door switches.
Product B is an automobile. Service requirements are significant during the warranty catamenia considering of customer sensitivity to whatsoever aesthetic and functional defects and too because repairs are free (to the customer). After the warranty period, however, service requirements across basic maintenance will be more extensive for B than for A, since at that place are more than mechanical parts to wear out.
What trade-offs are your customers prepared to brand?
Fantabulous service can always be extended—at a toll. Y'all should know the costs to your company of providing assorted client services through various delivery systems (an 800 telephone number, a customer service agent, a salesperson) at dissimilar levels of performance efficiency. At the aforementioned fourth dimension, you lot should establish what value your customers place on varying levels of customer service, what level of service quality they are prepared to pay for, and whether they prefer to pay for services separately or equally function of the product purchase price.
Customers are likely to differ widely in cost sensitivity. A printing press manufacturer, for case, has found that daily newspaper publishers, considering of the time sensitivity of their product, are willing to pay a high price for immediate repair service, whereas book publishers, being less fourth dimension pressured, can afford to be more toll conscious.
The Customer Service Program
The success of the marketing programme will depend as much on effective implementation as on sound analysis and research. After reviewing several customer service operations in a variety of industries, we believe that managers should concentrate on the post-obit seven guidelines for effective program implementation:
one. Educate your customers. Customers must be taught both how to employ and how not to apply a product. And through appropriate training programs, companies can reduce the chances of calls for highly trained service personnel to solve simple problems. General Electrical recently established a network of product education centers that purchasers of GE appliances can call toll free. Many consumer issues during the warranty period can be handled at a cost of $5 per call rather than the $30 to $50 price for a service technician to visit a consumer'due south home.
2. Brainwash your employees. In many organizations, employees view the customer with a problem as an annoyance rather than as a source of data. A marketing program is oft needed to alter such negative attitudes and to convince employees not only that customers are the ultimate judge of quality simply too that their criticisms should be respected and acted on immediately. The internal marketing program should incorporate detailed procedures to guide client-employee interactions.
3. Be efficient first, dainty second. Given the pick, most customers would rather have efficient resolution of their problem than a smiling face. The 2 of course are not mutually sectional, only no company should hesitate to centralize its customer service operation in the interests of efficiency. Federal Limited, for case, recently centralized its customer service function to improve quality command of customer-employee interactions, to more than hands monitor customer service performance, and to enable field personnel to concentrate on operations and selling. The fearfulness that channeling all calls through three national centers would depersonalize service and annoy customers used to dealing with a field office sales representative proved unwarranted.
iv. Standardize service response systems. A standard response mechanism is essential for handling inquiries and complaints. L.L. Edible bean has a standard form that customer service personnel utilize to embrace all telephone inquiries and complaints. As noted earlier, the documented information is immediately fed into a computer and updated daily to expedite follow-through. In addition, most companies should found a response system to handle client problems in which technically sophisticated people are chosen in on issues not solved within specific time periods by lower-level employees.
5. Develop a pricing policy. Quality customer service does not necessarily mean free service. Many customers even prefer to pay for service beyond a minimum level. This is why long warranty periods ofttimes have limited appeal; customers recognize that production prices must rise to cover extra warranty costs, which may principally do good those customers who misuse the production.10 More of import to success than free service is the development of pricing policies and multiple-option service contracts that customers view every bit equitable and easy to sympathise.
Because a split market exists for postsale service in many product categories, running the customer service operation equally a profit center is increasingly common. Merely the philosophy of "selling the product cheap and making coin on the service" is likely to be self-defeating over the long term, since it implicitly encourages poor production quality.
half-dozen. Involve subcontractors, if necessary. To ensure quality, most companies prefer to take all customer services performed by in-business firm personnel. When effectiveness is compromised as a upshot, however, the company must consider subcontracting selected service functions to other members of the distribution channel or to other manufacturers. Otherwise the quality of customer service volition decline as an aftermath of cost-cut or attempts to artificially stimulate demand for client service to employ slack capacity. Docutel, the automated teller manufacturer, for instance, transferred responsibility for customer service operations to Texas Instruments considering servicing its pocket-size base of equipment dispersed nationwide was unprofitable.
7. Evaluate customer service. Whether the customer service functioning is treated as a cost center or a profit middle, quantitative performance standards should exist set for each element of the service parcel. Exercise an analysis of variances betwixt actual and standard performances. American Airlines and other companies use such variances to summate bonuses to service personnel. In addition, many companies regularly solicit customers' opinions nigh service operations and personnel.
In conclusion, we must stress that responsibility for quality cannot rest exclusively with the production department. Marketers must also be active in contributing to perceptions of quality. Marketers have been besides passive in managing quality. Successful businesses of today volition apply marketing techniques to program, design, and implement quality strategies that stretch across the manufacturing plant floor.
References
1. Results of a Wall Street Journal:-Gallup survey conducted in September 1981, published in the Wall Street Journal, October 12, 1981.
2. Results of a survey conducted by the American Gild for Quality Control and published in the Boston Globe, January 25, 1981.
iii. 1981 survey information from Apparatus Manufacturer, April 1981.
iv. John Holusha, "Detroit's New Stress on Quality," New York Times, April 30, 1981.
5. Norman B. McEachron and Harold South. Javitz, "Managing Quality: A Strategic Perspective," SRI International, Business Intelligence Programme Written report No. 658 (Stanford, Calif.: 1981).
half-dozen. John F. Welch, "Where Is Marketing Now That We Really Need It?" a speech presented to the Conference Lath's 1981 Marketing Conference, New York Urban center, October 28, 1981.
vii. John Holusha, Ibid.
eight. Bill Abrams, "Research Suggests Consumers Will Increasingly Seek Quality," Wall Street Periodical, October 15, 1981.
9. Daniel Yankelovich, New Rules (New York: Random House, 1981), p. 182.
10. For show of this fact, see John R. Kennedy, Michael R. Pearce, and John A. Quelch, Consumer Products Warranties: Perspectives, Problems, and Options, report to the Canadian Ministry of Consumer and Corporate Diplomacy, 1979.
A version of this commodity appeared in the July 1983 issue of Harvard Business concern Review.
As A Long-run Strategy, Will Goltzã¢â‚¬â„¢s Approach To Superior Customer Service Quality Be Successful?,
Source: https://hbr.org/1983/07/quality-is-more-than-making-a-good-product
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