Flashcards in Chapter 4: Understand and involve customers Deck (17)
I. Concept of customer centricity
Key role of the customer for the company's success
For a company to be successful in the long term = it must understand, engage and satisfy its customers
Companies that successfully meet and exceed customer expectations have an effective "Customer Listening Organizational Culture":
- Continuous collection of customer information
- Continuous measurement of customer perceptions and satisfaction
Decisive for the loyalty of a customer = the intangible, peripheral components of the service
Competitive advantages = service excellence and differentiation
Customer focus and service orientation = two prerequisites for the company's success
Peter Drucker (1973, p. 79): "To satisfy the customer is the mission and purpose of every business"
Paradigm shift away from product centering (semiconductors, phones, chairs) to customer centering (government, large firms, consumer).
How can companies be customer-centered?
- Commitment of corporate governance (leaders)
- Organizational realigment
- Changes in the system and process support
- Customer-centric financial metrics
Service quality is defined as the extent to which a service meets or exceeds customer expectations. Companies must first identify customer expectations
Guestology @ Disney
Disney has a strong reputation as a customer-centric business
Concept of "Guestology" describes Disney's systematic view of the customer experience from the perspective of the customer point of view (i.e. door handle is at the size of the children)
Disney collects feedback from its customers through various channels:
- Personal talks with customers on site
- Letters, e-mails and calls from customers
- Website and Social Media
1. Internal customers
2. External customers
3. External customers of the competitors (would like to attract)
4. Former external customers (ex-customers)
5. Potential future external customers
3, 4, and 5 are not actual customers.
II. External customers and customer research
External Customers: relevance of customer information
Continuous research on the expectations and perceptions of customers
Communication of the research results to the employees
Exemplary questions to be answered by customer research:
- Why did a customer (not) buy a particular service?
- Is the customer satisfied with the service or not?
- Will the customer buy again in the future?
- What expectations did the customer have of the service before buying and consuming?
- How do customers perceive the different components of a given service?
- What are the trends in customer preferences over time?
- Would the customer recommend the service to someone else?
- What do customers like in a particular market segment?
Types: Qualitative and quantitative research
Objective: To identify the characteristics of a service that are most important to the customer in order to differentiate themselves from competitors and gain a competitive advantage
- In-depth interviews with individual customers
- focus groups
- General customer surveys
- Customer satisfaction surveys on service consumption
- Net Promoter Score (NPS)
- Critical Incident Technique / Complaint Analysis
- Mystery shopper
- Customer-to-customer communication
In-depth interviews with individual customers
Procedure: Interviewer interviews a customer on all aspects of the service using an interview guide
Advantages: Relevant, up-to-date and detailed information. Interviewer can ask for details in some aspects (active listening).
Challenges: Small sample of customers. Time and cost.
Procedure: Moderated group discussion with approx. 6 to 10 participants
Advantages: View the shared impressions and perceptions of a group of customers. Mutual inspiration of the participants
Challenges: identification and localization of appropriate participants. Limited control of the moderator on generated data
Procedure: Standardized questionnaire (mainly closed questions), data collection often electronic
Advantages: Large sample of customers. Statistic analysis of the data
Challenges: Competences in statistical data analysis required (software, analysis method). Representativeness of the sample.
Customer satisfaction surveys
Type: Qualitative or quantitative
Procedure: Questionnaires or commentary cards (e.g. in hotel rooms, hotel lobbies or restaurants); invitation to survey, via SMS or e-mail
Advantages: Direct, feedback on time. Possible high return rate through convenient and easy use
Challenges: Competencies in statistical data analysis required (software, analysis method). Representativeness of the sample. Time to answer the customer feedback
Net Promoter Score (NPS)
Procedure: Customer answers "How likely are you to recommend us to a friend or colleague?" On a scale from 0 ("not at all likely") to 10 ("most likely")
Advantages: A single question. Effective and accurate way to measure customer satisfaction and predict business growth
Challenges: The reasons for the answers of the customers remain unclear. Full assessment of the company, therefore it is less adequate for the analysis of individual service aspects.
0 – 6: detractors
7 -8: Passives
9 – 10: Promoters
NPS = Promoters (%) – detractors (%)
Critical Incident Technique / Complaint Analysis
Procedure: Systematic investigation (e.g. in an interview or as an open question in the questionnaire) of critical events in the customer experience (events that deviate significantly from expectations either positively or negatively)
Advantages: Identification of relevant customer experiences.
Identification of problems in service delivery.
Starting point for improvement
Challenges. As detailed as possible a description of the customer desirable, possibly difficult due to incomplete memories.
Type: Qualitative or quantitative
Procedure: Anonymous assessor tests the service provision as a "customer" and evaluates it on the basis of a questionnaire
identification of "gaps" in service provision. Force a firms to clearly communicate standards and expectations to employees.
Regular (positive and negative) feedback to employees and management.
Challenges: Subjectivity of the reviewers.
Possibly limited generalizability.
Type: Qualitative (or quantitative)
Procedure: Customers interact online and share information about companies
(e.g. Social Media, Blogs, Chat Rooms, Online Communities, Mobile Apps)
Advantages: Companies learn about trends and general perceptions of the customer experience. Opportunity to respond to customer comments in public
Challenges: Loss of control over customer communication through the company. Representativeness and credibility of customer reviews. Frequently still lacking expertise in companies.
Current challenges of customer research
"Feedback fatigue" of the customers (customers are tired of giving feedback)
Management response to customer feedback (best feedback comes out complaints)
Collection, storage, processing and analysis of "Big Data" (lots of data available)
III. Internal customers and employee research
Internal Customers: Relevance of employee information
Concept of internal marketing: company must first "sell" service philosophy to its internal customers
Concept of internal services: interdependence of services makes essential the cooperation between functions and employees (cross-functional organization)
- Internal service quality and employee satisfaction
- External service quality and customer satisfaction (employees as listeners and lawyers of external customers)
Service providers/"Back office" → Internal customer → Front Office/Line → External customer
Employee research (feedback from internal customers) is an important and valuable source of information for customer research (feedback from external customers).