Building Your Business With Customer-Focused Solutions

This is a Book Review of the book “Best Practices” – Building Your Business With Customer-Focused Solutions written by Robert Hiebeler, Thomas Kelly & Charles Ketteman

About the authors:

ROBERT HIEBELER is the Managing Director of KnowledgeSpace, an Arthur Andersen project dedicated to the productive leverage of knowledge. He pioneered Arthur Andersen’s 6-year study of Global Best Practices. He is based in Chicago, Illinois.

THOMAS KELLY is the Managing Partner of Arthur Andersen Knowledge Enterprises, a business focused on e-commerce and Internet based businesses. He is also the Managing Director of Arthur Andersen operations west of the Rocky Mountains and a member of the firm’s global management team. He is based in San Francisco, California.

CHARLES KETTEMAN is the Managing Partner of Arthur Andersen’s Business Consulting Practice. He has more than 20-years experience in consulting with clients in a wide range of industries, particularly telecommunications companies. He is based in Dallas, Texas.

Main Idea About This Book

Arthur Andersen conducted a $30 million research project over a 6-year period to identify specifically what it is world-class companies do better than anyone else. Six business processes were identified and labeled ‘‘best-practices’’ because — in Arthur Andersen’s analysis — they represent the optimum way for companies to achieve extraordinary results.

Taken together, these six business processes combine in a total commitment to and focus on the customer. Best-practice companies vigorously attempt to understand markets, form close associations with customers, design, market and deliver products that customers want. In the process, best-practice companies provide unequaled levels of service to their customers.

When everything in the company is focused on learning and responding to what the customer wants, world class performance can be achieved.

An Overview of the Best-Practices Used By World-Class Companies

Best-practices are the six business processes world class companies use to identify, develop and retain customers. They exemplify business excellence, and provide a template any company or organization can use to build its business.

Companies that are attempting to put best-practices into effect in their own businesses:

1. Constantly search for ways to make improvements to their products and services and enhance relationships with suppliers and customers.

The business world moves very quickly. Savvy business leaders realize that — therefore they are continually on the lookout for the major and minor shifts happening in the marketplace all the time. These leaders also understand how those shifts will impact on their current and future business operations.

The advent of the Internet has made it extremely easy for new competitors to crop up to serve a niche consisting of an existing business’s best customers. Again, experienced business leaders anticipate that and adjust their business plans to respond appropriately.

2. Develop ongoing relationships with their key stakeholders that are serious and positive.

The best companies don’t just give lip service to customer relationships — they make meaningful contributions to the success of those customers. Equally, aspiring best-practice companies build strong relationships with all their stakeholders — employees, suppliers and partners. The best way to build these key relationships to best-practice level is on a base of trust and shared communication.

3. View their operations from a business process perspective.

Aspiring best-practice companies leave internal functional boundaries to one side and focus on processes as achieving a specific objective. That way processes that have succeeded in different contexts can be evaluated for potential assimilation — even if the internal steps taken will be entirely different.

In other words, the process is important — not the component steps required.

Key Thoughts

‘‘The purpose of best-practices is not to find the perfect solution, the best practice that can be lifted intact from a hotel and put to work in a steel plant. That rarely happens. The purpose of best-practices is to disturb you with new ideas and insights. We mean “disturb” in a positive way: All creative ideas and insights have their origin in the minds of people dissatisfied or puzzled by what they encounter in their world. This cognitive dissonance demands a resolution to problems, simple or complex. Sometimes that discovery comes in a sudden illumination; sometimes over months of trial and error.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

Process 1: Develop a shrewd and profound understanding of your customers and markets

Best-practice companies understand and respond to the
constantly changing needs of their customers by:
1. Understanding the broader market, not just the customer.
2. Systematically visualizing the value chain.
3. Talking to customers meaningfully on an ongoing basis.
4. Revising products in response to customer requests.
5. Segmenting customers.
Supporting Ideas
Businesses that succeed realize that their customers represent
a moving target. Therefore, they have in place formal and well
designed processes which allow them to update their
understanding of their customers needs on a regular and
ongoing basis.
To achieve this, best-practice companies utilize these
1. Understanding the broader market, not just the customer.

The total market environment has a direct impact on your customer’s business needs and prospects. This will include factors such as:
General trends in society.

  • New products offered in other industries.
  • Supplier trends and developments.
  • The general economic climate.
  • The political climate and potential government action.

Smart companies don’t just study their customers in isolation. They look at the broader perspective, and factor in how those changes may impact on their customers in the future.

2. Systematically visualizing the value chain.

Best-practice companies can draw a detailed value chain running from their suppliers through the firm and right through to the end user. Once developed, this diagram is prominently displayed everywhere within the company so:

  • Employees understand how they fit into the overall process of creating and delivering value.
  • Employees understand how other stakeholders participate in the value creation process.
  • Everyone in the organization can be attuned to changes that are occurring in the value chain continually.

Unless a value chain can be drawn, it is highly unlikely the company has gathered sufficient information about the customer and the industry to be of long-term use.

3. Talking to customers meaningfully on an ongoing basis.

Best-practice companies gather specific information that allows them to understand why people are buying from them.

This information is generally of three types:

  • Understanding the ‘‘immediate gratification’’ benefits a customer derives, and the ‘‘long-term benefits’’ customers anticipate — so the company can meet both types of needs.
  • Measuring the customer’s perceptions which are shaped every time he or she interacts with the company — and how those vary for first-time and long-term customers.
  • Analyzing the customer purchase cycle so future needs can be properly catered for.

Gathering this type of information effectively takes far more than the odd survey or superficial attempt. Every customer’s reaction must be gathered personally and recorded. Best-practice companies profile their customers so they become more acutely attuned to their needs.

4. Revising products in response to customer requests.
Ideally, best-practice companies use the information they gather from customers to collaborate with them on the design of additional products and services that give customers more of what they want. In effect, they set up a feedback loop in which customers have a large input into what gets developed in the future.

That way, the customer’s voice colors and influences everything a best-practice company attempts to do. It doesn’t mean the company can’t introduce enhancements that dazzle and amaze. Best-practice companies do that as well.

The main focus, however, is on solving problems for customers.

5. Segmenting customers.
Best-practice companies segment customers in whatever way makes sense for them:

  • By age.
  • By income.
  • By purchases already made.
  • By demographic factors.

Segment-specific products and services can then be developed and marketed. Clear strategies can be developed by which customer satisfaction in each segment will be delivered. Marketing strategies and product specifications can be developed for individual segments.

Taken to its ultimate conclusion, segmentation is a form of customization. Many best-practice companies use technology to make their customer segments smaller and smaller — thereby enhancing customer satisfaction, loyalty and profitability.

Customer segmentation is also an excellent basis for the development of collaborative relationships with third party vendors. Working together, highly specific packages can be developed and marketed.

Key Thoughts

‘‘Business history is replete with companies that failed or faltered because they didn’t adequately understand, or were insensitive to, the ever-changing needs of their customers. It is also replete with companies that were so prescient that they were able to create markets where none existed before and capture customers whose needs changed once those companies came into existence. The lesson is clear: Companies that fail to adapt to changes elsewhere in their industries’ value chains are often blind-sided by competitors who react to those changes.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘We don’t want to do things to our customers to save money. We want to do it with them. We often act as a new pair of eyes seeing a process from an angle the customer may never have considered. We also have experts within our business that our customers would ordinarily not have access to.’’ — Sandy Torony, general manager of customer productivity programs, General Electric Plastics

Process 2 : Partner with customers to develop improved and enhanced products and services

Best-practice companies work closely with customers to improve the products and services they deliver by:
1. Surveying customers frequently for ideas and opinions.
2. Sharing the data gathered through the company.
3. Educating customers on how they can help.
4. Partnering with customers to develop enhancements.
5. Involving customers in the testing of prototypes.
6. Marketing the improved products effectively.

Giving customers exactly what they want is the new imperative in an era of intense competition. Best-practice companies understand they only ever achieve this ideal if they bring their customers into the product development process.

To achieve this, the sub-processes best-practice companies and organizations use include:

1. Surveying customers frequently for ideas and opinions.
Many companies are in the habit of surveying to determine customer satisfaction. This idea goes further — not only find out whether customers are happy but also take seriously their suggestions and ideas on how to develop and improve the products and services still further.

While as many means of communication as possible should be used, the most effective way to achieve this is by face-to-face meetings.

That way, latent needs that customers cannot verbally express may become apparent.

2. Sharing the data gathered through the company.
A significant number of companies gather information from their customers quite effectively but fail to develop internal systems by which that information makes its way into the hands of the product development team. Best-practice companies avoid that mistake.
Some best-practice companies even ‘‘implant’’ one of their employees at their customer’s work site so they can attend product development meetings and act as the conduit for information to flow between the company and its customer.
This works very well — so long as the implanted employee has the authority to make decisions in real time on behalf of the company.

3. Educating customers on how they can help.

Best-practice companies teach their customers everything they need to participate meaningfully in the product development process:

  • They help customers articulate their demands.
  • They create products & services meeting those demands.
  • They respond quickly and efficiently.
  • They deliver significant savings in practice and use.

4. Partnering with customers to develop enhancements.

Ideally, best-practice companies get their customers to critique the new prototypes as soon as possible. Sometimes, this is best achieved by having the customer visit the company. At other times, this can be more effective if it is carried out at the customer’s premises.

The very act of inviting customers to participate in new product development captures their attention and differentiates a best-practice company from all its competitors. It also enhances customer loyalty, and moves towards the ideal where all products and services are ‘‘made to order’’ for each individual customer.

5. Involving customers in the testing of prototypes.
Best-practice companies go out of their way to involve customers in new prototype product testing. The benefits flow both ways:

  • The company receives market specific feedback and ideas on enhancements.
  • The customer gets to design future products and services in ways that add more value from their perspective.

Companies and organizations that invite customers to actively participate in the development of future products and services have exceptional levels of customer loyalty.

6. Marketing the improved products effectively.

If the customer is closely involved in developing the new product or service, it makes equal sense to invite them to participate in evaluating marketing ideas as well. Their perspective may well provide some invaluable insights and ideas.

Equally, the product development cycle never ends. Even while a product is being actively marketed, development and enhancements should be ongoing. Best-practice companies don’t stop working with their customers to further refine and improve their products just because the marketing program is commencing.

It has long been realized that enlarging the customer development department increases the chance of coming up with a ‘‘blockbuster’’ product. By involving customers closely and meaningfully in the product development process, best-practice companies leverage and amplify the effectiveness of their product development and enhancement initiatives.

Key Thoughts

‘‘Sometimes we at the company are too close to the products, and we fail to see what value they have for end users. Sometimes we really like a product that our consumers don’t like. We’re always ready to listen to them, however, and we’re always glad we do.’’ — Mike Brennan, vice-president of engineering, Black & Decker

‘‘A myriad of ways to involve customers makes this process economically and logistically possible: A company can mail out surveys, conduct telephone interviews, put up Internet bulletin boards, write follow-up letters, open customer service centers, provide toll-free customer response numbers and establish customer advisory panels and focus groups. Consumers’ responses will quickly point out where and why a company’s products and services fail to satisfy, but for the most part these  reasons fall into a single category: They do not meet customers’ needs and wants.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘A company that learns how to speak the language of process, builds relationships of trust with stakeholders and is proactive rather than reactive with the forces of change will create value for both itself and its customers.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

Process 3 Incorporate innovative ideas and technologies into marketing and selling

Best-practice companies approach marketing and selling in innovative ways that align closely with customer preferences by:
1. Reaching customers through multiple distribution channels.
2. Effective pricing strategies
3. Developing highly effective advertising and promotion.
4. Putting a sales force in place.
5. Processing orders efficiently.
6. Developing and expanding the customer relationship.

The best products in the world are of limited value sitting in a warehouse. Best-practice companies make it a point of excelling at the marketing and sales functions — because their future growth or even survival depends on it.

Selling and marketing can be broken down into six main sub-processes:

1. Reaching customers through multiple distribution channels.
Forward-thinking companies identify all the links in the value chain: suppliers, distributors, advertisers, marketers, salespeople and customers.

From this understanding, best-practice companies then regularly try and identify the distribution channels that consumers feel most comfortable using. Often, this will result in new channels being utilized — direct selling, telemarketing, direct mail or Internet-based, for example.

2. Effective pricing strategies
Pricing is a critical issue since it communicates a great deal about the product or service. The optimal price is always a balance between the company’s internal financial constraints and the level of customer demand.

Best-practice companies realize profitability is built by capturing more value — which is not always the same as making more sales. In the final analysis, the product’s value (competitive strengths, positioning and distribution power) drives its pricing.

Of course, pricing never occurs in a vacuum. The pricing chosen by competitors will have a significant bearing. So too will the pricing of related products or services, or the pricing of alternative products and services. All of these factors need to have some bearing on pricing.

3. Developing highly effective advertising and promotion.
Having a world-class product is only half the battle. Best-practice companies know the other is getting the word out to potential customers — it’s the most important thing the company has to do.

The most effective approach to marketing is differentiation — making the product stand out from its competitors. Most often, best-practice companies differentiate by creating an image for their product that appeals strongly and emotionally to their targeted customers, and then aligning every resource behind an effort to reinforce and strengthen that image.

Choosing the right image to promote is often a challenge in and of itself. Generally, the best way to find the right image is by taking into account input from every level of the company, not just the upper levels.

4. Putting a sales force in place.

Well trained employees need to know:
1. Everything about your product or service.
2. Everything about the market as a whole.
3. Everything about the people they are trying to sell to.

Best-practice companies have found the best way to reward and motivate sales people is by aligning their compensation with generating greater customer satisfaction and profitability rather than simply sales volume quotas.

In addition, the sharing of experience between sales offices in different geographic locations is an imperative.

Best-practice companies create effective means whereby experience can be shared, so that success can be replicated.

5. Processing orders efficiently.
Nothing frustrates customers more than being unable to realize the benefits of the product or service just purchased. Therefore, best-practice companies execute well in the delivery of products and services.

Hand-offs from one person within the organization to another are often a sore point with customers. In recognition of this, many best-practice companies have a primary contact person policy — that is, a single person takes responsibility for resolving any problems a customer may encounter. That person develops a relationship with the customer, and represents their interests. They make sure the customer derives the anticipated value from the use of the product or service purchased.

The availability of better communication technology now makes it feasible for companies to be very flexible in the delivery process. The system should accommodate the customer, rather than forcing the customer to conform to the company’s system.

6. Developing and expanding the customer relationship.
Best-practice companies are increasingly integrating their customer information, history and preferences into one database. By incorporating all of the information gained from each individual customer interaction into one place, the key drivers of greater value (for that specific customer) will become apparent.

A good company then uses that information productively to retain customers and do more business with them in the future. By being responsive to the customer’s personal preferences and delivering customized service, a long-term association can be built. Best-practice companies excel at generating repeat business.

Key Thoughts

‘‘We started thinking about the lifetime value of customers as
opposed to their transactional value.’’ — Henry Joiner, vice president of marketing planning, American Airlines

‘‘For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product.’’ — Phil Knight, founder, Nike

Process 4 : Make customer preferences a priority in product and service delivery

Best-practice companies actively involve their customers in the delivery of their products and services by:
1. Positioning themselves as their ‘‘supplier of choice’’.
2. Offering delivery and supply customization wherever possible.
3. Learning about each customer’s individual needs.
4. Developing state-of-the-art distribution capabilities.

Having a fast, flexible and responsive delivery process is an important differentiator for best-practice companies. It also strengthens and builds the relationship between the company and its customers.

Achieving that in the real world requires four sub-processes:

1. Positioning as the ‘‘supplier of choice’’.
Customers naturally seek the supplier who will have the greatest stake in their future success. Simultaneously, suppliers like to build equity with customers by becoming an integral part of their core business activities.

Both these pressures encourage customers to designate a ‘‘supplier-of-choice’’ — the party they prefer to do further business with. In practice, these types of associations most frequently occur when the company is willing to generate customer delivery solutions that are original and innovative rather than bound by conventional practice.

Best-practice companies make it a habit to expand and reconfigure their product- or service-delivery systems so as to earn the right to develop long-term ‘‘supplier of choice’’ associations with good customers.

2. Offering delivery and supply customization wherever possible.

Customization can occur:

  • In a product’s design — by incorporating specific features the client requests, or by deleting features which do not add perceived value.
  • In packaging — by developing specific types of packaging that will meet customer specifications.
  • In delivery — by focusing on the attributes the customer values most highly.

Best-practice companies use constant customer feedback to provide delivery mechanisms that exceed expectations. In addition, whenever problems arise, a six-step process is followed:
1. The customer is called and the problem is reviewed.
2. Expectations are clarified for the customer.
3. The problem is restated when a technician arrives on-site.
4. Again, customer expectations are clarified.
5. The problem is fixed.
6. The customer is shown what was done to fix the problem.

As with any customer relationship, the majority of the problem resolution steps are communication-based rather than technically-based. Best-practice companies excel at establishing and strengthening the lines of communication between the company and its customers.

3. Learning about each customer’s individual needs.
The art of delivering products and services ultimately comes down to just one simple rule — give the customer what they want when they want it.

Best-practice companies make it their business to analyze what the customer needs and then to align delivery processes to match those customer needs rather than what the company itself would prefer. The more the company understands the customer’s needs in detail, the greater the likelihood it will succeed in meeting those needs.

4. Developing state-of-the-art distribution capabilities.

Armed with a detailed understanding of the customer’s delivery system needs, best-practice companies then:

Align their delivery strategies with the needs of specific customer segments.
Integrate internally the delivery process with other functions like marketing, product development, sales and customer service.
Looks for partners who can provide additional expertise to assist with the requisite logistics.
Continue to evaluate the performance of the delivery system on an ongoing basis, particularly watching for opportunities to generate greater efficiencies through streamlining or other methods.

By paying attention to the small details, best-practice companies solidify and build their relationship to the customer.

Key Thoughts

‘‘We’ve designed an ideal for customer service, and we’ve developed to fit that ideal. Instead of looking at a customer complaint and thinking, “Oh no, here’s another jerk”, we should think, “What can we learn from this, and how can we use it to serve this customer better or make a better product”?’’ — Nino Vella, CEO, New Pig Corporation

‘‘In today’s competitive environment, customers look beyond the simple formation of alliances with a strategic supplier; instead, customers seek the supplier who has the greatest stake in their mutual success.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘Right from the start, we defined customer service, warehousing, fulfillment and MIS as functions that supported marketing and the customer, not necessarily finance or operations.’’ — Nino Vella, CEO, New Pig Corporation

‘‘Perhaps the key element that defines a good business relationship is trust. Best-practice companies seem to capitalize on the major benefit of strong relationships. A strong relationship results in trust, which further results in better communication — the lifeblood of world-class process performance.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘With us, a customer gets an extraordinary experience and a superb product. We differentiate ourselves from our competitors by going that extra mile, whether it’s by keeping our warehouse fully stocked, by servicing customers with the technical support they need or by responding individually to any customer’s emergency, even if the call comes late at night.’’ — Carl deCaspers, manager of public relations, New Pig Corporation

Process 5 : Provide exceptional and immediate customer service

Best-practice companies deliver exceptional levels of customer service by:
1. Demonstrating to customers their needs are being met.
2. Allocating responsibility to one person from start to end.
3. Using customer feedback productively to anticipate.
4. Raising customer expectations of complaint resolution.
5. Empowering employees to handle complaints efficiently.

Savvy companies know the most direct way to improve their operations will always be highlighted by customer complaints.

Therefore, they actively seek complaints and handle them thoroughly.

The sub-processes involved are:
1. Demonstrating to customers their needs are being met.
Best practice companies understand the frustration of being unable to speak to someone about a complaint. Therefore, they make available ‘‘points-of-contact’’ — humans rather than automated systems.

In essence, the point-of-contact provides one-stop convenience for the airing of complaints. These people need to be well trained, so they can handle inquiries courteously and knowledgeably. Ideally, the points-of-contact should be empowered with authority to expedite the resolution of complaints on the spot and in real time.

2. Allocating responsibility to one person from start to end.
There’s nothing more frustrating than being handed off from one person to another within the organization. At the very least, the retelling of a customer complaint story to a fresh set of ears hardens the resolve of the customer.

Therefore, whomever the best-practice company allocates responsibility for solving customer complaints must have sufficient cross-functional knowledge and training to be useful. The best-case is for this person to handle the complaint personally from beginning to end. Getting back to the customer with additional information as required is okay — so long as the personal relationship between the customer and the service representative is strengthened and built.

3. Using customer feedback productively to anticipate.
Best-practice companies don’t look at complaints as one-off occurrences. They create a database and log the complaints. This will help the company identify weak spots in its overall product or service offering, and encourage the company to move to strengthen those areas.

The business principle involved here is that your customers know exactly what they don’t like and don’t understand. If you’re listening, customer complaints will show you how to become a world-class company.

Also, keep in mind there are other benefits as well. Generally speaking, it’s going to be cheaper to keep a loyal existing customer than to go out and find a new customer. Therefore, enhancing the customer’s experience is the ultimate win-win business situation for everyone involved in the transaction. Besides which — it’s a great business philosophy.

4. Raising customer expectations of complaint resolution.
Everything a best-practice company does is infused with excellence and a focus on customer satisfaction. Companies that handle complaints promptly, seamlessly and directly reinforce that perception still further.

Customers put a lot of credibility into the way complaints are handled. Best-practice companies know that, and are prepared to perform this function with distinction.

5. Empowering employees to handle complaints efficiently.
The key factors in the resolution of disputes are promptness and efficiency. Every resource of the company should be harnessed to ensure the people who assume responsibility for handling complaints can do so well.

Key Thoughts

‘‘We’ve found that we needed to hear more complaints to be able to understand what’s on the customer’s mind. Only then could we fix problems as our customers expected.’’ — Ned Lautenbach, senior vice president of sales and distribution, IBM

‘‘The new business philosophy seems to be: If you think it ain’t broke, you probably haven’t looked closely enough, and it’s better to find out that the axle is cracked before you start out on a cross country tour.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘You can dream, create, design and build the most beautiful place in the world, but it requires people to make it a reality.’’ — Walt Disney

‘‘The heart and soul of the whole issue to get to a high level of quality service is to take care of your people. Whether they’re directly delivering a service or they’re backstage boxing it up or folding it, they’re doing something to get it ready to deliver to the customer.’’ — Valerie Oberle, manager of customer satisfaction, The Walt Disney Company

‘‘Walt Disney’s own philosophy on business was simple: Give the public everything you can give them. Keep the place as clean as you can, keep it friendly and make it a fun place to be.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

‘‘While best-practices focuses on customer processes — particularly how a best-practice company understands the needs of those customers, captures new ones and develops loyalty — the customer relationship is only one in a vast network of a company’s business processes and practices. How an organization attracts, wins and serves its customers affects how it recruits, trains and rewards its employees. How it manages information related not just to creating customer profiles but also to optimizing business functions on a global scale affects how that company satisfies stakeholders and owners. How it manages its financial and physical resources has a lasting impact on how it positions itself for further growth. And how the company manages its relationship with the community at large has an important effect on how well it manages improvements and changes within its own walls. An unwavering focus on customers can help put any business on the lath to success.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

Process 6 : Manage productively the information gathered about customers

Best-practice companies turn what they know about customers into a sustainable competitive advantage by:
1. Designing and building customer profiles.
2. Systematically collecting information about preferences.
3. Distributing customer information throughout the company.
4. Analyzing how customers actually use the products.
5. Measuring customer satisfaction internally and externally.

World-class companies use their existing customers to point the way to even greater success in the future.

To achieve this, these sub-processes are involved:
1. Designing and building customer profiles.

By understanding what makes customers tick, best-practice companies develop specific marketing offers that will appeal to similar customers with laser like precision. The larger the amount of information available, the more successful this type of marketing becomes.

Information about purchasing patterns and preferences also has another important effect — the company can distinguish which customers will be most profitable and which customers will have only a marginal impact on the bottom line.

Detailed customer profiles allow the company to fine-tune its financial performance.

2. Systematically collecting information about preferences.
The people most qualified to identify which preferences are selling well and which are not are the front-line service people. Best-practice companies build communication systems by which these people’s observations can be spread throughout the organization.

In essence, every front-line employee should be considered a listening post to the world of the consumer.

3. Distributing customer information throughout the company.

The real value of information about customer preferences will only be realized if technology is in place whereby:

1. Employee observations are recorded.

2. These observations are communicated widely.

Many information technology systems make these functions within reach. Best-practice companies take advantage of these systems intelligently and consistently.

4. Analyzing how customers actually use the products.
The history of business is full of examples of products that are used in ways the original developers never even anticipated. Savvy companies are aware of this — and they analyze in detail the utilization or even misuse of their products or services.

By analyzing what people do in practice, the company may realize customers need to be educated about the capabilities of the product. Alternatively, the company may choose to redesign the product to align with the way people are tending to use it at present. Both are good options that are only available as a result of the company collecting knowledge about its customers. (Which therefore means competitors won’t have the same insights).

5. Measuring customer satisfaction internally and externally.
Best-practice companies measure customer satisfaction consistently and reliably. These measures may be internal (audits, sales growth, revenue growth) or external (customer surveys, industry analysis).

The most widely adopted customer satisfaction measures for best-practice companies are:

  • Value-in-use — whether the products are reliable, easy-to-use and suited to the job.
  • Critical incidents — whether every point of direct contact between the company and the customer was a positive or a negative experience for the customer.
  • Customer relationships — whether long-term value is being created or lost over a succession of interactions with the company.

All best practice companies develop clear and precise definitions of their expectations for customer satisfaction — even if it is something as straightforward as ‘‘creating a delighted customer by exceeding their expectations’’.

Key Thoughts

‘‘The Ritz-Carlton experience enlivens the senses, instills well-being and fulfills even the unexpected wishes and needs of our guests.’’ — Credo of the Ritz-Carlton Hotel Group

‘‘In today’s business world, sales and profits are essential if one wants to stay in business, but to be truly competitive in today’s market, an organization looks to other key measures of success. We are convinced that one of the most important of these measures is  customer satisfaction and its end result, loyalty. Satisfaction rests primarily on the degree to which customers are involved in the entire ownership experience.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman
‘‘Our study of best-practice companies suggests that the superior way to reach the goal of complete customer focus and satisfaction is to study the actions currently being undertaken by companies of many different sizes that are flourishing in many different industries. By examining the history and refinement of each universal process, managers at any company in any industry can discover innovative and effective ways of solving their current business problems and responding to their customers’ needs.’’ — Robert Hiebeler, Thomas Kelly & Charles Ketteman

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