Conceptualizing the Customer

Prof Michael Munkumba

Digitally signed by Michael Munkumba DN: CN = Michael Munkumba, C = US, O = ESAMI Date: 2007.03.14 14:22:49 +03'00'

Michael Munkumba

The Customer Platinum Rule:

Do unto the customers as they Would have you do unto them

Quotes

This is the age of the Never Satisfied Customer

Regis McKenna
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Quotes
The purpose of a business is to create and to keep customers (Peter Drucker , management consultant) Customers are assets to be valued, developed and retained (Valarie & Bitner 2003)

Quotes
Rules of Radical Marketing
Love + Respect Your Customers! Hire only Passionate Missionaries! Create a Community of Customers! Celebrate Craziness! Be insanely True to the Brand!
Sam Hill & Glenn Rifkin, Radical Marketing (e.g., Harley, Virgin, The Dead, HBS, NBA)

Context
Todays competitive environment is characterized by

More sophisticated customers Product proliferation Shorter product development times & life cycles Rapid changes in technology More customized products Customers seeking emotional engagement

Module Contents
The Customer paradigm shift The shift drivers CRM The 10 commandments of CS Defining a customer Moments of truth Best Practice
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Customer paradigm shift

The shift occurred around 1980 Until then, the organisation was central, the customer peripheral The Focus was purely internal Organisations were highly centralised Then Tom Peters, Walterman, Drucker and others started writing revolutionary philosophies

Sh ift

CUSTOMERS

Th e

TO

Frontline employees Managers Top Mgt

FROM
Top Mgt Managers Frontline employees CUSTOMERS
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Shift Drivers
Management Literature : e.g. Peters Books Uncertainty due to changing environment Competition due to liberalisation Changing tastes and customer assertiveness

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Customer Relationship Management- CRM

CRM can be defined as:
increasing the number of profitable customers and retaining those customers; with the purpose of maximizing their contribution to the institutions profit

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CRM
Relationship management is a paradigm shift away from an acquisitions/transactions focus towards a retention/relationship focus with the goal of:
acquiring, satisfying, retaining and increasing good customers

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CRM
CRM focuses on both human and commercial values CRM follows the following phases of customer engagement:
informing: this is what we are doing Involving to: What do you think? Participation: What should we do?

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The New Paradigm

Customer lock - on Flatter customer focussed structures Quality consciousness Listening to the customer Innovation Empowerment of the front-liners Innovation and flexibility backstopping systems
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Customer Service
Customer service has been defined as: everything an institution does and everything it doesnt do to create personally pleasing memorable interactions (PPMI) with the companys many constituencies (Karr & Blohowiak 1998)

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The 10 commandments of Customer Service

1 Ask customers what they want and give them 2 Have systems that guarantee right, first time 3 Under-promise, over-deliver 4 When the customer asks the answer is always yes 5 Empower employees to handle complaints 6 Cherish complaints 7 Measure everything 8 Pay people like partners 9 Show people respect 10 Japanese them!
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Who is a Customer?
There are internal and external customers There are trapped customers There are apostles There are members There are terrorists and defectors Delighted, wowed

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Complaining Customers
Only 4% of the customers complain 96% vote with their feet 68% quit because of an attitude of indifference by the owner, manager or some employee A dissatisfied customer will tell 8 to 10 others 1 in 5 will tell 20

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Complaining customers
95% will come back if the response is immediate It costs 6 times more to win a customer than to retain one Customer focussed organisations average 12% returns with market share growth of 6% p.a.

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Managing Customer Complaints

1 Apologise regardless 2 Restate the complaint to ensure you understand 3 Empathise with the customer and appreciate their bringing the problem to you 4 Restitution. Do what ever it takes to satisfy the customer 5 Follow up. Ensure all customers are satisfied before they leave

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Moments of Truth

An opportunity for customers to make judgement about the organisation

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Best Practice
Toyota: Dont just meet customer needs, exceed them Dont just answer questions, anticipate them Dont just do good work, provide an unparalleled service Dont just work, work smarter I.e. team through teams Dont just be courteous, make every customer feel special Pay attention to detail Fedex : 100 % satisfied customer at the end of each transaction
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Best Practiceother examples

1. 2. 3. 4. KQ and the seat mix up, Nairobi SAA and the missed flight, Dar Hotel Carlton? And the housekeeping staff Kilaguni Lodge

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Govt. of Singapore

3 Desired Outcomes
Delighted Customers
e-Services Advantage

Connected Citizens
Supporting Active Citizenry

Networked Government
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