Choosing to become more customer-oriented is a strategic decision at company level
Trends and tips for entrepreneurs – Extra services and customer orientation
Prof. dr. Kurt Verweire is an expert in supporting companies who struggle with their strategy formulation and implementation. His motto is to make strategy as concrete as possible. In June 2014 his new book ‘Strategy Implementation’ was published, in which he explains to companies what is takes to create a competitive advantage.
Trend 1: Be consistent
Today we are all confronted with more competition and more difficulties on the market. Competitors try to take over market shares and customers have become more empowered, putting more pressure on the prices of products and services. Consequently, offering separate products or services is no longer profitable. Companies are therefore trying to offer extra services, thus striving for long-term relationships with customers. However, offering such “solutions” is not simple and often fails to deliver the desired results.
Companies considering offering extra services and solutions to increase their customer orientation should understand that this is truly a strategic decision at company level. This means everyone should be on board, and it should not be an initiative by a limited group (of salespeople) within the organisation. Moreover, companies should ask themselves who would benefit from these extra services and who wouldn’t. These choices should be discussed in advance and all members of the organisation should be clearly informed.
- Explain to the entire organisation why extra services are important for customers. Provide a strategic explanation.
- Who are the customers who can benefit from extra services? “Everybody”? Then keep in mind that the costs would often also be higher, which could compromise the company’s profitability.
- Discuss with every department what offering extra services would truly entail, as it does not only concern the sales department.
Trend 2: Determine which extra services to offer in advance and how far to go
“Solution” is a word with many definitions. A solution in the financial sector is totally different from a solution for a retailer like Carrefour or Delhaize. We have developed a “service continuum” that defines various levels of extra services. An organisation should determine what the minimum service is it wants to offer. Often different shops or offices, as well as staff members, have their own interpretation of the concept “solution” or “extra service”, which results in a lack of harmonisation.
Organisations can offer “extra services” to make their customers’ lives easier and to distinguish themselves from their competitors. That is a first level of “solutions”. Zappos, Zalando’s successful American counterpart, is a good example of a company known for launching extra services. Product delivery is free and there are no special rules for customers, who can keep the clothes or shoes purchased for 365 days. If they are not happy they can send everything back and expect a full refund within a week.
Companies can take it one step further by offering “advice”, putting their know-how at the customers’ disposal. In this case, the company goes a step further than merely offering a set of products. It is seen as an expert in the field, and customers can use the company’s expertise. Hendrix is an animal feed business that not only sells animal feed, but also provides agricultural, financial and economic advice to its best customers.
A third step when offering “solutions” is for the company to not only offer advice but also to promise customers their problems will be solved. This is referred to as “customer process management” and means that companies turn their customers’ problems into a business venture. Insurance broker Aon offered several major clients a risk management service against a fixed fee, assuming all responsibilities. Another possibility is to ask for payment once the customer has actually been assisted. This is referred to as “”no-win-no-fee”, a well-known principle.
- Ensure your basic product or service is good. Extra services or solutions can only offer a competitive advantage if your basic product is good enough.
- Decide how far you want to go in offering solutions. Are you thinking of offering “extra services”? If so, what exactly does that mean?
- Or are you opting for a solution that includes advice? And what expertise do you want to share with your customers? Will the advice be offered for free or against payment?
- Or are you launching “customer process management”? What does it concretely entail for customers?
Trend 3: Rally the entire organisation around the extra services
Offering services is a significant decision and requires the entire organisation to become involved in the process. After all, salespeople and service providers need to have the necessary knowledge and expertise to offer these services. Sometimes this requires attracting new staff, which can create tension among the original salespeople. Are you organising training sessions for your staff to teach them the required skills?
Another element to consider is the way specific customer information should be stored. As the organisation grows, more needs to be formalised. When offering extra services leads to a competitive advantage the company should definitely consider purchasing an efficient CRM system.
And how are you planning to monitor customer satisfaction? Will it be measured systematically? After each repair or replacement of a car window Carglass® makes it a point to ask customers how they would rate the service offered. The company surveys some 80,000 customers a year, creating a dynamic approach, resulting in increasingly better performance.
- Do you have the right people to offer extra services and expertise in a credible manner?
- Do you have a CRM system that can store relevant customer information efficiently?
- Do you measure your customers’ level of satisfaction? And how do you process this information?