Recent research has highlighted that many customers move to a different supplier because there is a feeling that they are being taken for granted.  Advertising that highlights special value offers only open to new customers may be attractive, but the trend is now towards looking after existing customers just as well as new ones.  

The number of people switching mortgage suppliers also highlights that many of the offers may be very good at the start but after about two years revert to providing the supplier with a good deal rather than the customer.  The inference obviously is that the customer would not have the energy or motivation to switch and would pay for this lazy attitude (in some cases this is true) but the modern customer now seems more willing and able to contemplate a switch.  This trait is apparent in both the Business to Consumer (B2C) and Business to Business (B2B) sectors, which means that a shift in thinking has to take place: not only to offer the customer long term value for money (with a focus on the total cost of ownership), but also, and most importantly, be prepared to continually and proactively improve the service and offering to the customer, which requires much more thought than just providing a productive cost-effective solution.

One of the reasons why customer churn (low levels of customer loyalty) has become a problem for many businesses is caused by their inability to identify accurately the value they provide an individual or segment of customers, and the value that they are provided in return.  Research undertaken by Service Management magazine (see page xx) highlighted that the vast majority - over 75% - said that the primary goals for their service operation was to improve competitiveness, increase loyalty and reduce churn while supporting equipment sales, but unless they know the value they provide, and the value of a business to them, they have no way of determining the actions they need to take to achieve their aims.

In many service operations today, there is still an attitude that if the customer doesn't complain, even if the business senses the service is below standard, no attempt at improvement will be made because the customer has not demanded redress.  It is this mentality, however which results in many customers voting with their feet and leaving without explanation, or if pushed to give a reason, ubiquitously comment "The Price", which in turn led companies to try and price-cut themselves out of a problem rather than address underlying issues; now there is little room to price-cut.

Only 4% of customers ever complain, and 91% of the other 96% just go away, because they feel that complaining will not do them any good, or they haven't the time or the energy.  Instead, they simply do not make use of the supplier and walk away.   Fortunately most customers don't walk immediately; because they may find it difficult to find a replacement; or it is too much hassle; or they discover the competition is no better or not a reasonable alternative; or they are unwilling to deviate from routine; and so on.  An example of this used to be those who never moved their bank accounts, despite provocation and irritation, however that situation is changing dramatically and a growing proportion of customers will contemplate a move, even for a point of principle.

If, however, the right measurements are in place then a business can position itself to address issues when they are presented, before they become problems.  Owning up to an error, so that the customer who does not complain will still have a positive feedback, fits in well with a strategy of going above and beyond the expected performance.  This also provides a powerful message for the staff as well as the customer, about the attitude of the business towards customer service.

This situation is evolving even further as we approach a position of zero tolerance of failure, and become more and more accustomed to things not going wrong.  This trend has accelerated to the extent that even if a complaint is well resolved the customer may yet leave, as a single failure can now result in churn. 

Customer-focused companies with performance measurements accurate enough to lead their decision-making may promise a specific response time, and if they fail to respond in that time, send the customer a letter of apology, whether the customer has complained or not.  Many might see that as fixing what isn't broken, however, most businesses do not know if they have disappointed their customer, even if there is a high probability that this is the case. 

Innovative customer-responsive businesses will anticipate problems - because they can. There will be a complete balanced scorecard (not just efficiency measures but effectiveness measures) of each individual call-out by fault/by engineer/by customer/by process, and a record of responses to each outcome of every individual service cycle, from call received to call closed.

Research has highlighted that people evaluate themselves by their intentions but measure others by their actions, and to seriously think in this modern age that a customer will not notice poor service is foolhardy in the extreme, and to admit to not setting and measuring standards isn't professionally credible either.

Admitting to letting someone down, even if no complaint was received signifies high standards and integrity.  An unacknowledged fault may stem from ignorance or a vain hope that it has not been noticed, neither excuse very reassuring for the customer.  A supplier owning up to failure before the customer notices gives a very strong message of willingness to improve and a preparedness to set improving standards. Many might argue that this is unnecessary, as the only true requirement is to be better than competitors in order to win the customer.  The opposing school of thought will insist that setting standards is just as important, as this provides a continual stretch target to the competition, who will discover that their processes are not designed to continually respond to the pressure, and as a result will see their costs of performance-delivery rise. 

Gaps and cracks in performance are beginning to appear with companies who were capable of expounding marketing hype regarding customer service, but without the processes in place to deliver service have found it difficult to cope with increasing volumes and cost pressures.

Without customer-focused measures, there is no way of knowing that the customer has experienced any problems.  Measures that focus around customer satisfaction are obviously very important to get some idea of customer opinions but, as many companies are finding out to their cost, subjective data is not necessarily a good measure of retention or advocacy.

In research undertaken in 2004 of nearly 200 European companies it was revealed that less than 2/3 of companies measure repeat business and when it comes to referrals, this figure falls to just over a 1/3.  Lack of measurement is obviously endemic in the industry, with the result that these companies do not know if they are winning or loosing customers, this must put in question any bold statements about customer satisfaction and service delivery performance, simply because they don't know if they are delivering correctly.  

Many businesses seem to rely on the customer to tell them when they are not performing, which is rather like measuring driving skill by the number of times horns are tooted or lights are flashed by other motorists.

A classic example in businesses is the measure of calls delivered within Service Level Agreement (SLA).  In many cases the engineer or the scheduler will agree with the customer to re-schedule SLAs to supposedly fit in with the customer, whereas in reality the customer is accommodating the engineer.  This is acceptable up to a point, but can result in an apparently on target measure, hiding a significant problem.  This type of situation is not isolated and research would suggest that similar occurrences are being explained away as "demanding customers", and not poor process and inaccurate measurements, which is the reality.

Putting measures in place, and focusing on the customer is critical to attaining long-term loyally amongst customers and staff.    Understanding customer needs is key; patently any supplier can identify needs and desires and then satisfy them, but there must be a measure in place that makes sure the engineer is working with the business to satisfy the customer in a controlled, process-driven way, not in a one-off individual mode that will change every time, and be difficult to replicate with certainty.  This used to be called empowering the engineer to work round the problem and really should only be seen as a last resort not standard practice.

The challenge is to differentiate your service from the competitors.  Having great staff helps and keeping great staff is an even better way.  Giving your staff satisfactory reasons to stay and a framework of effective processes to work within will contribute to long-term customer and staff loyalty. 

If customer needs have been accurately identified, the next exercise is to closely monitor, and measure delivery to those needs, and be prepared to challenge internal performance to be better than the competitors.  Processes of effective measurement in place will afford close control of the service delivered, so that continual improvement can be achieved, to gradually and continually ratchet up the performance above that of the competitors in a cost-effective customer-focused way.  With the right measures in place, the business can assess the impact of actions, and utilise feedback to decide quickly what is working and what is not, and why. 

The ultimate aim is to have measures that are traceable all the way through the business, with a strict correlation between what is measured and the strategic way forward of the business, to ensure that performance and rewards are strictly relevant to each other.