Written By: Lynelle Wisneski
Graduate of University of Manitoba,
Economics Dept.
Originally Published in the April 1992
issue of The Outfitter Magazine.

Customer Satisfaction Vital for Customer Loyalty

In recent years, a “quality revolution” has hit the North American industrial sector with manufacturing companies leading the way. Very few service-oriented companies, however, focus on quality. The few that do, become leaders in their fields.

Productivity in the service sector increased less than one per cent for the entire decade of the 1980’s, compared to an increase of almost 4% every year for the manufacturing sector. Manufacturing has faced such stiff competition (foreign and otherwise) that companies have been forced to increase their productivity for survival reasons alone. In the lean nineties, all sectors of the economy will be faced with this survival reality.

Service-oriented companies employ 85% of all Americans and Canadians. The lack of productivity growth in such a large sector is hurting our economy. More of these companies could benefit from improving their quality of service.

It is relatively easy to measure aspects of quality (such as defects) in manufacturing because it deals with tangible goods. However, it is much more difficult to measure these things in the service industry. What exactly does quality mean for a service-oriented business?

The process of providing a service can be measured just like the process of manufacturing a product. The end product of a service is a satisfied customer. The measure of quality used by progressive service companies is customer loyalty: do their customers return?

Repeat customers tend to spend much more and you do not have to spend nearly as much time or money marketing to them. Loyal clients usually refer family and friends. Keeping your existing customers satisfied is the most important part of building a reputation for quality.

Large quality-oriented service companies focus on two key areas to help create customer loyalty. First is anticipating the customers’ wants and needs and second is empowering your employees.

ANTICIPATE THE CUSTOMERS WANTS AND NEEDS

Anticipate what your customer will desire and provide this to him/her every time. This involves knowing exactly who your customer is and what his/her tastes and preferences are. Most successful companies keep large databases on clients, including customer purchases and other information. This also involves anticipating any problems before they occur. As an example, Disneyland produces service manuals that try to anticipate every conceivable situation and then tell employees exactly how they should respond to each.

Never wait to fix something until a customer complains. Research has shown that most customers will not complain, they will just spend their money elsewhere the next time. When a customer does complain, a little extra effort to keep that customer happy will pay off in customer loyalty. Successful companies have found that fixing an existing customer’s problem is a much better investment than having to spend money on marketing to attract new customers. Record all complaints and then adjust your operations in the future to fit the wants and needs of customers.

EMPOWER EACH EMPLOYEE

When a customer goes to a hotel or resort he/she usually deals with employees at the bottom of the organization (desk clerk, waiter, guide). These “front line” people represent the company to that customer. Employees with day-to-day contact with customers are given more authority to satisfy customers at quality-oriented companies. As Business Week magazine reports, “Marriot Corp. is putting some 70,000 hotel workers through ‘empowerment training’, which gives them wide latitude to step outside their normal jobs and solve guests’ problems. At Satisfaction Guaranteed Eateries, which operates five restaurants in Seattle, any employee from the busboy up can order free drinks or even pick up the check if that’s what it takes to placate a disgruntled dinner guest.”

This involves hiring, training and keeping the right people, which is costly, but essential for a service company to do. When Toronto-based Four Season Hotels Inc., opened its Los Angeles hotel in 1987, 14,000 candidates were interviewed for 350 job openings.

It is important for companies of any size to learn from success stories in their own industry. Large companies spend millions of dollars on market research and quality improvement programs to gain a competitive edge. We, as small businesses, can look at their results and apply what is useful to our own operations.

Quality will be a big issue in the nineties, as consumers will be unwilling to settle for anything but the best. Large service companies have defined quality in terms of customer satisfaction and client retention. Small businesses must use the same techniques as these companies to create customer loyalty. Hopefully, then, the service sector will improve in the 1990’s as much as manufacturing has in the 1980’s.

Share

NOTO 386 Algonquin Avenue, North Bay, ON P1B 4W3 • T 705.472.5552 • F 705.472.0621 • info@noto.net
Website designed by Sofa Communications