Customer Service: Who Is Your Customer?

Customer Service is easier to comprehend if we believe that the universal concept of good manners should also be considered common business sense.

When you look at it, organizations are made up of people.

Ultimately, the Customer even if your business documents say it's a corporation will always end up being a human being.

Have you ever seen a corporation as a machine?

We must therefore understand what we are really offering. We must know who are we doing all these for.

Who Is Your Customer?

When identifying Customers from the Customer Service perspective, you are only looking at two (2) major kinds: Internal and External Customers.

People in your organization who need your products or services to get their jobs done are your Internal Customers.

On the other hand, people or organizations outside yours who require and buy your product or service to satisfy a need or solve a problem are your External Customers.

You need to know the distinction between the two for purposes of managing processes and measuring results.

Both require respective Customer satisfaction metrics in some way to measure the quality of service or product delivery.

Your concern for Internal Customers is cost-driven while for External Customers it is revenue and profit-margin-driven.

The approaches to communication and service delivery will be different.

The proximity of Internal Customers to you makes it relatively easy to deliver Internal Customer service.

External Customers however will require different media or channels to communicate to you.

You will have no way to determine where your External Customers are, physically and in mind, at any given moment to specifically trigger communication.

If you are working for a retailing organization selling microcomputers and their accessories and providing maintenance service, you will have Internal and External Customers.

Your Accounting Department may have people who will be using PCs that will need your maintenance service.

It will be quite odd to tell accounting to go call your competitor for the service you already have in-house.

Your External Customer may be a company, individual or any organization using PCs that may need your services.

The quality of the delivery and the constitution of "good" Customer Service is hinged on the expectations of that Customer and the execution of the service.

Beyond the measurable results, the quality of the service or product is really based on how close we are to meeting and satisfying customer expectations.

Nurturing Relationship with Customers in the Face of Global Uncertainty

The financial crisis that swept the US and sent tremors to most of the European Union is definitely one of many global uncertainties we hope we never have to face but unfortunately has now entered our front doors. 

There is no escaping this.

Those who are still in denial and have not planned contingencies will find themselves with a company with no more assets or working for another owner.

During the Asian crisis, the only thing we could do was prepare for the worse. 

I was working for an IT company providing maintenance services to computer network systems. 

We had to get down to the painful process of re-assessing what we really have in terms of receivables, projected sales, and current cash flows. 

Managing a marketing group at that time was so painful because I was there witnessing and causing a lot of good people to leave.

I trained these people and some may have to use what we have taught them somewhere else. 

The Asian crisis hit us at a time when most of our projections were already carved in stone. 

Dropping brands and replacing others was such an emotionally loaded process for some of my salespeople who have built their relationships and competence around a certain product brand.

Even before that crisis, I already knew that the only way we can assure constant profitability and sustainability was to nurture a critical mass of customers.

We have to do the math.

We have to calculate to a certain degree of confidence how much each of our customers was contributing to our annual revenues: which ones provided the highest margins and which ones were the least costly to serve.

It was a learning process for both Marketing and Technical Support teams learning that less than 20% of our more than 300 customers under contract yielded 80% of our revenue in the maintenance service category.

Maintenance services contribute 40% of our overall revenue every year.

It also contributes the most profit margin after the first year of the contract.

We ranked and grouped them in such a way that those who constitute 80% of our revenues were now assigned to the most dependable Account Executives.

No account executive was supposed to handle more than 10 of these accounts.

I handled the most difficult accounts (accounts with mission-critical servers).

It was a tedious process of looking into each of our accounts and doing the following:

• Updated their profiles.
• Determined the impact of the crisis on each of our customers (ability to acquire, expand, continue maintenance, recruit new people)
• Current products and services we have delivered and projected to be delivered to the customer
• Impact of the crisis on our own products and services and our ability to deliver them
• Impact on pending orders (delivery period, price, discounts, etc.)

It was a top priority to start doing courtesy visits instead of cutting down on the visits or customer calls.

In an economic crisis, sticking to the basics can force you to consider what you totally ignored in more complacent times--your existing customers.

You will start getting the most simple and elementary notes on customer service: Using basic customer service strategy for customer acquisition and retention.

Let's get back to basics about acknowledging who are your customers.

When identifying Customers in the Customer Service perspective, you are only looking at two (2) major kinds: Internal and External Customers.

People in your organization who need your products or services to get their jobs done are your Internal Customers.

On the other hand, people or organizations outside yours who require and buy your product or service to satisfy a need or solve a problem are your External Customers.

You need to know the distinction between the two for purposes of managing processes and measuring results.

Both require respective Customer satisfaction metrics in some way to measure the quality of service or product delivery.

Your concern for Internal Customers is cost-driven while for External Customers it is revenue and profit-margin-driven.

The approaches to communication and service delivery will be different.

The proximity of Internal Customers to you makes it relatively easy to deliver Internal Customer service.

External Customers however will require different media or channels to communicate to you.

You will have no way to determine where your External Customers are, physically and in mind, at any given moment to specifically trigger communication.

If you are working for a retailing organization selling microcomputers and their accessories and providing maintenance service, you will have Internal and External Customers.

Your Accounting Department may have people who will be using PCs that will need your maintenance service.

It will be quite odd to tell accounting to go call your competitor for the service you already have in-house.

Your External Customer may be a company, individual or any organization using PCs that may need your services.

The quality of the delivery and the constitution of "good" Customer Service is hinged on the expectations of that Customer and execution of service.

Beyond the measurable results, the quality of the service or product is really based on how close we are to meeting and satisfying customer expectations.

Customer Service Myth: Customer Service is for the Big Boys

Every time I have a casual talk with friends and even former clients about business, the conversation tends to drift towards the challenges of the markets and getting customers (or keeping them). Since customers are drivers of revenues in any business regardless of business models, quite naturally, it is a topic of interest to small business owners.

The usual concern is the question of costs and investment in any customer service initiative. The usual conclusion also is that the running costs and investments made on customer service make small enterprise owners perceive that customer service is the big boys’ game. My conclusion: It’s a Myth.

Most think that on average, interaction with the customer using sleek and expensive collaterals wins the day. There’s a tendency to spend on really expensive advertising and marketing materials to capture and keep customers. Unless you intend to be a national or global brand, small businesses can make do with the least expensive and often times more effective customer service programs.

Most enterprises (and I mean 60% of the enterprises existing today) will not grow to be national or global brands. You don’t need me for you to know this statistic. Just go to your local county or city and you will find out that a few businesses that register for their business permits will end up being a big brand five years after. What I am telling you is that “Customer Service” is not really exclusive for the big boys.

Customer Service is simply for enterprises or businesses who want to stay in the business of serving their customers. It doesn’t matter if it is a business with a 5,000 capitalization or a million dollars of capitalization, all businesses need customers and all customers want to be served in a manner they believe they deserve.

Think about this: All businesses have customers. The better they know them the better they can serve them. All businesses must understand how their products or services work or how it satisfies a customer's need.

Whether you’re an average guy or a genius, you will always end up adopting a process to make sure you deliver the product or service that satisfies your customer needs. Of course to deliver and consistently have the ability to deliver your products and services you need to have the right tools. You need technology and even the most mundane things like calculators and cash registers or a cheap communication tool like email.

Entrepreneurs or business owners may pride themselves on the ability to navigate around competition and the markets, but if you cannot afford risks it means you will have to plan. A business plan is important yet very few actually rely on a business plan to grow their business. Once you have confidence in your plan, you will need a team of very good people to run with the plan and make the business work.

Bottom line: Customer Service is not a complex or esoteric concept. It is just like any part of business made up of a manageable chunk of activities once organized can give you measurable and achievable results. I do believe that any business of whatever size will have to understand the six dimensions of customer service, namely: The Customer, The Service Concept, The Service Process, The Tools, The Business Plan, and The Team.
 

Why Do We Always Do The Basic Things Wrong?

While helping do an inventory of computer accessories and electronic gadgets in a retailing outfit, I can't help but ask the people manning the store how they keep track of their customers.

Guess what? They don't!

They don't keep track of where they are getting their sales: What product and who buys them? The last time I was in retailing was in 1998 selling the very exact things but I carried more than 50 brands with the likes of Seagate, IBM, Hayes, Microsoft, Lotus, Creative Labs, Intel, AMD, and a lot more.

I can't believe that in 2008, retailers are still doing a lot of things wrong. Well not exactly wrong, but they don't do the most basic things at all (at least to get the sales consistently coming).

Back when I was managing retailing operations more than 50% of our sales were from more than 30% of our repeat customers. Customers who buy more than two items or have bought the second time will always end up in our database together with information about what hardware or software they already have at home and at the office (in this order).

Eliciting this "basic" information from customers has been integrated into the "script" of counter sales associates so that even if we don't get a sale we always have at least 5 to 10 new names in our database on that day.

Basic sales training will tell you that it is harder to get a new customer than encouraging repeat sales from an old customer but most retailing organizations ignore this. It is amazing. 9 out of 10 counter sales personnel will not initiate on their own a sales campaign for existing customers and more than half of retailing (especially small businesses) do not have such a campaign as a matter of policy.

If you want to test this, just walk into a computer store or even a hobby shop. You will most likely leave the store without the store clerk ever asking you about what you already have or how to get in touch with you about what you may need in the future.

Don't ask me if I tried it. I bought books, a new TV, a DVD player, a video game player, DVD rewritable discs, a headphone set, 2 pairs of shoes, a file box, a knapsack, a LED flashlight, binders, and more since January of this year and not a single salesperson or clerk ever ask me anything.

You don't really need much to get basic information from your customers. I designed a form that can be printed on letter-size paper (four forms on one side). The form keeps the information about the customer's full name, phone, email, address (if you're lucky because some are not just concerned about security they just find filling up forms tedious like me) or even mobile phone numbers.

To encourage them to give information, I usually tell them that they get to be invited to free seminars sponsored by our partners and on some special occasions I get to give them freebies from our partners.

I also created a Microsoft Excel template to compile all of this information so that later on I can easily integrate that into mail merge or even a fax campaign template.

If you really keep track after a year, you will be amazed at the pattern that will be seen after collating all the information including sales from each of your customers. You can even predict which week in a month they will most likely order again their supplies (I used to sell printer paper and ink).

I like to hear the expression "You called me just in time!" from customers every time my telemarketers make their daily calls.

In my next blog, I will show how a simple graph in Microsoft Excel helps me advise a friend not to close shop just because customer traffic is not consistent in their new store location in the same shopping mall.