Who is a Customer?
A customer (also known as a client, buyer, or purchaser) is the recipient of a good, service, product, or idea, obtained from a seller, vendor, or supplier for a monetary or other valuable consideration.
Table of Content
Customers are generally categorized into two types:
- An intermediate customer or trade customer (more informally: “the trade”) who is adealer that purchases goods for re-sale.
- An ultimate customer who does not in turn re-sell the things bought but either passesthem to the consumer or actually is the consumer.
A customer may or may not also be a consumer, but the two notions are distinct, even though the terms are commonly confused. A customer purchases goods; a consumer uses them. An ultimate customer may be a consumer as well, but just as equally may have purchased items for someone else to consume.
An intermediate customer is not a consumer at all. The situation is somewhat complicated in that ultimate customer of so-called industrial goods and services (who are entities such as government bodies, manufacturers, and educational and medical institutions) either themselves use up the goods and services that they buy or incorporate them into other finished products, and so are technically consumers, too.
However, they are rarely called that but are rather called industrial customers or business to business customers. Similarly, customers who buy services rather than goods are rarely called consumers.
In the world of customer service customers are categorized more often into two classes:
- An external customer of an organization is a customer who is not directly connected tothat organization.
- An internal customer is a customer who is directly connected to an organization, and isusually (but not necessarily) internal to the organization. Internal customers are usuallystakeholders, employees, or shareholders, but the definition also encompasses creditorsand external regulators.
Putting the Focus on Your Customers
Customer focus is an essential part of any successful business and that focus has to be integral to the culture of the business. Defining that culture is a key step in bringing it to life. New enterprises that create a customer-focused culture from scratch are invariably successful and there are some great examples of businesses that have done that.
It is always good if the business has been already aware of customer service from day one and has taken mindful action to safeguard and nurture the culture of the business as it has grown.
How does a positive business culture grow?
Often, as the business has grown, the focus has been on developing the product or service and the processes that support it and not the people. New recruits have been engaged to fulfil a function with little regard for the alignment of their attitude and personality with the original business aims.
Sometimes it can be that the expectations of customers have moved on and the business hasn’t adapted accordingly. The most common reaction is to put everyone in the business through training on customer service.
Training is essential for teaching how a system operates, product knowledge or how a call centre agent must include legally required statements if they operate in the finance sector. It can also set baseline standards for how customers are dealt with or how telephones are answered, but these are processes that contribute to the customer experience, they don’t define or differentiate it.
How to get back to your original business objectives?
Sometimes we have to rewind the clock and try to recall the basic aims and attitudes the business started with – what did you aim to do and how did you aim to do it? This will help in identifying the customer experience. If a business is really brave they can ask their employees what they want their customers to experience.
Be Customer Focus
Everybody talks about being customer-focused, but few people really know what it means.Here are four basic elements of customer focus:
- Constantly gather Information
- Get Embedded in their Strategy
- Emphasize Customer Retention
- Debrief after Customer Engagements
Constantly gather Information
The more you know about customers, the better you will be able to help out. Research each customer thoroughly and when you meet, ask questions that deepen your understanding. Such knowledge makes selling easier and increases the percentage of prospects that become customers.
Get Embedded in their Strategy
To build a deeper relationship with your customers, show them how your corporate strategy matches their needs. Rather than merely sell solutions, sell them on the idea that you can help them sell to their own customers. Think long-term relationships, rather than short-term sales goals, and you’ll grow as your customers grow.
Emphasize Customer Retention
It’s always easier and less expensive to sell to your existing customers than to cultivate new ones. In addition, a loyal customer base spreads the good word, providing referral sales that are easy to close.
Debrief after Customer Engagements
Your organization can’t learn from its mistakes or its successes if you aren’t willing to examine each customer engagement. Whenever you win or lose a sale, have everybody involved freely discuss what went right and what went wrong, without fear of reprisals or negative performance reviews.
This form of organisational honesty uncovers both strengths to apply in the future and the weaknesses that thwart your growth.
Customer Life Cycle
Customer life cycle management is creating, cultivating, and constantly improving your company’s relationship with your clients. It is crucial to implement customer life cycle management in today’s marketplace where the competition is severe for your customers. The customer lifecycle is made up of three core customer management processes: customer acquisition, customer retention and customer development.
The processes of customer retention and development are the focus of this chapter. The major strategic purpose of CRM is to manage, for-profit, a company’s relationships with customers through three stages of the customer lifecycle: customer acquisition, customer retention and customer development.
A customer retention strategy aims to keep a high proportion of valuable customers by reducing customer defections, and a customer development strategy aims to increase the value of those retained customers to the company.
Just as customer acquisition is focused on particular prospects, retention and development also focus on particular customers. Focus is necessary because not all customers are worth retaining and not all customers have the potential for development. We will deal with the issue of retention first, before turning to development. A number of important questions have to be answered when a company puts together a customer retention strategy.
We believe that these issues need to be carefully considered and programmed into a properly resourced customer retention plan. Many companies, perhaps as many as six out of ten, have no explicit customer retention plan in place.
Stages of Customer Life Cycle Management
Following are stages of customer life cycle management:
Reach
Your content must be properly marketed in places where people businesses your the market will find your information. This way they will become aware of your company’s existence.
Acquire
You have to understand your potential customer’s needs so you can provide a service they will want to purchase. Contact them directly with per communication in order to convert them from potential leads to paying customers.
Develop
After the first purchase, keep in touch and build a relationship with your customer. Ensure they are fully satisfied with their purchase.
Retain
One time satisfying their needs. Care for them and continue to cultivate a relationship with them. Do not be afraid to ask for feedback. They will be happy you care about their opinion and you can use them to feel a part of the process.
Advocacy
If your customers are truly satisfied, they will become brand advocates. This will spread awareness within their social circles and the cycle will come full cycle when you reach potential new customers due to your existing customers.
Since each customer is in their own unique place along this lifecycle, their needs are also unique. A one-size-fits-all approach to marketing will cost you time, money, and resources. In order to maximize each customer’s lifetime value, you need to understand each of these four stages, and where your customers fall in the lifecycle so you can move them towards or keep them at the top of the value curve represented in the image above.
If their value starts to decline, you can nudge them back up the curve to the optimal point – but only if you can speak to them the right way. Your customers are smart. They know they have provided you with a great deal of information about themselves.
Your messaging should prove that you know them, their purchasing trends, history, and preferences, otherwise you’re breaking your brand promise regarding the use of that personal information. Today’s buyers have very little patience for this kind of oversight.
Customer Service
Customer service can be defined as ‘a series of activities designed to enhance the level of customer satisfaction the feeling that a product or service has met customer expectations.’
One example is a famous hotel group who see their mission as, “Ladies and Gentlemen serving Ladies and Gentlemen, in order to provide the finest personal service and facilities for our guests. Detail descriptions of the nature of customer services can be summarized in the following five dimensions:
Integrated
Tourists travel because they want to enjoy new experiences and the associated feelings which they won’t come across in their daily life. Through customer service, tourism and hospitality-related industry provide tourists with integrated services, e.g. pre-trip services such as inquiry and booking, and services during the trip such as transport, food and beverage, accommodation, entertainment and sightseeing, etc. Therefore, customer service in the tourism and hospitality industry is integrated.
Direct
All customer services are provided to customers in a direct, timely and immediate manner. For example, travel agencies or tourist information centres provide inquiry and booking services; hospitality staff provide food and beverage and accommodation services, and tour guides provide tour services. Therefore, serving customers directly is one of the characteristics of customer service.
Emotional
In addition to practical needs such as shopping or food and beverage, customers have emotional needs such as fulfilling the needs for recognition and respect during their trips. Therefore, the service attitude and quality of staff are important to customers. Customer service staff should pay extra attention to taking care of and satisfying the emotional needs of customers.
Timely
“Moment of Truth” is about the effects of customer and employee interaction when there is an opportunity for the business to impress or upset the customer.
Improvising
Customers have many different needs and want services that will satisfy them. However, the perception of satisfactory service varies significantly among different customers. It is important that at any time, customer service staff should be prepared to satisfy different customers with their different needs.
5 Dimensions of Customer Service
Five essential dimensions that customers look for, and evaluate when they buy products or services. are tangibility, reliability, responsiveness, assurance, and empathy. These five aspects help us understand customer expectations, and companies need to consider them carefully in their service planning and delivery.
Of the five factors, Reliability is the most important, Assurance is the second most important. However, tourism and hospitality organizations need to make sure that all gaps are identified and eliminated and that all five quality dimensions are met in order to provide customer satisfaction:
Reliability
Reliability is about always keeping the promises we make to the customer. These promises can be made in many ways. For example, they can be spoken or written agreements or contracts made with a customer, part of our sales literature or even an aspect of our service that is provided and comes to be expected by most customers.
Products and services are usually sold with certain implicit or explicit commitments about their sale. The table below shows the difference between implicit and explicit commitments of products and services.
Assurance
Assurance relates to how confident the customer feels about doing business with an organization. Many consumers have some concerns when using a business, especially when it is for the first time. They need to be sure that the business knows what it is doing and is competent and capable of providing the required product or service just when it is needed and at the desired level of quality.
For example, when using a restaurant for the first time customers may worry about the quality of the food, the atmosphere, value for money or how they will be treated. Knowledgeable, helpful, friendly and attentive staff and user-friendly systems can do a great deal to put them at ease. This also implies that the employee delivering the service knows his/her product well.
Tangibles
These are the items that the customer can touch, see and feel, and they will create an impression one way or the other. It is important to make sure that physical facilities such as decorations, furnishings, fittings should be in keeping with the type of services provided.
For example, modern steel furniture would look out of place in the lobby of a very traditional hotel, whilst antiques would be out of place in a modern theme restaurant. In addition, the equipment used to provide the service should be up-to-date.
Empathy
Empathy is about the concern, understanding and compassion a company shows to its customers when they have a problem or a worry about some aspect of the product or service. It is about how the staff deals with the customers, and the level of personal attention they are willing to provide.
It could be as basic as recognizing who is the regular customer or knowing the customer’s specific requirements. To a further extent, sympathetic, caring and considerate staff who are willing to help solve a problem can go a long way to satisfying that customer.
For example, a guest whose luggage has been lost en-route would probably be most satisfied by an empathetic approach which helps quickly solve the problems of having no change of clothing, toiletries etc., and locating the missing luggage.
Responsiveness
Responsiveness relates to the timeliness, speed, efficiency, courtesy, and capability of employees in providing help and assistance to customers when providing products, services or information.
Example of timeliness, speed and efficiency when a hotel guest who complains that the TV is not working would not expect to wait several days to have it fixed, nor would they expect a room service order to take several hours to be delivered. Example of courtesy: When employees show their politeness, respect, consideration and friendliness to the customers.
Customer Needs, Expectations, Perceptions and Satisfaction
Customer Need
A need can be explained as a basic essential which keeps one alive. Typical examples of basic needs include oxygen, water and food which are those key elements for human’s survival. Inservice marketing, needs and wants are similar and sometimes interchangeable.
The main differences of needs want and demands are explained as below: A want is something that a person desires, either immediately or in the future. Unlike needs, wants are those that differ from one person to another.
Each person has his or her own list of wants, each with a varying level of importance. Furthermore, wants can change over a period of time. This is in contrast to needs, which remain constant throughout the lifetime of the person. Basically, want is for the product or service that will satisfy a need, as shaped by the culture, personality and experience of the customer.
These are described in terms of the objects (products and services) that will satisfy the need of CustomersPeople have many wants but not enough money to meet all their wants. Therefore, the byproducts that provide the most satisfaction (value) for their money. When backed with buying power, wants become “demands”.
Customer Expectations
Expectations are all the benefits that the customer would like to get when satisfying needs and wants. Customer expectations are formed by many influences. And customer expectations have to be within a companies’ ability to meet them. That is they should be “reasonable”.
Customer Perception
Customer perception refers to how customers feel and think about a certain product/service. Generally, perceptions are formed mainly based on the customers’ past experiences. Other common factors which may also influence one’s perception include, word of mouth and advertisement.
Customer Satisfaction
Customer satisfaction can only be gained by meeting or exceeding customer expectations after experiencing the services/products.
Ways to Meet Customer Expectations
To satisfy customers, organizations should identify the services most needed by customers, and then try their best to reach or even exceed their expectations. The following are some approaches to meet customer expectations:
Respect
Sending a thank-you letter or birthday card to customers would make them feel that they are respected. For example, the customer service staff should take the initiative in providing customers with information that they need.
If you are busy with your work while a customer approaches, you should smile to him/her or indicate him/her to take a seat and wait for a moment. In this way, the customer will understand that you are aware of his/her presence.
Polite
Use polite expressions such as “please” and “thank you”. Any vulgar language or behaviour is prohibited. You have to be polite even if the customer may not be right. When a customer complains, the service staff should listen to his/her requests patiently and carefully. Ask for help from others if you are unable to solve the problem.
Efficient
The customer service staff must manage time efficiently. Do not neglect the customer you are serving nor let them wait for too long.
Enthusiastic
A smile and warm reception from customer service staff and their initiative in helping to solve problems will promote the message of quality service and commitment to customers.
Dedicated
Try to look at problems from the perspective of customers and understand their actual needs. For example, if a customer from Beijing is not fluent in English, you should arrange a customer service staff who can speak Putonghua to serve this customer.
If a customer complains, you must listen and explain the reasons to the customer patiently, and express your understanding and care, and apologize when necessary.