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Emerald Group Publishing Limited
Copyright © 2001, MCB UP Limited
Firms should give loyalty before they can expect it from customers
Firms should give loyalty before they can expect it from customers
We now live in a society in which the demands on business are so much greater than ever before; in response, we have to be more creative than ever before. Market competition now demands that organizations continuously seek means to gain customer loyalty. While customer expectations are continuously increasing, organizations are now required to go beyond their primary need of satisfying the customer, to that of exceeding expectations – to delight the customer. This delight factor is in reality the organization's ability to create a responsive relationship with the customer, and to demonstrate their ability to serve with loyalty.
One of the greatest challenges facing organizations today is the ever-growing volume and pace of competition. During the last two decades, most developed countries have recognized that we are living in a service economy, where services have become an integral part of every form of business enterprise, and an inescapable feature of domestic life. Technological innovations in all industries have prompted the growth of services. Let us take the example of the automobile industry. Fifteen years ago we would have been able to attend to minor engine problems in our car, such as (for example) adjusting the carburettor. Today's technology has replaced carburettors with fuel injectors, and we have to take our car to the mechanic for tuning; we no longer have the choice. Similarly, when we buy a washing-machine or a dishwasher, our concerns now extend to the various support services provided by the seller in the event of something going wrong. The service component has become an integral part of most manufactured products, with the result that many and various types of industry have recognized the potential development of service as one of the few sustainable competitive advantages.
Services, being intangible in nature (meaning that the customer does not receive product ownership), cannot be patented and are thus predisposed to duplication – competitors will seek to copy them. In the last two decades we have seen a large surge in competition, accompanied by the adoption of customer services within almost every field of business activity. In this manner service has become established as an integral part of product identity in the maintenance of market leadership.
Competition has had major implications for the customer, providing:
greater value for money;
augmented levels of service.
Additionally, there is little to distinguish one firm's manufactured products and services from another's. Hence customers have changed their emphasis from a demand for quantity, to a demand for quality. Organizations in this way are forced to differentiate themselves from their competitors through their quality of service, as opposed to competing on the basis of price.
It is generally acknowledged that customer satisfaction is not a constant phenomenon, but is indeed progressive. Services and products, deemed satisfactory by the customer today, will undoubtedly prove unsatisfactory to the same customer tomorrow. A few years ago, airline companies tended to highlight their near perfect punctuality as a competitive edge. Now, however, it would seem that, once the majority of airlines improved their punctuality, the on-time factor lost its significance; no individual operator had an edge. And as a result, today's customers have come to expect flights to be consistently on-time, as a matter of course.
Traditionally, manufactured goods and services were considered (or measured or assessed) as good or bad according to the degree of customer satisfaction, i.e. how successful they were at meeting customer needs. However, in this competitive market the continuous increase in customers' expectations and technological innovation demand that leading firms distinguish themselves from the competition by going beyond customers' present expectations. Thus organizations which have set their goals on mere customer satisfaction are, from a customers' perspective, deemed to be of limited value and may subsequently lack the anticipation and preparation necessary to meet the demands of the future.
Market competition today is forcing organizations to seek the means to gain customer loyalty, and thus aim to maintain their stability in times of economic turbulence. However, at the same time, the customer seeks firms which display service loyalty in return for their patronage. Hence, I would argue that service loyalty precedes customer loyalty – therefore organizations need to seek opportunities to offer products and services beyond the expectations of the customer. It is only by delighting the customer that firms today will maintain superiority over their competitors, and ultimately prove capable of consistently offering competent, reliable and exceptional service. However, excellence itself is not the goal, but rather a moving goalpost. Hence, for an organization to maintain superiority, it will need an ongoing quality upgrading process. This upgrading process can transform services and products to augmented levels of performance, and in this way offer greater and superior value to the customer.
Loyalty through service excellence is a formidable challenge to any organization, but not insurmountable. However, the challenge is not in achieving excellency in service, but rather in doing so on a managed and consistent basis, day-in day-out, every-time, all-the-time. It is only then that we are able to display effectively our loyalty to the customer. Thus, the goal becomes not to reach the top, but rather to stay there; that is to say, the organization must strive to gain the ability to sustain a loyal relationship.
We now live in a world where relationships are becoming more important than physical products. The service function of an organization is now considered to extend much further than answering and/or dealing with customers' special needs. Services are considered to be a unique strategic tool, facilitating the creation and development of a lasting loyal relationship between a firm and its customers. Thus business superiority is not just the sequel to service success, but the index of a lasting, progressive and responsive relationship with the customer.
Commonly, the missing link in a firm's organizing principle is the awareness of the customer's point of view. If a firm is going to have a chance of winning customer loyalty, the absolute minimum prerequisites are for that business to understand:
what the customer needs, and hence what they expect;
those factors which help to strengthen the customer/organization relationship;
the customer patterns of changing needs.
These three basic customer characteristics will assist firms to anticipate and act on behalf of their customers' needs and wants, before even the customer him/herself has identified such a need. These pre-emptive "service innovations" can help an organization to offer services beyond the customer's expectations and hence assist them in surprising – then delighting – the customer.
Many organizations are eager to provide good quality service, and to gain customer loyalty, but fall short because they simply fail to have a sufficient understanding of the expectations of their customers. The success of an organization ultimately depends on services to reflect the relationship and trust it is able to build with its customers. However, the effectiveness of this relationship is determined by each and every member of the organization and his/her ability to become genuinely service-oriented. Hence in their commitment to please customers, every member in the organization will be required to go beyond their specified job tasks, in orderto anticipate and surpass customer expectation.
Quality is often seen as the feature fulfilling the role of the value-adding component within services. However, from a customer's point of view, quality constitutes an integral and expected part of the service; service and quality are therefore synonymous and uncompromising. This argument is substantiated by the fact that customer purchase is increasingly founded solely on the expectation or assumption of good service. Moreover, services cannot be returned if they fail to comply with customers' expectations, nor can they be reworked to enhance the quality. It can thus be argued that quality and service cannot exist independently – without quality there is no service, and without service there is no quality.
In conclusion, I would like to emphasize that customers' needs and wants are time-specific, and hence their expectation is progressive in nature. It has as a result become necessary for organizations to:
improve and maintain quality standards at continuously increasing levels;
continuously surpass customers' needs and expectations;
build a long-term relationship with the customer.
From the customers' point of view, performances which fall below their expectations are mediocre in nature, and reflect neither what was promised or expected, nor what they paid for. Moreover, excellence is not a state to aim for, but should be an organization's state of existence; only then will the customer recognize the consistency, reliability and the loyalty of service. Satisfying the customer should represent the minimum standard of output and not the finite aim. Customer loyalty is indeed the goal; its prerequisite, however, is far from mere satisfaction. The term loyalty presupposes the establishment of trust and a long-term relationship; the only way to gain this trust and long-term relationship is by first offering it. Organizations will thus need to commit themselves to their customers – a commitment to offer loyalty of service.
Jay KandampullyUniversity of Queensland, Australia
The ever-increasing volume and pace of competition is one of the greatest challenges facing organizations today.
Customers have changed their emphasis from demand for quantity to demand for quality.
Loyalty through service excellence is a formidable though not insurmountable challenge – the goal being not just to reach the top but to stay there. This can only be achieved through consistency, reliability and loyalty of service.