Businesses need to examine their Customer Contact Point and determine if it is helping them or hurting them. How customers are treated at this critical point can ultimately determine the success or failure of a company.
Good Business is Repeat Business
Two words: Acquisition cost. Customers aren’t cheap to get into the store (or webpage or telephone…) and once they are there you had better make sure you take care of them to get them to come back.
How much is a customer worth? It doesn’t matter whether you are selling pasta or Porches; if the customer comes back a second time, he is worth more. Common business sense tells you to treat your customer right. A happy customer comes back to spend more money- and over time can become a loyal customer. Even better, they may tell friends how great your service or products are and bring more people to give you even more business.
This can be expressed mathematically as well:
NPV_C = CF_0 + [CF^1/ (1+k)^1 +CF_2/ (1+k)^2 + CF_n/ (1+k)^n + ... ]
The Net Present Value of the customer. Where CF is the amount of each purchase , N is the purchase number and the number of CF is determined by the number of purchases (over the years).
Ok, so the formula is boring, but the results are not: happy, returning customers and an increased bottom line. A win-win situation for both parties.
Customer Contact Point: Boxing Gloves or White Gloves?
All the strategy, branding, marketing, excellent management in the world doesn’t work when the customer contact point is rough. Where the customer “touches” the company is where close attention needs to be paid to the details.
Case Study #1: Menta, Televisió i Cable de Catalunya
Great Internet connection. Somewhat questionable telephone service. Decent customer service. AWFUL sales and installation.
I am a customer of Menta, so I speak from experience. Where are they dropping the ball? Installation and sales. The installation service is a disaster- they completely destroy your house- not exactly the best way keep customers happy. And the sales? Well, they flat out lie to you to get you to sign on.
These are the two main customer contact points. What is their effect on customer brand perception? Negative. Menta has a really innovative (read: difficult to use) and cutting edge website which strives to give them a cutting edge image over the incumbent: Telefonica. I’m sure there are some really cutting edge commercials on the local Catalan television channels as well… all of it telling the customer how advanced their services are. Well, that is, except for how the customer is treated during the only human contact point- which is the most critical point. If you work at Menta, please examine this area of your business- both you and your customers will come out ahead.
Case Study # 2: K-tuin Barcelona
K-tuin is an Apple Computer distributor in Barcelona. Apple spends millions of dollars on Research and Development, Branding and Marketing. They sell premium computer products. The whole image is about exclusivity. Apple placed front-page ads in the Magazine inserts in both the national Spanish newspaper El Pais and the regional La Vangardia this past weekend. This is the first time I’ve seen a marketing push like that in Spain- and it’s not exactly cheap.
So, I am a Mac user. I went last week to buy a new iBook (absolutely incredible machine and OS X is amazing) at K-Tuin. iBooks are not cheap machines, however I was treated as if I were buying coffee in a crowded café.
Does this make sense? No. Does K-Tuin have a happy customer? No. Why not? K-Tuin isn’t focusing on the customer Contact Point- their sales.
Apple, however, is highly aware of this type of scenario: poor customer attention. Because they must sell their computers through distributors (many times side by side with PCs) – they lose control over the critical Contact Point. Because of this lack of control, Apple is spending millions more to open their own, Apple-run stores. Why? To ensure that they have happy customers and that the branding efforts are extended to the last detail.
Which is what everyone should do. Be an obsessive, neurotic control freak when it comes to Customer Contact Points. Because that’s where it really counts.
Does this make sense in an “outsource everything” world? Yes. Apple is focusing on the very important customer contact point, and I wish them all the success in the world.
Apple is not alone, thankfully. Orange telecommunications in England also has a similar policy. Banana Republic in the US is another example. They all understand that branding issues and corporate image must be maintained down to the last detail. And what is the last detail? The Customer Contact point. It is very important that companies look at this key business area and determine whether or not they use Boxing gloves or White gloves when handling customers. Because, in the end, this determines whether or not the customer returns- which affects the life-time value of the customer and, more important still, the value of the firm.
Until next time- Happy Focusing!