Tuesday, January 10, 2012

80/20 Service Myopia

Many companies today follow the timeless Pareto Analysis where they believe that 80% of their business comes from 20% of their customers. On the basis of this, companies have become myopic in the way they hand out service to their customers. By providing differential service to their profitable customers they are possibly creating a very dangerous divide. There is no doubt that treating profitable customers differently in terms of incentives makes sense. Loyal customers have to feel the warmth in return. But customer service should be inclusive and doled out with the same consistency to every customer. At the end of the day, customer service is not only a hygiene factor for a business but also a promise made to a customer.

Organisations need to start showing courage in not distinguishing their customers when it comes to service. The condition has become endemic because companies are refusing to see the long term ills of such a move. Bad customer service across industries is the reason for customer migration. The telecom industry, for example, has made Bedouins of normal customers with their appalling customer service tactics. Often frustrating, often numbing, we have reached a point where customers have purely given up on the idea of good customer service. In an environment such as this, to have customers know that they are being treated differently can lead to nothing short of disillusionment.

Many companies especially some in the hospitality industry are very good at providing indiscriminate customer service. If a customer walks through their doors for the first time or the tenth, the service remains a constant because the true potential cannot always be realized in the first few instances. Over and above, a customer’s potential can be increased in time by providing consistently exceptional service. However, a brand that is truly in the business of customer service would never let such a situation ever arise. Don’t forget that as a company you have no clue what the potential of a customer is after his first few interaction with you. Differential customer service on the other hand on the basis of profitability, or a lack of it, can assure you that you will never see the full potential of that customer.

This is what we think, what do you think?

1 comment:

  1. absolutely agree! Very insightful comment. question is how to wean firms off of the time honoured segmentation approach?