Today we had another seminar on
service, in particular we were talking about Customer Relationship Management
(CRM) as well as about "complaining".
First of all I would like to talk
about CRM, which I have learned is really, really important, no matter which
industry you are in or which service you are offering. The main reason for the
importance of CRM is the fact that it is much easier and cheaper to keep
existing customers happy than to attract new ones (Harrison, 2012). Therefore maintaining good
relationships with existing customers and trying to fulfil or even exceed their
needs and wishes is crucial for being successful.
Although every customer is
important, as a brand you have to make sure you segment your customers and
treat them differently depending on their buying status. The framework shown in
Figure 1 shows a way of doing so.
Figure 1
Source: Harrison, J. (2012).
As you can
see your client base can be divided into four (or more, depending on the
strategy you are using) groups, rating customers from “poor relationship
customers” to “good-relationship customers” (Harrison, 2012).
In this
case four groups have been identified, which are explained below:
1. Platinum:
“The platinum clients constitute a very small percentage of the
customer base, they do however contribute a large share to the firms
profits. They are not price sensitive
but expect the highest service levels. They are the 20 percent of the
population providing 80 percent of the sales.” (Harrison, 2012)
2. Gold:
“The gold tier has a larger number of clients than the platinum tier,
they do however contribute less profit than the platinum clients. They are more
price sensitive and slightly less committed to the brand.” (Harrison, 2012)
3. Iron:
“Iron customers provide a customer/client base and can give companies
the economies of scale. Hence, they are often important so that a company can
build and maintain a certain capacity level, particularly important in certain
services such as hospitality. This is important for servicing platinum and gold
tiers as well. They are only marginally profitable and may be called ‘day trippers’, they are only marginally profitable.” (Harrison, 2012)
4. Lead:
“Tend to generate low revenues, but require same level of service as
the above group . The question is do we work on them through the obstacles to
Luxury?” (Harrison, 2012)
In my opinion the framework
explained above is a great method of segmenting customers and implementing
strategies to reach them. I am also very persuaded of this concept because we
were using it in a company I have worked for and it proved to be very efficient
and to the point. In this case we for example offered pre-launch events for
“Platinum”- customers to make them feel special and maintain loyal and sent out
gift cards with the slogan “Forget me not” to customers of the “Lead”-segment
to further engage with them and make them become more loyal.
Another framework which we were
talking about in class that is very interesting, is the one shown in Figure 2. It
basically also shows the four different categories, explained above, but it
also allows you to see the size of the different categories.
Figure 2
Source: Harrison, J. (2012).
So according to this framework, customers’
loyalty increases with the level of satisfaction of the service.
But although satisfied customers are
more likely to become loyal it is also very, very important to deal with
unsatisfied customers and to try to convince them of the service/brand (Harrison, 2012).
Therefore brands have to come up
with strategies for “service recovery”, hence they have to decide on things
such as return policies, responses to complains and compensation, having in
mind why customers complain and what it is what they expect (Harrison, 2012). Furthermore as a
brand it is crucial to train your staff so they know how to deal with
complains. This is particularly important because, although customers might be
upset about something, in my opinion a member of staff always has the possibility to change
that perception and turn an unhappy customer into a happy and loyal customer.
To explain this in a bit more detail
I will give a personal example of an experience I have had at a restaurant and
club called “Bodo’s Schloss”, which opened in London a few weeks ago.
When I went to Bodo’s Schloss the
first time, for their opening, I was absolutely amazed by the location as well
as the service. Although the invitation said that dinner will be served till 10
pm we totally forgot about that and were really disappointed when we arrived
and were told they do not serve food anymore. But what really impressed me was
that they instantly offered to prepare a cold starter for us so we do not have
to stay hungry all night long. This offer was amazing, especially because it
was their opening night and they were really busy.
So, impressed by this service and the
location, I booked a table for dinner a few weeks later because I had visitors
from Germany and felt this was a great restaurant to take them to.
But the disappointment already started
when we saw our table. Although I have booked a table for 8 people, we were
offered a very, very small table, which in our opinion was designed for a maximum
of five people. But in pleasant anticipation we did not complain, especially because
we saw that all other tables were gone already and that even groups of 10
people were placed on tables with the size of ours.
When it came to the order my friends
tried to make their order in German, just because it is an Austrian restaurant
so we were expecting them to stick to their identity and hire staff which can
also speak German. But they haven’t….So never mind we thought, let’s just order
a few drinks. And we asked for “Radler”, which is an Austrian drink, a mixture
between beer and lemonade. Although we could see the waitress has never heard
of that drink, she pretended to know and came back with something completely
different.
I do not have to say that the
quality of the starter was a disaster, because by that time we already didn’t
expect anything great anymore. After waiting for the main course for an hour,
we were served in two groups so four of us had to wait another half an hour
and started eating by the time the others were done with their main course.
By that time I already
complained three times but the waitress did not even apologize.
After waiting one more hour for one
Gin Tonic I asked to see the manager, who apologized and explained that the
waitress just started working at Bodo’s Schloss, but she did not even offer any
compensation. When I asked for compensation she offered a free shot for all of
us, which I thought was really disappointing. I would have expected her to
apologize to the whole table not only to me because I was the one who
complained, to reduce the bill and to offer any kind of compensation without me
asking for it.
So although I still like the
location and the atmosphere and the main course was not too bad, I will never
go there again because of the way in which we were treated by their staff. Furthermore
I have spread a really negative word of mouth, because I was really
disappointed by them and do not want my friends to go there and make the same
experience. I could therefore be defined as a “Irate” type of complainer, hence someone that is likely to spread a negative word of mouth
(Harrison, 2012). Especially because the restaurant is new, I would have
understood there are still a few things to fix and I would have come back even
after that night, but not after the staff has clearly shown that they do not even
care about our satisfaction of their service.
So as I said before, good service has the power to change every bad experience - but bad service sticks to customers' minds and will make them stay away from your brand.
References:
Harrison,
J. (06.11.2012). Seminar on “managing
luxury brands”. London: European Business School.
