Author and management consultant Ray Kordupleski is bringing his philosophy of Customer Value Management to Vietnam in a seminar at the Park Hyatt from 9 to 11 September. He explained to Brett Davis why these ideas hold the key to success in business.
Could you briefly outline what the principles of customer value management are?
For a business to succeed, it must beat the competition at attracting and retaining customers. Customers want products and services that are worth what they pay for and they choose the best value. This is easy to understand but hard to accomplish.
A firm must understand, focus and align its people and processes on what customers truly value. The firm needs insightful market data and proven management tools to systematically measure, manage and create the best competitive value in the marketplace.
Understanding the data and using the tools helps companies do three important things: choose their value proposition, manage their process to deliver the value and clearly communicate that value to the market. Businesses that execute all three of these steps effectively beat competitors, win the customer and have sustainable business results.
Why is it important for businesses to understand this and apply it?
Never forget that customers have absolutely all the authority to determine which businesses succeed or fail. They speak with their money by choosing where to spend it, and they vote for the best valued products and services. Businesses that cannot attract and retain customers cannot attract capital from financial markets and talented workers from employment markets. Therefore, businesses need to win, first and foremost, in the customer market.
However, most business leaders are focused first and foremost in one market – the financial market. They are comfortable using accounting data and financial management tools. Financial data provides the final scorecard to measure success, but it is after the fact. It doesn’t tell you how to win. Customer value data gives leading indicators of financial success. Customer value management tells you how you are doing in the competitive market and what you need to do to win the customers’ vote.
What are some of the more common mistakes you see businesses making in how they deal with their customers?
Leaders say ‘customers are number on’! but the first item on any agenda is ‘how are we doing with revenue and costs’? They talk about the customer, but then they focus almost entirely on financial data, forgetting that customers are the drivers of financials.
Leaders say they want to be number one in customer satisfaction, but they only survey their own customers. Consumers do not care if a company is better today than yesterday. They only care who is best today.
Leaders set goals for customer satisfaction such as 90 to 95 percent. Unfortunately, they don’t realise that there is no such thing as satisfied or dissatisfied, there are only different degrees of satisfaction. For example, if a survey has ratings of poor, fair, good or excellent, most companies say that all customers who rated them good or excellent are ‘satisfied’. But 40 percent of customers who rate their satisfaction as good are not satisfied enough. These 40 percent will shop around with competitors.
You spent many years in the telecommunications business, an area that often has difficulties with customer satisfaction – what were some of the major challengers you faced in that industry?
Yes, the telecom industry has had difficulty. Interestingly, the root causes and solutions are similar to other industries worldwide.
Service companies like telephone, power, insurance and banking strive to be customer-focused. They hold service representatives accountable for each service call. They survey customers after each contact asking how satisfied they were with the representative. They tie the individual’s rewards and recognition to the survey scores.
This all sounds good, but it misses a fundamental truth. No single person can totally satisfy a customer alone. If that were true, there would only be one person in the business. Of course, it is true that any one person can totally dissatisfy a customer. A common cause why companies fail to satisfy customers is they use customer satisfaction data to manage individuals. Since all work is part of a process, satisfaction data should be used to measure, manage and improve the process. When satisfaction scores improve, the process team should be recognised and rewarded.
Do you think the business community in Vietnam will be receptive to your ideas on valuing customers?
It is true that cultures and businesses are unique around the world. But there are common principles in every marketplace and every culture.
Customers want and seek value. When a person gives their time, energy and money to a business, they want the exchange to be worth what they get in return. That is ultimately what we mean when we discuss value. We are asking ‘was it worth it’?
This seminar will present tools that have helped businesses worldwide make sure customers feel their purchase was worth it every time and that it was the best choice. The tools work across boundaries and have stood the test of time. They can be tailored to fit unique challenges. I do feel the business community will understand, accept and use Customer Value Management in Vietnam.
What is the key thing you want people to take away from your seminar?
The secret to business success is creating value for the customer.
Over the two-day seminar, there will be many other specific and practical take-aways designed to help the participants lead their companies to choose value, deliver value and communicate value effectively to their customers.
Our objective for the seminar is to make each person who attends more knowledgeable and effective, and for each person to feel that the time, money and energy they spend is well worth their investment.
For information on the seminar or to register, visit Epinionglobal.com/events or call 08 3826 8989.