Who says you have to be customer centric to thrive?

Is it feasible that companies are not customer centred because it is possible to thrive without being customer centric?  Before you dismiss this out of hand consider the following examples.

Mary Portas: Secret Shopper – last nights episode on the furniture industry

On Wednesday I watched the tv program Mary Portas: Secret Shopper which took a look at the furniture retailing category and found that it was anything but customer centric.

The marketing across the category is either misleading or downright deceptive.   There is one kind of sale or another on almost around the year.  The discounted prices on the furniture are nothing of the kind.  And the price guarantees are absolutely worthless because the retailers know that it is simply not possible for the customer to buy the same product from another retailer.

The focus of the sales staff is selling irrespective of whether the furniture meets the needs of the customers.  The sales folks even convinced themselves that they were customer centric when it was blatantly clear that they simply did not get what it means to be customer centric: to put yourself in the shoes of the customer and thus help the customer to make smart purchasing choices that they will be happy with – no buyers remorse when they got home. In fact it can be argued that the sales folks were doing rather well by not being customer centric: one of them claimed to have earned £57,000 in commission just through standard selling.

Management simply wrote off the people who felt aggrieved about poor quality of the furniture and the poor customer service.  Yet despite the negative reviews on the internet on CSL (the furniture retailer featured on Mary Portas: Secret Shopper) I do not see it closing down because customers are running to its competitors.  Why is that?

Because all the furniture retailers are at it.  They are all misleading customers with their marketing and price promises.  They are all getting customers to buy whatever makes the most commission for the sales folks.  And they are all offering poor customer service.  I believe that I wrote about how easy it is to become customer centric by disrupting category practices

Tesco comes 8th in the latest Which? customer satisfaction survey

Tesco is the UKs most successful supermarket brand.  You might then assume that it would rank highly in any customer satisfaction survey.  Well Which? polled 12,000 consumers and placed Tesco 8th with a customer satisfaction rating of 48%.  Aldi scored 65%, Lidl scored 64%, Morrisons scored 59%.  You can find the full details here.

Does this mean that you can thrive without being customer centric?  Or does it mean that there is little or no correlation between customer satisfaction and financial success?  Perhaps it means that the Which? survey is flawed.  You decide.

BSkyB goes from strength to strength

As far as I am aware BSkyB is not a brand that is loved by consumers.  My own experience of dealing with BSkyB was less than positive.  And yet BSkyB keeps going from strength to strength.  Recently it announced that at the end of 2010 it had over 10m customers (thus hitting one of the key targets) and half-year profits were up 26% on last year.

Is it possible that BSkyB is thriving because it has an effective monopoly on pay tv?  So if you want what Sky has then you have to go and buy it from Sky.  That is to say that BSkyB owns strategic assets that allow it to deliver less than great customer service.  I believe I wrote a post on the value of strategic assets.

Is it because it has branched into adjacent areas: telephony and broadband?  Is it because it offers bundles (pay tv, telephony, broadband) that other players find hard to match?

Or am I wrong and BSkyB is a great example of a customer centric organisation?

TalkTalk continues to be the second largest broadband provider.

TalkTalk is the UKs second largest broadband provider.  The negative reviews posted on this company by customers are legion.  It is a company that was investigated twice by Ofcom (the industry regulator) last year as a result of customer complaints.   And Ofcom found it guilty of breaching telecoms regulations when it charged customers for cancelled services.

If customers are so dissatisfied then why is it that TalkTalk has not collapsed?  Or at least shrivelled significantly?

Is it because they are locked into existing contracts?  Or is it because far too many customers simply are not willing to go through the inconvenience of switching broadband suppliers because they consider them to be pretty much the same.  Does this remind you of the furniture retailing example that I started this post with?

Posted on January 28, 2011, in Case Studies, Marketing, Sales and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink. 5 Comments.

  1. Very interesting point via all these examples – why dissatisfaction doesn’t automatically bring a business down, leaving the impression that it’s ‘not important’ and one can thrive without doing much about it. Or can they?

    Nothing is ever pure black or white – not only are there too many shades of grey in-between, but also a myriad of colours. No company is providing hopelessly poor experience as a strategy and willful determination. They all make efforts to improve things, some more successfully than others.

    BSkyB, for example, has consistently developed improvement programmes and made investments towards providing better experience in a structured, methodical way. Far from ‘being there’ yet, but trying.

    Tesco is, in this case, the victim of a flawed survey by Which: comparing with Aldi and Lidl (even with Morissons) is like comparing the experience at RyanAir with a full-service airline. One reason for the higher scores of budget operators is that they set lower expectations (and surveys only find perceived experience, which is only relative to expectations). Another reason is surveying different populations: people who regularly shop at one chain have little awareness of what happens elsewhere (or memory of the last experience they had at the rival chain ages ago). Take someone who habitually buys their groceries from the Selfridges foods department to Lidl – and survey them for satisfaction! :)

    A survey of loyal Tesco customers who rarely shop elsewhere would be deemed ‘biased’ by statisticians and research pro-s, but this is the paradox: the Customer Centric business model is about creating such bias! You have to shop consistently at Tesco to ‘teach’ their (rather clever) systems about your needs and to start benefiting from relevant personalised offers and make the (not insignificant) savings through reward points. You have to shop there for quite a long time for the chance to experience their returns and compensations policies and the behaviour of their Customer Service staff. (Try to return something – anything – at Aldi! And, btw, there’s no service staff in their stores, it’s deemed an unnecessary cost which would hinder them form competing on price). Those loyal Tesco customers who have experienced all this would answer quite differently from the 48% score that Which? found. And Tesco is consistently working to create millions of them.

    And even TalkTalk (who notoriously won the “Worst Customer Service” title among UK broadband providers) aren’t there as a matter of conscious effort to disappoint. I am not a subscriber, but my impressions from (former) parent Carphone Warehouse are quite the contrary. And there was a time when (founder and CEO) Charles Dunstone had a “Passion for Customers” motto printed on his business card. I would be surprised if, as we speak, TalkTalk are not working on a customer-centric transformation project (or, rather – comprehensive programme) aimed to deliver better experiences, different satisfaction scores and respective market share and shareholder value.

    Like

  2. Hello Vladimir

    Interesting reply. I am not prepared to make the kind of bold statements that you make. For examply you say that you doubt that TalkTalk are consciously trying to disappoint. For my part, I doubt that they are consciously trying to create a great customer experience. It is one thing to have a billing system make mistakes (Centrica did that when they introduced a new billing system) and send out inaccurate bills. It is completely another thing to treat these customers so badly when they ring in to complain to the contact centres.

    The points that I was striving to make in a round about way are as follows:

    1. Category practices – this is what matters in competitive terms
    Put differently if everyone else in your category is doing what you are doing then you can get away with it. It is called an oligopoly. It doesn’t just happen, it is intentionally created and kept in existence by the small number of big players.

    Some day an outsider comes along along and upsets the cosy arrangement and then even the market leader pays the price. Take Apple as an example.

    2. Beware of surveys – they can be very misleading!
    You made the point for me, thank you.

    Like

  3. Ravindra Mehta

    Talktalk – I have been with Talktalk for 5 years, why because the packaged – Telephone, Broadband is unique, and it suits my need, as if it is tailored for my family. There is no company, that offers ‘any time’ national and international telephones at the price Talktalk offers. We are international family, and my family is on the phone to relatives all over the world. Broadband speed is just adequate at 6.7Mb for my family need. I look every year and compare the market, but, I have not found any company yet. I change my utility supplier, Insurance providers more frequently than Internet service provider. This is why Talktalk is still in business. I am retired, so I am not shy of ringing up customer services, and there is a ground for improvement there, but nothing serious, after the first year of teething troubles.

    Like

  4. 8th is not a bad at all and for me you really got a good customer satisfaction survey,in Helsinki Finland there are many business use first to do some mystery shopping survey for them to see what is really happening which i can say very helpful.Anyway this is really a good article i seen the importance of customer and its satisfaction.

    Like

Follow

Get every new post delivered to your Inbox.

Join 4,441 other followers

%d bloggers like this: