Customer orientation | Free| Managements

Essay add: 7-03-2016, 20:20 / Views: 11

Project Introduction:

The objective of the Project is to establish a link between Customer Satisfaction and Customer Orientation of the firm. It is important for a firm to understand what the constituents of Customer Satisfaction are and what processes and capabilities will help it in delivering it. After a rigorous literature survey on the topic, we take service quality as the starting point in the process of delivering Customer Satisfaction. It is to be noted that though the key terms defined in the Project as Service quality, Customer Satisfaction and Customer Orientation have many definitions but for purpose of uniformity and relevance to the project we have chosen these definitions. References are duly quoted in the end.

Service Quality

Service Quality is a subjective assessment by the customer. He arrives at this by comparing the service level he perceives as being delivered by the organization against the level he expected the organization to deliver

There are three components of Service Quality

Outcome quality.
Interaction quality.
Physical Environment Quality

For example in the case of a lawsuit a legal services client will judge the quality of the technical outcome, or how the court case was resolved and also the quality of the interaction.

Interaction quality would include things such as the lawyer's timeliness in returning phone calls, his empathy for the client and his courtesy and listening skills.

Similarly a restaurant customer will judge the service on her perceptions of the meal (technical outcome quality) and on how the meal was served and how the employees interacted with her (interaction quality). The décor and surroundings (physical environment quality) of the restaurant will also impact the customers perceptions of overall service quality.

In some cases as with restaurant services, all three aspects of service are likely to be important to the overall assessment of quality. Other times as in the case of a kiosk based ticketing service only technical outcome and physical environment quality are likely to come into play in the consumer evaluation process. Because the technical outcome for many services is highly complex and sometimes ambiguous the quality of the technical outcome is not always evident. For example the technical quality of services offered by lawyers , doctors , engineers, college professors, accountants and architects or computer repair - may be difficult to assess. In such cases consumers may rely on their assessments of interaction and physical environment quality as cues for technical quality.

Service quality dimensions

Customers do not perceive quality in a one-dimensional way but rather judge quality based on multiple factors relevant to the context. For example quality of automobiles is judged by such factors as reliability, serviceability, reliability, serviceability, prestige, durability, functionality and ease of use whereas quality of food products might be assessed on other dimensions (flavor, freshness, aroma and so on). The five specific dimensions are used as a criterion by which interaction, physical environment and outcome quality may be judged.

Reliability: This is the ability to perform the promised service dependably and accurately
Responsiveness: The willingness to help customers and provide prompt service.
Assurance: It includes the employees' knowledge and courtesy and their ability to inspire trust and confidence.
Empathy: It means the caring, individualized attention given to customers
Tangibles: It includes appearance of physical facilities, equipment, personnel and written materials.

Customer Satisfaction

"Everyone knows what satisfaction is, until asked to give a definition. Then, it seems, nobody knows." This quote from Richard Oliver, respected expert and long-time writer and researcher on the topic of customer satisfaction, expresses the challenge of defining this most basic of customer concepts.

Satisfaction is the consumer's fulfillment response. It is a judgment that a product or feature or service, or the product or service itself, provides a pleasurable level of consumption related fulfillment.

In less technical terms, satisfaction is the customer's evaluation in terms of whether the product or service has met their needs and expectations. Failure to meet needs and expectations is assumed to result in dissatisfaction in product or service.

In addition to a sense of fulfillment in the knowledge that one's needs have been met, satisfaction can also be related to other types of feelings, depending on the particular context or type of service. For example, satisfaction can be viewed as contentment - more of a passive response that consumers may associate with services they don't think a lot about or services that they perceive routinely over time. Satisfaction may also be associated with feelings of pleasure for services that make the consumer feel good or are associated with a sense of happiness. For those services that really surprise the consumer in a positive way, satisfaction may mean delight. And in some situations where the removal of a negative feeling results in satisfaction, the consumer may associate a sense of relief with satisfaction.

It is also important to recognize that although consumer satisfaction is measured at a particular point in time as if it were static, satisfaction is a dynamic, moving target that that may evolve over time, influenced by a variety of factors. Particularly when product usage or the service experience takes place over time, satisfaction may be highly variable depending on which point in the usage or experience cycle one is focusing on. Similarly, in the case of very new services or a service not previously experienced, customer expectations may be barely forming at the point of initial purchase; these expectations will solidify as the process unfolds and the consumer begins to form his or her perceptions. Throughout the service cycle the consumer may have a variety of different experiences - some good some not good - and each will ultimately impact satisfaction.

What determines customer satisfaction?

Customer satisfaction is influenced by specific product or service features and by perceptions of quality. Satisfaction is also influenced by the customers' emotional responses, their attributions and her perceptions of equity.

Product and Service features: Customer satisfaction with a product or service is influenced significantly by he customer's evaluation of product or service features. For a service such as a resort hotel, important features might include the pool area, access to golf facilities, restaurants, room comfort and privacy, helpfulness and courtesy of staff, room price and so forth.

Consumer Emotions: Customers' emotions can also affect their perceptions of satisfaction with products and services. These emotions can be stable, pre-existing emotions - for example mood state or life satisfaction. Specific emotions may also be induced by the consumption experience itself, influencing a consumer's satisfaction with the service. For example in river-rafting, the river guides have a strong effect on their consumer's emotional responses to the trip and that those feelings (both positive and negative) were linked to overall trip satisfaction. Positive emotions such as happiness, pleasure, elation and a sense of warm heartedness enhanced customer's satisfaction with the rafting trip. In turn negative emotions such as sadness, sorrow, regret and anger led to a diminished customer satisfaction.

Attributions for Service success or failure: Attributions - the perceived causes of events - influence perceptions of satisfaction as well. When they have been surprised by an outcome (the service is either much better or much worse than expected), consumers tend to look for the reasons and their assessments of the reasons can influence their satisfaction. For example, if a customer of a weight loss organization fails to lose weight as hoped for, she will likely search for the causes - was it something she did, was the diet plain ineffective or did circumstances simply not allow her to follow the diet regimen - before determining her level of satisfaction or dissatisfaction with the weight loss company, For many services customers take at least partial responsibility for how things turn out.

Perceptions of Equity and fairness: Customer satisfaction is also influenced by perception of equity and fairness. Notions of fairness are central to customer's perceptions of satisfaction with products and services. This also includes the moos and state on mind the customer is at the time of service delivery.

Other customers, Family Members and Co-workers: In addition to product and service features and ones own individual feelings and beliefs; consumer satisfaction is often influenced by other people. For example satisfaction with a family vacation trip is a dynamic phenomenon influenced by the reactions and expressions of individual family members over the duration of the vacation. Later what family members express in terms of satisfaction or dissatisfaction with the trip will be influenced by stories that are retold among the family and selective memories of the events. Similarly, the satisfaction of the rafters is certainly influenced by the individual perceptions but it is also influenced greatly by the experiences behavior and views of the other rafters.

In short all these factors and other forces that affect customer satisfaction can be grouped under following five heads.

Service Quality.
Product Quality.
Price.
Personal factors.
Situational factors.

Another important point is that these 5 factors are never judged in isolation. All of them perceived together result in customer satisfaction. Hence one or more factors might have negative effect but other factors might have delivered much more to cover for that.

Customer Orientation:

We have defined a Customer Oriented firm on the basis of following four characteristics. They are:

It understands that customers buy benefits, not products: This implies that firm looks at its product as not an end rather a means to the end called benefit to customer. Hence the priority is not to produce the most technically state of art offering (that might be of no use to the customer) but to satisfy the needs of the customer in the most efficient manner. For example, firms sell local area networks but Customers buy ability to share information.
It knows that Retention is more important then Acquisition: This implies that the primary concern/objective of the firm is to retain its customers. Hence it focuses on having closer ties with them, looks at their needs moiré closely etc. In short it tries to be closer to its customer and maintains a continuous dialogue with him. Getting repeat business is amongst the business priorities of the firm. Also all departments coordinate together to deliver customer satisfaction.
Empowers Boundary Spanners: This implies that it understands the importance of the front line people in the customer satisfaction program. It recognizes their role in various Moments of truth and hence regularly trains them for enhancing their soft and hard skills. It also ensures mechanisms for managing Stress. It also ensures that the frontline is equipped with up to date information and has certain plausible level of authority to be flexible enough to satisfy diverse customer needs.
Intimacy and Dialogue with Customer: This means that there is effective coordination between all the departments of the organization. No one is trying to push its own agenda rather the focus of each department is same, enhancing Customer Satisfaction. It ensures that knowledge of 'the trade' permeates every unit. For example Production department knows what all is the Marketing department promising right at the time of planning. And the marketing department knows the limits of its Production department before promising the customer.

On the basis of these 4 characteristics a customer oriented firm can be distinguished from a non customer oriented firm.

Relation in Customer Satisfaction & Customer orientation:

Now we proceed to establish a linkage between Customer Satisfaction & Customer orientation:

Service/Product Quality: First and fourth characteristics combinedly ensure that the offering is relevant, user friendly and satisfies customer needs in the most efficient way. The entire process starts and ends at the customer. Determination of customer needs either by research or by dialogue with him mark the first step of this process. Then the entire process is streamlined to deliver value to the customer at every end.
Situation Factors: Second and third point ensure that the situation factors as behavior of other customers etc do not hamper the Customer Satisfaction of existing customers. It ensures that he is not treated as a second grade citizen and gets equal importance. Frontline is adequately trained to handle any peculiar situation wherein conflict between the interests of present and prospective customer might arise. Also there is an effective grievance redressal mechanism in place that addresses the troubles present customer is facing. The information desk is equipped not only with acquisition related data but also data regarding issues of present customer. For example, billing issues, profiles of customers for better communication and cross selling etc.
Personal Factors: Second, Third and Fourth points ensure that the personal factors are handled properly. Issues like mood of the customer, peculiar customization needs etc are handled in an user friendly and democratic manner. For Example, there might be a case wherein a customer wants service delivery by a particular employee only. Effectively handling such situations is also the key to retention. This warrants that the frontline has sufficient authority to tackle operational issues like this. Regular dialogue will ensure that the firm has deeper understanding of the customer behavior and hence it can better factor it in its operational plans.
Price: First, Second and Fourth factors ensure that a customer is never ripped off. The firm understands that the life time value of serving a customer is much more then even a one time over charging. Hence it makes sure that the customer gets value worth for his money. A better understanding of customer needs ensures that he gets the best suited offering and pays only for features relevant to him.

Thus we find that the four characteristics of a customer oriented firm actually deliver optimum customer satisfaction. Establishing this linkage was the objective of our analysis.

Survey:

Introduction of the survey: After the formulation of a model that links customer orientation of the firm with its customer's satisfaction, we proceed to gauge the customer oriented ness of the BPO industry in Bangalore.

Why BPO industry?

Service provided by Business Process Outsourcing (BPO) companies is a classic example of a typical services firm with text book definition of the services it offers. Moreover the environment in which these firms operate is best represented by the model we have mentioned earlier that measure the customer orientation of a BPO company. The four characteristics of a customer oriented firm as stated in earlier parts of the report can be easily mapped with the way these BPO companies operate.

The motivation behind measuring customer orientation of the BPO firms were also fuelled by the growing number of backlashes and legislations against outsourcing in USA and Europe, the countries where major customers of these firms are located. The group wanted to study whether the image of BPO companies as sweat shops focusing on efficiency was either a perception or really true.

These BPO companies are all located in Bangalore. Due to time and travel constraints, BPO companies in and around the city were chosen, the selection criteria for which are given later on.

We conducted all interviews by meeting the person and asking questions. The details of the persons interviewed are given in the references part.

Importance of frontline people in a BPO:

Following reasons explain why management of the frontline is critical in a BPO

Moments of Truth: Frontline is exposed to maximum number of moments of truth as it is the one who is in direct contact with the customers. Hence, it is actually the face of the company.
Marketing and Cross Selling: Frontline people are in the best position to cross sell and market the company offerings because they are the ones who are in direct contact with the customers.
Dialogue with Customer: They can collect Critical Information about Customer Behavior through continuous interaction.
Face of the company, Brand image: Due to their direct contact with the customers, they actually represent the company and are the flag bearers of company image.

It is because of the following reasons that we incorporated many questions on management of front line.

Criterion for selecting BPOs:

The BPO Operates in Different verticals: It was a conscious attempt on our part to choose the BPOs on the basis of their area of working i.e. the profile of their customers, the kind of service provided by them etc. This was done to get a diverse view of the sector in general so as to nullify any commonalities across different BPOs
It serves Multinational Clients: The profile of the customers being served varies as the customer base gets more diversified, resulting in more information to analyze. Hence we decided to select BPOs serving multi national clients.
Minimum frontline Strength of 100: This was to get the perspective of a bigger BPO, where the front line has the experience of dealing with different varied group of customers
Interviews with Senior Level Management: The interviews were the main part, which included an attempt to understand the ideology of the management, their customer base, the measures of customer satisfaction adopted by them etc. The top management would constitute the interviewed people. This is because the project is intended to focus at the strategy level. Moreover time constraints prevented the group from interviewing a sufficient number of frontline staff of the same companies.

Design of Question for Top Management

A set of base questions was formulated to further design the questionnaire for the top management. These questions were based to find the extent of customer orientation of the firm.

These questions can be broadly classified into seven broad themes. All the questions that were asked to the management were localized around these main questions.

The intent behind each of these seven base questions is to gauge the position of the BPO on the four flagship characteristics of a customer oriented firm.

Priorities in Efficiency, Cross-Selling or Relationship building

The motivation behind this question was to measure the priority of the company on retention or acquisition. According to the model, a customer oriented company knows and fully understands in practice that retention of a customer is more important than acquisition because of a simple belief that a loyal customer has lifetime value rather than importance given to one time transaction.

Role of Customer Satisfaction in your business, how do you define it?

This question will gauge the benefits being conveyed by the company and the one which the customer receives. This is important because at the end of the day the benefits received by the customer will translate into satisfaction. The bottom line here is that customers are not looking for products but they seek benefits.

Is CS a part of KRA/KPA? How is it built?

The idea behind this question is to find if the company links customer satisfaction and performance with incentives and if it does what is the purpose behind it: to motivate or penalize the employee. This question would also gauge the communication of the same to the employees; is this always on the back of the head of the frontline agent when he/she is dealing with the customer? And is this communicated at every level?

How do you generate Customer feedback? What happens to it?

This question tries to measures the means and mechanisms in which the company listens to the customer. This question tries to gauge the intimacy and dialogue which the company has with the customer. Further how this feedback is utilized and channel zed back to the organization is probed here.

What type of training is given to Frontline people?

This question is trying to effectively gauge the boundary spanners empowerment. To deal with the relative importance of the job at the frontline and the stress, this question probes if there is some method/training in place for the frontline people. This question also tries to argue if the training imparted has any connection with the level of authority and responsibility bestowed upon the frontline agents.

How do you stimulate referrals?

This query again would measure the dialogue and intimacy which the company maintains with its customers. This is crucial to find the true needs of the customer and to get some sort of feedback form him.

What role do incentives and/or giving freedom to frontline, play in motivating them?

Through this question there would be better understanding of how empowerment of the employees, the level of authority given and the job role and responsibility all measure up in motivating the employee. The importance of boundary spanners comes into play here.

MphasisObservations from the interview:

Efficiency is the most important concern. Cross selling and relationship building feature in their list only after efficiency. Their motto is, give the best service and the customers will be loyal to you forever.
Customer Satisfaction: When the customer comes to us again that is they measure customer satisfaction only when the customer returns for another service. This colludes well with the fact that they are efficiency driven, as in the first time they worry only about delivery of service and not how it affects the customer satisfaction.
Customer Satisfaction: It is a key component of KRA of everyone. All the employees are evaluated on the basis of the customer satisfaction.
The different ways in which the customer feedback is taken are Customer Feedback by Regular calls, visits, Formal questionnaire, and SLA performance agreed upon in start.
The frontline is provided with regular training which is behavioral and vertical specific. They don't have a common training program for all the different departments. They do not have training for stress management.
They do not stimulate any referrals from the customers.
The front line is not entitled to take critical decisions, if they are not in a position to clearly solve the problems of the customers. Their discretion to take decisions on the spot is minimal. All decisions are to be taken after consulting 'Second line Managers'. There is high supervision. Motivation is heavily based on monetary rewards.

Process Mind