Reduce Costs While Increasing Revenue and Improving Customer Satisfaction

Everyone knows how easy it is to lose a customer due to poor service — if only because you have experienced it at some point in your own life. The situation is even worse for manufacturers. Competition is everywhere and customers have a strong incentive to jump ship if they feel their supplier can no longer deliver on what they promise.

Even though most organizations understand perfectly well that to win a customer can cost roughly five times as much as it does to retain a current one, on average companies still lose half their customers every five years. Increasingly, poor service is becoming the leading cause of customer flight.

Of course, service should not be viewed only as a way to prevent customers from leaving the fold. Service should be seen as a way to differentiate your company from the competition while reducing costs and increasing revenues. You can always be sure that your customers will measure you on your responsiveness, accuracy, and ease of interaction.

Creating Opportunity for Value

John Brandt, in the February 1, 2004 edition of Industry Week, writes: "If we believe we are merely makers of product, we will spend our days struggling only with cheaper/faster/better and never think beyond the walls of our commodity manufacturing prison. If, however, we can see ourselves as part of a broader flow of physical inventory from source to customer (and associated customer value), our horizons broaden as to what we might do to improve the entire process — and our margins."

A number of your business processes, some of them complex and cumbersome, can now be streamlined and automated to improve customer service:

Quote and Proposal Creation
Quote and proposal generation is an important area for manufacturers who want to capitalize on each and every opportunity in the pipeline and who may face constraints that limit their accuracy, efficiency, and responsiveness to customers and prospects.

According to AMR Research, quoting and proposal generation strategies reduce order error rates from 25 to 50 percent. The immediate impact on the accuracy of the orders taken and fulfilled is reflected in the reduction of the cost of handling an order several times, the reworking of the products to meet customer needs, and the decrease in the number of returned products.

Quoting and proposal times are being reduced 35 percent or even more. Obviously, the more complex the product is, the more you will gain from improvements to how quotes and proposals get generated. Over time, the results will continue to show up in your financial statements.

You want to examine your processes first and target all means of containing time and costs before you select a technology solution. Manufacturers that have quoting and proposal already automated should consider increasing the sales of customized products through configuration.

Supply Chain Visibility
As manufacturers are discovering, supply chain information is a key part of customer service. Your ability to provide sales force, service reps, and customers with real-time, accurate, web-based information on price, availability, order status, product content, and contract terms can be the decisive differentiator. As we all know, many companies come up short when it comes to customer requests, even for simple questions on product or price let alone complex queries regarding configuration or delivery.

From now on, your customers assess your viability as a partner not in days but in hours and even minutes and seconds. You need a powerful link between your organization's customer touch points and the rest of your extended ERP systems.

Customer Self-Service
Customer self-service is really less a means to reduce costs than it is to offer additional channels for customer support, convenience, and satisfaction — and thus ultimately to increase revenue and profit. This is not to say you cannot cut overhead. Forrester Research Inc. concludes that a self-service approach can slash the cost of a customer interaction from as much as $35 on the phone to $0.75 online — a potential savings of 98 percent. Still, many businesses venture into self-service because this is what we have all come to expect. A February 2003 UCLA Internet Report noted that the average user spent 11.1 hours a week online and used the Internet as the primary means for customer information and product research. Almost half of them made a purchase online.

The key to customer self-service is to offer the same benefits and opportunities available in assisted service. This includes identifying a customer by name, organization, and role; displaying and managing transactions for the customer's product portfolio, service agreements and entitlements, open inquiries, order status, and invoice and billing information; understanding the intent of the inquiry; and providing a resolution through integration with other systems and responding. If the issue cannot be resolved online, you then need to deliver a path to escalate the inquiry.

With this in place, your customers can transact business with you anytime and anywhere. Anyone who has taken advantage of a solid, fully functional e-commerce channel knows how much satisfaction and loyalty this generates.

Sometimes manufacturers who adopt new technology face older clientele who might be wary of such new channels or simply less likely to switch gears. Be sure to evaluate your current customer service and support protocols and determine exactly what can be web-based. You might even involve customers in your planning or in a beta test. This is an especially important concept because you want to be sure to view as much of your initiative as possible through the end users' point of view. When in doubt, keep it simple.

By all means communicate with your customers throughout the entire process and set expectation levels as to precisely what will and will not be available over the new channel. You can also promote the new channel in all other forms of customer communications and perhaps offer training or incentives for usage.

A Winning Hand

Manufacturers that perform at the most competitive levels in customer experience management have made customer service a core competency all across the enterprise. With integrated customer-facing, back office, and extended enterprise processes you can put the right information in front of the right people any time and any place they want it. The result is a closed customer loop where knowledge is captured on an ongoing basis and workflow proceeds most efficiently and effectively.

In these companies, managers understand that customer service is their competitive advantage. They strive constantly to offer their customers user-friendly information and opportunity that meets their specific expectations and needs.