In our cutthroat world marketplace, it’s becoming more and more difficult to differentiate yourself from your closest competitors. Traditionally, companies often look to bring new products to market that’ll set them apart from the competition; however, this can require significant time and capital expenditures to be successful. But one such element, often overlooked, that can be extremely fruitful is improving and capitalizing on the benefits of excellent customer service performance.
Making improvements in this area can typically be achieved more quickly, and with less investment, than just bringing new products to market alone. Furthermore, practicing excellent customer service can also add many positives to your supply chain. Having satisfied customers usually leads to repeat business and increased demand for your products or services. This commonly has a calming effect on demand volatility, which can lead to lower working capital costs, due to lower inventory levels.
To have satisfied customers your company needs to be in position to provide the right product, at the right time, and in the right market, and achieving this requires intelligent supply chain strategies that provide deep operational control, yet are targeted enough that costs are minimized. To find this balance and optimize your customer service strategy, several key questions need to be thoughtfully answered, so we recommend that your team address the five specific questions discussed below to help inform your customer-centric supply chain strategy.
5 Questions to Answer to Improve Your Customer Service Performance
1. How Do We Measure Customer Service Performance?
Companies typically measure customer satisfaction levels via direct feedback from surveys or similar devices, but this doesn’t always tell the whole story. Many customers self-select to not participate in feedback surveys if they’re happy; your inbox tends to be filled with responses from unhappy customers. Such information incongruency could drive supply chain strategies that work against your long-term success. Instead, measure how loyal your customers are. The ability and methods to do this accurately will vary by market, but a great start is tracking revenue generated by existing customers over time. Using this data, try to understand how it’s correlated with your company’s different initiatives and strategies to find out what works and what doesn’t.
2. Are We too Focused on Customer-Facing Strategies?
Initially, many companies focus their customer service development efforts on improving customer-facing operations, like offering more training and customer interaction scripts to reduce service level variability. Though it’s important, being too focused in this area tends to lead to results that fall short of expectations, as they’re often treating symptoms of your company’s operational inefficiencies. Alternatively, focus on optimizing operations that directly impact your company’s ability to fulfill orders or services that if done well will impress your customers, because the impressed one create repeat business and grow your revenue.
3. Can We Cost-Effectively Improve Customer Service?
The laymen will lament, “customer service costs money.” While this is inherently true, as all operational actions carry a cost, the statement is very short sighted. Having optimal customer service is about making choices to allocate operational cost in areas that greatly improve customer satisfaction and control costs areas that are necessary, but don’t greatly affect customer service. Companies who don’t truly understand which operational costs lead to better customer service tend to increase customer satisfaction across the board, causing them to underserve their critical customer segments and overserve the less critical ones. This practice won’t just increase cost, but also it reduces customer service to your most important customers. Avoid this by focusing on segmenting your customer bases and explore how different operational strategies impact the service level for each.
4. What’s the Best Way to Improve Our Customer Service?
To truly answer this question, you must know three things inside and out: 1) what’s valued by your customers, 2) how you value your customers, and 3) how your supply chain actions impact these values. The first step to addressing these areas is to evaluate and segment your customer base by how critical they are to your future success and what product or services are most important to them. After this evaluation, it’s easier to understand how you can tailor your offerings to your most important customers and ensure your supply chain is aligned with your customer service strategy. On top of that, you can also uncover opportunities to upsell your customers who are willing to pay for better service.
5. Does Supply Chain Have a Seat at Our Customer Service Table?
Exceptional customer service requires close collaboration between many internal stakeholders. Traditionally, the supply chain function has been excluded from these conversations, which can lead to misalignment between operations and strategy. When there’s misalignment, operational efficiency suffers, costs increase, and customer satisfaction levels drop. But the times are starting to change, as more companies are starting to recognize how critical it is that their supply chain is aligned with their organizational strategic initiatives. By including your supply chain team in customer service planning sessions, you’ll ensure that your supply chain team develops strategies to efficiently meet satisfaction requirements and uncover hidden costs that have traditionally gone unnoticed and uncontrolled.
Using your supply chain capabilities as a multidimensional tool to increase customer satisfaction while controlling costs is a great way to differentiate you from your competitors and to increase revenue quickly. By reviewing and addressing these questions with your team, you’ll be well positioned to best your competitors by providing superior customer service and sustain long-term revenue growth in the future.