MarketIntellibitsTM                        

October 31,   2005
Volume I   Issue 18


Customer Satisfaction

First, the bad news:  even service can get commoditized.

Do you remember the old game show, “Name That Tune”? The contestants
would bid for the opportunity to name a song by hearing the fewest notes.
One contestant would say, “I can name that tune in five notes.” The other
would say, “I can name that tune in four notes.” When one contestant could
not go lower, he or she would say, “Name that tune.”

Customer Service can follow a similar pattern. One mill says, “I can deliver
that paper in three days.”  Another says, “I can deliver that paper in two
days.”

Well, you get the idea.

Delivery lead times get shorter and shorter, and costs go higher and higher.
Service gets commoditized, and cutting lead times is like cutting prices.

Now: the good news:  it doesn’t have to be that way.

Is delivering the paper one day, or one hour, quicker really that important to
your customers?

Shorten the lead time, cut the price, increase the brightness. What really
matters?

I’ve heard printers say that availability was important in their selection of a
“house sheet.” After I’d heard this a few times, I realized that I really didn’t
understand. Paper was readily available. Merchants maintain inventory. Mills
can deliver product within twenty four hours in many cases. So what was
the big deal?

So, I decided to ask.

And this is important. We don’t ask our customers often enough what
matters. We think we know more than we do.

If you’ve read MarketIntellibits before, you know how much I love to ask the
“dumb” questions.

So I’ll ask you, what do you think printers said when I asked, “What do you
mean when you say “availability”?   Think about this while I tell a story
about another one of my dumb questions.

Since service levels from mills get shorter and shorter, and minimum
quantities for mill shipments direct to printers get smaller and smaller, I
realized I didn’t understand why merchants keep inventory at all. I would
have thought that the economics of buying truckloads and selling cartons or
skids would have enough in the price differential for different quantity
“brackets” to justify it, but those numbers just didn’t add up.

So I asked the dumb question: “Why do merchants keep inventory?” The
answers were astonishing.

One merchant thought for a few minutes and said he wasn’t sure. Another
said it was because the mills force them to keep inventory. Another said that
printers need same day delivery. No one said that the margins from buying
at the truckload price and selling at the “bracket” price made it profitable.

Astonishing, indeed.

Now, back to the earlier dumb question: what do printers mean when they
say “availability”? One printer said that a particular grade was his house
sheet because his preferred merchant stocked it, stocked every item, and
never ran out. Another said availability meant quick turn, i.e. short lead
times, on special making sizes. Still another told me about being able to pick
up a carton from his merchant in an emergency. That merchant was only
fifteen minutes away, but when the merchant moved his warehouse, the
printer switched merchants and house sheets.   

Do you really understand your customers? Do you really understand what is
important to them, and what their level of satisfaction is? Keep what’s right
and important. Fix what’s wrong and important. Don’t worry so much about
the rest.

Customer satisfaction research, when done right, can also give insight into
customer purchase decision drivers. And it is actionable. It is not easy,
however. If, for example,  you simply ask customers why they buy a
particular brand of beer, they will never say it’s because they like the ads,
and so you might conclude that advertising doesn’t matter.  I think we know
that, at least for beer, advertising does matter.

So, do your customer satisfaction research, but don’t do it yourself. Leave it
to professionals.

For more information about customer satisfaction, and making market
research actionable, call Jack Miller at 203 925 0326, or email Jack Miller at  
 
jack.miller@market-intell.com



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