Customers must come first - by Michael Skapinker
Published: January 11 2005 on www.ft.com
What, the caller from Hewlett-Packard wanted to know, did I think the big
business issues would be in 2005? Well, I replied, in Hewlett-Packard's case, I
thought the issues should be that my new HP printer-scanner-copier refused to
scan when I bought it and it took me weeks to sort it out. Also the machine
could not print on lightweight card, as it was supposed to, without jamming.
The man from HP (or, rather, from the research organisation contracted by HP) laughed nervously. Were there any other big business issues I would like to mention? No, I said. If HP took care of those small ones, the big ones would take care of themselves.
I could have talked for longer, but I had to call Powergen. I should not have been using the FT's time to sort out my electricity difficulties but no one had answered the 24-hour Powergen helpline the previous evening. This time I got through and, after a few false starts, Amit (as I shall call him) sorted out my problem.
I asked Amit where he was. Delhi, he said. Did he actually work for Powergen? No, although he spent all his time answering Powergen calls. Did he have any idea why I had not been able to get through the previous evening? The 24-hour helpline was not really available after 8.30pm, he said. (Powergen says this is not true, that my call should have been picked up by its Leicester call centre, that the company would like to apologise for any difficulties, blah-di-blah.)
Why is it so hard for companies to get things right?
The British utilities seem to have surrendered all their post-privatisation customer-service improvements. Some (not Powergen, I should say) have gone back to their tricks of 20 years ago, including not turning up at the appointed time and then claiming to have rung the doorbell and found no one home. Not that you would necessarily want them in your home. Some of these organisations appear to be staffed by people who opted to repair telephones and install broadband connections because English football stadiums have become too genteel.
Many banks, retailers and the rest are no better. Some seem to have cut back on the essentials of customer service training: please, thank you - that sort of thing.
There are honourable exceptions (take a bow Direct Line insurance, Hotter shoes and Pret A Manger sandwich bars), but that is what they are: exceptions. I know this is not just a British phenomenon: every time I write about deteriorating customer service, many of you e-mail from elsewhere with the same complaints.
What is the problem? Some of it is industry-specific: either there is insufficient competition or dissatisfied customers cannot be bothered to change because they doubt they will find anything better. But I sense a deeper malaise: many companies seem to have forgotten what business is about.
They think it is about cutting costs: hence the mania for outsourcing. I am not attacking outsourcing as such; it is not, on its own, responsible for deteriorating customer service. It was, after all, Powergen's outsourced call centre that dealt with my problem and its in-house centre that let me down. Rather, the problem is the mindset that so much outsourcing represents: the idea that a startling reduction in employment costs (all those PhDs doing the accounts for $3,000 a year) is all you need to succeed.
Costs do matter. If they exceed revenues, you have no profit - and no company, or individual, can carry on for long without profits. As Charles Dickens' Mr Micawber said: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
But making a profit, essential though it is, is not the purpose of business either. It is its consequence. As Peter Drucker wrote: "Profit is not the explanation, cause or rationale of business behaviour and business decisions, but rather the test of their validity."
The purpose of a business is to provide something that a customer wants at a price he or she is prepared to pay. In Prof Drucker's words: "It is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for a service converts economic resources into wealth, things into goods."
It is a simple idea. You provide goods or services that customers are pleased with - so pleased that they come back, and tell all their friends to buy from you too. You then sell more. Result: happiness.
Carrying this out, of course, is less simple. Others may have found a way of providing the same goods at far lower prices, in which case costs will have to be looked at again and you may have to move jobs to low-wage countries.
There is also the difficulty of execution: the bigger your business becomes and the more widespread your suppliers and customers, the harder it is to deliver.
You may need information technology systems to keep track of supplies and to ensure that when your customers call, it takes you no more than a few seconds to call up the information you need.
But when the new IT system has been installed, or the foreign factory built, or this or that activity put out to contract, there is only one test of whether it was worth it: are the customers happy?
As important as planning, talk and implementation are, once they are done, some part of the organisation, whether in Leicester or Delhi, has to deal with a customer - and it either works or it does not. Jan Carlzon, the one-time head of Scandinavian Airlines, called that moment of customer contact the moment of truth.
It is with the customer that all business decisions should start and end. Everything else is detail. That, should any other researchers call, is what I think the biggest business issue will be in 2005 - or any other year, for that matter.
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