Quotations  from  Valuing  Your  Customers  by  Angus  Jenkinson,  McGraw  Hill,  1995.    This  selection  from  his  classic  book  highlights  thinking  related  to  the  new  digital  marketing,  service  and  customer  experience,  and  customer  loyalty  in  the  era  of  individuality.  

The  ideas  and  cases  in  this  book  explain  how:  

– quality  must  evolve  from  product  quality,  to  process  quality  to  relationship  quality  to  meet  the  needs  of  today’s  consumers  and  employees,  and  to  achieve  optimum  potential  (returning  over  the  route  in  implementation);  

– lifetime  value  becomes  the  key  to  both  long-­‐  and  short-­‐term  profitability;  – strategic  application  of  knowledge  and  of  communications  changes  products,  

transforming  them  into  personalized  and  commodity-­‐proof  service  brands;  – shifting  from  ‘brand  management’  to  ‘account  stewardship’  preserves  and  

nurtures  the  brand;  – ‘moments  of  truth’  crystalize  service  experience,  organization  development  

and  relationship  management  in  the  ‘archetypal  moments’  that  make  customers  come  back  –  and  tell  their  friends;  

– guarantee  management  thinking  builds  an  end  to  end  business  devoted  to  acquiring  and  sustaining  valued  relationships;  

 

Throughout,  the  word  ‘consumer’  or  ‘customer’  means  a  private  individual,  an  individual  within  a  company  or  a  company  quite  interchangeably  according  to  context  or  need.  Where  a  distinction  needs  to  be  highlighted,  it  usually  is  [people  are  people  wherever  they  are  and  they  all  have  ideas,  emotions,  desires].    

 

These  are  disciplines  to  transform  organization  and  customer  value  by  creating,  sustaining  and  developing  relationships  of  value.  The  evolution  of  quality  from  product  performance  to  relationship  performance  is  the  critical  step  because  this  meets  the  new  aspirations  of  customers  and  employees...  

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If  the  transformation  is  successfully  implemented,  the  result  will  sweep  the  old,  impersonal,  antagonistic  mass  marketing  out  as  a  learning  phase.  If  not,  companies  will  count  the  cost  in  declining  margins.  

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Tomorrow’s  marketers  will  need  to  build  competences  which  move  marketing  from  an  impersonal,  transaction  focus  powered  by  image  to  a  personal,  relationship  focus  built  on  substantial  service  in  aid  of  the  brand,  not  just  one  to  one,  but  I  to  I  (I∞I),  using  and  mobilizing  all  the  responsive  company’s  resources  in  the  promise,  the  guarantee  of  quality,  delivered  at  the  moment  of  truth  to  a  recognized  individual.  

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[Marketing  in  the  digital  era]  is  the  means  of  transforming  the  impersonal,  unvalued  noise  of  the  modern  marketplace  into  welcomed  moments  of  truth  [touch  points],  which  become  the  basis  for  the  cultivation  of  a  reciprocal  relationship  between  the  individual  members  of  the  customer  community  and  the  responsive  company.  

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The  information  system  is  the  enabler  of  best  practice.  Until  a  company  has  developed  effective  knowledge  about  the  interaction  of  customers  and  company  at  the  front  line,  and  how  communications,  operations  and  activities  affect  customer  attitudes  and  behaviour,  it  has  little  opportunity  to  optimize  those  encounters  (Figure  1.2).  Until  it  knows  who  its  individual  customers  are  and  how  they  are  behaving,  it  will  find  it  difficult  to  break  out  of  an  impersonal  and  undifferentiated  treatment  of  them.  

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The  community  building  concept  is  central  to  quality  [database]  marketing.  Building  loyal  relationships  with  personal  customers  means  building  community.    

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Becoming  community  value  directed  increasingly  means  developing  a  mutuality  of  value:  loyalty  to  customers  creates  loyalty  from  customers.  Treasuring  our  reputation  within  the  customer  community  is  the  first  step  towards  creating  the  value  stream  that  sustains  the  company  into  the  future...  

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Service  mastery  is  then  the  blue  riband  goal.  It  is  achieved  when  organizational  and  relationship  effectiveness  come  together  in  product,  process,  information,  goals  and  mutual  loyalty:  the  needs  of  community  and  responsive  company  become  increasingly  self-­‐supporting.    

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This  model  of  organization  development  benefits  from  giving  direction  to  quality  development  goals;  and  by  ensuring  that  they  match  our  individual  needs  as  managers,  leaders,  employees  and  customers,  it  increases  the  possibility  of  achievement,  or  at  least  positive  movement.  It  replaces  the  goal  of  quality  as  

product  specification  with  quality  as  customer  partnership.  Perhaps  the  first  toolmakers  said,  ‘You  hunt,  you’re  good  at  it;  I’ll  make  your  flints’,  but  the  reality  is  that  no  product  finds  its  way  to  the  customer  without  an  uncommon  amount  of  cooperative  activity.  This  is  what  really  drives  economic  development.    

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On  co-­‐creation:  Let  us  first  say  something  about  ‘competitive  advantage’.  Until  the  eighteenth  century,  ‘competitive’  only  had  the  sense  of  ‘competence’.  In  fact,  it  meant  ‘working  together  to  achieve  excellence’.  This  is  the  basis  of  true  competitive  advantage.  

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For  decades,  organizations  acted  single-­‐mindedly  to  develop  the  skills  and  strategies  in  brand  building  and  communication  which  persuaded  customers  to  buy  the  products  the  company  wanted  to  sell.  The  skills  were  valuable,  but  their  deployment  was  one  way,  single  track,  outbound,  monolithic  communication  to  the  masses.  This  process  shaped  planning,  product  development,  manufacturing,  sales  and  marketing.  It  belonged  to  an  era  when  mass  manufacturing,  mass  distribution  and  mass  marketing  conditioned  the  industrial  paradigm  and  was  structure  focused  on  optimizing  the  length  of  production  runs,  not  customer  relationships.  Size  equalled  economy  of  scale  and  power.  Companies  relished  power  as  the  capacity  to  dominate  the  marketplace.  The  jobs  of  sales,  marketing  and  advertising  were  simply  to  shift  the  tin  the  factories  turned  out.    

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The  mass-­‐marketing  method  is  essentially  adversarial:  it  aims  to  dominate  markets,  customers,  tastes  and  styles.  Campaigns,  strategies  and  targets  shape  the  contest,  and  the  contest  is  often  with  the  customer.    

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Pushing  a  stone  uphill  is  hard  work.  So  is  paddling  a  canoe  against  the  river.  If  the  aim  of  marketing  is  to  make  products  sell  themselves,  doing  that  needs  a  profound  form  of  conversation:  profound  listening,  followed  by  profound  internal  action  to  digest  the  message,  then  profound  communication.    

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The  great  unifying  theme  of  the  20th  century  is  the  triumph  of  the  individual...  

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Marshall  McLuhan  made  the  following  prediction:  ‘One  of  the  future  aspects  of  advertising  is  the  custom-­‐made,  the  tailor-­‐made.  Instead  of  peddling  mass-­‐produced  commodities,  advertising  is  going  to  become  a  personal  service  to  each  individual.’  This  implies  that  the  customer  should  be  seen  as  a  partner  or  associate,  not  a  target  enemy  whose  resistance  must  be  overcome.    

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One  of  the  single  most  effective  ways  to  destroy  quality  is  to  stick  a  wet  finger  in  the  air  and  set  short-­‐term,  arbitrary,  numeric  targets  ‘to  get  people  working’.  The  gap  between  this  and  the  renewing,  ordering  imagination  based  on  intimate  and  profound  knowledge  of  customers  and  craft  is  as  wide  as  Ginnungagap,  the  void  between  worlds  in  Norse  mythology.  This  is  a  numericism  that  wants  to  impose  itself  on  the  world.  If  you  ignore  the  realities  of  the  marketplace  or  the  system  and  try  to  impose  your  own  order  onto  it,  is  it  so  surprising  that  you  should  find  yourself  obsessed  with  survival,  never  getting  off  the  bottom  rung  of  development?  

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Grocers  who  want  to  create  and  sustain  lasting  relationships  with  their  customers  use  a  number  of  time-­‐honoured  techniques,  whose  principles  cross  boundaries.  The  good  community  grocer  greets  his  or  her  customer  with  a  smile  and  by  name:  ‘Hello  Mrs  Horobitz,  and  how  are  we  today?’  There  may  even  be  a  family  question:  ‘And  how’s  your  son  after  his  operation?’  Produce  is  good  and  is  laid  out  openly  for  display,  and  in  the  process  of  picking  the  customer’s  order  the  grocer  would  publicly  reject  anything  considered  unsuitable  and  ostentatiously  but  naturally  throw  it  in  the  reject  bin,  in  a  gesture  that  says  ‘I  care’.  There  would  be  an  extra  carrot  added  to  the  pile  after  the  scale  dipped  and  the  right  weight  had  been  reached,  an  open  display  of  natural  added  value.  There  might  be  an  occasional  treat  such  as  an  apricot  for  a  child  or  a  bunch  of  flowers  at  Christmas.  The  grocer  would  talk  cheerfully  but  not  pushily  about  products:  ‘I’ve  got  a  nice  lot  of  new  potatoes  just  in.  Would  you  like  to  try  them?’  The  above  example  demonstrates  a  number  of  key  principles:  

–  Acknowledging  the  person,  both  as  an  individual  and  as  a  valued  customer.  

–  Having  a  dialogue  that  enables  warmth  and  knowledge  to  be  developed.  

–  Being  able  to  anticipate  a  reliable  relationship,  with  few  problems,  which  are  promptly  and  courteously  dealt  with.  

–  Regular  added  value  as  a  natural  extension  of  the  basic  transaction.  

–  Special  attention  during  relationship  development.  

–  Graceful  surprises.  

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Branding,  through  the  world  of  imagery  and  personality,  creates  a  ‘being’  with  which  the  customer  can  identify...  

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Alfie  Kohn  tells  me  an  old  American  joke.  An  old  man  was  getting  insulted  by  a  group  of  10-­‐year-­‐olds  each  day.  They  would  tell  him  how  stupid  and  ugly  and  old  

he  was.  Rather  than  shout  at  them  he  called  them  together  and  told  them  that  any  of  them  who  shouted  at  him  the  next  day  would  get  a  dollar.  Excited  and  amazed  they  all  came  round  hurled  abuse,  and  collected  their  dollar.  ‘Do  the  same  tomorrow’,  he  said,  ‘and  I’ll  give  you  a  quarter  for  your  trouble’.  The  children  thought  this  was  still  pretty  good,  and  turned  out  again  to  insult  him  and  earn  the  reward.  Then  he  apologized  and  told  them  that  on  the  following  day  he  could  only  afford  to  give  them  a  penny.  ‘Forget  it,’  they  said  –  and  that  was  the  end  of  his  problem.  NatWest  offered  one  point  per  £10  spent,  then  one  per  £20,  and  next?  

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The  new  marketing  seeks  to  establish  an  association  through  dialogue  and  through  a  set  of  values  that  are  mutual  and  community  creating:  the  higher  levels  of  organization  quality.  Such  values  are  essentially  moral.  They  are  based  on  a  principle  of  sharing  which  becomes  gain-­‐gain.  ...So,  the  ideas,  the  imagination  and  techniques  of  business  will  need  to  be  more  coloured  by  a  moral,  value  laden  outlook  if  they  are  going  to  be  successful  in  winning  and  keeping  customers  in  a  loyal  relationship.  This,  of  course,  does  not  mean  a  moralistic  attitude.  That  would  simply  be  talking  down  to  customers.  Companies  which  carve  a  great  reputation  for  themselves,  for  their  quality  and  dependability,  are  always  associated  implicitly  at  least  with  moral  worth:  with  integrity,  honest  value,  and  a  guarantee  of  worth.  

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Marketing  ...becomes  service  and  the  boundaries  of  product  and  marketing  become  blurred...    

While  good-­‐quality  selling  is  essentially  a  service,  paradoxically,  service  can  be  considered  as  a  sales  activity.  Service  is  the  creation  of  relationship  value  through  acts  of  care  that  satisfy  customer  needs.  Service  creates  the  company’s  future:  ensuring  that  customers  wish  to  return  to  the  same  source  for  future  purchases.  Service  creates  tomorrow’s  sales;  it  is  selling  through  a  long-­‐term  window.  The  promise  of  future  service,  if  credible,  also  produces  today’s  sales.    

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Service  transforms  the  commodity  in  personalized  interaction  with  the  customer.  It  generates  relationship  values  through  a  series  of  interactions  at  the  service  front  line.  These  are  the  threshold  moments  of  truth  when  clients  and  customers  test  our  development.  To  what  extent  will  the  quality  of  our  processes,  resources,  people,  information,  etc.,  come  together?  To  what  extent  can  we  put  the  customer’s  genuine  needs  and  preferences  first,  not  as  slaves,  but  as  partners?  Then,  good  service  transforms  commodities.  

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What  eventually  determines  our  loyalty,  or  the  lack  of  it,  is  the  ‘archetypal  moment,’  or  moments  that  we  would  call  to  mind  about  a  company,  the  inner  mental  picture  of  the  company,  or  its  products  and  services,  and  how  we  feel  about  this.    

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The  future  will  be  marked  by  an  intensification  and  deepening  of  business  relationships.  The  model  in  Figure  8.6  is  of  this  dynamic  threshold  [moment  of  truth,  touch  point]  with  customers:  a  two-­‐way  dialogue  and  relationship  that  needs  to  adjust  to  individual  customers  and  customer  groups,  and  their  changing  needs  over  time,  as  well  as  the  organization’s  changing  needs  and  capabilities.  

The  interaction  includes  all  communications,  including  product  and  service  delivery,  customer  complaints  and  requests,  telephone  contacts,  both  inbound  and  outbound,  promotional  and  service  mailings,  educational  and  promotional  events,  e.g.  seminars  and  previews,  and  face-­‐to-­‐face  meetings  or  encounters...  one  has  to  call  into  question  the  real  value  of  any  part  of  the  business  that  has  no  relationship  with  customers.  

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First  Direct  are  in  the  top  quartile  of  British  banks  in  a  Boston  matrix  measuring  ‘customer  satisfaction’  and  ‘willingness  to  refer’,  and  are  one  of  only  two  banks  in  this  quartile.  In  addition  to  being  the  first  British  bank  serious  about  remote  banking,  they  achieved  technical  leadership  with  implementation  of  an  event  management  or  event  trigger  system.  This  enabled  them  to  predefine  a  series  of  possible  customer  events  and  to  programme  a  desired  response,  an  idea  first  promoted  by  the  author  in  1988.  Marketing  management  define  ‘rules’  and  customers  are  subsequently  selected  by  the  database  system  for  communication,  promotion  or  service,  based  on  their  event  or  behaviour  history.  

This  concept,  an  event  trigger,  links  three  ideas:  

1.  The  recency/frequency/value  behaviour  thinking  that  has  driven  mail  order  for  decades:  Who?  

2.  The  moment  of  truth  concept:  When?  

3.  Contact  management  techniques  developed  for  salesforce  management  systems  and  telemarketing  scripting,  with  emphasis  on  process  management:  What?  

An  event  trigger  can  be  defined  as  ‘the  configuration  of  a  system  to  recognize  particular  customers  and  their  relationship  at  a  moment  of  truth  and  thereby  stimulate  an  appropriate  action  according  to  a  predetermined  and  evolving  policy’.    

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The  most  important  moments  of  truth  [touch  points]  are  the  archetypal  moments,  ...It  is  the  picture  and  feeling  of  the  event  experienced  by  a  customer  that  best  sums  up  his  or  her  loyalty  or  disinterest  in  a  company  or  its  products  [brand  essence].    

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Studies  of  satisfaction  show  that,  ‘Satisfaction  is  not  the  pleasurableness  of  the  [consumption]  experience  …  it  is  the  evaluation  rendered  that  the  experience  was  at  least  as  good  as  it  was  supposed  to  be.’15  Satisfaction  is  an  evaluated  condition  which  arises  during  a  two  stage  process.  It  is  summarized  in  the  study  by  Westbrook  (1987)14  as:  consumption  outcome  →  affect  →  satisfaction.  This  study  also  showed  that  feelings,  which  may  be  less  conscious  (and  which  are  described  by  one  researcher  as  primitive  and  naive16)  are  more  powerful  drivers  of  word  of  mouth  recommendations  and  future  buying  decisions  than  satisfaction,  perhaps  because  of  those  very  conditions.  In  fact,  recent  scientific  studies  are  only  now  recognizing17  what  is  obvious  to  many:  the  important  role  of  feeling  and  emotion  in  judgement  and  decision  forming.  

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Of  course,  some  decisions  are  made  with  considerable  rational  input.  This  is  particularly  true  in  business-­‐to-­‐business  marketing  where  the  decision  process  tends  to  be  more  formalized  and  involves  multiple  individuals  and  organizational  specifications.  Even  here  though,  feelings  of  confidence,  warmth,  fear,  etc.,  often  influence  decisions.  Even  in  the  most  intellectual  process,  there  is  a  final  judgement:  does  it  feel  right?  Einstein  would  judge  a  theorem  on  feelings,  for  example  by  its  beauty.  The  ‘feel  good’  factor  is  now  a  recognized  force  in  political  processes  and  the  economy.  

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Service  is  the  creation  of  relationship  value  through  acts  of  care  that  satisfy  customer  needs.  Service  creates  the  company’s  future:  ensuring  that  customers  wish  to  return  to  the  same  source  for  future  purchases.  Service  creates  tomorrow’s  sales;  it  is  selling  through  a  long-­‐term  window.  The  promise  of  future  service,  if  credible,  also  produces  today’s  sales.    

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The  greater  the  service  content,  the  more  likely  it  is  that  the  product  consists  of  the  capacity  of  systems  of  people,  processes  and  equipment  that  can  be  tested,  exported  and  franchised  but,  in  a  sense,  comes  into  being  only  in  memory,  imagination  and  experience  (see  Figure  8.8).  Such  a  product  cannot  be  seen,  but  exists  only  in  the  moment  by  moment  of  life  and  service  delivery:  as  the  crystal  suddenly  appears  in  the  supersaturated  solution.  

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Each  and  every  product  begins  first  with  an  idea  (or  concept).  Take  the  most  tangible  product  you  can  think  of,  and  you  start  with  the  idea  you  are  thinking...  So  the  core  of  a  service  product  is  a  concept:  a  haircut,  a  flight  to  New  York,  a  holiday  in  France,  a  personal  computer.  This  is  the  core,  generic,  essential  or  commodity  concept  that  can  then  be  personalized  in  two  ways  (see  Figure  8.9):  

1.  Brand  image.  Not  ‘a  radio’  but  ‘a  Sony  radio’;  not  ‘fast  food’  but  ‘McDonald’s’,  i.e.  a  brand  image  which  makes  the  business  or  brand  unique  among  commodities.  

2.  Customer  personalization.  Personally  recognized,  configured,  cooked,  delivered:  service  elements  that  made  the  service  product  unique  for  the  customer.  It  is  often  more  difficult  for  others  to  replicate  customer  unique  aspects  for  they  invariably  include  something  of  the  personal  relationship  between  buyer  and  seller.  All  true  personalization  of  service  and  relationship  does  this.  Of  course,  false,  unwarranted  or  inaccurate  personalization  is  simply  a  unique  form  of  customer  insult,  not  service.  

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The  specific  service  product  is  therefore  a  brand  image  and  a  service  experience  which  is  woven  in  the  moment  of  truth  from  its  delivery  attributes  –  which  correspond  to  elements  of  the  four  core  competencies  of  the  business  described  at  the  end  of  Chapter  5.  

1.  Physical  or  tangible  features;  the  essential  or  core  item  

2.  Activity,  movement  or  process  elements  

3.  Relationship  or  personal  features,  the  human  touch  

4.  Information  content,  including  data  supporting  or  developing  brand  values.  

A  service  product  consists,  therefore,  of  what  we  provide  and  what  the  customer  experiences.  These  are  united  in  an  act  of  knowledge  which  is  also  the  customer’s  judgement  of  what  we  provide.  Image  and  reality  meet.  The  customer  perceives  not  only  what  we  provide,  the  tangibles,  but  also  the  way  we  provide,  the  intangible  values.  

Perhaps  the  best  way  to  represent  this  is  by  an  illustration  (see  Figure  8.10),  the  magic  of  the  clover  leaf.  The  aim  should  be  to  craft  and  shape  the  service  elements  until  they  deliver  the  proverbial  crock  of  gold.  The  brand  both  unites  the  four  elements  of  the  total  service  product  and  wraps  them  in  its  values  and  image.  Customers  experience  tangible,  process,  information  and  relationship  elements  of  the  service.  

One  of  the  advantages  of  this  model  is  that  it  has  complete  synergy  with  the  organization  model  (which  will  be  developed  in  the  next  chapter).  This  should  not  be  surprising.  The  distinction  between  company  and  product  is  partly  artificial  and  meets  in  the  moment  of  truth.  

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One  of  the  most  important  developments  over  the  next  years  will  be  the  increasing  ‘intelligence’  and  information  content  in  products.  Information  is  not  only  a  component  of  the  product  package  in  its  own  right,  as  in  a  railway  timetable  or  library  database,  but  will  increasingly  transform  the  process,  relationship  and  hardware  components  of  the  product.  More  and  more  products,  for  example  financial  products,  consist  almost  exclusively  of  information  (or  expertise)  added  value.  

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It  is  therefore  crucially  important  that  the  computer  database  system  is  able  to  record  the  total  service  package,  or  at  least  all  meaningful  elements  of  it.  For  example,  in  making  a  decision  about  the  effectiveness  of  a  particular  insurance  product,  it  may  be  necessary  to  link  the  product  not  only  to  the  marketing  promotion,  but  also  to  the  particular  script  that  is  used.  Furthermore,  if  customers  telephoning  for  an  insurance  quotation  are  kept  waiting  for  a  long  time,  this  could  affect  take-­‐up  and  loyalty.  An  insurance  product  that  has  had  a  claim  is  a  different  insurance  product  from  one  that  has  not,  both  to  the  customer  and  the  company.  

It  should  therefore  be  possible  to  configure  the  database  to  recognize  the  different  elements  or  entities  that  are  likely  to  be  relevant  to  total  service  product  mix.  A  technique  such  as  regression  analysis  can  then  be  used  to  link  customer  satisfaction  and  retention  to  key  ingredients  of  the  product.  It  is  less  important  to  adopt  a  particular  model  of  the  product  than  to  recognize  the  needs  to  be  able  to  link  service  components  in  an  information  system  and  measure  productive  effects.  This  is  covered  in  more  detail  in  Chapters  11  and  12.  

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A  powerful  service  guarantee  works.  It  produces  companies  that  stand  out  from  the  crowd,  and,  if  taken  seriously,  forces  commitment  to  quality.  The  result  is  a  double  impact:  

–  Better  quality  service.  

–  Contented  customers  willing  to  pay  for  assured  quality.  

‘Guarantee  management’  is  the  end-­‐to-­‐end  establishment  of  a  market-­‐moving  commitment,  a  guarantee  of  delivery  supported  by  systems,  knowledge  and  processes.  It  is  an  idea  that  was  developed  earlier  as  a  support  for  the  development  of  treasured  reputation.  There  were  four  components:  

1.  Establish  what  you  want  to  promise  (from  knowledge  of  customers).  

2.  Establish  how  to  deliver  it.  

3.  Make  the  offer.  

4.  Invite  response,  making  it  easy  if  anything  goes  wrong.  

It  is  quite  obvious  that  a  guarantee  hits  straight  at  the  problem  of  reliability  while  providing  great  marketing  leverage.  And  a  guarantee  is  essentially  a  direct  marketing  device.  It  is  targeted,  it  communicates  and  it  invites  response.  Link  it  to  a  database  and  you  have  great  analytical  and  targeting  power,  e.g.  for  follow  up.    

 

Angus  Jenkinson