Term Paper on "Customer Experience and Employee Satisfaction and Its Relation to Customer Centricity Approach at the Organizations"

Term Paper 15 pages (4822 words) Sources: 15 Style: Harvard

[EXCERPT] . . . .

Customer Experience and Employee Satisfaction and Its Relation to Customer Centricity Approach at the Organizations

In the last decade the world has experienced dramatic shift in the business culture and business practices, mainly, from product oriented to purely customer oriented approach to operating in either profit or non-profit organizations. As suggested by Ranjit Bose, business orientation has changed from purely production growth focused in 1900's, to sales growth focus until 1950's, to marketing driven by 2000's, and has evolved into customer centric currently in the medium term future. This has triggered a new era in the marketing theory and the company which were able to shift to the new practices managed to become more profitably and has gained a competitive advantage over companies practicing old marketing approaches. Such a shift has occurred due to strengthening economies and tightening competition in them, thus increasing the number of suppliers of different goods and services in the market. At the same time, daily needs in terms of foods and services for the population remain approximately the same over time, which triggers necessity by the companies to either create new demand for new products in services which is very expensive, or to retain the customers as long as possible through different methods.

Many researchers have focused their numerous studies on the most important factors in retaining the customers, and thus winning the business for the company. But this can be considered only as 'external marketing', while organization success depends heavily also not only on winning the customers and brining in the business, but also on how the staff of the company benefits from this growing business. If the wealth and psychological satisfaction of the employees grows proportionally with the company revenues and profitability, the sole end effect on overall company performance is synergetic as more satisfied employees will perform their duties at another more professional level, which will blossom customer satisfaction with the products and services offered, and lead to more business. If all the segments within this success cycle are implemented wisely by the top management of the company, the organization will be successful financially and a good employment place for the people.

The three major cores of the successful management from this point-of-view are the positive customer experience which help customer retention and win business for the company. As Reichheld and Sasser have proven already in 1991, retaining customers and increasing their loyalty is much less costly for the company than acquiring new customers. The second core is the employee satisfaction within this organization, leading to the third core, or to devotion of staff at all hierarchy levels to turning organization operations into customer centric organization. The literature review will focus on these three major milestones.

Customer Experience

The classic transaction marketing has transformed into relationship marketing, either internal to company relationship, or relationship with external networks, such as suppliers, customers, referrals and the like. In order to motivate the customers to turn to the company goods and services as often as possible and to purchase more each time, the company and the employees must ensure that each client's experience with this company is very positive and the customer from an occasional purchaser turns into a loyal golden client. The company must improve and develop cumulative client satisfaction with the company, rather than one transaction-specific client satisfaction. Any company will have value to the customer only if this firm is able to firstly, satisfy client's basic needs, such as having products/services required and being easily and comfortably accessible to the client. Secondly, as there are different providers of similar products, the customer will also choose by the quality of the service offered and the level their basic needs are satisfied, such as speed of transaction and responsiveness of the staff dealing with the client. Thirdly, the two mentioned above must differentiate the firm from the other competitors by means of flexible pricing, personalized approach to the clients, adaptation of the products and services to specific clients needs, and generally positive attitude to the cooperation. These three components will affect the total customer experience with the company and will influence desire for future cooperation. Molineus emphasizes that customer's decision on which company to deal with depends on three milestones: how, when and at what cost to the customer. More importantly, clients that have already existing relationship with the company, expect to receive quality services all the time they deal with the company, which stresses necessity to train staff to constantly offer best quality services and products. It is vital to match customers expectations, as due to human psychology, they tend to compare anything to the best they obtained once in the market.

Client Relationship Management concept has been developed as a tool for managing customer experience by allowing to actively analyze the historic purchase patterns of the customers within the company and be able to adopt company productions and services, ability to adopt which becomes company competitive strength, as noted by Ahn. Widely used definition of Client Relationship Management concept is developed by D. Nelson: a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behavior that satisfies customers and implementing customer-centric processes. To achieve the long-term value of CRM, enterprises must understand that it is a strategy involving the whole business, and thus should be approached at an enterprise level'.

As the result of successful customer relationship management program adopted by the company, and growing customer positive experience with the company, as suggested by Gummesson, the company will maximize its Return on Relationship, or 'long-term net financial outcome caused by the establishment and maintenance of an organization's network of relationship'. Findings of Reichheld, Jackson, Levine prove that CRM implementation triggers clientele satisfaction and retention levels and makes the companies more competitive. Customers receive the message that the company is making efforts to maximize clients' costs and time savings by getting better service.

Analysis of successful customer experience management has stimulated development of an idea by a number of researchers, such as Edvinsson and Malone, Sveiby, Olve with his colleagues, that the importance of intellectual capital in the company, measured as difference between company capitalization value in the stock market and the book value, is overcoming the importance of financial capital in company performance. Accumulation of human capital in terms of (1) staff quality, their skills, knowledge, behaviour and motivation; all these being employed to increase customer satisfaction and loyalty, and in terms of (2) growing client database or expanding personal relationship network of company staff with the representatives of the clients, is the driver behind the company value and profitability. Quality of such human capital accumulated can reveal possible future performance of the company, or the tasks it will be able to carry out, while financial indicators typically presented in the balance sheet to the investors, say for the past performance of the organization.

Successful Swedish company Skandia Group has developed a set of 111 major indicators of human capital accumulation and performance within the company, which company invests into monitoring and analyzing, the process yielding in higher company profitability. They can be classified as three major groups: customer focused (sales per customer, trends in preferences, customers lost, times a customer was visited and the like), employee centred but directly linked to customer satisfaction (motivation, turnover of staff, number of years worked for the company), and development of customer centric organization of promoting technological base for effective and cost efficient timely customer support. This example is the practical case of successful implementation and integration of three major principles discussed herein and how tracking customer experience can lead to perfection of company performance.

Quality of customers experience is measured by customer retention rate and customer satisfaction rate, after which the customers can be grouped according by their loyalty to the company. Lindgreen in his study suggest development of such customer loyalty matrix for this purpose. Changes of the quantity of customers within each segment can reveal effectiveness of the transformation of the company into customer-centric organization. Also, changes in customer loyalty can reveal effectiveness of implementation of employee motivation systems. For big companies which has many sales account managers or the like, it is also necessary to monitor changes in customer loyalty and performance for each such big sales manager in order to be able to define areas of improvement for total company level customer loyalty mix.

Customer Centric Organization

Building a customer centric organization was defined by several ways and methods in the literature, which can be summarized as constructing business operations which ensure 360 degrees view of the customers, and customer centric business processing is defined as 'culturally-focussed approach which genuinely attempts to put the needs of the customer at the heart of all core business processes'. The difference between designing customer centric enterprise structure, and between implementing client relationship management system, is in the fact that the latter is more focused on improving performance of sales and marketing department, where the former is the… READ MORE

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