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Analysis

Don't cut customer service along with the budgets
Rob Bamforth By: Rob Bamforth, Principal Analyst, Quocirca
Published: 6th November 2012
Copyright Quocirca © 2012
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Many of the online forum comments following the surprise departure from Apple of former Dixon’s chief John Browett indicate that while ‘clicks’ might be replacing ‘bricks’, customer service is still a significant demand. The comments might read as a little damming to anyone from Dixons, but they clearly show that having too few, dis-interested shop assistants lacking product knowledge, but still wanting to pump up add-on sales is not the way to sell technology.

Some of Apple’s followers may be a little too fervent to care whether it’s good or bad, but Apple’s in-store support and customer service seems to be appreciated by those with no fanatical allegiances. In Apple stores no one seems to be ushered off ‘having a play’ with the stock, staff are plentiful and knowledgeable, after sales support is generally pretty good. No wonder that there were concerns that someone from Dixons might change things to a more traditionally ‘pile-em-high’, cut the costs accountant-driven high street model.

A penny pinching supplier can also be a real turn off in B2B transactions, especially for smaller customers to larger suppliers. The mantra for many suppliers, when times were good, oriented around avoiding ‘not leaving money on the table’, i.e. making sure that they took a larger share of the customers wallet by up-selling, cross-selling and leaving less room for 3rd parties. Dress this up as benefits for the customer—fewer suppliers to deal with, fully integrated, complete solution—and it all looks fine.

In these tighter economic times however, many companies are looking for better value. This means that sometimes customers will split up their buying, shop around to try to get better deals while suppliers will try harder to increase revenues and preserve margins.

The temptation for larger companies in the supply chain is to exert even more financial pressure. This is especially the case when senior management has taken cost-cutting measures too far (usually led by the financial director and their accountants). There are several symptoms of this:

  • taking much longer to pay suppliers, especially smaller ones with less legal clout or ability to chase.
  • incrementally charging customers for things that might have once been free or at least delivered as part of a bigger project, but now being broken out and separately charged for.
  • Viewing customer service simply as an unnecessary cost that can be cut or trimmed to the bone.

None of these elevate the perception of a company in the eyes of its suppliers or its customers. Large companies may appear to get away with such behavior for a while, but it will increase pent-up resentment in both customers and suppliers, who will at some point switch. Smaller companies will take action faster as word of mouth is an even more important influencer of new business for them.

The increasing use of online and social media for sharing experiences only exacerbates the risk of any switching point being sudden and unexpected, especially for changes that adversely affect customer service. Good reputations take a long time and a lot of effort to build up, but news of bad experiences travels fast and brands and reputations can be destroyed while marketing folk sleep.

It might have been that the former Dixon’s man’s face didn’t fit, rather than a reaction to any changes he was trying to usher in, but the latest news of the other UK consumer retail giant, Comet, entering administration underlines this is a very difficult market. It might also indicate that cut price doesn’t cut the mustard if service standards are cut too.

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Published by: IT Analysis Communications Ltd.
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