By Bob Berger and Bill Schneiderman
Building strong relationships and competitive advantage through the support experience can be a powerful ingredient in earning and maintaining customer loyalty. But judging from the quality of support provided, many companies have not achieved this. Instead, the customer experience is at best mediocre and at worst leads to lost customers and negative "word of mouth" to potential new customers.
This outcome often results from outsourcing customer support to low-cost suppliers around the world and managing those suppliers as vendors of commodity services who are continually pressed for cost reduction. Having the right focus on both customer experience and shareholder results requires a very different approach, built upon a sourcing strategy that recognizes the varying needs and value of individual customers. Successful implementation of the strategy requires building strong working relationships with the appropriate outsource suppliers who are aligned with the values and mindset of your own business.
This article explores these six essential steps for a sourcing strategy that contributes to enhanced customer relationships and satisfied shareholders:
- Segment the customer base by value and expectations for support
- Segment types of support provided by potential impact on competitive advantage
- Determine the appropriate supplier profile and geographic location for type of support
- Evaluate and select suppliers, both outsourced and "insourced"
- Establish the right framework for managing supplier relationships
- Manage the relationships as partnerships
Customers — The Alpha and the Omega
Defining the target intersection between the desired customer experience and the cost of delivering that experience is a key foundation of the support sourcing strategy. This requires understanding both the customer's value to the business and the customer's expectations for support.
On the value side, it's important to segment customers according to profitability. Some customers generate much higher profit and expected lifetime value than others. Higher-value customers may warrant special support offerings with a focus on an excellent experience. Retention of these customers is key, and the cost of delivering a superior customer experience is insignificant in comparison to overall profitability.
Offering the same level of customer experience to a lower-value customer, however, will result in a financial drain. A generic "peanut-butter spread" philosophy to customer support will be unprofitable in the lower-value segments, a disappointment to those customers in the higher-value segments or often a combination of both.
Arriving at the proper customer profitability segmentation requires a cross-functional effort across the organization with marketing, sales, operations and finance. Many times a third-party is in the best position to develop the strategy, facilitate and manage the implementation process. Marketing and sales will normally be the source of the revenue portion of lifetime value. Also key may be customers who are opinion leaders with strong "recommender" influence over a broader customer base. Operations and finance will also be heavily involved, particularly to understand the cost side of customer profitability. Putting the complete profitability picture together will have strong implications for the appropriate support and sourcing strategies.
Customer expectations for support also need to be considered. High-end customers usually place considerable value on the ability to resolve any technical support issue, and minimizing the time from problem occurrence to resolution is critical. For example, disruption to a company's ability to ship products at the end of its fiscal year due to a loss in networking capability could be very serious and result in a lost customer if the problem is not quickly resolved with expert technical support. On the other end of the spectrum, mass-market customers often buy based on low cost and usually expect reduced or minimal support for such a product.