Over the last decade there have been many proposals for building good and profitable customer relations, but many have proved to be largely unsuccessful. As discussed in the article ‘Customer Relationship Management: Is this the key to improved customer relations?’ such solutions often forget the customer themselves and think instead in terms of facts and figures. Although CRM has a place in the improvement of customer relations, it is far from the key. A new approach was needed, that not only concerned itself with profits, but also kept its customer focus.
Total Quality Management, or TQM, attempts to overcome such difficulties. It adopts a completely different approach to customer relations, being much more proactive than many of the other solutions. Instead of focusing on maintaining customers through reactive measures as CRM does, it is designed to win customers over from the beginning. Instead of reacting to customer surveys and comments about service, TQM intends to get things right the first time.
From a customer perspective, getting things right the first time means a greater level of satisfaction, and a more rapid building of the trust necessary for good customer relations. TQM does not intend to inspire loyalty by offering special concessions, but by letting the level of quality of service provided speak for itself. It does not just focus on creating a good service to start with, but aims at continuous improvement and the overturning of all previous standards. Providing an AQL – Acceptable Quality Level – is not good enough; it must be of the top quality, to surpass customer expectation.
In providing a Total Quality service, customers are more likely to use the company again and again. TQM also considers the impact of customer comments with the use of its ‘Quality Mushroom’. This considers that unhappy customers are much more likely to talk to others about their experience, providing negative marketing. It assesses that each unhappy customer will tell at least 10 others, but only a small percentage will actually tell the supplier about their grievances. As a company you can remain unaware of the extent of the dissatisfaction with your product or services, whilst the rumours about the company are reaching a wide audience from your other unhappy customers.
So where does the profitability of TQM come in? To the untrained eye, such an investment in quality would seem remarkably unprofitable and expensive. TQM is expensive – at least in the sense of the initial investment in services. Striving for greater quality at all levels is not something that comes cheaply; a Total Quality product or service is far more expensive than an Acceptable Quality one. The daunting costs of implementing TQM as a customer service solution could potentially be enough to put companies off implementing it. However, in doing so, they are taking a remarkably myopic view of the situation.
The large investment TQM requires is only a short term inconvenience. Although it does mean greater initial cost, in striving for Total Quality, fewer errors should be made. This is the basis of TQM’s profitability; in getting things right the first time, the margin for error is greatly reduced, or removed. A company does not have to then spend further money getting things right a second, third or fourth time, after finding faults with their initial product and having to overcome them. In terms of customer service, TQM reduces the necessity for reactive measures to be made to services as a result of customer complaints.
By getting things right the first time, TQM ensures that the initial, larger investment, is the only investment required. By producing a lower quality product, the risk is being taken that faults could be found and it will need to be produced again – to produce one quality product is cheaper than producing two lower quality products.
TQM clearly can be more profitable in terms of overhead costs, but does that really make it more profitable in the long run? In considering the customers themselves, it is clear to see that it probably is. Consider a statistic – it costs 5 times as much to attract a new customer as it does to retain an existing one. It is far more profitable to build up a solid and loyal customer base than to be constantly trying to get new customers.
It is this that is a further aspect of the Total Quality approach. It aims to retain customers by providing the kind of quality service that not only meets customer expectation but actually surpasses it. Because expectation has been surpassed, the service will stand out, and customers will remember it. Customers are then encouraged to use the service again as it was excellent the first time; hence the continuous investment in improvement. In constantly improving the service provided, customers will be convinced to return time and time again, building a solid base.
In an Acceptable Quality environment, customers will only have their expectations met, so it will probably not create such a striking impression. Expectation levels are very different, so the possibility of a customer being disappointed by the level of service provided is always possible. The high level of trust engendered by a Total Quality company will not be anywhere near as high in an Acceptable Quality company, so the likelihood of a customer being retained is less. They could be very easily ‘won’ over by other companies, thus leaving you with the necessity of attracting more customers.
The influence of reputation also has an impact on the high levels of profitability seen with TQM. As previously discussed, an unhappy customer can tell many others and spread the word about their unhappy experience of a company. In the reverse manner, it is possible for a happy customer to spread the word about their positive experience, thus providing positive marketing. This kind of ‘word-of-mouth’ marketing can have a tremendous impact on attracting new customers. The best thing of all, it is completely free!
Therefore it clear to see that employing a Total Quality approach to customer service can indeed be an extremely profitable approach. It involves a greater short term investment, but its long term benefits are without a doubt much greater. Error margins are reduced, customers retained, and the word spread about the positive experience your service offers. In an increasingly competitive market, the TQM approach certainly seems to provide an edge on competitors by putting the customer first, and profits second. Too many companies are forgetting about the customer in the search for profits, often producing a lower quality product and alienating their customers. When we return to the basics of providing good customer service it should be about just that – the customer themselves.
West End Training has launched a Quality Programme, which introduces Customer Care, TQM and the principles of ISO 9000 into the workplace.
