Executives Learn How It Pays to Serve Customers Right

If you give people bad service, they’ll go someplace else.

That may be obvious to most people, but on Thursday about 80 Southland executives went to a seminar in Newport Beach to be told exactly that and to learn just how service affects the bottom line.

The seminar, offered by an independent consultant, recapped the findings of a survey released by his firm in January, 1988, in which researchers concluded that customers are more likely to defect to the competition because of poor service than because of the price or quality of merchandise.

The study, done by the Forum Corp., a Boston-based corporate research and training firm, surveyed more than 2,370 customers and 3,200 employees at 14 large companies in the United States and Canada. A range of industries were covered, including manufacturing, high technology, banking, utilities and telecommunications. Among the findings: There is a competitive advantage to staying in touch with what buyers want.

“If you put the customer first, the other things are a byproduct . . . . And if that gets out of sync, you’re going to have problems. That’s what clearly emerged,” said William Molloy, senior vice president with Forum.

That was Molloy’s message Thursday to the executives who heard his talk.

Many, such as Sharon M. Stevens of Nissan Motor Corp. in Carson, came to learn how competitors are improving their service.

“Maybe there’s something we’re not currently doing,” Stevens said. After all, putting customers first is a key industry concern, so “we want to be a part of it.”

Some, such as Todd Weber from Western Digital Corp. in Irvine, already have a plan intended to inspire buyers’ loyalty.

Western Digital has always focused on its customers, said Weber, who is director of engineering and quality service. But now, he said, “we’re looking from the inside outward . . . (and) beginning a lot of very serious effort toward becoming much more consumer-focused.”

Part of what that translates into, Weber said, is changing the way the company asks questions. Rather than presuming that customers want some of Western Digital’s products or services, he said, “we’re saying, ‘What product or services would you like?’ It’s the difference between telling them what we have and not presuming but asking what they’d like and what they expect.”

Similarly, at TRW Inc., the Business Credit Division in Orange has put together a program that has its sales force asking customers questions about its and competitors’ products.

The questions are on the order of “what we’re doing better than competitors and worse than them. We’re always looking to find out what we can do to improve,” said John N. Taussig, vice president and general manager of the business credit division.

That sort of awareness is the key to improving the bottom line, Molloy said.

In fact, Molloy told the group, citing data compiled by the Strategic Planning Group of Cambridge, Mass., companies that focus on what customers want show average annual growth rates of 10% and average annual profit increases of 12%. Those figures contrast with growth rates of zero and profit increases of 1% increase among companies that do not listen to their customers.

Moreover, at any given time, he said, 25% of a company’s customers are ready to switch to the competition, yet only 4% are going to complain. The conclusion, then, is that if customers say they are satisfied, that’s not enough.

“Customers have expectations,” he said. “We want to avoid a gap between those expectations and customers’ perceptions of quality . . . . The companies that do best know and stay in touch with their customers.”