Post-sale Customer Loyalty


Maintaining the loyalty of major current customers can be crucial for improving a business’s profitability as its markets mature. Loyal customers become more profitable over time. The firm not only avoids the high costs associated with acquiring a new customer, but it typically  benefits because loyal customers a) tend to concentrate their purchases, thus leading to larger volumes and lower selling  and distribution costs, b) provide positive word-of-mouth and customer referrals, and c) may be willing to pay premium prices for the value they receive.

Periodic measurement of customer satisfaction is important, then, because a dissatisfied customer is unlikely to remain loyal to a company over time. Unfortunately, however, the corollary is not always true. Customers who describe themselves as satisfied are not necessarily loyal. Indeed, 60 to 80 percent of customer defectors in most businesses are “satisfied” or “very satisfied” before their defection. In the interim, perhaps, competitors improved their offerings, the customers requirements changed, or other environmental factors shifted. Businesses that measure customer satisfaction should be commended, but urged not to stop there. Satisfaction measures need to be supplemented with examinations of customer behavior, such as measures of the annual retention rate, frequency for purchases, and the percentage of a customer’s total purchases captured by the firm.

Defecting customers should be studied in detail to discover why the firm failed to provide sufficient value to retain their loyalty. Such failures often provide more valuable information than satisfaction measures because they stand out as a clear, understandable message  telling the organization exactly where improvements are needed..

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

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Consumer Affairs Department


Many large corporations operate consumer affairs departments, often placing a vice president in charge. These centralized departments normally handle consumer inquiries and complaints about a company’s products and services, particularly in cases where a customer has not been able to resolve differences with local retailers. Some companies have installed consumer hot lines for dissatisfied customers to place telephone calls directly to the manufacturer.

Many companies now communicate with their customers and other interested persons through Websites on the Internet. Some sites are interactive, allowing customers to post comments or questions that are answered via e-mail by customer relations staff.

Experienced companies are aware that consumer complaints and concerns can be handled more quickly, at lower cost, and with less risk of losing goodwill by a consumer affairs department than if customers take a legal route or if their complaints receive wide-spread media publicity.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Productivity Measurement System


One of the important steps in productivity improvement is establishing a productivity measurement system with the enterprise. This in itself brings some improvement in performance by making people more aware of the meaning of productivity. The following advice could be useful in setting up the measurement system:

  • Determine the elements of the enterprise that most need to be monitored.
  • Determine the types of measure to be used.
  • Select perfect concepts and units of measurement for the output and input of the company as a whole, and for the critical sub-activities.
  • Ascertain the availability of data and make necessary compromises.
  • Select a post activity, section or group within the organization, and test the measurement system to obtain periodic feedback on the results.
  • Assess the system’s value, make any modifications and conduct a new pilot activity if the modifications completely change the original system design.

A measurement system must consider cost effectiveness, the limitations of productivity measurement and whether total factor measurement is necessary; in other words, it must determine the range and terms of the measurement system tasks. It must be easy to use and serve to identify the reasons for the organizational changes.

The general consideration on productivity management helps in identifying the so-called organizational meta-structure of productivity improvement process. Every given method of productivity improvement covers:

  1. Organizational forms of productivity improvement
  2. Productivity improvement areas
  3. Productivity improvement techniques

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Workload


The workload may vary from hour to hour, day to day, week to week, season to season or from department to department or job to job. Workloads may be as simple to measure as, “We need one security guard on duty every hour of the year,” or as complex as, “We manufacture and ship over 300 different customer products, and our customer orders come in at the last minute.” Companies that do not routinely measure their workload practice backward scheduling, fit the workload into their current schedule even though that schedule may be the wrong one. The result is often a big gap between the master schedule (the one that’s posted in the employee handbook or printed in the union contract) and the actual schedule (the one that is really worked). Many companies become experts at backward scheduling and are able to stretch their master schedule to the limits, keeping customers satisfied, but the negative impact on productivity, safety, overtime, and morale can cost millions of dollars every year.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Strategic Control and Continuous Improvement


Strategic control is concerned with tracking strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments. In contrast to post-action control, strategic control seeks to guide action on behalf of the generic and grand strategies as they are taking place and when the end results are still several years away. The rapid, accelerating change of the global marketplace of the last 10 years has made continuous improvement another aspect of strategic control in many organizations. Continuous improvement provides a way for managers to provide a form of strategic control that allows their organization to respond more proactively and timely to rapid developments in hundreds of areas that influence a business’s success.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Profit Economics


The following information is required, at a minimum, to understand the profit economics of a business:

  1. How many dollars of assets are committed in each stage of each product/market business (e.g., R&D, materials, plant and equipment, finished stock, post-sale support)?
  2. What is the fixed/variable cost relationship for each product/market business, that is, for each dollar of sales, how many cents are attributable to bedrock fixed costs, how many to structured or discretionary costs, and how many to out-of-pocket costs?
  3. How do costs and profit change with swings in volume?
  4. What is the break-even point at current volume and what actions could be taken to bring that break-even point down should volume potential decline?
  5. What is the rate of incremental profit on each added increment of volume? What are the volume points where new increments of structured cost must be added?

A net profit and loss statement (after all allocations) and a balance sheet for each product line are essential for generating answers to these questions. Despite their claim that “we know all that,” very few managers actually have this information readily available.

Actually, most accounting systems are not designed to provide these kinds of statements and the accountants will argue that you can’t get them because many products run over the same machines, a lot of indirect costs can’t be allocated, and so on. To which we say, baloney! Shared fixed and indirect charges often represent the most serious cost problems in business situations where a cost disadvantage exists. And they are impossible to attack in the aggregate. They must be broken down and assigned to a discrete business unit even if done arbitrarily. Then a manager with hands-on responsibility can argue about fairness and whether there is value received for the costs involved. Although this is obviously not a precise exercise, it is effective and essential. Without full cost profit and loss and balance sheet statements managers cannot really understand the profit economics of their business. Further, they can’t make the types of intelligent business decisions and plans so important in today’s environment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Intranets


Not all Websites are available to anyone cruising the Net. Some are reserved for the private use of a single company’s employees and stakeholders. An intranet uses the same technologies as the Internet and the World Wide Web, but the information provided and the access allowed are restricted to the boundaries of a company-wide LAN or WAN. In some cases, suppliers, distribution partners, and key customers may also have access, but intranets are protected from unauthorized access through the Internet by a firewall, a special type of gateway that controls access to the local network. People on an intranet can get out to the Internet, but unauthorized people on the Internet cannot get in.

Possibly the biggest advantage of an intranet is that it eliminates the problem of employees’ using different types of computers within a company. On an Intranet, all information is available in a format compatible with Macintosh, PC, UNIX-based computers. The need to publish internal documents on paper is virtually eliminated because everyone can access the information electronically.

Besides saving paper, an intranet can save a company money in the form of employee hours. Employees can find information much faster and more easily by using a well-designed database on an intranet than by digging through a filing cabinet or card catalog. Some of the communication uses companies have for intranets include updating policy manuals, posting job openings and submitting job applications, accessing martketing and sales presentations from anywhere in the world, updating and managing employee benefits, accessing company records and databases, collaborating from anywhere in the  world to develop new products, scheduling meetings, setting up company phone directories, and publishing company newsletters. In fact, just about any information that can help employees communicate is a good candidate for an intranet. As video and audio technologies progress, you can expect to see more multimedia applications on intranets as well.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

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