Understanding your sector
Understanding your sector

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2 Customers

Every organisation exists to serve the needs of its customers; there are no exceptions to this rule, even though the words used to describe ‘customers’ might vary from organisation to organisation. Take the example of Tesco used in Activity 1. In this case, it is very simple: the supermarket exists to sell goods – principally food, groceries and clothes – to its customers, who are ordinary people buying basic goods for themselves and their families. Tesco will be judged on its success in terms of its volume of sales and what this represents in terms of profit.

By taking a very different example, such as a hospital, then you can see that the situation is more complex. Certainly, a hospital exists to meet the needs of its customers, or more accurately its patients, but how is success judged? Tesco might define success as having a customer return to shop again at the same store, but a return visit to a hospital might indicate that the treatment was not effective and that the patient’s needs were not fully met. A more sophisticated measure is needed in this situation; one that takes into account longer-term patient health outcomes.

In fact, although these two examples are drawn from almost opposite extremes, there are many variations on this theme. This means that you need to think carefully about the customer and their relationship with the provider (for example Tesco, the hospital, etc.) before deciding what constitutes a successful relationship between them. The term ‘customer satisfaction’ is also commonly used to illustrate whether or not such a relationship is positive, but, once again, you need to ensure that the appropriate variables are examined.

Bear in mind that customers are not simply individuals, but could be other businesses or even public bodies such as councils or the government.

Activity 2 Indicators of customer satisfaction

Timing: Allow about 15 minutes

The following table contains the names of three very different organisations, each of which aims to meet the needs of its ‘customers’. In each case, list what you think might indicate healthy levels of customer satisfaction. There is also a box where you can insert an alternative word to ‘customer’ if you think this is more appropriate.

Table 2 Assessing customer satisfaction
Organisation Customer satisfaction Alternative to ‘customer’
Great Western Railway
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BBC
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Apple
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Words: 0
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Comment

The suggested answers below are not intended to be definitive; you may have come up with alternative thoughts. Once again, it is the principle that is important here. Thinking about the nature of the relationship between a provider and its ‘customers’ is a crucial first step in identifying what constitutes success in meeting customer needs and customer satisfaction.

Table 3 Suggested measures of customer satisfaction
Organisation Customer satisfaction Alternative to ‘customer’
Great Western Railway

Ticket sales

Passengers making repeat journeys

Reduced levels of car use and air travel

Growing customer base

Passengers

Travellers

BBC

Viewing and listening figures

Opinions of licence payers

Comparative figures for other TV and radio channels

Digital sales

Growing customer base

Viewers

Listeners

Apple

Sales figures

Comparative sales for rival products

Repeat buyers of Apple products

Growing customer base

Users

How then, should an organisation measure its success in meeting customer needs, and how does it truly find out what they think? As you can see from Activity 2, simple figures – for passenger miles, viewers, sales, etc. – tell only some of the story, and any organisation wanting to engage seriously with its customers will carry out market research.

Market research can take various forms, ranging from a short online survey seeking numerical ratings of a number of selected factors to full-blown qualitative research, which typically involves discussion groups and in-depth interviews on the organisation, its services and products.

Activity 3 is designed to help you find out what your organisation – or one that you have previously worked for or would like to work for – does to meet its customers’ needs and what else it might do to improve its performance in this respect.

Activity 3 Measuring customer satisfaction

Timing: Allow about 15 minutes

The following are a few common methods that organisations use to measure and evaluate their success:

  • analysis of sales figures
  • quantitative market research (e.g. online surveys) that analyse data
  • qualitative market research (e.g. discussion groups, interviews) that analyse people’s opinions and views
  • compliments and complaints
  • mystery shopper or hidden customer
  • monitoring social media comments.

Which of these methods does your organisation use regularly?

Which methods don’t they use but perhaps if they did, it would help them to improve customer satisfaction?

You might be able to find out the answers to these questions by, for example, talking to your manager or by looking on the organisation’s website.

Record the results of your investigations in your notebook or the Notes tool in the Toolkit [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] . Also make a mental note to follow up at least one method that you currently know little about.

Comment

You may have experience of other methods, in which case make a note of these, too. All these methods allow an organisation to measure its effectiveness in meeting customer needs. Being aware of these, and their advantages and disadvantages, can help you to understand the business realities that affect the area in which you work.

An organisation’s customers – the people that it exists to serve or to whom it sells products or services – are crucial to its success. Ignoring customers and what they think is the first step to business disaster, and many organisations spend considerable sums of money on ensuring that they keep up to date with customer views and opinions. Think about former retail high street giants such as Woolworths, Comet, Littlewoods and Blockbuster – what do you think contributed to the demise of these companies?

Such organisations, which had been household names for many years, can fall foul of taking both their customers and their loyalty for granted, and the consequences can be severe. Now fallen by the wayside, all these businesses would, at some point, have felt secure in their reputations and business health. Although a key element in their disappearance was their failure to respond to changes in consumer attitudes and behaviour, another factor could have been the level of competition that they faced. The reasons for an organisation’s collapse can be complex, however. Perhaps you can think of other reasons why such organisations disappeared including being overtaken by, for example, technological or social changes.

You will move on to examine competitors and the market place in the next section.

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