Is your company reviewing controls around consumer functions – sales, marketing and customer support? – The Art of Auditing

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As we all know a well know to survive in the market every company must follow the saying – “Customer is the King”. Customers are at the core-sphere of an organizational hemisphere.A organization’s success is determined by how well they can satisfy its clientele. Providing exceptional customer experience is as much necessary as it has become challenging in today’s dynamic environment, where consumer’s expectations are ever evolving and there is constant expectation to get personalized experience from the product or services.

To adapt to these ever-changing market scenarios and ensure that the business always remain customer focused, organizations need to rethink their sales, marketing and customer support strategies to have a (1) robust, (2) detailed, and (3) real-time customer strategy information system. This is achievable by adopting an appropriate mix of technological and manual efforts to unleash the potential of in-house customer information; enhance collaboration among organization, their clients and other stakeholders including competitors; and last but not the least create more value for the customers.

Consumer functions such as sales, marketing and customer support – all share a common focal point i.e. ‘always keep the customers happy’. However, nowadays this is becoming more and more complicated task due to:

  1. Every customer demands a product or a service tailored to their requirements.
  2. Consumers have greater access to information such as product reviews, forums and blogs. Hence they are more likely to rely on these channels, as compared to information provided directly by company through advertisements and direct sales executives.
  3. Fast paced rise in competition and emergence of digitally naive new players across all the industries implying that if a customer walks away from a brand post an unsatisfying experience, there is minimal probability that such customer will be comfortable play another chance on their hard earned money for such an organization, unless there is a significant or a push.

To overcome such complexities, businesses must adopt several solutions:

Businesses’ requirementsCurrent ChallengesProspective Solutions
Timely, candid and unbiased customer feedbackOutdated and unbiased customer feedback:

–          Marketing heads struggle to get timely feedback on customer’s requirements. By the time the marketing plans are finalized, the information these plans are based on has usually become outdated.

–          Information obtained from direct sources such as customer support employees, sales employees and management, and indirect sources like end-user customers, market surveys or marketing agencies, may not always be free from bias due to conflict of interest and may lack credibility.

Needless to mention that a strategic decision based on biased or redundant information may lead to adverse outcomes.

Adopt a customer experience design that embeds robust internal controls to not only engage customers to provide feedback, but also ensure the feedback reaches the correct decision-makers within the organization, appropriately (i.e. timely and with adequate detail).
Customer loyalty, competitive pricing and high marginsLost business and failure to meet targets:

–          Delay in understanding and fulfilling ever-changing and customized demands of the customers results in significant loss of clientele. Business development professional often struggle to provide better products and services at customer-friendly prices.

–          This challenge often leads to focusing efforts and resources on retaining existing customer, rather than acquiring new markets or customers.

Implement an integrated information system that:

–          Continuously mines behavioral customer data.

–          Can design and provide products and services that matches customer’s tailored expectations.

–          Set accurate prices of products and services and offer loyalty benefits and discount to certain targeted customer segments.

Maximum Customer Satisfaction

And

Greater market capitalization

Poor and delayed response on customer’s feedback and grievances, leading to high volume of customer disputes and claims, hence degrading the brand image in the market:

–          Rising use of social media and greater access to information through various online sources.

–          This leads to a situation where an aggrieved customer when loses faith in the organization’s internal escalation protocols, is compelled to reach higher level of authority of the organization.

–          This also consumes significant C-suit professional’s time and efforts to address such exceptional circumstances.

Design internal organizational structure, in such a manner that:

–          Allows customer to feel secure about the company’s process and their ability to resolve the disputes.

–          Is prudent and adaptable enough to take necessary corrective or remedial actions on the exceptionally wrong circumstances.

–          Also, the details of such exceptions are circulated appropriately to the decision-makers for better strategizing their respective functions.

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Key risks of inappropriately designed and implemented customer functions

Not having a strategically collaborated sales, marketing, customer service and support functions makes business vulnerable to multiple risks:

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Example #1

The aforementioned tasks above can be best understood with the help of an example pertaining to the transport industry. Let us assume there are 3 types of customers using cab services.

  • One customer (say P) is ready to pay X amount for a BASIC cab service from point A to B, and ‘P’ is somewhat indifferent about any potential service lapse (such as delayed pick-up, cleanliness or rash driving) that may occur due to unavoidable reasons.
  • Whereas there is second customer (say Q) who wants to pay ‘X+1’ amount for a PREMIUM cab service from point A to B, but also expects certain additional amenities like big car, good ambiance, availability of amenities like laptop charger or in-car entertainment.
  • And there is a third kind of customer (say R) that is comfortable in paying ‘X+1’ for a BASIC cab service only, but ‘R’ is highly intolerant about any sort of service lapse.

In this example, if the business is able to appropriately, timely and accurately identify the third type of customer ‘R’ and is able to differentiate between two customer segments i.e. ‘P’ and ‘R’ and provide slightly tailor the same BASIC cab services and customer support function to suit each of their requirements then the business will not only be able to have:

(A)- two large set of loyal customers, but ALSO

(B)- will be able to earn higher margins for the same BASIC cab service.

This service may also have ripple effects like improved customer experience, expanded customer base and higher market capitalization.

Example #2

An example from manufacturing industry (consumer durable, say – electronics, utomobile) can explain this. Nowadays, there are phenomenal efforts that put focus on six-sigma methodology. The organizations adopting those would like customers to not only be aware but also to get a whole-hearten feeler that the products of the organization are free from any defect and may not trouble the customer by making them visit the service centers.

For instance, customer ‘M’ buys a product only on the basis of the reputation of the organization with such expectations. For any exceptional or unfortunate circumstances if ‘M’ experiences trouble with the product it bought within warranty period then it opens the first door of pool of disappointment for the customer. In this situation, the probability of customer keeping the trust and loyalty for such brand will depend a lot on the kind of experience it gets from the customer support team of the organization.

In the same example, if we may assume another worst case scenario that the customer remains unhappy with customer support team as well. Then the two important aspects worth considering are:

(A)- Are there still any scope of making certain remedial actions (in the form of goodwill gestures, future benefits and rewards) could be made on real-time basis to replicate the disheartening experience of aggrieved customer into a neutral one?

(B)- Secondly and most importantly, how internal information system or internal control system will remain free from bias and conflict of interest, and ensure that the executive dealing with the customer is honest, prudent and insightful enough to understand and report the feedback to the senior authorities, which finally reaches up to those charged with the decision-making.

  • that customer has walked away disappointed and
  • what are the reasons for his disappointment so that it can be worked upon in future?
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To overcome such situation, the organization must follow:

  • A mechanism of taking real-time and detailed feedback of each incident / interaction with the customer.
  • The feedback mechanism must be robust enough to ensure that the required actions in favor of aggrieved customers are implemented.

By engaging the customer on real-time basis and by timely compensating the customer with reasonable benefits, the organization is able to:

  • restore the trust for their products as well as customer support, and
  • open doors for future value creation by way of referrals.

In other words, the organization would have been able to develop not one but two key-selling propositions (KSP) i.e. (1) defect-free products and (2) exceptional customer support.

Example #3

Let’s consider an example from the Health Insurance Industry – A health insurance company operating in a developing country like India always exhibit reluctancy in offerring health insurance cover to the individuals with pre-existing diseases. Even if such companies are willing to offer a health insurance policy to an individual with pre-existing ailments then such policy is usually sold at a mark-up or surge on the normal or regular insurance premium.

Let’s assume there are two insurance companies – ‘F’ and ‘G’. Both the insurance companies are offering to cover a pre-existing ailment, say ‘D’. For covering this pre-existing ailment, the Insurer-F is charging 1.3X times the regular premium, whereas the insurer-G is charging 2X times the regular premium. Insurer-F is not giving any additional benefit to the subject insured for charging 1.3X premium, except for the fact that it is covering the pre-existing disease ‘D’ of the subject. However, in lieu of charging 2X premium amount, Insurer-G is offerring certain additional benefits like – a health coach on call, periodic health check-ups, fitness assessments and reimbursement of medicines that are used for pre-existing ailment ‘D’.

It is noted that despite charging 2X premium amount, Insurer-G is able to capture greater market and earn higher revenue because they are engaging customers by providing a health coach and other benefits in the form of periodic health check-ups, reimbursements, etc.

In this example, all aforementioned benefits for customers are:

  1. Helping in keeping the customer happy by regularly engaging them by way of interactions with the health coach and build trust, which may avoid any potential health related claims.
  2. Giving insurer an unveiled benefit to the insurer to mine plethora of data about the insured individual, which not only helps during processing the claims of the customers, but also process inputs for future benefits like:
    • reducing the need for a surveyor or any other middlemen;
    • avoid potential claim related disputes;
    • enable a platform to evolve an automatic claim processing system.
  3. The insurer is also able to capitalize greater market by pulling individuals with different pre-existing ailments in their clientele umbrella.
  4. Earn much higher revenue. (Insurer-G is able to earn 2X revenue in comparison with 1.3X revenue for Insurer-F)

For solution design and implementation approach to overcome all such problems, kindly read through How to keep Customers happy?! – An visionary algorithm and implementation approach

Over past 2 decades, the economy has progressively moved away from traditional model of centralized organizations, where large operators, often with a dominant position were responsible for providing a service to a group of passive consumers. Today, there is a shift toward a new model of increasingly decentralized organizations, where large operators are responsible for aggregating the resources of multiple people to provide a service to a much more active group of consumers.

Today, the success is no longer dependent on improving the performance or process in marketing, sales or support functions individually. Current state of market dynamics demands an integrated approach, involving both digital and non-digital methods for revamping the dissected consumer functions i.e. Sales, Marketing and Customer Support, and bringing them together to one integrated function to enable disruptive growth.

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