Over the past few months, several managers have expressed frustration about being unable to get an acceptable view of their end-customers. As one said to me, “we do not know how well our end-users are being served. We have no view on the customer experience. I cannot see my customer!”
These managers work at manufacturers who use distributors to resell their products to end-users. Distributors play an essential role in many business-to-business markets by providing a cost-effective way of moving products and services to customers.
Distributors are the only ones that have regular contact with the end-user. The manufacturer may judge it’s distributors on purchases and sell-through but because there is no measuring process in place, it cannot evaluate the distributors’ customer service.
In this blog, I want to discuss why customer experience matters (or should matter) to manufacturers and what to do to measure and, ultimately, improve the end-user experience.
Why Does Customer Experience Matter to a Manufacturer?
In the past, the manufacturer had to only pay attention to the Four Ps of marketing: Product, Place, Price, and Promotion. The manufacturer had control over the product, where it was sold (place), and significant control over both price and promotion.
While the Four Ps still matter, what is becoming a new reality is customer service is the “new marketing.” When a manufacturer goes through single or multiple step distribution channels, service is quality is something over which they have little concrete knowledge of and certainly little control.
To illustrate the importance of service in marketing, consider the chart below (From The Effortless Experience, Dixon, Toman and Delisi, 2013).
The chart above illustrates the importance of creating a positive service experience. If the customer has a positive experience with a product, almost 70% of them talk about it to someone else (word-of-mouth, WOM) while only 30% will talk to others about a negative product experience. For service, the story is almost reversed. When the experience in service is negative, about 75% of customers will talk about it versus 25% who will talk about a positive experience. A great product has the potential to get torpedoed by poor service! It is the service delivery that manufacturers have a hard time gauging and little or no control over it.
What’s a Manufacturer to Do?
The obvious answer is to survey your customers. Not so fast. There are some complexities to address first, including gathering data from a multitude of different information systems.
And perhaps more important than solving survey implementation complexities is getting buy-in from distributors to do the surveying in the first place. Distributors may feel possessive about their customers and may be unwilling to share information. More importantly, assuming distributors decide to cooperate, they have to become active participants in this significant change effort. How do you get this support from distributors?
I have several suggestions:
- Many research studies illustrate the business impacts of both good and bad customer service. Use these to build the case with distributors (visit our website and download “The Case for Investing in Customer Experience,” https://thedanielgroup.com/wp-content/uploads/2015/09/The-Case-for-Investing-in-Customer-Experience-v12.pdf).
- Explain what’s in it for the distributor. Depending on the industry, there may be a great deal of value a distributor can create by improving the customer experience.
- Be prepared to deal with many questions. After all, for some distributors this may be their first formal customer feedback program. The results can provide positive and negative surprises!
Now Is the Time!
I suspect the reason I hear complaints from manufacturers about “not being able to see the customer” is it is such a tough thing to do. You have a many differing information systems from which data has to be obtained. Distributors are often not interested in having the manufacturer further involved in their business.
A manufacturer’s products can be quite good, and customers that have a positive experience tend to talk about these positive experiences a great deal. However, a great product experience can be wrecked by poor service. The impact on WOM (service is marketing) from a poor service experience is much more significant. When you start thinking about your next marketing plan, if improving the service experience in your distribution channel is not there, revisit it. Now is the time!