Change the relationship, says Andersen report

COMPANY aspirations to drive revenue growth through offering services with extra value cannot in many cases succeed without a remodelling of the underlying approach to customer relationships, according to research among global and high-technology companies by Andersen Consulting, writes Roger Trapp.

Indeed, there is what the firm calls a well-kept secret in that customer service performance is "already a key differentiating factor which is enabling pioneering companies to pull away from the merely progressive".

According to the research based on a four-year programme of detailed studies of the industry, there are five key factors that separate proven high performers from other players. Such companies have all established:

q customer relationship management at the centre of the business strategy, with a close link between the boardroom and execution in individual business units;

q a holistic and globally consistent approach to implementation of customer service strategy through integrated change programmes;

q highly motivated channel partners who act as a natural extension of the business in meeting the requirements of target customer segments;

q detailed performance metrics regarding service costs, margins and customer behaviour rather than using raw customer satisfaction ratings;

q business-wide processes which exploit information technology in order to improve competitive capability in such areas as product reliability and supportability.

According to the report, "Profiting from Customer Service", as the competitive edge to be gained from product development diminishes, "a new focus on customer relationship management makes excellent business sense: the pioneering companies are all achieving compound annual growth rates in customer service revenues of greater than 20 per cent."

It then quotes Wayland and Cole (see above) as saying: "Customer relationships are assets that should be evaluated and managed as rigorously as any financial or physical asset. We stress that it is the relationship that is the asset, not the customer. The relationship gives rise to future cash flows that we can estimate and to which we can assign a value."