Companies Need Customer Expectation Management Because Successful Customers Create Profitable Businesses | Article

Wipro Voice: A conversation with Vijayalakshmi S. Paduvalli, Global Practice Head for Business Process Management Services at Wipro Technologies, and Member, Wipro Council for Industry Research

Vijayalakshmi S. Paduvalli, Global Practice Head for Business Process Management Services at Wipro Technologies, and Member, Wipro Council for Industry ResearchIn the current economic environment, survival and continued business success mandate “exclusive attention to the customer,” observes Vijayalakshmi S. Paduvalli, Global Practice Head for Business Process Management Services. She maintains smart customer interactions are the driving force for sustainable value creation. “Failure to understand and manage customer expectations successfully over the years will accelerate a company’s downfall. Today there is a critical need for effective and successful customer expectation management,” she says.

An excellent example is FedEx. FedEx clearly sets customer expectations by offering dependable delivery services with convenience at drop points and stores as well as on the phone and the Web. “FedEx set new standards for on-time and accurate parcel delivery and real-time online shipment tracking. The company has built a brand that consistently meets customer expectations,” she points out. She says FedEx became a market innovator by providing new services “that make customer life simpler.”

By practicing what it preaches, FedEx does not give customers a reason to consider other delivery services. “This extends the duration of the customer life cycle,” she says.

Why customers are so critical now

Competitive crunch and convergence in today’s increasingly challenging global marketplace is fueling more customer churn and testing customer loyalty. “Marketers face unprecedented challenges as cut-throat competition and new service models undercut pricing, prey on lucrative customers, and disrupt established markets,” she says.

Today, operational profitability is no longer enough. Now business success is dependent on delivering successful customer outcomes that increase loyalty and reduce turnover and the associated high costs of customer acquisition.

Paduvalli says companies are scrambling to retain customers, induce loyalty, improve customer satisfaction, and deliver appealing revenue-producing products. This is becoming ever more difficult because of:

  • Increased globalization
  • Trends towards decentralization
  • Proliferation of interactive digital media channels, social networks, mobile messaging devices, and online communities

What is customer expectation management (CEM)?

Customer expectation management requires businesses to identify and define customer expectations. Once set, businesses have to ensure they meet these without exception.

Customer expectation management shows how customer expectations exist in every customer touch point. CEM helps businesses create repeatable processes that align a business with its customers’ success.

Meeting customer expectations without exception impacts the business by:

  • Expanding the customer base
  • Reducing customer attrition
  • Increasing profit per customer by extending the customer life-cycle duration

How can companies manage customer expectations?

Business processes form the backbone of all businesses. “It is here that strategy meets action,” she says. The Wipro executive says business processes “are both an opportunity and a threat to establishing and sustaining competitive advantage.”

A process-centric organization that focuses on CEM creates processes that go beyond the efficiency gains of process improvement. They proactively avoid failures like missed customer expectations before they occur. The Wipro executive says the proper processes “generate a high degree of customer loyalty, thereby securing the top line with a stable and expanding customer base.”

She maintains customer expectation management needs to be the governing paradigm for customer-facing processes. Critical imperatives to consider include:

Responsiveness: Paduvalli recommends designing all customer-facing and impacting processes from an “outside-in” view of the business. “The customer’s perspective makes processes responsive to customer expectations,” she says.

Impact: Paduvalli maintains enterprises need to measure ALL their business decisions by their impact on customers. “A detailed assessment of the impact on customer value yields insights into non-customer-facing decisions that are otherwise unavailable,” she explains. For example, calculating the impact of a new factory on customer value requires estimating not only the change in product costs, but also any change in product mix, product development time, delivery schedules, and quality.

Agility: Paduvalli says customer expectations in the global real-time economy shift quickly to align with the best value proposition in the market at the time. “This has a profound impact on business success,” she says. Having the ability to redefine customers’ expectations is “the best way to extend market share by expanding the customer relationship,” she says.

Transparency: Complete, up-to-the-minute information about the business relationship is a critical component of customer expectation management. Paduvalli says today’s savvy consumers expect to have the data available, both in a self-service mode and when they ask a company representative for help. She says transparency “opens new opportunities for customers to take charge.” For example, they can change an order before it’s shipped, reroute a package that’s on its way, and update account options.

Reliability: “Customers demand consistent service delivery without exception,” she says. Businesses can only do this by standardizing their processes and creating execution metrics based on customer expectations. Companies must include the ability to determine real-time failure of any process.

Predictability: Companies can leverage business process simulation tools to predict operational barriers to deliver on set customer expectations under various market scenarios. The goal: to define mitigation in advance. “The key to creating intentional positive customer experiences is increasing the predictability of successful customer interactions at every customer touch point,” she explains.

Accountability: Paduvalli believes there should be controls in place that hold companies accountable for delivering on set customer expectations. “Companies have to acknowledge customer failures when they occur,” she says. End-to-end process visibility can help them understand inter-departmental handshakes and identify contradicting key performance indicators, which they have to correct.

Managers gain from this visibility “because it lets them understand what’s happening in their organizations,” she continues. “This improves their ability to make changes and be accountable to customers.”

Empowerment: “In a world where security and control are lacking on so many levels, gaining even a small measure of power gives customers great psychological comfort and tightens their bond to any organization that is kind enough to do so,” Paduvalli maintains. Companies can achieve customer empowerment by giving customers access to critical processes such as product configuration, shipment tracking, returns, and payments through self-service channels.

Business benefits of CEM

The Wipro executive believes companies that offer the most compelling customer expectation (value proposition) have the largest potential market. “Strategically looking at the business’s customer expectations is the first step towards leveraging this century’s complex value chain,” Paduvalli says.

She adds companies that use customer expectations to set business strategy “will increase the size of their customer base while decreasing the number of competitors.” She maintains such companies will be able to build long-term, successful, and rewarding relationships with high-value customers.

“Customer success without exception is the only way to stem customer abandonment,” she notes. New customers “cost more than they used to. One failure can end the relationship,” she says.

Lessons from the Outsourcing Journal:

  • Customer expectation management requires businesses to identify and define customer expectations. CEM helps businesses create repeatable processes that align a business with its customers’ success.
  • Meeting customer expectations without exception impacts the business by:
    1. Expanding the customer base
    2. Reducing customer attrition
    3. Increasing profit per customer by extending the customer life-cycle duration

Wipro set up the Council for Industry Research, comprised of domain and technology experts from the organization, to address the needs of customers. It specifically looks at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information on the Research Council visit www.wipro.com/industryresearch or e-mail [email protected].


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