Across the private and public sectors, it is becoming harder for organisations to get away with providing standard, ‘one-size-fits-all’ services that change little from year to year. Some of the changes may be cosmetic - that is, done to give the illusion of improvement.
However, the underlying trend of increasing expectations is still one which most managers in most organisations need to be aware of, so that they consider:
Making changes in response to customers will affect many areas within an organisation, and it is not something that only its marketing department needs to concern itself with - if indeed it has a marketing department.
Obviously, the level of impact on the organisation will depend on the nature of the change. However, even minor changes to products can affect a number of departments and processes.
Adding a new flavour to a line of tinned soups will affect, at the very least, the production department, the purchasing department and the marketing department. Other more fundamental changes could affect the whole organisation.
Customers are now expecting quite different things from organisations. Some customers are looking for an organisation that can make the chore of washing clothes redundant. This is only one of the activities that customers are increasingly trying to ‘outsource’, in other words find someone else to do.
Other activities such as cleaning, keeping track of finances, home maintenance, shopping and the general running of people's lives can be done by someone else. Not everyone will want this, or be able to afford it, but it is a growing trend, which organisations such as Unilever need to be aware of. If it wants to become part of this change, all the parts of the organisation will have to be involved.
Let us consider exactly what parts of Unilever will be affected. We start by considering the product, but we define this as the provision of clean clothes, rather than as soap powder. The product could change from a tangible good to a cleaning service. We use the marketing mix framework of the four Cs:
If we apply this framework to the Unilever product we can see that all four areas will be altered if Unilever seeks to provide clean clothes ready to wear, rather than to sell soap powder. The product will change from a tangible good, to a service.
The customers will have to pay for the price of the service, which is likely to be very different from the cost of buying soap powder. Also, the cost will involve an element of risk, as giving your clothes to someone else to wash and iron requires that you trust them. Unilever will have to think about how to set a price for the service and how to win the trust of its customers.
Before, customers went to a shop to buy soap powder; how will Unilever make the new service available? Will customers deliver and collect the clothes somewhere, or will Unilever do this? Will the service be available only on weekdays or at weekends as well? How can it be tailored to suit people who are out at work all day?
Communicating with customers can be done through advertising in the same way as for soap powder, but it will be necessary to try to build the sort of relationship with customers that cannot be done through advertising alone.
Unilever will have to consider who will communicate with the customers and how they will get to know them, and get responses from them. All of Unilever's other operations will also be altered. Different kinds of employees with different skills will be needed. They will need different kinds of training and development. Revenue streams will be altered. Capital investment is likely to be low and labour input high, as a service will be provided rather than a tangible good.
The service will be custom-made when a customer wants it, rather than standardised and produced in advance. One-to-one relationships will need to be built with its customers. Cost structures will be different, and the infrastructure will revolve not around efficient factories but around local outlets.
Of course, Unilever does not need to make all these changes at once; in fact, it is unlikely to be able to, but if it chooses to look at customers' requirements in these terms, the impact will be felt throughout the organisation.
This was an extreme example, and it is only one possible response that Unilever could make to its customers’ changing needs. However, even fairly straightforward responses to customers' requirements can have far-reaching effects.
A change to respond to the new expectations of its customers can be felt throughout an organisation. This emphasises the need for quality management systems that look at all of a company's processes. One is a vicious circle, the other a virtuous or positive circle. The importance of quality management can be seen in both.
The vicious circle shows the danger of cutting back on the level of quality, while the virtuous circle shows the benefit that an organisation can gain by implementing quality management systems that are felt throughout it.
The circles suggest that an organisation’s best response to customers’ changing needs is to meet them through changes to products and internal processes, and to implement quality management systems that will ensure everyone in the organisation understands how they contribute to its final product.
If an organisation does not do this, it is likely that, although it may achieve marginal savings in the short term, the combined effect of irritated customers and dissatisfied staff will lead to higher costs in the longer term. These higher costs will be made up of the cost of recruiting new staff when existing staff leave, the cost of recruiting new customers when existing and potentially loyal customers leave, and the cost of putting right products which are of inadequate quality or do not provide solutions to customers’ problems.
Changes in what society recognises as acceptable behaviour also influence customers’ expectations. In the UK, customers used to find it difficult to complain. They sometimes make excuses for organisations and put up with what they got.
This is now changing. Once it is acceptable to complain, customers start to demand that organisations act on their complaints and make changes to their products.
Other changes will also affect customers. For example, in many countries it is becoming increasing unacceptable to throw rubbish away. Recycling is important and in some countries obligatory.
Paper, cans, bottles, clothes, books and so on can all be recycled.
Customers are increasingly demanding the same type of responsible behaviour from organisations, and are likely, if they have the choice, to change their supplier if the one they use does not respond.
New generations have always expected different things from products and organisations. However, the scale and speed of change in expectations seems to grow faster all the time.
How can we find out about the changing expectations?
The obvious answer - ask them - is unfortunately not as easy, or sometimes as effective, as we might hope. Customers may know they are dissatisfied, but they often do not know exactly what an organisation needs to do to help them become satisfied.
Customers' dissatisfaction is not the only reason that organisations make changes to products. Most companies are constantly trying to improve and develop their products, because they know that if they do not their competitors will, and they will be left behind; or they will be exposed in the league tables or effectiveness audits that increasingly apply to public and not-for-profit organisations.
Some of the changes that organisations introduce are surely not attempts to make products better, but rather attempts to make them stand out from the other options available. This type of change is really a short-term solution to the problem of attracting customers, as it is unlikely to retain them for very long.
Organisations make other changes because their internal systems have been changed, and this has affected what can be offered to their customers. Unless these changes are made with an understanding of the probable impact on the customers, they are likely to create dissatisfied customers, and the organisations will need to think again.
Customers do not always know what they want. It’s up to organisations to interpret what their customers say and develop their products and services to respond to their needs. The difficulty inherent in doing this is one of reasons why organisations try to develop relationships with their customers.
For many organisations, particularly those producing what are called fast-moving consumer goods, the relationship that exists is really of a them-and-us type.
Manufacturers concentrate on producing high-quality goods at the cheapest price and communicate to consumers through advertising. Consumers are on the receiving end of this.
Feedback to producers is generally through complaints and through their tracking the sales of individual products.
Other organisations try to develop a mutual benefit for themselves and their customers. In this way customers see the value of interacting with an organisation, and in return the organisation is likely to learn more about the customers and what they want. This learning is done through continuing interaction rather than through questionnaires and surveys carried out periodically.
These examples show that developing relationships through close contact with customers, and involving them in the design and development of products, will help an organisation respond to their demands.
It is also likely to create loyal customers who are enthusiastic about the organisation.
Even if your ultimate aim is not to encourage your customers to return to use your organisation again, involving them is likely to create services that respond to their needs and to make them satisfied customers who have no need to return because their problems have been solved.
Why do customers' expectations change, how do they change, what causes the changes, how can we find out about those changes? These are important questions, which can be answered by organisations only if the people within them observe what customers expect and want.
If they are not answered, then it will be impossible for organisations to define quality or implement a management system designed to ensure that quality.
How do customers' expectations change?
We have suggested that customers’ expectations do not remain static for very long. They are constantly changing. Not only do they change but also they increase over time. For example, customers generally are unlikely to ask a company to reintroduce a product that was withdrawn from the market 15 or more years ago — people are unlikely to want to go back to using computers for which they used an audio cassette to store data and the television as a monitor, for instance.
Customers' expectations change and increase — customers demand more from products over time, not less. Why should this be so? Why are people not satisfied to be offered the same things they once were? Generally, this is because in all walks of life we are led to believe that improvement is not only possible but also desirable.
When organisations set themselves targets, they usually set targets higher than the ones they set the year before. The same targets would not be considered challenging or acceptable; their employees are expected to achieve more than they did the year before.
We live in an environment where this is normal. Similarly, customers expect things to improve. They expect their products to do more than they did before, and they expect more and more choice.
Organisations may feel that they are constantly having to respond to these increased expectations, but they are actually a part of the reason that the expectations are increasing. As soon as organisations improve a product, their customers become accustomed to the improvement and expect it to be standard. They then start to expect further changes and improvements; so their expectations rise again, and the organisations respond again.
If no organisation responded, customers would have to put up with what was available or do without. However, this is unlikely to happen. In the commercial world, organisations are constantly trying to find ways to add value. If they can see a chance to do so ahead of other organisations, they are likely to take this chance.
Other organisations will follow, and the stakes will have risen for everyone. It may be in the organisations' best interests to agree with others that they will make no changes; but this is very unlikely to happen, as all organisations want to gain customers, usually at the expense of others, and taken too far this type of collusion would result in a cartel, which is unacceptable in most economies.
In the public and not-for-profit sectors the situation is different, but customers do have constantly rising expectations. They may accept a difference between what the private and public sectors provide, but their expectations may be influenced by what is happening in the private sector.
People expect computerised appointment and tax collection systems, helpful staff and detailed information from teachers, social workers and other public officials. Increased choice and competition within the public sector means it cannot afford to lag behind what the private sector provides.
All organisations need to know how their customers' expectations are changing. What causes the change in expectations? We have already said that a general desire that things should get better drives people to expect more. Quite often people find it difficult to say exactly what else they expect from a product, but they are sure something is possible.
For example, it is unlikely that drivers specifically asked for airbags in their cars. They expressed the desire for improvement as a desire for increased safety, particularly in the event of an accident. Manufacturers responded to this by developing airbags, along with other changes, such as stronger bodywork, and so on.
There is no shortage of advice on how to achieve quality. The only apparent problem is how to choose from among the innumerable models and methods on offer.
Also, quality is something that everyone must be in favour of, as no one ever argues that there should be less of it. So, by default, we must assume that there is both the will and the way for organisations to improve the quality of their work.
However, in reality many organisations and managers seem to find managing quality difficult. If you have been involved in trying to implement quality initiatives you already know that it rarely works out that way. This can lead to cynicism about quality management and give it a bad name.
All claims for a universal panacea in management should be treated with extreme scepticism. If it were that easy, there would be no unsuccessful organisations.
As consumers, most of us normally prefer to deal with organisations that offer high-quality goods and services. Consequently, we would expect quality organisations to have more satisfied customers and so achieve a greater degree of success, whether in terms of profit, or value for money in the not-for-profit sector.
This commonsense analysis is also supported by research evidence. For over 20 years the Strategic Planning Institute in the USA has collected data on more than 3,000 companies (over 600 of them based in Europe). The Profit Impact of Market Strategy database, PIMS, as it is known, has consistently shown that the single most important factor affecting a business’s performance is the quality of its products and services.
Organisations offering higher quality than their competitors achieve the highest market share and the greatest profitability. An observer might therefore reasonably conclude that organisations should certainly try to achieve a high level of quality.
Given the quantity of advice on quality management available, it would appear that it ought to be fairly simple for any organisation to improve its quality. However, people’s experience both in work and as consumers would suggest that this is often not the case. Many organisations have learned to their cost that converting the good intentions of managers into the successful implementation of a quality improvement programme is not straightforward.
Surveys examining the track record of various quality programmes have found a high level of dissatisfaction with them among the organisations concerned. Smith et al. (1994), for example, report that only one-third of 500 US companies surveyed felt that their quality programmes had had a significant impact on their competitiveness, while only one-tenth of 100 British firms surveyed believed that their quality programmes had achieved tangible results.
The same authors also quote another survey showing that two-thirds of quality programmes ground to a halt after two years because they had failed to produce the desired results.
Oakland (1989) lists some of the main difficulties experienced by those implementing quality improvement programmes:
Next week we will discuss some of the problems associated with implementing quality programmes and how quality initiatives, even after a successful introduction, can simply fade away over time if not properly serviced.
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