Customer perception

PERCEPTION CONCEPTS It is important to underscore the word perception. Perception is the act of discerning, realizing, and becoming aware of through the senses. The customers perception is what counts, not what we think it is. To understand this point it helps to consider perception categorized into (4) quadrants (Table 1):

Table 1 How a Graphic Arts Company views itself How the customer views the Graphic Arts company

The real view of the Graphic Arts company

How a Graphic Arts Company thinks the customer views the company

The first quadrant has value, but includes obvious blind-spots. Some of us score higher in self objectivity than do others. The second quadrant is the one that counts most and the goal of assessing customer perception is to develop as accurate a picture of the customers view as possible. The third quadrant is a companys perception of how its customers perceive it. Bias creeps into this quadrant as well. The fourth quadrant is an amalgam of 1 3 and deals with a philosophical discussion similar to, If a tree falls in the forest . In practice, our profile of customer perception resides in the third quadrant because our ability to vision, listen, and interpret is in itself a perception which carries filters. A quick review of concepts related to perception helps attain higher degrees of accuracy when assessing customer perception because it is wise to remember that beauty is in the eyes of the beholder and in this case the beholder writes the check.

THE IMPORTANCE OF ASSESSING CUSTOMER PERCEPTION

METHODS FOR ASSESSING CUSTOMER PERCEPTION

Before considering any methods for assessing customer perception, clear cut goals should be established. The following question needs answering prior to conducting an assessment,

When we have completed the assessment activity, What information about how our customers perceive us Do we want to ensure that we obtain? One question or a variation thereof, which should be mandatory, is, What would our company have to accomplish In order for you to do more business with us (presuming we do not do all of the work today)?

To this extent, assessing customer perception should be part of an overall systematic approach aimed at improving customer satisfaction. Figure 1 is an example of such a system named the Customer Wellness System and is one such systematic approach aimed at acquiring and retaining customers. There are too many methods for assessing customer perception. There are five basic categories of methods to gather customer perception information.

1. 2. 3. 4. 5. 6.

Surveys Feedback Cards Focus groups Face to face interviews Telephone interviews Customer Complaint Process

Surveys

The experience suggests that providing the customer with a survey is the most frequently used method to obtain customer feedback. These vary in length and focus with the most common categories for questions covering, 1) quality of product, 2), timeliness of delivery, 3) price,4) responsiveness & flexibility, 5) service quality, 6) cooperativeness of Customer Service Representatives and/or Sales Representatives, 7) innovation and creativity, 8) vastness of service offerings etc.

Potential Strengths: Relatively easy to coordinate the distribution. Relatively inexpensive.

Potential Weaknesses: . Response rate is not usually stellar. We cant control who responds and who does not. So, you may not necessarily obtain a representative perspective of the overall customer base. Poorly crafted questions may create a built-in bias by leading the respondent to answer in a certain way. This is an issue with all methods of assessment, but with a survey there is no opportunity for two-way communication that might resolve misunderstanding.

Feedback Cards
These are attached to the product, or to an invoice, and focus on the quality of a product shipment. Areas of focus typically include; 1) product quality, 2) condition of the product when it arrived, 3) timeliness, and 4) packaging.

Potential Strengths:
Inexpensive to execute. The cards are attached to something that is already going to be shipped or mailed.

Because it is smaller in size and therefore less burdensome to complete, the recipient may be more inclined to return it.

Potential Weaknesses:

The size of the card restricts the number of questions that can be listed. Although directions for distribution (who should complete it) are included on the card, the card often does not hit its intended target. Sometimes the receiving department throws away the card.

We cant control who responds and who does not. So, it is unlikely that you obtain a representative perspective of the overall customer base.

Focus Groups
A focus group session is a meeting conducted with a variety of customers to assess a product or service. Meetings can also focus on service or process issues. The automobile industry conducts what it calls 20 Groups where it brings a group of twenty customers together for the purpose of discussion. In a traditional Market Research sense, the results generated in a focus group are not considered scientific and are used to further hone other research instruments like a survey. We know of Graphic Arts firms that use the concept with a twist by bringing buyers and prepress/customer service representatives together for the purpose of improving file transfers and/or job related communication.

Potential Strengths:

Sometimes a customer will think of an idea with others present that he/she otherwise would not. Generates a good deal of input in a short span of time.

Potential Weaknesses:

If not facilitated properly (focus on the outcomes and actionable items), the meeting can turn messy. When this happens, it is worse than if nothing was attempted. Sometime individuals in a group are subjected to group think and support the viewpoints of others rather than voice their own.

Face to Face Interviews

You may see these being executed at shopping mall. Shoppers are escorted into a room where a prepared survey is completed which usually includes both open-ended questions and those that require a rating. It is important to use interviewers that are independent of the process. It is not unusual for ownership to say, My sales force has a handle on the customer. After all, thats what I pay them for and they dont get paid unless they keep the customer happy. Ill restate the point that interviewer independence is mission critical.

Potential Strengths: The setting provides an opportunity to clarify questions and discussion topics because communication is two-way. The interviewer can check-in for both nonverbal and vocal cues. The interviewee might be more attentive and thorough in answering questions when an interviewer is involved.

Potential Weaknesses: The interviewer is constrained by geography. Either the interviewer visits the interviewee or vice-versa. So to obtain wider coverage can be expensive. The interviewer may enter bias into the activity, by either saying too much (leading the interviewee), not listening well, or by not accurately or comprehensively recording responses.

Telephone Interviews
These are not telephone solicitations. Rather these are contacts made with existing customers for the purpose of assessing their perception of how well a company is meeting their needs. With intelligent crafting of both questions and sequence (the nesting of questions), a tremendous amount of useful and actionable information can be gleaned. As previously stated, it is critical to use interviewers who are completely independent so as not to filter the information.

Potential Strengths: The setting provides an opportunity to clarify questions and discussion topics because communication is two-way. The interviewer can check-in for vocal cues. The interviewer is not constrained by geography. The interviewee might be more attentive and thorough in answering questions when an interviewer is involved.

Potential Weaknesses: The interviewer may enter bias into the activity, by either saying too much (leading the interviewee), not listening well, or by not accurately or comprehensively recording responses.

Customer Complaint Process

By customer complaint process generally a company implements a form or electronic recording method for capturing a complaint. Responsibilities are assigned to individuals to resolve the immediate issue. The log of complaints is analyzed to determine patterns and root causes of customer perceptions for the purpose of permanently eliminating the condition causing the complaint.

Potential Strengths: If a company genuinely listens to the complaining customer, it is hearing an unsolicited cry for help and there is no better substitute for that particular perception. Proper handling of the complaint can lead to a save which may improve the relationship.

Potential Weaknesses: Making this method the only source of customer perception. Often times customers do not complain; they just never do business with you again.

Understanding and Managing Customer Perception

In todays globalising economy competition is getting more and fiercer. That means it becomes more difficult for products and services to differentiate themselves from other offerings than ever before. Not only is the number of competitive offerings rising due to globalisation of production, sourcing, logistics and access to information. Many products and services face new competition from substitutes and from completely new offerings or bundles from industry outsiders. Since product differences are closed at an increasing speed and many companies try to win the battle for customers by price reductions, products and services tend to become commodities. On the other hand, customer behaviour becomes more hybrids. On one hand, customers are increasingly price sensitive searching for bargains at marketplaces like eBay or buying their groceries at discount markets. On the other hand they enjoy branded and luxury goods. One and the same person may plan a weekend trip with a no-frills airline and a stay at a fivestar-hotel. In the result, customers have a wider choice of often less distinguishable products and they are much better informed. For many offerings the balance of power shifts towards the customer. Customers are widely aware of their greater power, which raises their expectations on how companies should care for them. Bringing it all together, it becomes ever more difficult to differentiate a product or service by traditional categories like price, quality, functionality etc. In this situation the development of a strong relationship between customers and a company could likely prove to be a significant opportunity for competitive advantage. This relationship is not longer based on features like price and quality alone. Today it is more the perceived experience a customer makes in his various interactions with a company (e.g. how fast, easy, efficient and reliable the process is) that can make or break the relationship. Problems during a single transaction can damage a so far favourable customer attitude. The consequence for companies is that they have to adapt their ways of competing for customers. Traditionally, companies have focused their efforts of customer relationship management on issues like customer satisfaction and targeted marketing activities like event marketing, direct marketing or advertising. Although doubtless necessary and beneficial, these activities are not longer enough. They narrow the relationship between company and customer down to a particular set of contacts in which the company invests its efforts. Most likely this will produce not more than a satisfied customer who is well aware of the companys offerings and has a positive attitude towards them. However, a satisfied customer is not necessarily a loyal one.

If a customer is satisfied that means that a product of service has met his expectations and that he was not dissatisfied by it. Customer satisfaction is doubtlessly very important. It is the precondition for repeat purchases and it prevents the customer from telling others about his disappointing experiences. A loyal customer, however, is more than a customer who frequently purchases from a company. The difference is the emotional bond which links the customer so closely to the company that he develops a clear preference for these products or brands and is even willing to recommend them to others. Loyal customers truly prefer a product, brand or company over competitive offerings. Thus loyalty goes beyond a rational decision for known quality or superior price-performance-ratio. It is about the customers feelings and perceptions about the brand or product. When the customer makes his buying decision, he evaluates the benefits he perceives from a particular product and compares them with the costs. The value a customer perceives when buying and using a product or service go beyond usability. There is a set of emotional values as well, such as social status, exclusivity, friendliness and responsiveness or the degree to which personal expectations and preferences are met. Similarly, the costs perceived by the customer, normally comprise more than the actual price. They also include costs of usage, the lost opportunity to use another offering, potential switching costs etc. Hence, the customer establishes an equation between perceived benefits and perceived costs of one product and compares this to similar equations of other products. Based on this, customer loyalty can be understood as to how customers feel about a product, service or brand and whether their perceived total investments with a it live up to their expectations. The important point here is the involvement of feelings, emotions and perceptions. In todays competitive marketplace, these perceptions are becoming much more important for gaining sustainable competitive advantage. Customer perceptions are influenced by a variety of factors. Besides the actual outcome i.e. did the product or service deliver the expected function and did it fulfil the customers need the whole process of consumption and all interactions involved are of crucial importance. In todays globalised information driven economy this can also comprise issues like How other customers or influencing groups perceive the product or brand The degree to which the customer feels the actual marketing campaign addresses the most important issues Responsiveness and service quality of any affiliates, e.g. distribution partners Customer perceptions are dynamic. First of all, with the developing relationship between customer and company, his perceptions of the company and its products or services will change.

The more experience the customer accumulates, the more his perceptions will shift from fact-based judgements to a more general meaning the whole relationship gains for him. Over time, he puts a stronger focus on the consequence of the product or service consumption. Moreover, if the customers circumstances change, their needs and preferences often change too. In the external environment, the offerings of competitors, with which a customer compares a product or service will change, thus altering his perception of the best offer around. Another point is that the public opinion towards certain issues can change. This effect can reach from fashion trends to the public expectation of good corporate citizenship. Shells intention to dump its Brent Spar platform into the ocean significantly altered many customers perception of which company was worth buying fuel from. Research has been done on the impact of market share on the perceived quality of a product. Depending on the nature of the product and the customers preferences, increasing market share can have positive or negative effects on how the customer perceives the product. Positive effects of increasing market share on customer perception Increasing market share can send out positive signals by acting as an indicator of superior quality that is recognised by more and more other customers. This effect is particularly strong for premium priced products. Customers normally assume that a product must be of exceptional quality if it can gain such an unexpected market success despite its high price. Many brands offer positive emotional benefits of using a product that is popular in the markets. The value of a product or service can rise through increasing number of users of the same product, e.g. number of members of an online community, better availability of software for popular computer systems.

Negative effects of increasing market share on customer perception For premium and luxury products, customers may translate an increasing market share into a loss of exclusivity and thus perceive it as less valuable.

The quality of services may suffer if they are consumed by increasing numbers of users. .

The concept of customer perception does not only relate to individual customers in consumer markets. It is also valid in business to business situations. For example, a competitor benchmarking survey of a large industrial supplier revealed that the market leader, although recognised for excellent quality and service and known to be highly innovative, was perceived as arrogant in some regions. If we take into consideration that there are about four other large players with a similar level of quality and innovative ideas, this perceived arrogance could develop into a serious problem. Customers here are well aware the main characteristics of all the offerings available at the market are largely comparable. So they might use the development of a new product generation of their own to switch to a supplier that can serve them not better or worse, but with more responsiveness and understanding. Companies have done a lot to improve customer satisfaction and customer relationships in the past. As discussed above, this will not be enough anymore. Any serious effort to manage customer perceptions starts with a good measurement system. Companies must be truly willing to look at the whole process of interaction through the customers eyes. For many companies, this requires a more or less extensive shift in mindset, since most departments from development to sales will be involved. The backbone of any customer perception management and measurement system, however, is thorough market research and surveys. There are several aspects of measuring customer perceptions. First of all the company has to find out how itself and its offerings are perceived by the customers. It is essential to identify what the customer is actually buying and which features are most important to him. Only this way it is possible to align the internal focus and resources to the customers expectation. This information is of greater value if it can be compared to the customers perception of competitive offerings. Not only will this reveal relative strengths and weaknesses, it is also a valuable source of ideas for improvement. Besides that, surveys should also identify the relative importance of several influencing variables in the eyes of the customer. To know what matters most to the customer helps to set priorities for projects. Of course, as with any market research activities, it should be based on a careful customer segmentation. Customer groups that differ by frequency of use, social status, geographical region or other criteria, are likely to have different expectations and preferences. Hence, they will probably perceive an offering in different ways. Only if a company knows which features of its products and services or which other points of contact with the customer are considered most important by the customers, it can develop appropriate strategies. Such a strategy will not only help the company to strengthen the emotional bond with the customer through targeted improvements and activities. It may also have the positive side effect that the customers whole experience leads him to the conclusion that this company really understands his distinctive needs and really takes him seriously. Hence, the customers perception of the whole company may improve beyond a positive attitude towards a particular product.

Based on thorough research, companies can develop strategies and initiate targeted activities to manage and improve customer perceptions. This article finishes with some examples of how this can be done. It has to be taken into consideration, however, that there is no one right strategy. Since these measures shall provide a distinctive competitive advantage, they should be based on the particular competencies and resources of a company and they should aim at setting the company apart from the other market participants. The service experience is closely linked to his perception of the total company and its offerings be it products or service. A common idea of many authors is that it is not always necessary to deliver the absolutely perfect customer experience. Instead it is important to solve the customers need or problem in a matter that is perceived appropriate. For many retail products, for example, it will be sufficient in most cases to offer an appropriate group of substitute products, but not all particular products. In service situations, customers will depending on the actual nature of the service - not expect an immediate service delivery. They will however expect a delivery within a time frame that is either market standard or meets the service promise of the actual service provider. As long as the company keeps this promise, the customer will perceive this as satisfying. Byrnes even suggests that you earn more customer loyalty when you do a good job fixing a service problem, than if there had been no problem at all. The point is to meet or excel the customers expectations, not to achieve some ideal level of product or service delivery. Companies should try to make sure that their customers are fully aware of all the ways their offering can provide value to them. They have to explain the customer how this particular product can deliver more value than those from competitors. This approach means to widen the customer perception and to extend their awareness and appreciation to more features or aspects of the offering. However, this point has to be considered very carefully in order not to produce a diametrical effect.

This point again highlights the critical importance of market research. In this example, market research would help the company to develop different communication strategies that focus on those product features that are of high priority for particular market segments. A commonplace strategy to circumvent the loss of exclusivity associated with high market share is to leverage the brand by introducing new related brands. This is very efficient with fragrances or fashion brands. In situations in which customers perceive high market shares lead as a sign of quality, it is advisable to advertise a favourable high share, e.g. Americas most popular SUV, Three out of five people already use . It is advisable to contact customers who indicate low results for loyalty or perception of the company in the surveys. Direct contact allows to identify the roots of the problem and if possible to solve the issue. Besides solving some customer-specific problems and thus

improving the perception of some individuals, such follow-ups may reveal some causes for problems that are common to wider parts of the customer base. These are the starting points for some improvements with potentially significant effects. Follow-up is the hallmark of any loyalty or customer perception surveys. The effects of any activities should be measured and analysed by follow-up surveys to provide further insights.