UQ Business School Industry Fellow Chris Roberts argues that slashing staff to reduce costs might be exactly the wrong thing to do when times get tough.
Mr Roberts said that instead, it was critical to enhance customer loyalty in a slowing economy.
“Though increasing customer focus rather than cutting costs may seem counter-intuitive, when you factor in the incremental loyalty, repurchase rates, and especially word-of-mouth, it makes perfect economic sense,” he said.
“Even if overall demand in a category decreases, organisations can still take a leadership role and ensure they position themselves strongly for the future."
Mr Roberts said his analysis of five major Australian industry sectors used a proprietary management tool, the Net Promoter Score of customer loyalty, to assess performance.
“This score asks customers how likely they would be to recommend the company to others,” he said.
“By focusing on improving their customer experience, companies can significantly improve their score – which is associated with better growth outcomes.”
He said the score was used by many major organisations including GE, Microsoft, Paypal, Phillips, Sony, American Express, and The Harvard Business Review.
Mr Roberts, CEO and founder of Engaged Marketing, said he had surveyed five industry sectors – property insurance, banking, mobile networks, online shopping, and health insurance.
He surveyed a total of 1501 customers.
“In general, Australian brands across the five categories performed badly with only 7 out of 31 achieving a positive score," he said.
“Only two organisations – APIA and Bendigo Bank – achieved world-class scores.
“Bendigo Bank blitzed the banking sector coming in way ahead of giants Commonwealth Bank and National Australia Bank.
“The survey also put home grown online retailer Oztion ahead of international brands eBay and Amazon.”
Mr Roberts said there had never been a more critical time for organisations to go back to basics and focus on the customer.
“In tough times customer loyalty is vital – and everyone knows word-of-mouth is the most effective and trusted sales and marketing channel available to business,” he said.
“Customer service can sometimes seem to be nothing more than courtesy and being nice.
“The reality is that in the current environment, customer service is an economic necessity.”
The full report outlining scores, key findings by industry, and identifying the drivers of recommendation behaviour is available at www.engagedmarketing.com.au.
Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
Media: Cathy Stacey (07 3365 6179, 0434 074 372).
