MANAGING THE CUSTOMER IN THE KNOWLEDGE ECONOMY

Dr Austin Nweze

We live in interesting times. This 21^st Century is the century of knowledge. This is why I prefer to call it the knowledge economy. It has redefined the traditional and conventional ways we manage, lead or conduct businesses. The knowledge economy has provided us with new set of tools that will enable us to be more productive and manage and lead differently. In order words, this set of new tools will enable us to be more effective as managers and leaders.

The customer, therefore, is at the center of it all. The customer is the center of gravity for the survival and growth of businesses. The customer has become more informed and more sophisticated unlike in the past. Talking about the customer and his position in the past, he or she was relegated to the background. Nobody paid attention to him. Servicing or managing the customer was virtually non-existent.

Let me digress a little bit to the marketing eras we had in the past and how we came to this “age of the customers.” These four eras of marketing are

• The Production Era
• The Sales Era
• The Marketing Era and
• The Relationship Era.

In each of these periods different marketing activities were carried out. Be reminded that the essence of marketing, according to Boone and Kurtz “is the exchange process, in which two or more parties give something of value to each other to satisfy felt needs”.

At this point, let me comment briefly on each of these four eras for better understanding. The production era was a period firms had a business philosophy of being more efficient in producing high quality products. The prevailing attitude then was that “a good product will always sell itself”. It was during this period that Ralph Waldo Emerson made his famous statement that “if a man writes a better book, preaches a better sermon, or makes a better mouse trap than his neighbor, though he builds his house in the woods, the world will make a beaten path to his door.” Does this statement still hold today? The answer is NO! There is no guarantee that if you make the “best product” that it will succeed in the market place.

Stories and evidences abound of high quality products that became abysmal failures in the marketplaces. During the production era, Henry Ford, the one that taught the world how to mass produce, made his famous statement. He stated that customers can have any color of car they want, as long as it’s black. During this time, demand exceeded supply. In order words, product shortages prevailed. It was Robert Kiyosaki who countered these attitudes expressed by both Emerson and Ford when he stated that “the world is filled with good quality products but the money goes to good communicators.” What this means then is that it’s all about how effective your communication mix is and not necessarily your product quality, though product quality is equally important too.

The second marketing era, the sales era, came about as a result of massive production of goods in the production era. Manufacturers were then forced to start looking for customers to buy their goods.

The belief then was that “creative advertising and selling will overcome consumers’ resistance and convince them to buy.”

The basic assumption was that consumers will resist the purchasing of goods and services that were not essential.

The marketing era on the other hand ushered in the marketing concept as a result of the shift from the seller’s market. This era also brought about a very important change in management philosophy. This is the era of the buyer’s market, where there were more goods and services than people were willing to buy them. The philosophy behind the marketing concept is that the consumer rules. You have to find a niche and fill it.

The marketing era gave birth to the present relationship era, otherwise known as relationship marketing. This involves having a long-term relationship with customers as well as other partners which will eventually lead to success. Don’t forget that the key thing in this era is adding value to the customer or suppliers or other stakeholders.

To maintain a long-term relationship means that the customer must be satisfied with the product performance or functionality, and the service provided by the company. The customer therefore became the focus of many organizations. Let me at this point add that there are two phases of marketing: Acquisition marketing and Retention marketing. Acquisition marketing is when the company’s marketing efforts or activities are focused on bringing in the customer to the business. Retention marketing on the other hand is the activities carried out by the company to keep the customer within the business after experiencing the products or service. Customer service therefore belongs to the retention side.

In the past, companies used to pay lip service to customer service. Improvement came about through evolution. There is some level of seriousness today, and some have taken a step further to create a customer service department and also a manager appointed to head the department. Some people feel that customer service is just generally smiling at the customer when he or she visits your shop or office, or just being nice to the customer. It goes beyond those. The question is, are you creating or adding value to the customer? Are you solving his problems?

This is beside the point. The point I want to make here is that managing the customer as we know today is changing. The future lies in having less face-to-face interaction with the customers. That future is already here. Have you tried calling the care center of your GSM operators for help? The last time I did I found that there was a pre-recorded messages telling you what to do to sort out whatever be your problem. You’ll only need to speak to the call center officer as a last resort. It is some kind of do-it-yourself service. Have you also tried shopping at any of the numerous supermarkets in Lagos, especially the foreign ones? You’ll also find that products are arranged in such a manner that the customer can easily pick the items you want without the help of a store clerk, except of course when you want to pay for the items you have selected.

My hunch tells me that managing the customer in this knowledge economy will be slightly different. I read an article in Time Magazine that corroborated my hunch. I have been researching on the knowledge economy and its impact on business now and in the future. The research is for a book l am currently working on. In that Time magazine article, Barbara Kiviat opined that we have come to the end of customer service. Her reason for saying so: “with self-serve technology, you’ll never have to see a clerk again.” She argued that technology has aligned with public sentiment to shift the responsibility of collecting goods and services to the customer.

In advanced economies, companies are shifting to self-service. There are quite a few benefits to the company that self-service brings along. These include the fact that it saves the company money and reduces interaction with the customer by customer service personnel or any other person for that matter. To support her argument Barbara Kiviat gave a couple of examples including the British retailer, Tesco, which opened several Fresh and Easy grocery stores in the U.S. which have all the lanes as self checkout. Alaska Airline will be launching their “Airport of the Future” in Seattle, Washington, with self check ticket countries some time in 2008.

But who is behind all these? NCR of course! NCR UK is responsible for selling self-service systems. They have gone beyond just selling self-service machines and are now experimenting on machines that can allow customers return merchandise they don’t want or that is defective without interacting with a clerk – do it yourself kind of stuff. If you think that it is awesome, wait until you hear this. Heritage Valley Health Systems based in Pennsylvania, USA, uses “check in Kiosk for emergency-room visits. All the patient has to do is to touch the image of the human body where it is paining him or her”.

Cost-saving and efficiency apart, according to Kiviat, “slowly, we are separating services from the places where we are used to receiving them.” Continental Airlines, Motorola, and others are doing one thing or the other to make it easier for the customer to get served. Continental Airlines has a program that allows passengers to use their PDAs to check their flight standby list without necessarily having to talk to a counter agent.

Also Motorola came up with a handheld scanner that customers carry around when they shop at supermarkets. With the handheld scanners customers can easily ring up (add up) what they are buying and bag as they move along in the supermarket without the help of a clerk.

Don’t get me wrong here. This does not mean you don’t need clerks in the supermarkets any more. It is just that there is less interaction with the customer. Customers don’t get to see them as often as they should. Adding his voice, Bill Nuti, the CEO of NCR said: “We’ve all had the pushy salesperson. Businesses will get smarter about when to serve you.” What is happening today is that employees work is being shifted to customers to do. The question then is what work will the employees be doing? Will the customers be paid for doing employees work? Contributing to this debate Mary Jo Bitner stated: “The Company is more productive but we’re shifting work to consumers. So from a macro perspective, are we more productive or less?”

Ladies and gentlemen! I welcome you to the real world of the knowledge economy – a phenomenon that has transformed the business of business and helped entire emerging economies to compete globally.