Jul 09

Why is the customer neglected?

All things considered, the word customer is a new entry in the business economic language, although well-known in the light of the age-old saying which reminds us that the customer is always right. It is a new word because it is often referenced by synonyms. Based on the tenets of political economy, the customer is referred to by the neutral expression ‘custom’ to signify anything that is either opposed or intertwined with the offer or with the more straightforward term ‘consumer’. The individual who consumes what is manufactured by the offer, while maximising their curve of marginal utility, based on a homo aeconomicus behaviour, namely by rationally discriminating and formulating their decisions. Until the mid Eighties, business administration literature, except for marketing publications, used the expression consumer, mistaken amongst others, rated far more important to the aim of studying and regulating corporates. It was only the advent and circulation, in the same years, of the principles of global quality which drew utmost attention to the word customer, something that the scientific language of economics and, even worse, the behaviour and decision-making of businesses, had not acknowledged.
Where does this lack of attention stem from?

1) The most remote has its roots in the very etymology of the word

The Latin word cliens reminds the notion according to which the customer is protected, therefore it is the person who is taken up by the patronus. By the Greeks, the meaning was even clearer because the root klyo equals to the Latin root kleu, from which stems the Latin verb cluere which, in turn, originated into the word cliens, that is to say client. This verb, in fact, means taking orders. The client, therefore, is a protected individual who is given orders by the patronus.

2) We do not conceive of ourselves as customers

We forget that the problems affecting customers are exactly the same we encounter and suffer from when, as customers, we interact with the companies that are supposed to try and tackle them. This is an interesting attitude because it does not seem to mirror the fact that service businesses are run by a management and a front/back office harboring the same aspirations and sharing the same values as the customers they ought to attend to and please.

3) Another reason resides with the structural evolution experienced by industries and businesses which, with the passing of time, have growingly shifted from being labour intensive to capital intensive

Such transformation, which has required the allocation of huge financial resources to cope with the required investments, has spurred businesses to turn their attention to the measurement of economic indicators such as: sales and profits as well as to their closest antecedents, products, services, geographic markets, to prove to the financial market that such investments would have resulted into highly profitable returns. Such perspective has thus diverted attention from the most strategic antecedent, namely the customer of its products and services.

4) Many companies, instead, are not focused on the customer because they still have not understood that it is the customer from whom their  emoluments originate

Whenever buying either a service or a product, the customer incurs a cost (sacrifice) as they pay the price at which either the service or the product sell. Besides remunerating for the supply cost and the cost of the capital invested by the company, the price paid by the customer generates a margin that also pays the salary of the people who, directly or indirectly, have contributed to manufacturing it and, hence, of all the people employed by the company. Accordingly, it is the customer who keeps our business and, consequently, our future going. Mistreating a customer as much as to lead him/her into walking away from the company, is a major individual and collective responsibility. Losing a customer, in fact, means losing the most strategic asset which, by compromising the competitiveness of the business, may also negatively affect the personal and professional goals of its employees. This notwithstanding, customers are often overlooked nearly as if they were  the product of our imagination. At other times, at its worst, we afford to mistreat them by bunching them all together in what turns out being an undifferentiated crowd. Paradoxically, we show greater responsibility towards in-house customers, namely colleagues, who operate in the different professional divisions of the company and simply forget that the out-house customer, the distant one, is the one who actually generates the company’s true value: in fact they put up real money for what we promise them.

5) As contended by Peter Drucker, “we forget that companies exist only because they have a customer to attend”

Would you ever give your life for a customer? By this message a specialised large-retailers chain published an advertisement in an Italian newspaper to the aim of recruiting new collaborators. Based on this ad, the company overtly claimed their being passionate about customers who played a key role in their very existence. Whenever I show the chart reading this message, with a view to spurring reactions and comments, I am faced with two completely different responses. The former being sheer irony about the hyperbole used by the company at issue. The latter, instead, reflects initial astonishment followed by criticism because, theoretically, a person would give their life only when it comes to serious, morally relevant aims and principles. Why, then, has a sophisticated company decided to formulate a statement arousing irony or criticism to the aim of hiring new workforce? Because they endorse and share the statement made by a factory worker interviewed by a TV journalist on her way out of the car industry where she worked. In blunt terms, this woman reminded that manufacturing faulty cars a customer would not be happy with would have put her future and, consequently, her family’s, at stake. Her simple words at the same time hinted at her concern for a collective anti-corporate culture oblivious of the number one reason why a company does exist and survive: attending to its customers as best as ever. Let us go through an exercise and ask ourselves what company on earth, be they a profit-making or a non-profit organization, or what political, religious institution could ever exist unless they had customers to attend? I wait for your reply.

6) Others forget that when a company has to generate value, it all begins with the customer

As pointed out, profit-making and non-profit organizations exist only because they have a customer to attend. The former serve their customers by generating an economic value, the latter pursue a social or charitable value. In either case, it all begins with the customer being the focus of their attention. Businesses thus struggle to acknowledge the crucial role played by customers when they do not endorse the simple truth the following statement brings with it: customers are where the money comes from. Ignoring such truth means not only exposing the company to miss opportunities for improving their profitability but to the far more serious threat of compromising their competitiveness and, hence, their very survival.