The staff a company employs and the systems or processes it uses
play a key part in forming the impression which shapes or undermines
customer loyalty. Gary Ransom of Forum Europe talks to Ken Gofton.
All marketers are brought up on the four Ps: the right product, in the
right place, at the right price and with the right promotion.
The Chartered Institute of Marketing, I recall, added a fifth and very
important one: ’at a profit’.
Now we have two more: ’the right people’ and ’the right processes’. But
to be fair, a strong case can be made for saying that these latest
additions are the missing ingredients which have been holding some
They’ve been tossed into the pot by The Forum Corporation, a
Boston-based consultancy specialising in customer satisfaction, customer
loyalty and training. And they come about not so much from a new theory
of marketing as from refining an existing line of thought, says Gary
Ransom, vice-president of Forum Europe in London.
’We are constantly questioning what drives loyalty,’ he explains. ’You
can look at all the strands: how to measure it; how to identify the
revenue streams in a long-term relationship; and issues such as
life-time values and segmentation of the customer database.
’As we push further, we find we can sum up what we are talking about as
’the truly branded relationship’. It covers everything from the way
customers hear about the organisation, to the expectation they have of
its products and services, to how they are handled when they have a
complaint or need to use the warranty.
’Businesses tend to focus on the four Ps of marketing, but we believe
that if you add ’people’ and ’processes’ then you have a much more
How we got here
Consultancy waffle or genuine insight? It is worth taking a step back
and looking at how we reached some of the modern thinking on customer
First, that word brand. In marketing terms, it is about instant
recognition and emotional values as well as product values. It means an
indelible impression. Second, we’ve all absorbed that stuff from Bain &
Co, about how much cheaper it is to retain and nurture existing
customers than it is to replace them with a constant supply of new ones
More recently, there have been attempts to pin down the link between
customer satisfaction and customer loyalty.
But mere satisfaction isn’t enough. Xerox did some research into this in
the US. It found that if customers assessed the company on a scale of
one for total dissatisfaction to five for complete satisfaction, those
who gave it a four rating were six times more likely to defect to a
competitor than those who gave it a perfect score.
Telephone bank First Direct is not a client of Forum, but Ransom is a
customer. The bank claims to get half of its new business from
referrals, and that’s how he was recruited. ’A colleague who banked
there said ’It has changed my life’. How many banks have that impact? In
fact, First Direct is a powerful example. It totally managed its
interaction with the customer. And it is branded in the sense that you
can always expect the right level of service: friendly, knowledgeable
’The most common excuses you would get elsewhere, like ’the computer’s
down’, don’t happen. And you know it is due to the organisation, rather
than a few star players. They all have the training to accomplish what
they need to.
’First Direct understands that when I am dealing with my money, I want
the assurance that my instructions have been understood and carried out,
and all in a friendly way. It is not about bricks and mortar, it is
Iceland was once a fast-expanding and award-winning operation, but it
has lost some momentum in recent years. The company had already taken on
board the fact that its future could not be restricted to frozen
Forum was called in because it was felt that the management structure
might be the problem. After researching the situation, it concluded that
Iceland has a powerful customer franchise among people who require value
for money, and also want outlets on the high street. This bond was
stronger than the store itself had realised, but it was in danger of
being lost because the customers were frustrated over issues such as
promotions not running long enough and items being out of stock.
’Iceland has discovered that its future is about the customer,’ says
Ransom. Everyone has spent time - from four hours to two days - learning
a new set of values, about how to look after the customer and how to
recreate the buzz which the group believes it once had. The ideas have
been fed down from the top, so there can be no doubt about management’s
commitment to the idea.
Queuing is one example. All food retailers are keen to cut queues and at
Iceland, extra staff would be moved to the tills if the lines were
building. It was part of the culture, however, that men didn’t work the
tills. Now all staff, including store managers, are primed to volunteer
for the tills if they see that the queues are getting too long.
’We know, and they know, it will take time,’ explains Ransom. ’But
they’re starting to see their managers come alive and excel. Already,
they’re seeing results improve.’
But enough of ’people’, what about ’processes’? Forum quotes one example
of a hotel chain which analysed its customer complaints and found it was
getting a surprising number from people who claimed to have booked rooms
with king-size beds and had failed to get them.
The problem was that visitors from the US were demanding king-size beds
even when they had not booked them. With insufficient information about
guests’ specific requests, hotel staff were changing the rooms allocated
to people who had asked for those beds. Now the system has been changed
to prevent this happening - a much cheaper alternative than putting
king-size beds in every room.
A very different example concerns construction plant manufacturer
’I was talking to a guy who runs Caterpillar in Asia/Pacific, where the
competition is particularly fierce,’ says Ransom. ’The way they are
differentiating their offer within the next six months is that every
Caterpillar they sell will be able to communicate its health every day,
via satellite, to a computer in Illinois.
’So now there will be a relationship, instead of just a transaction.
The machine will be sold, but the umbilical cord will not be
The dealer will be able to ring the contractor way out on some isolated
site and say ’we’ll bring a new hub the next time we visit, because the
left one is showing signs of wear’.’
The right philosophy
Ransom believes that the ’branded customer experience’ philosophy is
relevant across all businesses: consumer and business-to-business,
products as well as services, even the FMCG sector. However, he thinks
the greatest scope for FMCG marketers might come from building
relationships with their trade customers. In the US, the broad pattern
has been that powerful manufacturers have screwed down the margins of a
fragmented retail trade.
Here, the reverse has been true. Either way, Ransom argues for
’The best example I came across was Procter & Gamble and Walmart in the
US, and it began with Pampers. Electronic point of sale was just coming
in, giving retailers much more information about product sales.
’They were half a day into a two-day meeting when Stan Walton (the
founder of Walmart) put his feet on the table and said that what he
wanted was everyday low prices - always a good price and always in
stock. He wanted P&G to split the money it allocated to Walmart
promotions with the store, so that both sides benefited, and he wanted
to be able to refill any of his 360 stores at an hour’s notice.
’Over the next two years, a P&G team moved into Walmart’s HQ, and
together they created a system. Trucks would leave the P&G loading bays,
heading for a broad geographical region. They were satellite-linked, and
when Walmart knew which stores were running low on Pampers, the drivers
would get their last-minute instructions.
’The system has since been rolled out to other products. Under US law,
what you offer to one retailer has to be offered to all retailers.
Walmart had no problem with that because it knew it would take the
others a long time to catch up. And it gave P&G a sizeable advantage
over its competitor, Kimberly-Clark. So this is one of the answers for
FMCG: working in partnership.
Arrogance on either side will tend to keep it from being as effective as
it could be.’ k
A shortage of champions
In a recent NOP survey commissioned by Forum Europe, a third of the
population was unable to name a single company which they regarded as
excelling in customer service. A further 42% identified firms which were
not household names. Marks & Spencer came top with a mere 7%, followed
by Tesco (5%) and BT (4%).
’What we wanted was to identify the best and say ’these are the
companies that are setting the pace’,’ says Forum vice-president Gary
Ransom. ’We were initially gobsmacked and depressed to discover that the
highest percentage any organisation got was 7%. We thought ’there is no
story here, we can’t give victors’ laurels to anyone’.
’But I think what it shows is that those which are ahead of the herd
have a huge advantage. As products become commoditised, it is the
quality of the total experience that will differentiate companies.
’This is a much less happy public than we had thought. Their
expectations are rising. The British consumer has seen what real service
means, whether they have encountered it at Disneyland or Pret a
The other interesting point from the survey, says Ransom, is how many
people named their local greengrocer or butcher. Such owners of small
businesses understand the importance of relationships, he claims, and
big companies can do the same. ’For a large chain like Kwik Fit to
recreate the experience that you would get from a caring local supplier
is very impressive,’ he says.
’A few months ago, my nine-year-old son wanted me to describe my
I thought about it and then told him that a lot of what I do is helping
big companies act like small companies.’