According to a Yankelovich Report in Q4 2007, only 9% of consumers report customer service in the appliance industry as being either “excellent” or “very good”. This is the worst performance of any industry other than oil/gas – even worse than cable! There are two ways to look at this, a great opportunity for brand differentiation, enhanced equity and loyalty --- or a money pit. Is it really possible to distinguish a brand on customer service or should the money be invested in product innovation and quality, i.e., exciting products that don't break down in the first place? Which is more important to building equity?
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Both are extremely important. No matter how much money you put into designing high quality products you will always have some that break down, so it is necessary to invest in customer care centers. Obviously the end goal is to produce such high quality products that they rarely break down, but this is not always possible. It seems to me that Lynn has the right idea and that call centers can be an area where you gain customer loyalty and future sales. Keeping the call center in the U.S. is a good thing from my perspective because it allows customers to talk to agents who understand them and their product. Also it keeps jobs in the U.S.!
Innovative products and superior customer service are crucial to a company's future. Establishing outstanding customer care centers will increase profits for the company in the long run. Handling customer problems in a timely, acceptable manner will build brand loyalty and brand awareness. This will generate more consumers and profits for the company. These profits can then contribute to research and development. I believe process starts with happy, re-assured customers.
Having superior customer service can be a competitive differentiator in this category. It's really easy for the competition in this industry to reverse engineer any innovation that Whirlpool may introduce.
Customer service, however, can provide them with a sustainable difference. No matter how great a product may be, consumers will have questions because they're dealing with complicated electrical equipment. I think to be viable in the future excellent customer service is a must. If they don't provide this, consumers will continue to seek brands they are more familiar with from other purchases such as LG and Samsung. I think quality and innovation are becoming parity attributes in this industry, but service can be a meaningful differentiator.
They are equally important. If a company does not innovate it will cease to exist. In that sense innovation would be more focused on the customer of the future. But the company already has a relationship with its current customers and their loyalty is a great source of equity. Acknowledging that there will always be a percentage of defects, the company has to make sure it will deliver its promise to all customers by reducing the frustration associated with the breaking of that promise. Given this report there is a great opportunity to differentiate the brand by ensuring customer satisfaction. A bad customer service experience can break that customer’s “relationship” with the brand but a great one will strengthen it.
I absolutely believe it is possible to distinguish a brand based on excellent customer service. An example that comes up time and time again is Nordstrom. For many consumers, just hearing the name makes them think of great personal customer care, which adds to brand equity and customer loyalty.
On the other side, I belive it is still essential to invest money in product innovation and quality. There has to be a happy medium between the customer service and product quality.
Because customer service performance is rated so low in the appliance industry, it's certainly wise for Whirlpool to put a lot of resources behind it. I think outstanding customer service is more vital to brand equity when the level of product differentiation is relatively low (is one brand of washer really that different from another?) and you need something to set your product apart.
If you have an industry where products are highly differentiated, I think it might be more of a money pit scenario.
It is important to invest in areas that can be key differentiators for a company, but investment considerations should always be context dependent. Whirlpool has found customer service to be a differentiator, since most of its competitors are probably already pretty good on dimensions of price, quality, and performance. Lynn's comment that the customer call center is sometimes the only touch point between the customer and a person representing the brand supports her choice to invest in this competency. Additionally, monitoring the web for negative blog posts is a good practice.
I think you really need both good customer service and good quality innovation in order to do well as a brand.
I think a quality product with good innovation will be the driver of sales, but good customer service will keep those customers invested in that particular brand.
I think at the start up of a company, the money needs to be invested in innovation and product quality, and once the company is more mature, it should be redirected to customer care. I do think both aspects are extremely important, so from the start, both areas should be funded.
There is definitely a differentiation opportunity in good customer service. Nevertheless, if deciding between investing in it or investing in PREVENETIVE quality, I believe that the second should be a priority. Most of the time, costs of preventing defective products would be significantly lower than the cost of correcting the mistake ones the product gets to the customer. On the other hand, it might be not possible to improve quality to the point of not needing any customer service, plus it not only resolves quality problems but other usage issues, therefore good customer service would always contribute to building customer loyalty.
I believe that there is an excellent differentiation opportunity in customer service. I am a bit passionate on this issue due to the fact that I just purchased a new dishwasher and after it was installed realized there was a leak. It took another week and a half to get a new dishwasher shipped and installed and this gave me a negative opinion of both the brand and the company that I purchased the dishwasher from. High quality products are the ultimate goal but low end brands can distinguish themselves through quality customer service. There will always be faulty products for any company as well so customer service matters.
There are too many examples of companies that distinguish themselves through enhanced customer service to believe that a Whirlpool cannot create a competitive advantage by investing in this area. Companies like HP, Southwest Airlines and Nordstrom provide better customer service than their competitors which provides them with superior financial performance. On the other side, companies like Dell and American Airlines have (arguably) not invested in this area, only to see their sales decline significantly over time.
The goal should always be to provide quality products that do not break. Innovation is often an area where companies can create a competitive advantage. However, today's business cycle is much shorter than in the past and competitors will quickly copy new technologies and innovations. Therefore, companies must look elsewhere for differentiation. Quality customer service is an area that consumers have shown they will pay a premium for, and it is also an advantage that is difficult to replicate.
I think it is hard to completely divest from the after purchase market because consumers need to know that the company is going to back up their product. By the time a product breaks and needs service, they are usually disgruntled so the job of taking them from upset to loyal is extremely hard but also has many benefits. Once a consumer has had a good experience they tend to be even more satisfied with the brand than they originally were however the opposite is true as well. Having such sever detractors for your brand can terribly tarnish your image. There is no question that having perfect quality would make customer service unimportant which truly is the goal but since it is impossible to have a 0%SIR rate, Whirlpool needs to look at ways to support the brand better than our competitors.
I believe a high level of customer service is a "greens fee" when purchasing a high dollar purchase such as a dishwasher or washing machine. It is not an option to provide a less than exceptional job in the customer service category. The highest level of customer service is a must for Whirlpool's brand equity.
Where Whirlpool has lost is in the innovation game against LG. LG has beat them at the home appliance game and has offered customers more than they could have every imagined in something like a microwave. To stay competitive in the hypercompetitive global market, innovation must be a priority.
There are definitely possibilities in improving customer service to differentiate the company from competitors. American Express has done this with their brand by offering excellent customer services with the their memberships. Unfortunately the appliance industry has low ratings because typically when people are calling for repairs it is disruptive to their daily lives, while having a TV out just limits their activities for the day. Therefore it is the situation that creates the discontent of the consumers, not the actual quality of the service. Product improvement could be another route to go, however, repairs are inevitable regardless.
I think that differentiating a company using customer service is an excellent idea. If only 9% of customers are satisfied, Whirlpool could appeal to those 91% that are not by establishing themselves as an "ease of doing business" company.
I have never purchased a large appliance, but I know that I'd switch from Comcast if I had another option that had better customer service.
I don't think that you can focus on one at the peril of the other. Both product innovation and customer service are extremely important. However, I do feel as though focusing on customer service can provide a point of differentiation from the competition. This could be especially true for Whirlpool, where clearly there is only room to improve. Appliances are bound to fail at some point, but if Whirlpool can ensure that the customer has a pleasant customer service experience it will go a long way towards establishing a positive association amongst consumers with their brands.
I think that customer service is an excellent opportunity for a brand to distinguish itself. I recently purchased a Whirlpool dishwasher and upon installation it had a leak. I was extremely dissatisfied and while the company is known to make quality products, there are always situations where products are faulty. I had to have another dishwasher shipped and the old one removed and taken away. This was about a week long process where I had no dishwasher at the time. Though the service was helpful in rushing a new appliance to me, I would have liked to recieve a discount or at least an apology to know that I am a valued customer to the company. In my opinion, customer service can be the reason a customer chooses to purchase a brand again.
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