Loss of focus on customer service

[pitzerwm]

Wal-Mart under CEO Lee Scott has moved from a focus on customer service to a focus solely on price. Wal-Mart is the largest company in the world and with 2 million employees it the largest employer. Each year Wal-Mart increases its sales and profits. However, it has NOT increased its market value since 2003.

In its 2008 Annual Report Lee Scott said, "I am optimistic about our future because I know that customers everywhere will continue to depend on Wal-Mart to save them money so they can live better." Sam Walton built the most successful company in the world around customer service. K-Mart started the same year as Wal-Mart but over 20 years they gave up on service and Wal-Mart crushed them. Now the problem at Wal-Mart is it has given up its brand built around service and price to one solely focusing on price.

Wal-Mart is the only firm I know of that has huge increases in revenue and profits whose market value doesn?t increase. I am talking about Wal-Mart because it is an ideal example of a firm that got so big that it started talking to God and management lost the focus it built the company on. If you had invested $1000 in stock at Wal-Mart on May 3, 2000 it would be worth $1,088 on May 3, 2008 for an 8.8% increase over 8 years.


While Wal-Mart continues to grow billions of dollars a year in revenue the market places a greater value on service leaders and thus you will see after an increase in revenue of $209 billion the value of its stock over 8 years only increased $4.06 and almost all of this was in the last 60 days. Wal-Mart's brand is only around price. It lost its focus on service years ago. Most firms believe they have awesome service like Wal-Mart. Most CEO's have never been in their own stores where the employees did not know who they were and when they were coming. Everyone is on their best behavior when they know the CEO is coming like Lee Scott, CEO of Wal-Mart. Wal-Mart has dirty stores; bathrooms are from the stone age (filthy and dirty with graffiti everywhere). The employees are hired from the bottom of the barrel. (They started to copy K-Mart). I would rate customer service at most a 5 on a 10 point scale

Poor people don't care as much about lousy service, because price is so important to them. However, I still do not believe you can build a brand around price and bad service. The market place has recognized this. Rarely do you will see Fortune Magazine or other leading magazines write stories on Wal-Mart. The lack of service has made them a less sexy story.

 

[pitzerwm]

Singapore Airlines - Most Profitable Airline in the World

Singapore Airlines just released its 2008 financial data. They are the most customer driven airline in the world. I live in Minnesota and rarely get the opportunity to fly with them. Most airlines want a monopoly and government protection. The country of Singapore proves that competition can improve customer service and make a company more successful. Any airline can fly into Singapore . The Singapore government which owns a huge part of Singapore Airlines believes if they are good they will do well. They are correct. In Minneapolis where I live, Northwest Airlines has almost a monopoly. The result is high prices and poor service.

Singapore Airlines ended its March 2008 fiscal year with $11.6 billion in revenue and $1.55 billion in profit. Revenues grew 10.2% and profit was 61.7%. Last year they had 19 million passengers.

Many people have told me it is not necessary to fly Business or First Class with Singapore because in coach they treat you like a king. While most airlines treat you like cattle even in First Class.

Singapore Airlines proves that when you consistently provide awesome service you create a powerful brand and make more money than ALL THE OTHER AIRLINES IN THE WORLD COMBINED.

 

[pitzerwm]

The Lesson

Consumer reports, in their May 2008 issue, reported on customer satisfaction with auto repair providers. Overall 71% of respondents were highly satisfied with the work done by independents, but only 53% were highly satisfied with work done by new-car dealers. Acura had the highest rating of new-car dealers with a rating of 64%. I remember when I was in school that 64% was a failing grade. An F not even a D.



The lesson to be learned is spend your money teaching the total workforce the art of service with something new and fresh every 4-6 months. Don't do what the car manufacturers do and waste millions of dollars a month on surveys that are totally manipulated when in fact the overall satisfaction rating is 53 out of 100. This is worse than an F.

 

[Danny]

I agree customer service has gone down. We compete on quality of product and price/volume. 95% of my business as a distributor is shipping based, 75% of that is to the west coast not allowing us to have much face to face customer service. Our policy is if it is in stock we ship within 24hrs. We call if it is not instock to see if the customer wants us to ship partially or wait and ship complete. You would be amazed at how many people are in shock that we provide these simple services. I get calls because we can get it to them faster and for less than their local suppliers. I hear it all the time. It is also hard to find employees (as we all know) that simply give a damn anymore. On the flip side there are also the customers (that we all have) that take for granted the good customer service or do not see a value in it.