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High-Tech Firms Make a Business Case for Customer Service

June 10, 2014
More high-tech manufacturers emphasize the value of customer service over cost as a market differentiator.

By 2015, customer centricity will surpass quality and cost as the top business priority for high-tech manufacturers, IDC Manufacturing Insights reports in its 2013 Change in the (Supply) Chain survey.

Customer centricity means companies want to place more emphasis on the entire customer experience, including order fulfillment and post-sales capabilities, notes IDC in the annual survey sponsored by UPS.

The shift toward a customer-centric approach is tied to an increasingly competitive high-tech market. More companies are entering emerging markets to grab a share of the growing customer base in these regions. Meanwhile, customers are using online tools to price shop, compare product features and share reviews in real time.

These trends mean customers have more options than ever at their fingertips. Leaders at high-tech firms say they are adopting customer-centric strategies to help their companies stand out from the pack. The shift to customer centricity is most evident in the consumer electronics industry, according to the IDC report.

“Often, the products are equal in the marketplace if you go out there, but if you have the customer-service piece, you have an advantage,” said one consumer electronics manufacturer who participated in a focus group for the IDC study.

The number of high-tech firms expected to shift to a customer-centric focus will grow to 44% by 2015, a 19% increase from 2011. Nearly three-fourths (72%) of IDC survey respondents say more intense global competition was a top driver for adoption of a customer-centric approach. In North America, 92% of respondents say they have adopted or plan to adopt a customer-centric approach to improve sales and profits.

Solidify Customer Loyalty

Customer loyalty is one of the key benefits of a customer-centric strategy. High-tech firms say customer retention played a central role in their ability to weather the Great Recession, IDC reported. A customer-focused approach may also lead to an increase in profits. Companies that embrace service as a revenue generator rather than a cost center can attract new customers and retain them long term, advisory services firm KPMG states in its “Optimize Your Service Supply Chain” white paper. Companies also can offer a service contract when they sell a product to customers to gain additional value from a deal, according to KPMG.

“As a high-margin sale, support services generate revenue and enhance the life-long utility of the company’s products,” notes KPMG. “Both are compelling reasons to never regard service contract sales and support as an afterthought to the product sale.”

Value-added services can include product training sessions for a company’s staff, implementation support and the availability of dedicated service personnel. KPMG also recommends that companies offer services that provide value throughout the lifetime of a product, including an effective reverse-logistics process.

Successful returns, or reverse-logistics, processes include tracking capabilities that identify whether the customer is eligible for an exchange, reports KPMG.  The ability to simplify the return or exchange process improves customer relationships, logistics consulting firm Greve-Davis notes.

Forward-thinking high-tech manufacturers adopt advanced parts-exchange programs to attract new customers, Greve-Davis reports in “Recovering Lost Profits by Improving Reverse Logistics.” These programs give customers the option to receive a replacement item overnight before sending the defective item back to the manufacturer.

The process reduces downtime for the customer and allows the manufacturer to provide shipping containers and instructions that can eliminate further damage to the product during the return, Greve-Davis notes.

Focus on Fulfillment

High-tech firms responding to the IDC survey cite lead-time reduction, improvements to planning and fulfillment capabilities, and post-sales/returns improvements as the top ways they plan to enhance the customer experience. One IDC survey participant says his company needs a partner who can handle order fulfillment needs without “a lot of hand holding.”

Many high-tech companies have addressed this need by hiring third-party logistics (3PL) providers. Experienced 3PL providers offer extensive global networks and supply chain expertise that enable enhanced customer service.

For instance, a 3PL provider with multiple global stocking locations brings companies closer to customers in various markets. The benefits of such an expansive network include shorter customer delivery lead times and a provider that can meet local customer expectations. 

3PL providers also help high-tech manufacturers meet next-business-day and express shipping commitments. Some leading logistics providers offer same-day delivery services that include the option of receiving a product within one to eight hours of completing the order.

Logistics providers that provide specialized services, such as same-day delivery, help high-tech manufacturers differentiate themselves in a fiercely competitive market. The partnership is a key component of a high-tech company’s transition from a cost-focused business strategy to a customer-centric approach.

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