Does the customer always get what they want in terms of product and service? The answer is often “no”. Frequently the customer has to put up with what they are offered or what is available. This can happen for a number of reasons, such as lack of opportunity, choice, or competition.
Products and services are designed to solve particular problems of customers as perceived by their designers. The problem for product and service designers is that often they see the customer’s problem differently from the way it may be appreciated by the potential customer. This misunderstanding can lead to over engineered product or services that provide too many features not enough benefits. Washing machines are an example where machines frequently provide a multiple selection of user programs of which in reality, only one or two are actually used. Over engineered products and services waste time, money, and resources, of producers as well as customers, especially if additional features result on less reliability.
Commercial managers need to ask whether their product or service does what the customer thinks it does. Is the product capable of meeting the customer’s expectations and requirement?
Sales people are key to finding potential customers, understanding their requirements, presenting a solution and to closing the sale. Sales representatives may be the first to identify a customer’s problems which may provide a potential opportunity for a profitable solution. Understanding the customer’s problem is essential, but so is understanding whether a solution is sufficiently important, that the customer would be prepared to pay for its resolution.
While commercial managers have overall responsibility for producing profitable income efficiently, it is those people who directly and indirectly have customer contact, that have the experience, corporate and customer knowledge, that collectively gains and maintains customer loyalty on which repeat income depends.
Good communication with customers is essential in order to understand their needs and problems. Complaints should be treated as an opportunity to engage with the customer, understand their problem or complaint and by successful resolution, help to retain a customer’s repeat business. Not fully understanding a customer’s requirements can lead to unintentional mis selling, where a customer finds that the product or service does not fully address their requirements.
Miss-selling may described as encouraging customers to buy products or services by the deliberate or unintentional miss-representation of the benefits and features of a product or service, or through the obscuring of particular terms and conditions in tortuous “small print.”
For the financial services industry, the exposure of miss–selling has had disastrous and very expensive consequences, which have resulted in compensation payments running into millions of pounds. In addition, the subsequent loss of customer confidence and trust in the companies concerned has been seriously damaging their reputations.
For the commercial manager, understanding how miss-selling can happen, together with its potential consequences is very important if actions are to be taken for its avoidance. In many miss-selling cases, the driving force had been the level of commission payments that could be earned by sales staff, which encouraged volume selling. Specialist products were not accurately targeted at specific and identified customer requirements, but at a larger and more generalised market for whom the specialised product was often unsuitable, as the profile of many customers made them ineligible.
The objective of producing profitable income must be for the long term future of the business. If the level of income is increased in the short term through dubious selling practises, it will have serious effects on the flow of income in the longer term.
What actions should the commercial manager take to avoid the inherent dangers?
Of miss-selling?
- Ensure that all sales executives fully understand their product’s benefits and features.
- Use training to ensure that all sales staff understand the dangers and potential consequences of miss-selling.
- Use market research to identify and profile potential customers, identifying those factors that make them eligible for the product benefits.
- Prepare a due process to ensure that all aspects of every sale are covered before the customer commits to purchase.
“Caveat Emptor – buyer beware,” means that the ultimate responsibility for a purchase remains with the customer. However the customer’s ultimate responsibility can never be used as an excuse for suppliers deliberately or unintentionally misleading them to purchase unsuitable products. While in the short term, miss-selling will damage the individual customer/supplier relationship, its longer term effects on the trust and integrity of the supplier may be manifest in reducing its future level of profitable income.
(746)© N.C.Watkis, Contract Marketing Service 25 June 24
