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Service and the Economy
Good service helps make you recession-proof.
Posted Aug 21, 2008
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We are a service economy. Close to 80 percent of our gross domestic product is service-based. In a marketplace wrought with problems and concerns over the economic downturn, one must wonder how we will pull ourselves out of this fiscal malaise, when our primary business resides in how we service what others manufacture.

Never will service be a more considered factor in securing and maintaining business relationships. In these troubling times, relationships will be tested -- and I predict that only those who serve customers and clients well, will survive well. With ferocious competition for limited client attention and business, how we serve will become a means to compare and judge.

Competitive differentiation, which is lasting and enduring, will prevail in these turbulent times. We're seeing it already: Retailers and suppliers who have treated their customers and clients badly are feeling the pressure now. Business is falling off, and trying to change in the midst of an economic crisis may be a daunting challenge. People are being let go and locations are being closed -- despite the fact that two factors, connection and convenience, are at the center of any service strategy.

Those who have been paying attention all along to how they serve their customers and clients will get through these difficult times hurt, but perhaps not crippled.

Let's explore this notion:

There are many great companies that come to mind as examples of how service has defined them. Four Seasons, Marriott, Charles Schwab, General Electric, Container Store, Wachovia, Southwest Airlines, and Apple are just a few. These companies have used service as a bridge to loyalty and competitive differentiation. They place customers first, train associates on how to support that, make certain that their service culture is monitored for consistency in performance and reward, and recognize those who serve well. They have also integrated technology with people to better the experience not hinder it.

Let's focus on three companies that are benchmarks in service excellence in their competitive set and are recognized as such by those they serve:

  • The Ritz-Carlton consistently ranks at or near the top in guest satisfaction among luxury hotels.
  • EBay is one of the most trusted companies in the United States for customer privacy.
  • Saturns are consistently among the top-ranked value-priced cars in the automotive industry.

These companies was among the first in their respective industries to identify service as a differentiator and set their corporate directions accordingly. In short, they each developed a Service Excellence culture. As service pioneers in their fields, each of these companies was able to define the benchmarks against which service for that competitive set would be judged, further enhancing its competitive edge. This determination positions each one well for an economic downturn.

In many instances today, due to the economy, customers and clients make choices that are based less on what a product or service delivers and more on how the experience makes them feel about how they're treated. Sadly the cost reductions associated with economic downturns compound the service dilemma. Embracing a service strategy in these times supports customer significance and gives customers a reason to stand by you. These are great times to buck the tide and differentiate yourself by how you do what you do.


About the author
Bob Livingston, formerly head of sales at Unilever's The Lipton Company, is the founder and CEO of REL Communications, a consulting firm that moderates the Client Service Advisory boards. He also leads service-based cultural transformations within the companies with which he consults. His book, How You Do...What You Do, is available from McGraw Hill (www.mhprofessional.com/product.php?isbn=0071592784).


Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration, please email viewpoints@destinationCRM.com.

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