Who is your customer? Why customers are different to consumers
To any savvy business manager, that may seem a simple or even silly question. “Of course I know who my customers are, I wouldn’t be in business otherwise” might be the natural response. However, one organisation who got this drastically (and what could have been tragically) wrong, and which almost crippled an entire country (well at least for a couple of weeks), was the US Federal Aviation Administration.
It was reported in the US press that ”When a federal agency refers to the industry it oversees as its ‘customers’ a boundary has been dangerously crossed. As representative James Oberstar, the chairman of the House Transportation and Infrastructure Committee rightly said, ‘The FAA’s only customer is the air-travelling public.”
This press report highlights two important issues. The reporter was right when saying “a boundary has been dangerously crossed”. James Oberstar was wrong when saying “The FAA’s only customer is the air-travelling public.”
Before looking further at the FAA and it’s “boundary” and “customer” issues, let’s start at the beginning. As any experienced Organisation Development person will tell you, getting the answer to “Who is my customer?” correct is the foundation stone for any successful business.
Take two examples.
In the first, the manufacturers of popular brand name soap powders such as Persil (which by the way has been around since 1903 – now, that’s success!), have clearly identified you and I as their customer. We are also the consumer. Although they sell to shops and chain stores, all their marketing is aimed at getting you and I, their customers, to select their product when we enter the store, not someone else’s.
The second case is the manufacturer of high quality furniture. Unlike soap powder where most people (well at least those who do their own washing) can name three or four brands, you and I would be hard pressed to name one brand of high quality furniture. In this case we are still the consumer, but we are not the manufacturer’s customer – the furniture store is their customer. The manufacturer’s sole aim is to market to the high-end retail stores to stock their furniture and not someone else’s. Until we see and feel the furniture (and possibly not even then) do we know what brand we are about to consume.
How does the correct identification of “customers” relate to the FAA’s problems? Perhaps similar to the FAA, in the 1980s the Australian Taxation Office (inland revenue) was faced with mounting criticism over the service it was providing to the tax paying public. After much soul searching (and probably the services of a good OD consultant), they decided their only customer was Treasury (the government). But they still had their poor service image to fix. Cleverly, they decided to call the tax paying public their “clients”. The critical point here was that they kept clearly in mind that the one and only true customer they had, whose needs, expectations and requirements must be met at all times, was Treasury.
If the FAA had identified that the Government (through the appropriate Senate Committee) was their one and only customer, they would not be in the situation they are today.
With the deregulation of the airline industry in 1978, someone probably well intentioned, but customer-naïve within the FAA, decided that they needed to give better service to the people they deal with most regularly, the airlines. And that service should be “customer service”. And so by default, the airlines became their “customers”. Now we all know that “customers are always right”. When an organisation starts to think erroneously of a key stakeholder as a customer, their entire mode of operation changes. No longer do they meet the real needs, expectations and requirements of their real customer.
You and I are customers. Not of the FAA, but of the airlines. The FAA has only one customer – the government. It is the FAA’s sole responsibility to ensure that it is meeting all of its customer’s very high standards. As customers of the airlines and consumers of the product, you and I put our faith in the fact that the airlines have been regulated by an organisation that is at all times meeting its customers needs, expectations and requirements.
And that’s why it is so important to be clear about how any business handles the perennial statement “The customer is always right”. First, one has to know, “Who is the customer?”
About the Author - Bob Selden
Bob Selden is the author of the best-selling “What To Do When You Become The Boss” – a self-help book for new managers – see details at http://www.whenyoubecometheboss.com/. He’s also coached at one of the world’s premier business schools, the Institute for Management Development in Lausanne, Switzerland and regularly advises managers around the globe on their current challenges. Please add your comments to this article or contact Bob via http://www.nationallearning.com.au/contact if you would like some free advice on your current management challenge.
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