Quality should remain focus – even in tough times

With the economy in the doldrums and energy and food prices soaring, the only sensible business focus seems to be that of reducing costs.

Virtually every information technology vendor will tell you its main objective is to reduce the cost of doing business. That is, in principle, a good motive, but I doubt that the before-and-after costs are truly comparable in most cases. It is obviously cheaper to take the bicycle than the car, so why doesnÂ’t everyone do so? This is a silly question, but it makes my point. The before-and-after comparison is not always that easy.

I suggest that, too often, cost reductions are achieved by lowering the quality of service. In manufacturing, automation can improve quality and lower costs at the same time, but that is not fully transferrable to business operations because of the human aspects.

In some areas of customer-to-business interaction, these automation principles might be helpful. For example, I prefer to receive information from a computer-generated voice over waiting for hours listening to recorded content in the “wait” loop. But a support hotline is different, and any kind of sales or service function is, too.

Controlling a certain service by means of software does not by default improve quality or reduce cost. For example, I believe that stand-alone CRM (Customer Relationship Management) software actually diminishes the quality of customer-to-business relationships by disconnecting customers from the business. Clerks simply follow the guided scripts, regardless of a customerÂ’s situation. The more a company ties its personnel into rigid processes, the less they feel responsible for customer satisfaction, achieving goals and improving results. With the establishment of CRM-enabled offshore call centers, there comes a further reduction in the quality of service in exchange for lower costs. Call centers are outdated because they need to be converted to sales centers focusing on quality.

Why is cost such an overused target? Mostly because it is a numbers game that everyone on the board understands as it improves profits in the next quarter — no matter what happens later. Customers, however, do not look only at price. Once again, there is a slight difference between selling a product and offering a service or a product-related service.

Buyers are very quality-conscious in both areas, but the product-buying decision is weighted more toward price. Read the product reviews at the Amazon Web site to see how important the quality of after-sale service is to most people.

In a service business — and that includes techno-savvy businesses such as telecoms — quality is key to everything. Yet, most companies try to outdo each other only in price. While people will buy in because a cost seems cheap, they leave not because it is expensive but because the quality of service is lacking. Customers’ loyalty is not an outdated concept.

A quality perspective

So why am I proposing that a quality perspective can improve all that? In all my years of working with large corporations, I have seen never seen a business grow because it is the cheapest. Businesses grow because they are the best in quality-price relationship. Instead, I have seen many businesses fail because they were too cheap, and unable to keep up the minimum quality requirement. Wal-Mart is an overused example of how to succeed by being the cheapest. Does anyone really want the whole world to be like that?

The focus of doing business must switch from offering the same service product cheaper to offering a better-quality product for the same price. Make no mistake: I am not confusing production cost and product price here, because in the budgeting process management looks at cost that derives from a numbers game that is directly related to expected product revenue.

This is an important subject for a software vendor because a higher service quality will be the only differentiating factor in the future, when everyone can manufacture products for the same low price in Asia or resell the same outsourced services or financial products. Quality will be achieved only by giving the business a consolidated customer perspective across all aspects of the relationship.

Tough going

Today, differentiation is mostly in the advertising, which is now a substantial part of product cost. Most marketing concepts no longer claim to provide product information but rather focus on entertainment value and originality. Marketing people sell a brand-name illusion rather than a real product. That is all fine, but we can take it only so far. At some point, more of the same does not cut it. I donÂ’t want to do any finger-wagging on moral issues here, but rather simply point out typical human behavior.

Last but not least, I can only talk about my experience from running a business for more than 20 years. While the numbers obviously had to work — and that means understanding how much the business can spend — that has always been my second thought.

The first consideration, at all times, is about how I can do something better than my competition. Some have grown faster and are long gone, while others took their customers to the cleaners and made a fast buck. Those have been sold off to the highest bidder, and the entrepreneurs are celebrated without regard to what might have happened to the customers in the process.

By contrast, I enjoy my customer relationships because they keep me going. Maybe you will consider this attitude old-fashioned. But a quality perspective in customer service is going to be in vogue once again when the going gets tough and all we can rely upon is the loyalty of our satisfied and loyal customers.

Max J. Pucher is the chief architect and co-founder of ISIS Papyrus Software, a global innovator in enterprise communications and process solutions, based in Vienna, Austria, with U.S. operations based in Southlake.