Customers are Getting Smarter About Service

For years, many high-tech customers were as casual about service as their suppliers. That is no longer the case. Customers have become increasingly sophisticated and aware of the true value of good service and the high cost of bad service.

The Rise of the Sophisticated Customer:

1. Focus on Total Cost of Ownership: Customers now understand that the initial purchase price of a piece of equipment is only one part of its total cost. The cost of maintenance over a five-year life can be more than 50% of the purchase price. The cost of lost output or slipped schedules due to downtime can be even higher.
2. Understanding Supplier Impact on Overhead: Sophisticated customers recognize that a supplier's service level has a direct impact on their own overhead costs. Good service from a supplier can save a customer up to 10% of the purchase price through:
   • Reduced inventory levels (due to reliable, on-time delivery).
   • Lower administrative costs (due to accurate paperwork).
   • Elimination of costly line shutdowns.
3. Evaluating Service as a Product Feature: Customers now evaluate a supplier's service level with the same rigor as they evaluate the product's technical specifications.

The time it takes for your customer to learn the value of good service is much shorter than the time it will take you to put a good service program in place. This means companies must be proactive in building their service capabilities, because customers will get there first and will be slow to forgive shortcomings.