better, safer products to sell—and better regulations around them—that give consumers confidence in the quality of the goods they buy, be it cars, food or fashion.
The rise of industrial engineering in the early 1900s ushered in physical improvements, like the assembly line in the 1910s, along with conceptual ones—from W. Edwards Deming’s theories of quality control in the 1950s, through to efficiency-maximising management systems of the 1980s and 2000s.
So the quality management of our goods has improved, but what about services?
In 2020, Australia’s Royal Commission into Aged Care Quality and Safety is underway. In another sector, just 12 months ago, Commissioner Kenneth Hayne released his final report into misconduct in the Banking, Superannuation and Financial Services Industry. The quality of our key services is under the spotlight.
Australia’s spending habits have seen a revolution over the last three decades. In the late 1980s, the average household budget was split fairly evenly between goods and services. By 2014—according to the Reserve Bank of Australia (see graph below)—two thirds of Australia’s household budget was spent on services.
As we invest more in services, our expectation of service quality is on the rise. We want our spending to be worthwhile. It’s no wonder services that concern our health and financial security are under scrutiny.
But managing service quality is challenging. Customer services are invisible—compared to tangible products—so it’s harder to measure when a service fails. It’s much more straightforward to replace a faulty product than it is to repair a customer relationship tarnished by subpar service.
Because there’s a human element, we take it personally when our service providers don’t live up to their promises.
As a result, we are far less trusting when purchasing services. We feel more confident purchasing services—from, for example, doctors, dentists, auto-mechanics, hotels, restaurants, lawyers, business advisers, banks, insurance agents, superannuation funds, real estate agents, retirement villages, even aged care providers—from people we’ve met in person or have had personally recommended.
While money can’t buy a good word-of-mouth reputation, your marketing strategy can communicate your service quality promise to your customer.
In his February 2019 report (AFR paywalls! – also see ABC’s coverage), Commissioner Hayne’s six simple principles guide a newfound service-quality focus for businesses:
- obey the law;
- do not mislead or deceive;
- act fairly;
- provide services that are fit for purpose;
- deliver services with reasonable care and skill; and
- act in the customer’s best interests.
According to former Supreme Court judge Bob Austin, “The most important thing the Hayne commission did was shine a blinding spotlight on failures of consumer protection in the financial services industry… The boardrooms of consumer-facing companies are changed forever, because the interests of consumers are now right up there in the forefront of thinking.”
So, who’s managing the quality of your customer service offering? It’s the foundation of your reputation—and if you don’t manage your own service quality in 2020, your customers will.
Edmonds Marketing is a strategic marketing consultancy —our clients entrust us to deliver effective marketing that enables them to excel and thrive.