Customer service - retaining customers during the recession - Franchising: Special Guide

Nation's Business, March, 1992 by Gregory Matusky

Marketing in the recession requires finding new ways to reach and retain customers. If a product or service doesn't measure up, it disappears.

Yet franchise products and services rarely suffer from consumer indifference. Franchises, with their centralized marketing and consumer-driven research-and-development programs, know how to win the hearts of even the most discriminating consumers. They do it through customer-service programs that go far beyond a simple thank-you after the sale.

For franchisors, customer service means winning and retaining consumers even when times are tough or recession threatens to cause even the most loyal consumer to give up a product or service.

"The only way you can service your customer is to first understand who your customer is," says Nancy Nagamatsu, director of marketing for Goodbodies Natural Investment, Inc., a Miami-based retail franchisor. Goodbodies, with 14 franchisees in the U.S. and Europe, markets hair, body, and skin products that are said to contain no ingredients that could harm the environment.

"We have learned that our consumers tend to be innovators who want to know everything they can about the products they use," says Nagamatsu.

To meet their customers' hunger for information, Goodbodies provides a range of educational services about their products and related topics.

Among the services are in-store product dictionaries that report key features of a product, toll-free consumer hot lines, and consumer newslteers that promote consumer causes and issues--not products.

"Our customers don't buy our products because they smell like lavender," says Nagamatsu. "They buy them because they know that lavender is a natural ingredient that can help any number of skin problems."

For other franchises, customer service takes a more pragmatic approach. For instance, at Takeout Taxi, a food-to-your-door franchise based in Herndon, Va., consumer feedback is regarded as the key to serving customers better. Takeout Taxi delivers restaurant-prepared meals to customers at their homes or workplaces.

The company, which has 11 franchisees who operate 30 units throughout the country, requires franchise owners to call every customer after they first use the service. "That first exposure to our service is the critical point in determining whether the customer will become a frequent or a one-time user," says Jonathan Krasner, the company's vice president of marketing. "If the customer liked the service, the telephone call reinforces their positive impressions, and if something wasn't absolutely right, the telephone follow-up gives us the chance to regain their confidence."

Krasner believes that these types of customer-service programs are a big reason why franchises succeed where independent businesses fail. "We tracked more than 150 attempts to copy our concept during the past three years," he says. "Ninety-eight percent of them failed. Sure, many of them had customer-service programs in place. But the service wasn't incorporated into the policies of the business. They were followed once or twice and then forgotten or abandoned.

"But a franchise doesn't give you that option," he adds. "Calling every new customer takes time. Most franchise owners think they have better things to do. But we enforce the rule, and the results speak for themselves." Ninety percent of Takeout Taxi's business in a mature market is from repeat customers.