Why successful brands sell quality to earn consumer trust and loyalty

Inadequate quality control has this year lost South Korean electronics company Samsung sales of what may be up to 19 million phones, following reports that its smartphone Galaxy Note 7 was catching fire.

But weak quality assurance is, in fact, blighting almost every company, according to research by management consultancy Operational Excellence Consulting, which has found that poor quality costs the typical business 15 to 20 per cent of annual sales.

“The costs incurred as a result of not doing things right the first time will include; mistakes, scrap, rework, equipment downtime, handling customer complaints, warranty claims, and customer return analysis,” said the research.

For Samsung, the initial result was the recall of 2.5 million phones, but after a failed replacement, it later stopped the sales of the smartphone altogether, with analysts predicting that it could lose $17bn in revenue. The effect of this move was also felt in customers’ trust in the brand.

According to a consumer survey conducted between October 11 and October 12, 2016 of 1,000 Samsung smartphone owners by mobile e-commerce platform, Branding Brands, 40 per cent of Samsung consumers said they would not buy another smartphone from the brand, with 30 per cent saying that they will switch to its main competitor, the iPhone.

“As we have watched the Galaxy Note7 recall and discontinuation play out, even more people say they will switch their smartphone brand,” said Chris Mason, co-founder and CEO of Branding Brand.

“Consumers want to be confident in their personal safety and will choose a new smartphone accordingly.”

In this, trust plays an important role in consumers deciding which product to purchase. “For a brand, quality assurance is a way of selling trust to consumers and for a consumers it is a way of establishing a relationship based on trust with a brand,” said Odanga Madung, the data science lead at Odipo Dev, an analytics firm.

“It is a simple concept but it can prove to an excellent strategy for a brand in terms of its brand recognition, reputation and customer acquisition.”

Such was the case with Canadian telecommunications company, SaskTe.

The company made quality control a differentiator in the competitive Internet protocol television and triple-play provider market, instead of discounting its prices in bid to win new consumers.

Using a service assurance programme that proactively monitored quality, attempting to identify problems before they occur and, where possible, preventing them from happening in the first place, the company reduced its customer churn rate from about 5.5 per cent to approximately two per cent in three years.

The programme also led to a 22 per cent decrease in rework and call outs, according to quality assurance company Agama technologies.

Major business

“Quality Assurance has become a major business issue for Pay TV operators, vital in competitive terms both for keeping customers happy and reducing the cost of support,” said Agama Technologies in an article titled The Business Impact of Quality Assurance on its website.

“The benefits of an increased focus on quality can include reductions in churn rate through greater service reliability and quality, but also through improved and more proactive customer support. Such a good reputation for service can attract new customers, while also encouraging existing ones to exploit new features and boost average revenue per user.”

However, the importance of quality assurance does also depend on the target market.

“In some cases, products in the same industry that are considered to be of low quality have a higher purchase rate compared to those considered to be of high quality and this is usually because of price,” said Madung.

“Most high quality products are expensive, thus most people will not afford them, while low quality is cheap, hence consumers will buy in a bid to enjoy the ‘same’ products,” he said.

-African Laughter