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Who is the internal customer? It depends upon who you ask. From the manufacturer's viewpoint, the internal customer is the next station on the line, or the recipient of your output. If you are in the utilities business, the internal customers may be the transmission and distri­bution providers as well as the regional substations for a utility company. In retailing, the stores are the inter­nal customers for the headquarters and distribution operations. For a government organization, the front­line employees who man the consumer support lines are critical internal customers.

A much broader perspective views all of an enterprise's associates as internal customers. Debra Thompson of TG & Associates states that creating good relationships between the internal customers (defined as staff) is key to retaining external customers and expanding your business profitably. Doug Hardawell of the ACA Group writes that the internal component of customer service, or the way the company acts within its own four walls, is vital to achieving excellent customer service.

The concept of the internal customer is an offshoot of the total quality management movement and has been given at least lip service for many years in the re­tail and hospitality industries. Some of the latest trends in internal customer service in­clude the idea that the external customer is secondary to the in­ternal customer. Companies such as Southwest Airlines are often cited as organizations that put their employees first to ensure that their external customers are treated royally.

Now that we have an idea who this internal customer is, how does it affect what we do in our busi­nesses? Earl Naumann, Ph.D., in his white paper entitled Creating Customer Value, cites a study done by a large multinational company investigating the relationship be­tween external customer satisfac­tion and the share price of its stock. The firm used a five-point scale to measure customer satisfaction.

The relationship between the percentage of custom­ers checking the top box (5 points) and the share price had a correlation coefficient of over .80, which is extremely strong. Naumann goes on to say that employee attitudes and satisfaction are key to attaining high marks in cus­tomer satisfaction, making the connection that satisfied employees can be instrumental in enhancing the share price of your company's stock. It seems apparent from this and other studies that a corporate strategy focused on internal customer care is one that will reap benefits in increased profitability, improved external customer care, and retention of valuable associates.

To Be Continued

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