OPINION: Penny-pinching ends up costing more in long run

The thirsty diner - whose group had already bought several drinks - was told she had to either pay 80p for a glass of bottled mineral water, £2 for a whole bottle or simply go without. When she complained, the managing director's justification, recounted in The Times, would make Basil Fawlty proud.

He pointed out that he buys the water from South West Water, the glasses the water is served in, the ice that goes into the water and the labour that serves it. He also has to pay for the 'luxury' surroundings where the water is drunk and the labour needed to wash up. And he should provide this for free? Well, he can do without customers like that.

This hapless hotelier is in good company. According to a study of 10,000 consumers released last week, many businesses are risking up to £11bn in lost revenue because they provide such low levels of customer service.

The research has been carried out in more than 30 different sectors by the Customer Care Alliance, a consortium of organisations that specialise in customer care measurement and improvement.

It found that 81% of UK consumers have experienced a problem over the past year with product and services. While most complained, only about a tenth were completely satisfied with the response they received, with more than half dissatisfied.

Worse, getting a resolution is just too slow. Despite contact predominantly being made by telephone, only 11% are resolved within a day. And worse again, up to a fifth of these problems can take more than a month to sort out. All most of the complainants want is an explanation or an apology, not compensation.

A big part of the problem is that marketers are often too disconnected from the entire buying experience - despite 85% of brand loyalty being created at the point of sale, according to a Booz Allen Hamilton study.

Only 15% is generated by promotions and the quality of the product itself.

That's why it's becoming essential for marketers to take more interest in the effective management of the supply chain from start to finish.

This is the argument put by experienced brand strategist Joseph Benson and supply chain expert Bret Kinsella in a paper posted on Brandchannel.com.

In their view, most marketing and brand executives spend too little time thinking about the company's supply chain, regarding it as either a nuisance or, worse, irrelevant. That's dangerous, because pumping money into campaigns and promotions is a waste if customers have a single bad buying experience or can't get hold of the product or service in the first place. As the authors say, supply chain capabilities can make or break the ability to keep the promise made by the brand. Because a promise is either fulfilled or it's not; it's that simple.

Companies that get this right, such as Dell and Amazon, reap the benefits on a daily basis. For instance, Jeff Bezos of Amazon stopped advertising so he could put more money into fulfilment and lower prices. Making sure the supply chain delivers is the sharp end of marketing. Those last few feet can make all the difference.

This article was first published on Marketing