CUSTOMER SERVICE

Customer service is the provision of labour and other resources, for the purpose of increasing the value that buyers receive from their purchases and from the processes leading up to the purchase. With the rising dominance of the service sector in the global economy, customer service has grown in importance, as its impact on individuals, households, firms, and societies has become widespread.

History of Customer Service

The modern concept of customer service has its roots in the craftsman economy of the 1800s, when individuals and small groups of manufacturers competed to produce arts and crafts to meet public demand. The advent of mass production in the early 20th century, followed by an explosion in the demand for goods after World War II, increased the power of suppliers at the expense of consumers, and thus reduced the importance of customer service. A shift in this balance began in the 1970s, as international competition increased, and the dominance of western manufacturers was challenged, first by Japan, then by Korea, China and other developing economies. Producers responded by improving the quality of their products and services.

The economic boom of the 1990s again increased the power of suppliers who, while not completely reverting to lower standards of service, were able to be more selective of which customers to serve, and of what levels of service to provide. The overall quality of customer service - in society and in specific industries - will continue to be determined by the relative balance of power between suppliers and consumers; it will improve as competition becomes more intense, and decline as competition decreases.

Strategic advantage through customer service

A company can outperform rivals only if it can establish a difference that it can preserve. Customer service can be such a difference. It is very difficult to control, and therefore difficult to imitate. It is difficult to control because of its variability. The level of service may vary greatly between two providers in the same organization. It may also vary from one moment to another, even as delivered by the same provider. The difficulty is compounded in multi-unit operations: in addition to variability within units, there is also variability among units.

That is both the challenge and the opportunity. The consistent delivery of superior service requires the careful design and execution of a whole system of activities that includes people, capital, technology, and processes. The few companies that can manage this system do stand out, and are sought out. This is the foundation of their sustainable competitive advantage.

Customer service culture

For an organization’s members to deliver superior service consistently, they must be acculturated, i.e. instilled with the values, traits, patterns, and behaviors associated with a service culture. The mechanisms of this acculturation include recruitment, training, empowerment, and accountability, within the framework of an organization’s ideology of service.

Service Ideology

An organization’s ideology comprises its purpose (Why are we here?) and values (What do we stand for?). Organizations renowned for providing excellent customer service have typically defined their purpose in terms of service – to serve their customers, and to serve their members. Their values typically include integrity, trustworthiness, reliability, personal responsibility, industriousness, continuous improvement, respect, and consistency.

Recruitment

The challenge of recruiting and retaining qualified customer service focused employees becomes painfully apparent when one is presented with a (not so uncommon)case in which a large company situates itself within a small rural area. This has been a tradeoff some companies have made in order to save a few dollars on real estate costs. The difficulty comes when employees are discharged during seasonal down cycles and the same talent is desired three or four months later. This model is not ideal and is risky, thus companies find themselves utilizing talent oveseas in locales such as India to supply our needs longer term.

Training & Empowerment

Training is focused on enabling personnel to deliver service in manner that is beneficial to both the organization’s customers, and to itself.

Accountability

Whereas outstanding service organizations allow their people to make mistakes and learn from their failures, there is little or no tolerance for violations of its core service values. People who do not fit into the culture are removed.

What customers want

Delivering customer service begins with understanding what customers want. And this understanding begins with the understanding that they do not always know what they want, or why they want it. Traditional market research assumes that they do. Newer methods recognize that as much as 95% of our decision making is subconscious.

Common research methods (e.g. surveys and focus groups) more often reveal what customers think their motivations are, rather than what their motivations truly are. When respondents do not comprehend their true motivations, they tend to state how they think they ought to be motivated. Recent progress in neuroscience and in observational technologies have yielded more reliable, less biased, results.

Regardless of how they arrived at their findings, most researchers agree on the factors listed in this table to the right. Suppliers that meet these requirements are likely to give their customers a satisfactory experience.

In a competitive environment, however, satisfaction may not be enough. To stay in business, firms must be at least as satisfactory as their competitors. Moreover, firms that aim to gain profitable growth must increase the number of their customers, while reducing the cost of customer acquisition. This is particularly true of companies that compete in mature industries. The objective then is not merely to satisfy customers, but to convert them into promoters (customers who recommend a company to others). Promoters serve to increase a firm’s clientele, without increasing its cost of acquisition – i.e. with no additional marketing or promotional expense.

But customers do not make recommendations lightly. When they make a recommendation, they put their own reputations on the line. Firms must earn that recommendation through the consistent delivery of outstanding customer service.

Benefits of customer service

Customer Complaints [[1]]

Complaints are often treated as a nuisance. Indeed, many e-commerce organisations are so determined to avoid them that they exclude any means by which customers can make complaints! Yet they have considerable value for a number of reasons:

1. Although there will always be a small proportion of 'frivolous complaints', a complaint usually highlights something which has gone wrong with a part of the overall marketing operation; usually the high quality, which should be a fundamental requirement for most organisation, has not been achieved. Whatever the reason, the sensible marketer will want to know exactly what has gone wrong - so that remedial actions may be taken. A strength of e-commerce is that its interactive nature enables the necessary conversations with the complainant to take place easily, and in good time, and the flexible nature of the 'product' allows for remedies to be quickly applied.
2. The way a complaint is handled is often seen by customers, and their many contacts, as an acid-test of the true quality of support. What is more, it is also a powerful reminder to the organisation's own staff of just how important is quality.
3. Not least, customers who complain are usually loyal customers (those who are not loyal tend just to switch to another supplier), and will continue to be loyal (and valuable) customers - just so long as their complaint is handled well.

In the case of e-commerce the transparent nature of the processes themselves provide reassurance. Even so:

1. The first requirement is that complaints should be positively encouraged. That is not the same as saying that the reasons for complaints should be encouraged. But, assuming that despite your best efforts the problems has occurred, you should put nothing in the way of any customer who wants to complain; and, indeed, positively encourage such complaints - since the main problem lies with the many more customers who do not complain (and instead change to another supplier) rather than the few who abuse the complaints system. This may be difficult to achieve in conventional markets, where the face to face contact often relies on the member of staff causing the complaint to log it! It should be much easier for e-commerce, where a specific structure can be put in place - which is guaranteed to work.
2. The second requirement is that all complaints should be carefully handled by painstakingly controlled, and monitored, procedures. Complaints must be handled well, and must be seen to be well handled; by the complainant, and by the organisation's own staff. Again, the structure of an e-commerce system should easily ensure that the best audit trails are maintained, and regularly monitored.
3. The third, and most important requirement, is that the complaint should then be fully investigated, and the cause remedied. Complaints are only symptoms. The disease needs to be cured! There may be an understandable temptation to overlook complaints until they reach a 'significant level' - but holding off until the complaints reach this 'pain level' usually means that they have already become damaging to the organisations' image. It is far better to assume that 'one complaint is too many'!

The reality in most organisations is very different. Not least, despite the ease with which complaints may be handled, e-commerce companies are perhaps the worst offenders - possibly because the customer is remote, and has no means of embarrassing the manager responsible! Too often the number of complaints are minimised not by remedying the reasons for them but by evading the complainants! The assumption is usually made, wrongly so, that complainants are trouble-makers; and have to be handled in a confrontational manner!

The reality is that most dissatisfied customers do not complain (a US survey showed that 97% didn't!), but they do tell their friends (the same survey showed that 13% complained to more than 20 other people!). In e-commerce markets it is easy to avoid an unsatisfactory vendor - there are many others to choose from, just a click or so away - and then you can tell the whole world (or large parts of it) about your unhappy experience! Clearly, if it was not already obvious, any organisation should be highly motivated to make certain its customers are satisfied. Yet, in practice, remarkably few do so!

Satisfaction Surveys

It is essential that an organisation monitors the satisfaction level of its customers. This may be, all else failing, at the global level; as measured by market research. Preferably, though, it should be at the level of the individuals or groups - especially where this is easy to achieve in the case of e-commerce, by simply asking customers, after they have used the service, how satisfied they are. IBM, at the peak of its success, every year conducted a survey of all its direct customers. The results were not just analysed to produce overall satisfaction indices, though that was done (and senior management viewed any deterioration with alarm), but they were also provided to field management so that they could rectify any individual problem situations - where the customer was dissatisfied with any aspect of the IBM service and the IBM representative (presumably in 97% of the occasions if the above results - of the numbers who do not complain - hold true in this field) did not realise this to be the case! Much the same can be done with individual e-commerce customers - something which is much more difficult in conventional marketing.

There are a number of advantages to conducting satisfaction surveys (particularly where any individual problems highlighted can be subsequently dealt with) for e-commerce as much as in traditional markets:

1. Like complaints, they indicate where problems lie; for rectification
2. If they cover all customers, they allow the 97% of non-complainers to communicate their feelings; and vent their anger
3. They positively show, even the satisfied customers, that their supplier is interested in the customer, and their complaints - which is at least half way to satisfying those complainants
4. They help persuade the supplier's staff to take customer service more seriously.

The only difference with e-commerce is that the process should be much easier to undertake.

The importance of very high standards of customer service is evidenced by two examples. The marketing philosophy of McDonalds, the world's largest food service organisation, is encapsulated in its motto "Q.S.C.& V." (Quality, Service, Cleanliness & Value). The standards, enforced somewhat quixotically (but memorably) on its franchisees and managers at the 'Hamburger University' in Elk Grove Village (Illinois), require that the customer receive a 'good tasting' hamburger in no more than five minutes, from a friendly host or hostess; in a spotlessly clean restaurant. The second example, Disneyland, also insists on spotless cleanliness, and on the customer being 'The Guest'. It is salutary to observe how few of the competitors in either of these fields manage the simple task of keeping their premises clean, let alone being able to think of their customers as 'guests'; where the terms used in the fairground trade (with which Disney competes, albeit at a very different level) usually see the customer as some form of victim ('pigeon', 'mark', 'punter' etc) - to be fleeced before the fair moves on! E-commerce pioneers, with the important exception of Amazon, unfortunately seem to be following the latter path!

References

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Free Web Resources

• Rate Your Customer Service Experiences and Stories You can rate your customer service experience and view other ratings as well.
• Customer Service Manager Forum for the discussion of customer service matters.
• Customer Service Reader Links to source material referenced in this article
• CustomersAreAlways.com Devoted to customer service and the principles of exceptional customer services
• Service Untitled A blog about customer service and the customer service experience.
• Customer Service Point Resource and articles on good customer service.