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Chapter 4: Customer Service Management

Process Management: Creating Value Along the Supply Chain (1st edition)

Wisner and Stanley


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Chapter Outline

Introduction Customer Service Defined Customer Behavior and Expectations Customer Perceptions and Satisfaction A Framework for Managing Customer Service Integrating the Customer Service Process

along the Supply Chain Summary


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Learning Objectives

After completing this chapter, you should be able to:

Define customer service and describe its contributions to firm success.

Understand how customer behaviors and expectations influence elements of customer service.

Describe several customer service strategies. Explain how customer service audits are

conducted.


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Learning Objectives (cont.)

After completing this chapter, you should be able to:

Define customer service quality and explain how it is measured and improved.

Describe some of the trends in customer call centers.

Understand the importance of customer service integration throughout the supply chain.


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Introduction

Companies spend a great deal of time, money to deliver great or acceptable customer service

Customer service is generally presumed to be a means by which companies attempt to differentiate their product, keep customers loyal, increase sales, and improve profits

Customer service means : Allowing customers to access products in the most

fair, effective and satisfying way Activities that support orders Product delivery, advice, handling complaints


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Customer Service Defined

Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation.

Logistics plays a vital support role. Pretransaction customer service

elements (before sale) : occur prior to or apart from the sale of products/services.


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Customer Service Defined (cont.)

Transaction elements of customer service (during sale): occur during order cycle.

Posttransaction customer service elements (after sale): occur after the product or service has been sold.


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Customer Service Elements

Customer service

Pretransactionelements• Designing and using CS policies• Written statement of policy• Statement in hands

of customer• System flexibility• Hiring/training CS personnel

Transactionelements• Ability to back

order• Delivery • Elements of order

cycle• Time• Order entry• System accuracy• Warehousing • Product substitution

Posttransactionelements• Installation, warranty

alterations, repairs, parts

• Product tracking• Customer claims,

complaints• Product packaging• Temporary

replacement of product during repairs

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Customer service failures Neglecting or performing customer

service activities poorly Stockouts, unwillingness to honor

customer service policies, lost orders, late deliveries.

Effective hiring practices, increased general communication, training, better design of service activities help minimizing such failures.

Customer Service Defined (cont.)


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Customer Behavior and Expectations

Customer behavior: Mental, physical activities that result in purchases (affected by needs, wants) Important to understand the motivations

behind each customer purchase Customer wants: desire to make an already

satisfactory condition better Vary based on financial resources, cultural

influences, availability of technology Customer needs: desire to make an

unsatisfactory condition better Vary based on age, gender, culture,

experiences, perceptions


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Customer expectations: can be formed and modified by knowledge of products, based on previous experiences, advertising, reputation of firm

Customer Behavior and Expectations


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Four types of customers based on expectations

Economizing Customer Pricing is important

Ethical Customer Social & environmental responsibility is

important Personalizing Customer

Recognition & conversation is important Convenience Customer

Fast service is important Firms need to consider ways to design

products/services to appeal to customer classifications.


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Customer Perceptions and Satisfaction

Customer interpretations of product, service information Influenced by senses, memories, the setting of the item, or prior

expectations Perceptual biases causes selective bias

Perceptual biases Selective exposure: People's tendency to expose themselves predominately and

preferentially to information that is consistent with their own beliefs and attitudes.

Selective attention: individuals have a tendency to orient themselves toward, or process information from only one part of the environment with the exclusion of other parts.

Selective interpretation, perceptual distortion Companies must be mindful of how perceptual biases can be

influenced.


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Customer Perceptions and Satisfaction (cont.) Customer satisfaction

Result of comparing product’s perceived performance or outcome relative to expectations

Raising the bar of expectations too high Service-profit chain: The Service Profit Chain is a

concept developed by authors at the Harvard Business Review which directly addresses the relationship of customer loyalty and profitability. The concept requires a paradigm shift from the traditional focus of quantity of market share, instead focusing on the quality of market share.


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Customer Perceptions and Satisfaction (cont.)


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A Framework for Managing Customer Service Evaluate and improve employee satisfaction:

derived from the internal work environment, including comfort factors, hiring and training practices, reward system Happy-productive worker hypothesis: job

satisfaction increases employee service performance.

“Steady Eddies” Employee satisfaction surveys - analysis and

strategies


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A Framework for Managing Customer Service (cont.) Conduct customer service audits

Determining customer service requirements through focus groups, interviews, surveys, records of complaints, call center comments

Topics to consider: Customer service requirements Customer service characteristics Average performance requirements from each characteristic Type of customer External customer service audits: To identify any changes in customer service requirements To determine current customer service performance of the firm and

competitors Example: McDonald’s

Internal customer service audits: Reviewing company's current customer service measures, policies, and practices

To identify any inconsistencies between the firm’s view and practice of customer service and the actual requirements of customers


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A Framework for Managing Customer Service (cont.) Creating a customer service strategy

Based on customer service audits To create value through optimum service levels The law of diminishing returns: as customer

service levels increase, the incremental value and benefit created by even higher levels of customer service becomes smaller.

Should concentrate on high quality customer service

Reliability, recovery, fairness, wow factor Creating value with customer service

Example: Overstock.com


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(cont.) Fostering achievements in customer

service: training, communicating successful service recoveries, rewarding innovative customer service activities

Aligning customer service with the mission: firms must live their strategy.


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(cont.) Customer service departments:

provide direction and coordination to customer service assessment and improvement efforts.

Importance of personnel: must be motivated to get the job done, posses a service mentality, have the necessary product knowledge and skills, and be well-respected within the organization.


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A Framework for Managing Customer Service (cont.)

Customer service teams: consists of executives, department managers, design engineers to react to a significant customer service problem.

Customer contact centers: all of the methods customers can use to contact a business

Focal point for developing, monitoring and improving customer service strategy

Automated agent (interactive voice response, speech recognition)

Value of optimizing customer interactions Customers should be able to contact with the

company easily


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A Framework for Managing Customer Service (cont.)

Creating a customer service strategy (cont.) Customer participation and self-service

ATMs, website purchases Web-based customer service applications Outsourcing customer service: automated

contact center services, web services Offshore and virtual call centers


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A Framework for Managing Customer Service (cont.) Implementing the customer service

strategy Organizational commitment,

management support, commitment, providing financial resources required

Pilot customer service initiative Training, equipment and leadership


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A Framework for Managing Customer Service (cont.) Measuring and improving customer

service performance Customer service measures Mystery shoppers who pose as

customers to asses the customer service performance of employees and the work environment

Total quality management (TQM) Fishbone diagram


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Integrating the Customer Service Process along the Supply Chain Share information, make joint decisions

regarding customer service activities with key supply chain customers

Software applications and use of the Internet, CRM programs


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Examples of good customer service

personalized attention vision and goals clear going the distance/ making an extra effort/ thorough/ following up later if you couldn't give an answer immediately good humored/ relating personally/ putting people at ease positive attitude/ friendliness/ smiling courteousness/ respectful/ humane accommodating special needs organized affordable cleanliness/ attractive space/ clean bathroom with supplies compensate user for slow or unsatisfactory service quick response to request or complain damage control: trying to make the best out of a situation that is mostly out of the hands of those providing the service dumb it down: describing technical/complicated processes in layman's terms lots of information and frequently/ providing updates on issues or situations good signage/directions/ instructions advance notice/ planning/ anticipating needs putting customer needs before what you are doing timely and convenient really listening/ tuning in being intuitive specialized knowledge familiarity with procedures/ being able to explain and enforce rules without alienating the customer staff supportive of each other offering refreshments accuracy about services offered patience involvement in services by customer/ customer able to evaluate service avoiding assumptions flexibility/ making exceptions share written information concerned for safety delivery world wide access and service


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Examples of bad customer service getting the right person is not obvious/ service providers inaccessible bureaucracy that slows everything down/ infighting/ rigid hierarchy overdoing the personal touch filth no eye contact/ apathy towards customer/ ignoring the customer/ minimal aid personal income and financial gain is above care for the client not getting what you paid for/ charging for what should be free/ unexplained fees untrusting behavior discrimination/ xenophobic inflexibility/ rigid/ unimaginative incompetence/ untrained/ lack of knowledge under staffing automated systems that don't work (phone trees, etc) being off schedule (and not acknowledging it) no advance warning of problems lying/ blaming/ denying about problems poor communication (inc. not listening) transition to new services poorly handled promised service not available/ false advertising expert presumes last word no focus on or consideration for user/ not knowing your audience's needs failure to follow through/ no response to feedback callousness/ arrogance/ rudeness/ disrespect/ inconsiderate poor survey design inconvenient hours long lines customer does not know what the next step is; information service requires prior knowledge unfairness/ unevenness of service service provider allows his/her mood to affect the service no compensation for foul-up lack of preparation ambiguity of information information overload

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Business

managing customer

customer service

copyright

customer service

customer service

customer service

customer perceptions

supply chain