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464ch4

  1. 1. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 1 Chapter 4: Customer Service Management Process Management: Creating Value Along the Supply Chain (1st edition) Wisner and Stanley
  2. 2. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 2 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
  3. 3. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 3 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.
  4. 4. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 4 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.
  5. 5. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 5 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
  6. 6. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 6 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.
  7. 7. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 7 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.
  8. 8. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 8 Customer Service Elements Customer service Pretransaction elements • Designing and using CS policies • Written statement of policy • Statement in hands of customer • System flexibility • Hiring/training CS personnel Transaction elements • Ability to back order • Delivery • Elements of order cycle • Time • Order entry • System accuracy • Warehousing • Product substitution Posttransaction elements • Installation, warranty alterations, repairs, parts • Product tracking • Customer claims, complaints • Product packaging • Temporary replacement of product during repairs 4-4
  9. 9. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 9  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.)
  10. 10. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 10 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
  11. 11. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 11  Customer expectations: can be formed and modified by knowledge of products, based on previous experiences, advertising, reputation of firm Customer Behavior and Expectations
  12. 12. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 12 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.
  13. 13. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 13 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.
  14. 14. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 14 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.
  15. 15. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 15 Customer Perceptions and Satisfaction (cont.)
  16. 16. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 16 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
  17. 17. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 17 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
  18. 18. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 18 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
  19. 19. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 19 A Framework for Managing Customer Service (cont.)  Creating a customer service strategy (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.
  20. 20. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 20 A Framework for Managing Customer Service (cont.)  Creating a customer service strategy (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.
  21. 21. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 21 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
  22. 22. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 22 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
  23. 23. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 23 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
  24. 24. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 24 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
  25. 25. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 25 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
  26. 26. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 26 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
  27. 27. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 27 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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