Manage Quality Customer Service

1. Topic 1
THHGLE11B/SITXCCS003A

2. Outcomes
This topic provides knowledge required for assessment of the
following:
 Develop and maintain product, service and market
knowledge
 Provide quality service to customers
 Deal with complaints and difficult situations
 Manage and use information about clients and customers
 Identify and resolve conflict
 Evaluate service situations for ongoing improvement

3. Quality Customer Service Overview
Why are we going to talk
about this topic?

4. Quality Customer Service Overview
 Many complaints about the poor levels of customer
service
 Quality is increasingly important: for our customers,
for success of our business as it determines whether
the customers are coming back to us or not =>
differentiation from competition
 Quality rules
 Quality is not price sensitive
 When we want to buy some service, we rely more on
personal recommendations (word-of mouth) rather
than on impersonal advertising

5. Question for students to think
about…
Who measures the quality of
the service?
Manager, or the customer?

6. Answer…
 Quality is measured by our customers
‘If you don’t look after your
guests,
someone else will ‘

7. What Is Quality?
 A high grade of excellence
 What the customer wants; what the customer expects;
what the customer is prepared to pay for
 Continually satisfying or exceeding ‘reasonable’
customer expectations
 Quality needs to be applied to each stage of the supply
process from the initial call to follow-up of invoicing
and payments (not enthusiastic response over the
phone, inferior quality of wines to those in the
brochure, reminder to pay for the bill, actually paid
already)

8. What Is Service?
 The interaction b/w 2 human beings: service
provider and service receiver (customer)
 The assistance 1 party provides to another
that is expected as a part of contractual
relationship
 Consumer experience = key driver of value
and profit in service organization (more
than physical product)

9. Service is Complex
 It involves unique social acts
 Perceptions differ (on both sides)
 Expectations differ
 When the production side of service is outstanding it
is invisible, a flawless system
 When the human side of service is outstanding it is
visible
 Quality control in service is much more difficult than
it is on a production line

10. Characteristics of Service
Characteristics of service:
 Intangible (can’t touch it)
 Inseparable (can’t separate it from the
provider)
 Variable (every interaction unique)
 Perishable (can’t keep it and sell it later)

11. Characteristics of Service
 Intangible – cannot be touched (but every service has
not only intangible aspect - service, but also tangible
aspect – food => very few ‘pure’)
 Customers are often more influenced by intangible
elements than tangible => tangible are easy to be
replicated by competitors
 Inseparable – creation and consumption of the service
cannot be separated
 The service cannot be separated from its provider
 Perishable - cannot be kept and sold later, cannot be
stored for later use, must be used at the same time as
they are provided

12. Characteristics of Service
 Heterogeneity (variability) – every service is different/unique
=> inconsistency of services due to:
 Quality of service varies from one service provider to another
 Quality of service varies from one member of staff to another
 Quality of service varies for the same person on different
occasions (different days, different situation, different mood) =>
person’s performance fluctuates
 People to people service => ‘high-touch’ service system
 However, ‘High-tech’ service system – with ATMs’, vending
machines’ performance will not vary that much, but we don’t
want to talk to machines (robots), we prefer people => that’s
why we are tolerant to some service performance variables,
but unlike machines, people can exceed their customer’s
expectations

13. Human Side of Service
Examples:
 Keeping customers informed
 Instilling confidence
 Giving customers individual attention
 Providing accurate and complete information
 Being attentive and thoughtful

14. One Size Fits All?
Discuss or debate:
‘Service is the same,
whether a Chinese take-away
or a fine dining hotel restaurant’

15. Variables Influencing Service
 Customer’s profile (age, country of origin)
 Emotional state of customer (tired, hungry)
 Duration of service encounter (short or lengthy)
 Decision process (how complex the decision)
 Competing demands (others waiting)
 Significance of decision (booking one night or a
wedding reception)
 Social and cultural features (eco or adventure)
 Importance to business survival (corporate customer)

17. Providing Service
1. Identify customer needs
2. Meet time frames
3. Enhance the quality of service
4. Recognize dissatisfaction
5. Manage complaints sensitively
6. Refer difficult problems to senior staff
7. Document issues and action

18. Questions
 Closed (was your meal okay?)
 Open (what type of shopping do you want to do?)
 Active listening (paraphrase to check
understanding – e.g. you would prefer something
scenic but not a group tour?)

19. What Is a Quality Service?
 Customer’s perceptions of the service experience
consistently meet their expectations => quality
 Should even exceed customer expectations (stand out
against competitors) => give them more than they
expect => quality is higher
 It is defined by customer (from their perspective)
 It matters little if the provider feels the service
delivered is excellent, if the customer does not see it
this way
 Experience for the customer leaving good impression

20. What Quality Is NOT?
 When expectations exceed what is delivered => no
quality, or very low quality
 Customer dissatisfaction due to mediocre service
 Defects or errors
 Delays, late or wrong deliveries
 Re-doing jobs => Wasted time
 Inconsistency
 Unreturned phone messages
 Broken or unfulfilled business promises

21. What Quality Is NOT?
 Lack of trust, poor motivation to perform, poor
attitudes to staff, customers
 Problems at work
 Lack of customer service => complaints
 Waiting for 10 minutes
 No towel in bathroom
 Waiting for 10 minutes
 Coffee is cold
 I booked a double room, not a twin bedded room
 My chicken is undercooked
 This steak is overcooked
 Nobody ever answers your phone

22. Question for Discussion
What is a good quality service
according to you?

23. Good Quality Service
 What I expect
 Attitude
 Timely service
 Easy to use (in the past business were concentrated on
them whether it was easy for them to use, not how
customers are going to use it)

24. What Is Value?
 Every service seeks to achieve value for the customer
 E.g. high quality meal with an excellent service
‘experience’ for the money paid => great value

25. Customer / Supplier Relationship
Supplier Aspect
 Old way:
 Customers have to accept what we offer them
 Take it or leave it
 New approach
 A very competitive environment
 Customer friendly => make it easy for our customers to do
business with us
 Needs and expectations of customers need to be considered
 Communication with customers (directly or marketing research)
 The most important stage of any quality system is to
measure the quality, i.e. seek customer quality service!

26. Customer / Supplier Relationship
Customer Aspect
 Expectations:
 Needs – the essential requirement that must be satisfied
 Preferences – non-essential requirement - bonus
 Quality perceptions
 Opinions formed by customers regarding the supplier’s
ability to meet their needs and preferences

27. Customer’s Needs & Expectations
Understanding customers’ needs and expectations
 We don’t want just cheap and convenient products and
services
 We want sincere smile, genuine show of concern or
interest, listening, we want to be recognized as
individuals = personalized service – designed just for
us not for masses, we want to be different, interacting
= attention at our need of time
 We want experience = key driver of value and profit in
service organization (more than physical product)

28. Customer’s Needs & Expectations
Identifying customers’ needs
 What do they want?
 What do they need?
 What do they think?
 What do they feel?
 Are they satisfied?
 Will they return?

29. Customer’s Needs & Expectations
Anticipating customers’ needs => constantly ask these
questions
 Have we considered their needs?
 What will they need next?
 How can we improve our service?
Situation => anticipated need
 Customer waiting longer than usual => an extra warm
smile, comment of appreciation for waiting is anticipated

30. Four Basic Needs
Four Basic Needs
 The need to be understood
 The need to feel welcome
 The need to feel important
 The need for comfort

31. Four Basic Needs
The need to be understood
 Feeling they are communicating effectively
 Language and emotions can cloud the accurate
understanding of the message
The need to feel welcome
 Pleased to see the customer
 Value the business with the customer
 Not an outsider => not return

32. Four Basic Needs
The need to feel important
 Ego and self-esteem
 Make your guest feel special
The need for comfort
 Physical – place to wait, rest, talk, to do business
 Psychological – confidence they will take care of you
appropriately

33. Levels of Service
Customer Expectations
Levels of Service:
 Basic service
 Expected service
 Desired service
 Unanticipated service

34. Levels of Service
Customer Expectations
 Basic service
 Why the company exists – reason (hotel – room, bed, breakfast,
bathrooms, restaurant – food and beverages)
 Expected service
 What customer expects as appropriate and right (prompt service
and pleasant manners)
 Desired service
 Value added service
 Superior level of service
 Unanticipated service
 Anything that can be added to desired service in the future
 Customers get used to superior levels of service => they may
expect something more, or different

35. Customer Service on Offer
Café
 Limited menu
 Accept only cash
 Order and pre-pay at the counter
 Receives a number, sits down and then collect the
order from the counter

36. Customer Service on Offer
Restaurant 1
 Extensive menu
 Accepts some credit cards
 Order and pre-pay at the counter
 Take the drink
 Chooses a seat
 Food is delivered to his table

37. Customer Service on Offer
Restaurant 2
 Wide choice menu and wine list at the table
 Accepts all credit cards
 Customer pays on departure
 Customer is requested to wait to be seated by staff
 Drink and food orders are taken at and delivered to the
table, incl. water and bread

38. Infrastructure Development
 Chipped paintwork ad threadbare carpets
 Inadequate ventilation
 Poor lighting
 Uncomfortable chairs
 Inadequate toaster facilities
 Inadequate hot water supply

39. Old Style of Management
 ‘Pleasing the Boss’
 Authoritarian style
 Information flows down from the boss at the top
to the staff at the bottom on a ‘need to know’ basis
 No input from staff
 Staff just operate machines, serve customers and
follow instructions from management to meet the
management needs and standards
 Staff performance is measured in terms of
‘pleasing the boss’, at the expense of customers

40. New Management Style &
Service Concept
 Customer focused (oriented)
 Change from pleasing a boss to serving a customer
 People at all levels actively work in teams with the aim
to improve the systems and processes that serve
customers = > staff are encouraged to participate in
decision-making process and provide support and
training for people
 Flatter organizational structures – departments and
people are co-operating, supporting each other for the
benefit of the customer (and ultimately the staff, and
the organization)

41. Manage Quality Customer Service
SITXCCS003A

42. Total Quality Management
 Management approach to long-term success through
customer satisfaction
 All members of organization participate in improving
processes, products, services and the culture in which
they work

43. Total Quality Management
The aim is to:
 Resolve quality problems
 Prevent problems from re-occurring
 Prevent problems from occurring = aim for ‘zero
defects’
 TQM is focused on prevention rather than detection
 Is to perform a TQM process in the best way possible
 People are a very important part of TQM process

44. Total Quality Management
The aim is to (cont):
 Emphasis is on how things are done, not the end result
 TQM focuses on being proactive and creative, ‘think
outside the box’, be a ‘creator’ and not a ‘competitor’
 Do things better every time
 Teamwork
 Constant improvement

45. Quality Management
Monitor service
Improve service
Provide service

46. Basic Principles of TQM
1) The Approach - Quality begins at the top
 TQM must be management led => lead by an example =>
cannot expect something from staff if the management
doesn’t take it seriously
2) The Scope - TQM must be organization-wide
 Constant improvement of all areas of the business, not just
one
3) The Scale - Everyone is responsible for quality
 Traditionally, quality assurance department was
responsible for quality
 Now, everyone should be involved in process and focus on
quality => Quality is critical to the future security of
everyone’s job.

47. Basic Principles of TQM
4) The Philosophy - The focus is on prevention not
detection
 Past => mass production => little time => low quality =>
errors/defects
 Quality inspections can stop faulty products going to
customers
 Quality inspections have little opportunity for stopping
errors occurring in the first place
 Quality inspections don’t reduce the number of errors or
costs
 Quality inspections encourage people to expect errors and
provide ‘safe net’ to detect defective goods

48. Basic Principles of TQM
5) The Means - Control the process
 Set the standards, check and measure against these
standards, ensure that any shortfall is answered/acted
upon swiftly

49. Basic Principles of TQM
6) The Standard - Get it right first time, every time =>
zero defects
 Telling people to produce quality is not efficient = like
spreading a message by whispering => no one hears you
 You need to provide information, clear instructions,
training, tools, environment that make it possible =
practical to achieve the quality
 Create environment where people take responsibility
for the quality of tasks they do
 End traditional autocratic style of management
 Manager delegates responsibility for quality to people doing
the work => requires skills and knowledge => training and
supervision

50. Basic Principles of TQM
7) The Measure - The cost of poor quality
 ‘Defects are not cost free. Someone makes them
and gets paid for making them’
 It’s much cheaper to get it right first time
 Measurement has two aspects:
 Money that could have been saved had things been
produced right the first time
 Money that could have been made from missed business
due to poor quality or missed opportunities (important
to recognize, but difficult to evaluate)

51. Basic Principles of TQM
 Efficiency of the business (health) is measured in
financial terms
Categories of these costs:
 Failure costs
 Appraisal costs
 Prevention costs
 Other costs of poor quality

52. Basic Principles of TQM
 Failure costs:
 Internal failure costs: sorting, inspection, re-work, re-test,
scrap
 External failure costs: complaints, faults, warranty charges,
refunds to customers
 Intangible quality costs: loss of morale, production delays
 Appraisal costs:
 Involved in discovering state of the product or service
 Inspection through observation
 Customer and employee appraisal
 Quality and reliability audits

53. Basic Principles of TQM
 Prevention costs:
 To keep failure and appraisal costs at a minimum
 Include quality planning, quality training, supplier appraisal,
contracts procurement
 Small increase in prevention and appraisal costs will reduce
failure costs by a greater amount, thus reducing the total costs
 Other costs of poor quality:
 Free meals, drinks
 Loss of reputation
 Loss of customers
 Wasted time and effort by everyone involved

54. The Theme:
Continuous Improvements
 What is good enough today, may not be as good
tomorrow
 Products are important (food, drink,
accommodation, clean premises), but the most
important issue regarding quality in hospitality
industry is the interaction b/w customers and
hospitality staff.

55. Resistance to TQM
Reasons for a resistance to TQM
 Waste of time
 Waste of costs
 Waste of energy
 Interesting fact is that they resist TQM even when the
mediocre service is the top reason for customer
complaints

56. Repeat Business
Customer retention
 The key to success is to ensure the repeat business
Why do so many people fail to return?
 1% of lost customers die
 3% move away
 4% just naturally float
 5% change on friends recommendations
 9% can buy it cheaper somewhere else
 10% are chronic complainers
 68% go elsewhere because the people they have
been dealing with were indifferent to their needs

57. Ways of Customer Retention
 Marketing strategies:
 Frequent buyer programs
 Thank you cards
 Customer reward and recognition program
 Customer special events
 Newsletters / personal letters
 Telephone recalls

58. Ways of Customer Retention
 Recovery:
 Not all customers are happy customers => complain
 We should accept the fact that at some time, our customer
will be unhappy, dissatisfied, or upset with product or service
=> solve it asap to customer satisfaction
 Sometimes we need to compensate them for bad service or a
bad product
 Recovery means action to tell customer we will take care of
their problems
 Restitution means something you give your customers to
compensate them for their inconvenience
 We should welcome any situation that our customer
complains as they are taking time to help us to improve our
business (majority keep quiet)

59. Ways of Customer Retention
 Managing complaints
Please have a look at the suggestions how to turn complaints
into sales
 Suggestions how to turn complaints into sales:
1) Understand why the customer is complaining
2) Listen attentively
3) Handle 1 complaint at a time
4) Ask what were their needs at a time of purchase and how
they have not been met
5) Tell the customer you understand the complaint and you
are sorry and will do anything to resolve their complaint
immediately

60. Ways of Customer Retention
6) Once resolved => discuss new sales offers and their
benefits
7) Attempt to close the new sale
8) If you cannot solve to their satisfaction => offer
alternatives, e.g. talking to a supervisor (higher
authority), exchange the good, refund the money
9) More than 75% people who complain and have their
complaint resolved immediately, will make another
complaint

61. How to C.A.R.E. for Your Customers
 You must show your customers you CARE for them
 If you CARE, they will reward you with their loyalty
 Credible: reputation, they must believe in your business,
products and services
 Accessible: quickly, easily and customer friendly; they are
already distressed, don’t make them more by passing the
bug = them from an employee to an employee
 Reliable: consistent in the performance to ensure
satisfaction (they know what to expect)
 Excellent: your customers want excellence, so should you
 Excellent customer service = excellent retention of customers
 Excellent training programs for staff = excellent performers
who will ensure the retention of customers

62. How to C.A.R.E. for Your Customers
Training:
 Untrained employees present a bad image for your
companies
 Language difficulties, or no knowledge about the
business create a bad image for the business, too
 Rapport and effective communication
 Opportunity to represent your company positively
 Training:
 How to do the job
 How to interact with customers

63. How to C.A.R.E. for Your Customers
Most important types of training for customer
retention:
 Team building – cohesive, self-directed teams
 Sales training basics
 Communication skills, effective listening
 Customer service through procedures, policies, systems
 2-5% of annual payroll on training => 10% increase in net
profit
 Superior quality of customer service and loyal customer
base => can charge up to 10% more than competitors =>
20% increase in net profit

64. Handling Complaints
1. Take responsibility
2. Focus on the person
3. Be courteous, use the person’s name
4. Suggest steps taken or alternatives
5. Take the problem to someone who can solve it
6. Implement the solution
7. Follow up and check
8. Record the situation

65. Benefits of Good Service
Benefits of good service:
 Time saved
 Fewer mistakes
 Accurate expectations (there will be a half hour
wait)
 Increased customer satisfaction
 Increased employee morale

66. Selling
Selling:
 Top down (start high)
 Bottom up (start low, our lowest room rate…)
 Suggestive selling (the green salad would go well
with that)
 Cross selling (can I book the restaurant for you)
 Benefit selling (if you take the inclusive rate you
can enjoy the other facilities)
 Informational selling (an award winning Shiraz)

67. Legal Issues With Selling
 Don’t promise what you can’t deliver
 Trade practices and sale of goods acts cover this
area
 Advertising must be accurate

68. Continual Analysis and
Improvement

69. Revenue Management
Efficiency and cost effectiveness is managed by
taking a scientific approach to maximizing
output
 E.g. including menu items that are prepared
quickly to allow more customers to be served
during a lunch period
 E.g. offering room discounts during quiet periods
of the year

70. Revenue Management
 Variable pricing
 Capacity management
 Demand smoothing
 Duration controls