Analysis of Customer Service and How It Affects Profit
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Analysis of Customer Service and How It Affects Profit
- 1. Analysis of Customer Service and How It Affects Profit By: Katherine Podrasky MBA 592
- 2. Overview Hypothesis What is customer service? Why is it important? What is a customers expectations? Analysis: Amazon FedEx The Home Depot Comcast Compare Profit to Customer Satisfaction Rating
- 3. Hypothesis: Why this topic? My hypothesis: The idea is that great customer service would result in outstanding profits for companies. I chose two companies that are known for their service- Amazon and FedEx- and two companies that are known for poor service- The Home Depot and Comcast.
- 4. What is customer service? The assistance or advice provided by a company to those who buy or use its product or service. Why is customer service so important? Because there are only two ways to improve the operations of a business: increase sales or decrease costs. How do you increase sales? Great prices Great products Great service
- 5. Customer Expectations It is the total perceived benefits a customer expects from a company’s product or service. Do these Companies Meet Customer Expectations? Yes No High FedEx The Home Depot Low Amazon Comcast
- 6. Analysis: Amazon Company’s values- Customer Obsession: We start with the customer and work backwards. Innovation: If you don’t listen to your customer you will fail, but if you only listen to your customer you will also fail. How does Amazon give amazing customer service? Amazon has everything you need, at low prices, anytime of day. Their website and App is simple to use. Offer many shipping options
- 7. Amazon Amazon’s customers expectation: Low expectation. They are an online based retailer. Customers expect easy and fast. The answers are right there on the product page.
- 8. Analysis: FedEx FedEx slogan- Absolutely, Positively, Overnight. How does FedEx give amazing customer service? Empower and Applaud Employees People, Service, Profit- put your people first, they will provide the highest possible service, and profit will follow.
- 9. FedEx FedEx’s customer expectation: High expectations Customers expect their packages to be delivered on time and undamaged.
- 10. Analysis:The Home Depot The Home Depot customer service idea: Offer low price hardware in a warehouse setting while still providing the mom-and-pop customer service. Why did Home Depot’s customer service idea fail? Hired Bob Nardelli as CEO. Fired skilled full time workers. Hired unskilled part time workers and did not train about products and services.
- 11. The Home Depot Customer expectation: High expectation. Customers are looking for help and answers when shopping in store. The turnaround: Lengthy sales associate training. Easy to use website and interactive mobile app.
- 12. Analysis: Comcast Comcast customer service guarantee Not in effect until 2010 Why was customer service so poor? Long wait times, unresolved issues Tried to sell other products instead of fixing issues Little to no competition
- 13. Comcast Customer expectation: low expectations You want the issues fixed fast and without hassle. The Turnaround: 2 hour appointment windows- $20 credit if they didn’t show up on time. New interactive mobile app
- 14. Does Good Service = High Profit? Amazon vs Ebay FedEx vs UPS The Home Depot vs Lowes Comcast vs Netflix vs Dish Network
- 15. Amazon vs Ebay
- 16. Amazon stock vs satisfaction rating
- 17. FedEx vs UPS
- 18. FedEx stock vs satisfaction rating
- 19. The Home Depot vs Lowe’s
- 20. The Home Depot stock vs satisfaction
- 21. Comcast vs Netflix vs Dish Network
- 22. Comcast stock vs satisfaction
- 23. Conclusion Hypothesis is met. Good customer service= high profit Bad customer service= low profit:
Editor's Notes
- Good morning my name is katherine podrasky. I have chosen Analysis of customer service and how it affects profit as my research product.
- During my discussion. I will go over: __________
- First up: why did I choose this particular topic? I have been working in customer service my entire career. And each company I worked for had different customer service models and expectations. So I chose this topic first to see what major companies did and then to see if those processes would relate to higher profits. I chose 2 companies that excelled in customer service- they would be Amazon and FedEx. Then two companies that were known for their bad service- The Home Depot and Comcast.
- But before we dive into the findings, first what is customer service. It’s the assistance of advice …… Why is customer service so important? If you cant decrease costs, how can you increase sales? By providing something no one else has, whether it be great service, great products, great prices, or a combination of all three.
- How did I measure whether my chosen companies were excelling at service. Well other than using internet surveys, I thought whether a company would be reaching a customers expectations, whether the expectations for the company is high or low. Looking at this chart, you can see that for fedex, you expect your packages to deliver on time-which is fairly high- so they reach that expectation. But on the flip side, your expecting comcast’s services like internet and cable to work all the time without having to contact anyone- so its pretty low in expectation.. Pretty much just work and im happy- but surprisingly or not, comcast does not reach customer expectation.
- So lets take a look at Amazon. As you can see their values are about customers. ________. So how do they provide great customer service? They offer you everything you can want-books, clothes, groceries- and you can order them online from your phone, computer, or Echo exclusively from Amazon. And everything ships directly to your doorstep. They have made shopping easy, no matter what you’re purchasing.
- Because Amazon is so easy to use, and like many other online stores, you expect things to go smoothly. Making your customer expectation to be pretty low. You’re expecting to go online, find what you want, and get it to you fast and easy. And in today’s social world, you expect to not have to talk with anyone in the process. Another reason things go so smoothly with Amazon purchases, if you have questions about the product, the answers are on the page. 5 star ratings, customer comments, and even other product recommendations. Amazon leaves the majority of the customer service work up to the customers.
- Next, I took a look at FedEx. Now I worked for FedEx, so their customer service slogan is 100% accurate. Absolutely, positively, overnight. It was Fred Smith’s first idea when he came up with the idea of FedEx and it is instilled into every single employee. FedEx does a great job at ensuring everyone knows how important it was to make the customer happy. And when you do go above and beyond the call of duty for someone, you are rewarded, whether an award, money, or a lunch, FedEx makes sure their employees feel empowered. Which can be shown in their corporate philosophy- people. Service. Profit. Fred Smith believed if you put your people first, they will provide the highest possible service, and profit will follow.
- So FedEx’s customer expectation is high. As a customer, you expect your packages to be delivered on time and undamaged. Now to someone that may have ordered something that isnt time sensitive may not scale this too be a high expectation, but for, lets say, a hospital that is expecting to receive tissue cultures for a skin graph by 9am the next morning, timing is everything. And FedEx meets or exceeds these expectations.
- Bernie Marcus and Arthur Blank dreamt up the idea of a hardware warehouse that offered everything for the home, at low prices, but still wanted to provide the mom-and-pop customer service. When Home Depot first opened, they achieved these goals. It wasn’t until Bob Nardelli took over as CEO in 2000 that changed the way Home Depot operated. Originally, Home Depot sales associates were previous carpenters, plumbers, electricians, so when a customer came in trying to fix something in their home, the sales associates were able to answer questions and help point them in the direction of how to fix it themselves. But after Nardelli, he started cutting spending costs and let go of the over paid full time skilled workers and replaced them with part time, unskilled, and untrained sales associates. The morale of the store started to diminish under the military like regime which started effecting sales.
- The customers expectations of home depot were high. From the beginning you were able to go into the store, find a sales associate, explain your project, and be able to leave knowing what to buy and how to fix it. Now customers were going to stores, if they were lucky to find a sales associate, chances are they didn’t know much about home improvement. But Home depot is working towards making the company number one in customer service. They are hiring and training sales associates and have come up with an easy to use website and interactive mobile app. These are simple fixes, but took hard times for the company to realize what they needed to do to fix the issues.
- Lastly, were going to look at Comcast. This company, like many cable services operates in an industry with little to no competition. So when you had issues with your service, you were pretty much forced to wait until someone came to fix it. You as a customer were not in control of this company, they controlled you. If there was an issue, you had to sit through long wait times on the phone, which could lead to not getting your issue fixed, or you were upsold other products. Then you would be forced to wait around a whole day for a technician to possibly show up. Comcast didn’t care about their customers, they cared about the bottom line. It wasn’t until 2010, a few years after streaming television became popular that comcast realized they are losing their customers to companies that provided the same services at cheaper prices; the customers finally had a choice and said no to comcast.
- So their customer expectation was low, because you expected their service to work without having any issues if it needed to be fixed. But even with it being low, comcast still failed to reach our expectations. Now, after 60 years of service, comcast is started to make a turnaround to boost customer service. They are offering 2 hour appointment windows and easy to use mobile app. Hopefully these changes can help turn the customers around.
- So lets take a look at the companies compared to the other leaders in the their industries.
- Looking at Amazon vs Ebay, here you can see each of their satisfaction ratings and their stock prices from 2000 to present. Ebay never surpasses Amazon and hasn’t exceeded their stock prices. Amazon has always had good customer service and their stock shows it.
- Since I tried to prove that customer service directly affects profit, here is a graph showing this correlation. Since they maintained there service, their stock continues to grow. Their a strong company and their stock shows it. Each time their customer satisfaction rate increased, their stock doubled. You can see in 2014 where the stock dipped while the satisfaction rating stayed about the same. This was do to amazon making large investments on new products and not receiving large returns.
- Next you can see the comparison between FedEx and UPS. These 2 companies have had an ongoing battle in stock prices for years. But you can see that FedEx has almost always surpassed UPS’ customer satisfaction rating.
- Like Amazon, FedEx has always strived to be the best, and their stock vs satisfation rating shows.
- Now these graphs are a bit different from the norm so far, they show that Lowes has lower stock prices, but higher customer satisfaction ratings. This is partly to do with how Bob Nardelli ran the stores. You can see where ratings were low, the stock was low.
- Now its hard to say with complete confidence that customer service has impacted profit and value for the home depot. the year after nardellis hire 2001, stock and rating dropped. From 2001 to 2008, satisfaction hovered around 70 points and the stock price fluctuated as well. The main reason is difficult to directly correlate stock to satisfaction is the large impact the housing market crash had on the stock market for everyone including the signifiacnt impact on sales for home improvement stores. However as the satisfaction increased from 2008 to 2011, so did the stock.
- Lastly, we take a look at Comcast, Netflix, and Dish Network. You can see that stock prices for each company do correspond with customer satisfaction ratings.
- Here you can see how prior to 2010, before they realized customers were important, their stock and ratings were almost parallel. Then after 2010, both started increasing.
- So my original idea that customer service directly affects profits is proven. You are able to see it more clearly with companies that have had more recent reports of bad customer service like united airlines. When the incident happened with the man being forced off the plane, a few days after, the stock dropped. It has since gone back up, but you can see how quickly something like this can affect your profits.