The document discusses the importance of customer service and loyalty. It notes that while the economy has become more service-oriented, many companies have failed to meet customer needs by ignoring them, making unmet promises, and using jargon instead of providing answers. The document contrasts the success of Walmart compared to Kmart, noting they sell similar products but Walmart earns much more in sales due to superior customer service. It emphasizes that satisfying customers leads to business success, and that the cost of replacing unhappy customers who may tell others is very high.

1. Chapter One
Chapter 1
Know Why Service Matters

2. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
2
Healthy relationships: Key to business and
personal success
 Succeed by attracting, keeping loyal customers
 “Service economy” not as it should be

3. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
3
What Happened to the Service Economy?
Ignoring customers
Unmet promises
Incomprehensible customer service people
Jargon instead of answers

4. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
4
Ockham’s razor
 Wal-Mart vs. K-mart

5. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
5
Satisfied customers lead to success
 K-mart sales about $50 Billion/yr
 Wal-Mart sales about $400 Billion/yr
 But they sell the same stuff for about the same
prices from the same type stores in the same
locations . . .
 Same, same, same . . . DIFFERENT

6. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
6
A “customer” is someone with whom we
exchange value
 Money for a product or service
 Work for wages
 Time as a volunteer

7. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
7
No one succeeds without loyal customers
 External customers: transactions involving
an exchange of money
 Internal customers: employees and co-
workers

8. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
8
Relationships with customers can become
partnerships
 Ongoing relationships
 Service intimacy
 Generosity, trust
 Share joint purpose
 Speak truth with compassion and care
 Pursue equality with grace

9. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
9
Positive word of mouth gets and keeps
customers
 Cost of getting a new customer
 A friends’ advice or recommendation
 Turbocharge with email, blogs, or other
electronic communication
 “word of mouse”

10. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
10
How do you calculate the cost of a lost
customer?
 10-30% loss of customers per year
 Customer retention programs= profits jump
25-100%
 Ripple effects

11. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
11
What are the numbers behind an
unhappy customer?
 An upset customer tells 10-20 other
people
 These tell five more
 The total number affected by one poor
experience = 50 to 100!

12. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
12
How much does it cost to replace the
unhappy customer?
 Five to six times more than keeping existing
one
 About $118 to get a new customer
 About $19 to keep one

13. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
13
Some key change in the diverse nature of
customers
 Most diverse customer base ever
 Wider age range of employees and customers
 More 60+ customers
 Broader globalization means customers from all
around the world
 More work/life balance

14. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
14
Few companies fully back their promise
with strategy that
 Makes customer satisfaction/loyalty key
strategic goal
 Trains all employees to use behaviors that
make customer feel important
 Translates slogans into actions that convey
caring to customers

15. Customer Service, 5e
Paul R. Timm
© 2011, 2008, 2005, 2001 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
15
Your number one task, regardless of your
job title, will always be to attract, satisfy,
and preserve loyal customers.