1. Customer Service
Chapter 18

2. Customer Service
• What is Customer Service?
• Customer Service is the set of activities and programs undertaken by retailers to make
the shopping experience more rewarding. These activates increase the value customers
receive from the merchandise and services they purchase.
• Examples of services provided by stores and call center employees interacting directly with
customers, while others are provided by the design of the retailer’s store and/or website.

3. Strategic Advantage through
Customer Service
LO 1

4. Strategic Advantage through customer service
• Many stores differentiate their retail offerings, build customer loyalty, and
develop sustainable competitive advantages by providing excellent customer
service.
• Perceptions of customer service are often developed through interactions
with frontline employees.
• Next slide give a list of services provided by retailers.

5. Acceptance of credit cards Free shipping
Alterations of merchandise Gift wrapping and notes
Assembly of merchandise Information on product availability in a specific store
ATM terminals Layaway plans
Blogs Online chat
Bridal registry Online customization
Check chasing Parking
Child care facilities Personal assistance in selecting merchandise
Coat checks Personal shoppers
Credit Repair services
Customer reviews Restrooms
Delivery to home or work Return privileges
Demonstrations of merchandise Shipping to store or home address
Display of merchandise Shopping carts
Dressing rooms Signage to locate and identify merchandise
Easy returns to bricks-and-mortar location or online Special orders
Extended store hours Valet parking
Facilities for shoppers with special needs
(physically handicapped)
Warranties

6. • All employees if a retail firm and all elements of the retailing mix can
provide services that increase the value of merchandise to customers.
• Providing high quality service is difficult for retailers.
• Most services provided by retailer are intangible.
• The challenge of providing consistent, high- quality service offers an
opportunity for retailers to develop a sustainable competitive
advantage.

7. Customer Service
Approaches

8. Customer Service Approaches
• Personalized Service
• Personalized customer service is less consistent than standardized service. The delivery
of personalized service depends on the judgment and capabilities of each service
provider.
• It is believed that personal touch is all but disappeared with the growth of national
chains that emphasize self- service and lower cost.
• The Internet has made vast amounts of information on products and retailers available
to consumers, and recommendation engines are a response to this information
overload.

9. Customer Service Approaches
• Standardized Services
• Retailers standardize the service they offer to increase the consistency of the service
quality and avoid the cost of paying the more skilled service providers required to
effectively personalize customer services.
• Store or website designs and layout also play important roles in the delivery of
standardized service.
• Ikea uses a standardized, self service approach with some unique elements to attract
customers who expect the traditional personalized approach commonly used in
furniture retailing.

10. Customer Service Approaches
• Uses of Service Approaches
• There are multiple ways to use customer service
• Business such as supermarkets, libraries, pharmacies, and airports are using self
checkout and stepping away from personalized services.
• Soon more stores will go to handheld payment methods or also using mobile
phones as ways to scan and pay for items in store.

11. Customer Evaluations
of Service Quality
LO 2

12. Perceived Service
• Reliability
• Reliability is the ability to perform the service dependably and accurately, such as
performing the service as promised or contracted or meeting promised delivery dates.
• Example: To assure service reliability, new Nordstrom salespeople go through training and
extensive mentoring by managers and seasoned sales-people.

13. Perceived Service
• Assurance
• Assurance is the knowledge and courtesy of employees and their ability to convey trust
and confidence.
• Example: Trust and confidence are particularly important at Nordstrom, where
merchandise can be relatively expensive and customers rely on the good taste and fashion
judgement of its sales associates.

14. Perceived Service
• Tangibility
• Tangibility is associated with the appearances of physical facilities, equipment,
personnel, and communication materials.
• Example : Nordstrom has always prided itself in providing a modern, but classic ambiance
with wide unobstructed aisles.

15. Perceived Service
• Empathy
• Empathy refers to the caring, individualized attention provided to customers.
• Example: Nordstrom attempts to hire people that are knowledgeable about fashion. But
equally important, they must love helping others.

16. Perceived Service
• Responsiveness
• Responsiveness means to provide customer service personnel and sales associates that
really want to help customers and provide prompt service.
• Unlike so many retailers during recessionary times, Nordstrom has not cut back on customer
service and sales personnel.
• One way to promptly solve service issues is to empower its employees.
• Example : A Nordstrom shoe sales associate decided to break up two pairs of shoes, one
size 10 and other 10 ½ , to sell to a hard to fit customer.

17. Role of Expectations
• In addition to the perception of the actual service delivered, expectations
affect the judgement of service quality. Customer expectations are based on
customer’s knowledge and experiences.
• Example: On the basis of past experiences, customers have different expectations for
the quality of service offered by different types retailers.

18. Role of Expectations
• Customers expect a traditional supermarket to provide convenient parking,
be open from early morning to late evening.
• Unexpected positive service experiences are unexpected by the customer and
if done right the customer can be delighted.
• In return the retailer has significantly exceeded their expextations.

19. Roles of Expectations
• Examples
• A restaurant that sends customers who have had too much to drink home in a taxi and
then delivers their cars in the morning.
• A jewelry store that cleans customers’ jewelry and replaces batteries in watches for free.
• A men’s store that sews numbered tags on each garment so that the customer will know
what goes together.

20. Roles of Expectations
• Around the world
• Customer service expectations also vary around the world.
• Another trend that’s spans cultures is the way technology is dramatically changing
customer expectations.
• Example: Customers expect to be able to interact with companies through automated voice
response systems and place orders and check on delivery status through the internet.

21. The Gaps Model for Improving
Retail Customer Service Quality
LO 3

22. Service Gaps
• Service Gaps
• When the customer’s perception of the service delivered by a retailer fails to meet the
customer’s expectations, a service gap results.
• 4 types of service Gaps
• Knowledge Gap
• Standards Gap
• Delivery Gap
• Communication Gap

23. Knowing What Customers Want: The
Knowledge Gap
• The first step in providing good service is knowing what customers want,
need, and expect and then using this information to improve customer
service.
• When retailers lack this information, they can make poor decisions.
• Example: A supermarket might hire extra people to make sure the shelves are stocked
and organized so that customers will find what they want. But the supermarket’s service
perceptions may not improve because the supermarket did not realize that its customers
were most concerned about waiting in the checkout line.

24. Knowing What Customers Want: The
Knowledge Gap
• Social Media
• Retailers can learn a lot about their customer expectations and perceptions of their
service quality by monitoring what they say about the retailers offerings and the
offerings of competitors on there social networks, blogs, review sites, and what they are
posting on sites like YouTube and Flickr.
• Sentiment Analysis
• Numerous retailers have started to use a technique know as sentiment analysis to assess
the favorableness( or lack of favorableness) in their customers’ sentiments by
monitoring these social media.

25. Knowing What Customers Want: The
Knowledge Gap
• Surveys, Panels, and Contests
• Many retailers survey customers immediately after a retail transaction has occurred.
• Example: Airlines, automobile dealers, hotels, and restaurants give customers surveys,
encourage them to take on online survey, or call them on the phone to ask them questions
about their experience
• Although some retailers use surveys as described, others interview panels of 10 to 15
customers to gain insights into expectations and perceptions.

26. Knowing What Customers Want: The
Knowledge Gap
• Interact with Customers, Either Directly or through Observation
• Owner-managers of small retail firms typically have daily contact with their customers
and get accurate, firsthand information about them.
• In large retail firms, managers often learn about customers through reports, so they may
miss the rich information provided by direct contact with customers.

27. Knowing What Customers Want: The
Knowledge Gap
• Customer Complaints
• Complaints allow retailers to interact with their customers and acquire detailed
information about their service and merchandise.
• Although customer complaints can provide useful information. Dissatisfied customers
typically, though this tendency is changing as customers turn to blogs, review sites(e.g
Yelp), retailers’ own online review systems, and customers service messaging systems
more frequently.

28. Knowing What Customers Want: The
Knowledge Gap
• Feedback from Store Employees
• Salespeople and other employees in regular contact with customers often have a good
understanding of customer service expectations and problems.
• This information can improve service quality only if the employees are encouraged to
communicate their experiences to high-level managers who can act on it.

29. Knowing What Customers Want: The
Knowledge Gap
• Using Customer Research
• Collecting information about customer expectations and perceptions is not enough.
The knowledge gap diminishes only when retailers use this information to improve
service.
• Examples: Store managers need to review the suggestions and comments made by
customers daily, summarize the information, and distribute it to service providers and
managers.
• Feedback on service performance needs to be provided to employees in a timely
manner.

30. Setting Service Standards: The Standards Gap
• After retailers gather information about customer service expectations and
perceptions, the next step is to use this information to set standards and
develop systems for delivering high quality service.
• Service standards should be based on customers’ perceptions rather than
internal operations.
• Example: A supermarket chain might set an operations standard of a warehouse
delivery every day to each store.

31. Setting Service Standards: The Standards Gap
• Commitment to Service Quality
• Service excellence is achieved only when top management provides leadership and
demonstrates commitment.
• Top management’s commitment sets service quality standards, but store managers are
the key to achieving those standards.

32. Setting Service Standards: The Standards Gap
• Defining the Role of Service Providers
• Managers can tell service providers that they need to provide excellent service but not
clearly indicate what excellent service means.
• The Ritz- Carlton Hotel Company has its “ Gold Standards” printed on a wallet-size
card carried by all employees. The card contains the hotel’s motto, the three steps for
high-quality service, and 12 basic rules for Ritz-Carlton employees.
• Every companies standards of customer service defer, but all have one thing in
common, to provide great customer service.

33. Setting Service Standards: The Standards Gap
• Setting Service Goals
• To deliver consistent, high-quality service, retailers need to establish goals or standards
to guide employees.
• Employees are motivated to achieve service goals when the goals are specific,
measurable, and participatory in the sense that the employees participated in setting
them.
• Employees participation in setting service standards leads to better understanding and
greater acceptance of the goals.

34. Setting Service Standards: The Standards Gap
• Measuring Service Performance
• Retailers need to assess service quality continuously to ensure that goals will be achieved.
• Many retailers conduct periodic customer surveys to assess service quality.
• Mystery Shoppers
• Retailers also use mystery shoppers to assess their service quality. These professional shoppers visit
stores to assess the service provided by store employees and the presentation of merchandise. Some
retailers use their own employees as mystery shoppers, but most contract with an outside firm to
provide the assessment.

35. Meeting and Exceeding Service Standards:
The Delivery Gap
• To reduce the delivery gap and provide service that exceeds standards,
retailers must give service providers the necessary information and training,
empower employees to act in the customers’ and firm’s best interests,
provide instrumental support, provide appropriate incentives, improve
internal communications, and use technology.

36. Meeting and Exceeding Service Standards:
The Delivery Gap
• Give Information and Training
• Service providers need to know about the retailer’s service standards and the
merchandise it offers, as well as the customers’ needs.
• Service providers also need specific training in interpersonal skills.
• Through training, employees can learn to provide better service and cope with the
stress cause by disgruntled customers.

37. Meeting and Exceeding Service Standards:
The Delivery Gap
• Empower Service Employees
• Empowerment
• Empowerment means allowing employees at the firm’s lowest levels to make important decisions
regarding how service will be provided to customers.
• However, empowering service providers can be difficult. Some employees prefer to have the
appropriate behaviors clearly defined for them.
• In some cases, the benefits of empowering service providers may not justify the costs. If a
retailer uses a standardized delivery approach like McDonald’s, the cost of hiring, training,
and supporting empowerment may not lead to consistent and superior service delivery.

38. Meeting and Exceeding Service Standards:
The Delivery Gap
• Provide Instrumental and Emotional Support
• Service providers need to have instrumental support (appropriate systems and
equipment) to deliver the service desired by customers. Customers in need of an oil
change expect and get a quick turnaround.
• In addition to needing instrumental support, service providers need emotional support
from their coworkers and supervisors.
• Emotional Support
• Emotional Support involves demonstrating a concern for the well-being of others.

39. Meeting and Exceeding Service Standards:
The Delivery Gap
• Provide Incentives
• As discussed in Chapter 16, many retailers use incentives, like paying commissions on
sales, to motivate employees.
• If service personnel feel incentivized and satisfied with their rewards, they likely offer
improved productivity.

40. Meeting and Exceeding Service Standards:
The Delivery Gap
• Improve Internal Communications
• When providing customer service, frontline service providers often must mange a conflict
between customers’ and their employer’s needs.
• Example: Retailers expect their sales associates to encourage customers to make multiple
purchases and by more expensive items; customers are looking for the best value choices that fit
their needs.
• Retailers can reduce such conflicts by issuing clear guidelines and policies concerning service
and explaining the rationale for these polices.
• Example: Training should teach employees to apologize for a service failure, even if the failure
was caused by someone else in the organization or was a result of something the customer did.

41. Meeting and Exceeding Service Standards:
The Delivery Gap
• Improve Internal Communications
• Conflicts can also arise when retailers set goals that are inconsistent with the other
behaviors expected from store employees.
• Finally, conflicts can arise between different areas of the firm. A men’s specialty store
know for its high levels of customer service has salespeople who promise rapid
alterations and deliveries to please their customers. Unfortunately, the alterations
department includes two elderly tailors who work at their own speed, regardless of the
workload.

42. Meeting and Exceeding Service Standards:
The Delivery Gap
• Use Technology
• Retailers have been actively engaged in implementing a vast variety of technology tools
in their stores and websites to help their customers.
• Example: Massachusetts-based Zoots dry cleaners does not want to mimic its
competitors, which are open from 8:00 a.m. to 6:00 p.m.- right when most customers
are at work. So it supports 24/7 pickup and drop-off with an automated system that
allows customers to swipe their credit cards.

43. Communicating the Service Promise:
The Communications Gap
• The forth factor leading to a customer service gap is the difference between
the service promised by the retailer and the service actually delivered.
• Example
• If an apparel store advertises free alterations, and then informs customers that it is free
only on full-priced items, customers shopping the sales racks my be disappointed.

44. Communicating the Service Promise:
The Communications Gap
• Realistic Commitments
• Promotion programs are typically developed by the marketing department, whereas the store
operations division delivers the service.
• Poor communication between these areas can result in a mismatch between a promotional
campaign’s promises and the service the store can actually offer.

45. Communicating the Service Promise:
The Communications Gap
• Managing Customer Expectations
• How can a retailer communicate realistic service expectations without losing business to a
competitor that makes inflated service claims? One common problem is not having clear
expectations of how long a customer has to wait at the deli counter.
• Information presented at the point of sale can be used to manage expectations.
• Example: Theme parks and restaurants indicate the waiting time for an attraction or a table. Online
retailers tell their customers whether merchandise is in stock and when customers can expect to receive it.
• Sometimes service problems are caused by customers. Customers may use an invalid credit card to
pay for merchandise, not take time to try on a suit and have it altered properly, or use a product
incorrectly because they fail to read the instructions.

46. Service Recovery
LO4

47. Service Recovery
• The delivery of customer service is inherently inconsistent, so service
failures are bound to arise. Rather than dwelling on negative aspects of
customer problems, retailers should focus on the positive opportunities the
problems generate.

48. Service Recovery
• Listening to Customers
• Customers can became very emotional about their real or imaginary problems with a
retailer. Often, this emotional reaction can be reduced by simply giving customers a
chance to get their complaints off their chests.

49. Service Recovery
• Providing a Fair Solution
• Customers like to feel that they are being treated fairly. They base their perceptions of
fairness on how they think others were treated in similar situations and with other retailers.
• Distributive Fairness
• Distributive Fairness is a customer’s perception of the benefits received compared with his or her
costs in terms of inconvenience or monetary loss.
• Procedural Fairness
• Procedural fairness is the perceived fairness of the process used to resolve complaints.

50. Service Recovery
• Resolving Problems Quickly
• Customer satisfaction is affected by the time it takes to get an issue resolved. So,
empowering the first contact employee to move quickly to solve a problem increases
customer satisfaction.
• Although resolving customer complaints promptly generally increases satisfaction, if the
complaints are resolved too abruptly, customers might feel dissatisfied because of the lack
of personal attention they received.

51. Summary
• LO 1 – Identify how retailers can build a competitive advantage through
customer service
• LO 2 – Explain how customers evaluate a retailer’s customer service.
• LO 3 – Indicate the activities a retailer can undertake to provide high quality
customer service
• LO 4 – Articulate retailers’ service failure strategies