Customer Service Notes

The Concept of Customer Service

Objectives

  • Defining Service
  • Defining Customer Service
  • Overview of the Service Industry
  • The Evolution of Customer Service
  • Traditional vs. Modern Management Hierarchy
  • Importance of Service
  • Nature/Characteristics of Customer Service
  • Roles of Technology in Customer Service Delivery

What is Service?

  • A service is an activity or a set of steps involving the treatment of a customer or something belonging to them.
  • The customer is involved and performs some role in the service delivery process.

What is Customer Service?

  • Customer service is the act of taking care of the customer's needs by providing professional, helpful, high-quality service and assistance before, during, and after the customer's requirements are met.
  • It enhances customer experience and satisfaction.

Examples of Customer Service

  • Free car wash with fill-up
  • Calling the customer by name
  • Easy return policy
  • Service provider doing check back
  • On-time delivery
  • Showing empathy
  • Sending reminders about upcoming payments, renewals, maintenance
  • Offering discounts for service inconvenience

Key Customer Service Practices

  • Train your staff
  • Be helpful
  • Don't make promises you can't keep
  • Address complaints
  • Listen
  • Answer your phone
  • Throw in something extra
  • Take the extra step

Fundamental Needs of a Customer

  • To feel welcome: A warm, friendly smile is critical for the first impression.
  • To feel important: Acknowledgment, name recognition, and eye contact make a person feel appreciated.
  • To be understood: Listen attentively to what the customer has to say and maintain eye contact.
  • The need for comfort: Provide a comfortable physical environment (waiting area) and psychological comfort (assurance and confidence).
  • To be recognized: Acknowledge the customer's presence immediately with eye contact and a friendly smile.
  • To receive help and assistance: Anticipate customer needs and offer assistance proactively.
  • The need for timely service: Acknowledge customers promptly as they walk in to make their wait seem shorter.
  • To feel appreciated: Thank the customer for their patronage.

The Evolution of Customer Service

  • Letter
  • Telephone
  • E-mail
  • Self-Service
  • Chatbot
Letters
  • Before the telephone, consumers communicated with businesses by mail.
The Telephone (1876)
  • Customers could contact local service providers without visiting the physical location.
  • Mechanism: A needle connected by wire to a battery and a receiver. Voice vibrations were converted into electric current, which traveled along the wire to the receiver.
The Telephone Switchboard (1894)
  • Allowed all telephones across a country to be connected to each other.
Rotary Dial (1920s)
  • Automated the connection process by utilizing the numbers dialed to connect to the proper phone, replacing operators.
The Call Centre (1960s)
  • Companies began dedicating large rooms with agents to answer and resolve customer issues.
Touch-Tone Dialling (1962)
  • Enabled early computers to recognize and respond to sounds made from dialing.
The 1-800 Number (1967)
  • Allowed customers to call a specific company without collect calling or service charges.
IVR (Interactive Voice Response) (1970s & 80s)
  • Hard drive technology allowed storage of digitized speech, processing customer responses and moving them through phone trees.
Call Centre Outsourcing (1989)
  • Companies outsourced customer service functions for cost-effectiveness, but this led to decreased customer satisfaction.
The Internet (1991)
  • By 1996, businesses utilized email and 1-on-1 chat to interact with customers personally.
Social Media (2008)
  • Businesses used platforms like Facebook and Twitter to connect with customers publicly.
Remote Desktop Support (Late 2000s)
  • Contact center agents could co-browse and execute actions on customers’ computers.
Dedicated Mobile Apps (2014)
  • Allowed customers access to information and self-service options on their smartphones.
Generative AI Chatbot (Present)
  • AI agents that generate unique responses using advanced language models to create content in response to user queries.

Evolution of Customer Service - Customer Trends

  • Then: Less informed, fewer choices, less dynamic preferences, satisfied with low-priced, mass-produced products/services, selection mainly based on price.
  • Now: Highly informed, more choices, ever-changing preferences, demands customized solutions, selection based on convenience and convergence.

Traditional vs. Modern Hierarchy

Traditional
  • Pyramid-shaped organization with a top-down approach.
  • People at the top have the most responsibility and authority.
Modern
  • Flexible and dynamic structure.
  • Those in authority are facilitators rather than superiors.
  • Focuses on empowering employees.

Traditional Management Hierarchy

  • Top Management: President, Chairman of the Board, Vice-Presidents
  • Middle Level Management: Department Head, Branch Manager, Dean of a school
  • First Level Management: Supervisor, Foreman, Office Manager
  • Individual Contributors: Salesmen, Clerical, Technical Employees
  • Autocratic management style - BOSS
  • The customer is at the bottom.
  • Organizations lose touch with customers and become less competitive.
  • Revenue and profit margins shrink.
  • Internally focused, and leaders lose sight of customer needs.

Modern Management Hierarchy

  • Customers and clients receive an optimal service experience
  • Frontline employee team demonstrates a mindset of an engaged employee with intrinsic motivation and provides an optimal service experience
  • Team leaders & managers model the behavioral changes, empower and coach the team to take more ownership and responsibility and encourage problem solving
  • Top managers model, coach and link the behavioral changes that will lead to increased employee engagement and customer satisfaction and keep a clear vision on the mission and strategies of the organization
  • Democratic management style - COACH
  • Front-line employees support customers, and management supports front-line employees.
  • The people at the top (the customers) are most important.
  • Customer-contact employees are empowered with authority.
  • Education and training is a key part of the employee's experience.

The Importance of Service

  1. Significance

    • Customer service is often the only contact a customer has with a company.
    • Customers are vital to an organization.

  2. Acts as a means of identification

    • Customer service can help differentiate a company from its competitors.

  3. Function

    • Excellent customer service leads to repeat business and greater sales and profits.
    • Poor customer service may lose customers, which will have a negative impact on business.
    • It costs more to acquire a customer than to retain them.

  4. Improves Publicity

    • Positive experiences lead to word-of-mouth promotion.
    • Bad customer service experiences can deter many potential customers.

  5. Allows for prevention and solution

    • Customer service is important because of potential complaints.
    • Consumers can file complaints if dissatisfied.
    • Customers expect to be able to service a product they own.

Characteristics or Nature of Customer Service

The four inherent characteristics of service are:

  1. Intangibility
  2. Heterogeneity/Variability
  3. Perishability
  4. Inseparability
1. Intangibility
  • Services cannot be seen, touched, or stored.
  • Customers cannot know services before experiencing them.
  • Services can be easily copied by competitors.
  • A service once consumed cannot be returned.
Market Challenges of Intangibility
  • Lack of protection by patents: Services cannot be patented and can be easily copied.
  • Difficult to price the services: Pricing is difficult as it mainly attributes to labor.
Possible Market Solution of Intangibility
  • Use of tangible clues: Consumers look at tangible clues or physical evidence surrounding the service (e.g., quality of furniture, appearance of employees, logos).
  • Creation of a strong organizational brand image: Lowers perceived risk and results in loyalty.
2. Variability
  • Differences or inconsistencies that occur in service deliveries.
  • Performance and behavior vary among workers.
  • Systems and procedures are put into place to ensure consistent service.
  • Effort to deliver high and consistent quality by selecting good and qualified personnel.
Market Challenges of Variability
  • Lack of ability to control service quality before it reaches the consumer.
  • Most errors are one-time events and cannot be foreseen or corrected.
  • Consistency of service varies from firm to firm, among employees, and even with the same provider.
  • Service standardization and quality control are difficult to achieve and maintain since each employee has a different personality.
Possible Market Solution of Variability
  • Standardization of services through training employees and service providers.
  • Replacing human capital with machines (ATMs, automated car wash).
3. Inseparability
  • Both customer and service provider must be present for the service to take place.
  • Services cannot be separated from the service provider.
  • A service cannot be resold or owned by someone.
Market Challenges of Inseparability
  • Service provider should be physically present to deliver the service (dentist).
  • Requires customer to be physically present to receive the service (surgery, haircut) or present at the start and end (dry cleaning, auto repair).
  • Production and consumption happen simultaneously; several customers share a service experience.
Possible Solutions of Inseparability
  • Multi-site locations would reduce travel distance and offer better service.
4. Perishability
  • Value of service exists at the point when it is required.
  • Services perish as soon as they are used; they have short-lived value.
  • Services last for a specific time and cannot be stored like a product.
  • Once the opportunity to deliver a service is missed, it cannot be recovered.
Market Challenges of Perishability
  • Unused capacity is lost forever.
  • Some services can inventory a part of their services (mostly related to goods).
  • Cannot be stored as buffers for periods of high demand.
Possible Solutions of Perishability
  • Creative pricing: early bird specials, price offs, discount coupons.
  • Reservation system: guarantees minimum usage of services.
  • Development of complementary services (lounge in a restaurant).

The Role of Technology in Customer Service

  • Speed up communication
  • Providing self-serve options
  • Enhances convenience
  • Quicker and easier access to customer records
  • Globalization