Customer Service Excellence - Lecture 2

Customer ServiceCustomer ServiceExcellenceExcellence

Week 2

Katherine Mutter BA, DMS, MCIM, MSc, PGCE, Chartered Marketer

Kotler – 2007Kotler – 2007

“The current economic panorama is “The current economic panorama is determined by two powerful forces:determined by two powerful forces:

TechnologyTechnology and and GlobalisationGlobalisation “ “

Sources of competitive advantageSources of competitive advantage

Superior product benefitSuperior product benefit Perceived advantagePerceived advantage Low-cost operationsLow-cost operations Legal advantageLegal advantage Superior contactsSuperior contacts Superior knowledgeSuperior knowledge Scale advantagesScale advantages Offensive advantagesOffensive advantages

Source: DavidsonSource: Davidson

Strategic ChoicesStrategic Choices

GrowthGrowth LeaderLeader ChallengerChallenger FollowerFollower And Porter’s three generic strategies:And Porter’s three generic strategies: NicheNiche Cost focusCost focus DifferentiatedDifferentiated

Taken from Brassington and

Pettitt 2007

Technology and Customer Service?Technology and Customer Service?

Relationship MarketingRelationship Marketing ++ ITIT == Customer relationship ManagementCustomer relationship Management

(Teresa Harris 2004)(Teresa Harris 2004)

The appeal of technology to individuals is The appeal of technology to individuals is closely linked to the pressures on our closely linked to the pressures on our time…..time…..

Economic Time: A resource that must be divided amongst Economic Time: A resource that must be divided amongst various activitiesvarious activities

Doing one thing at a time Vs multi tasking:Doing one thing at a time Vs multi tasking:

Group Debate: Group Debate:

What is the most efficient Multi tasking or What is the most efficient Multi tasking or doing individual tasks?doing individual tasks?

Using technology to squeeze 31 hours into a day…Using technology to squeeze 31 hours into a day…

http://www.timesonline.co.uk/tol/news/http://www.timesonline.co.uk/tol/news/uk/article3735970.eceuk/article3735970.ece

The truth about multi tasking…..The truth about multi tasking…..

Is Multitasking Driving You Mad?, Sure, Most Of Is Multitasking Driving You Mad?, Sure, Most Of Us Keep Too Many Balls In the Air At Once, Us Keep Too Many Balls In the Air At Once, But What's The Price We Pay? - CBS NewsBut What's The Price We Pay? - CBS News

What the experts say….

Time poverty – perception or fact?Time poverty – perception or fact?

Is a woman busier in 2008 than in 1958?Is a woman busier in 2008 than in 1958?

Why has ‘the situation’ that women find Why has ‘the situation’ that women find themselves in changed so much?themselves in changed so much?

How has this changing situation affected How has this changing situation affected marketing, products and customer service marketing, products and customer service offered?offered?

Psychological time – important in customer Psychological time – important in customer serviceservice

Does queuing only generate negative feelings?Does queuing only generate negative feelings?

Are there cross cultural differences?Are there cross cultural differences?

Tricks employed by marketers to minimise negative feelings: Tricks employed by marketers to minimise negative feelings:

Mirrors near lifts in hotelsMirrors near lifts in hotels Long walks to luggage carousels at airports (Palma!)Long walks to luggage carousels at airports (Palma!) Automated check outs in supermarketsAutomated check outs in supermarkets

The fluidity of timeThe fluidity of time

Consumers are more likely to be in a consuming Consumers are more likely to be in a consuming mood at some times rather than others;mood at some times rather than others;

Flow timeFlow time: totally absorbed in an activity: totally absorbed in an activity Occasion timeOccasion time: Something monumental occurs – a : Something monumental occurs – a

birth, landing our dream job…birth, landing our dream job… Deadline timeDeadline time: Working against the clock: Working against the clock Leisure timeLeisure time: Down time, relaxed, receptive: Down time, relaxed, receptive Time to kill:Time to kill: Bonus time, open to suggestions Bonus time, open to suggestions

Impact on customer service?

Is it always about speedy shopping and saving time? Is it always about speedy shopping and saving time? What are the trends in the purchase environment?What are the trends in the purchase environment?

1.1. Shopping is now a major activity for some consumersShopping is now a major activity for some consumers2.2. Boundaries are being blurred between types of outlets e.g. Boundaries are being blurred between types of outlets e.g.

supermarkets and the non food categorysupermarkets and the non food category3.3. We live in an era of Global retailingWe live in an era of Global retailing4.4. There is a growing experiential dimension to our shopping..There is a growing experiential dimension to our shopping.. Shopping malls are becoming giant entertainment centres Shopping malls are becoming giant entertainment centres

Bluewater | HomeBluewater | Home All kinds of outlets attempt to position themselves as more All kinds of outlets attempt to position themselves as more

than a distribution outlet. Hard Rock Cafe, than a distribution outlet. Hard Rock Cafe, Themed events at department stores e.g. New England Themed events at department stores e.g. New England

Week at SelfridgesWeek at Selfridges Retail theming – landscape, marketscape, cyberspace, Retail theming – landscape, marketscape, cyberspace,

mindscapemindscape

Group discussionsGroup discussions

How has technology affected consumer How has technology affected consumer loyalty?loyalty?

Ebay was a prototype – a powerful peer to Ebay was a prototype – a powerful peer to peer marketing machinepeer marketing machine

…….now firms like Zlio provide an online .now firms like Zlio provide an online service allowing users to set up their service allowing users to set up their

own online shops in five minutesown online shops in five minuteshttp://www.zlio.co.uk/http://www.zlio.co.uk/

Source: Market Led Strategic Change by Nigel Piercy

Product disposal – junk vs ‘junque’Product disposal – junk vs ‘junque’(how consumers have taken power using the (how consumers have taken power using the internet)internet)

The Freecycle NetworkThe Freecycle Network

eBay - The UK's Online MarketplaceeBay - The UK's Online Marketplace

http://www.teamuphere.com/http://www.teamuphere.com/

http://www.secondlife.comhttp://www.secondlife.com

What is the impact on organisations?What is the impact on organisations?

Some organisations have ‘pulled some of this back’ (i.e.) Amazon Some organisations have ‘pulled some of this back’ (i.e.) Amazon allowing you to sell second hand via them (an online service) ,Game allowing you to sell second hand via them (an online service) ,Game allowing games to be traded in (an offline, instore service)allowing games to be traded in (an offline, instore service)

Living in a multi channel worldLiving in a multi channel world

‘‘We live in a multi channel world. Whether booking We live in a multi channel world. Whether booking a hotel, reviewing our pension or evaluating a hotel, reviewing our pension or evaluating

potential suppliers at work, we routinely step potential suppliers at work, we routinely step from one channel – the web, the telephone, e from one channel – the web, the telephone, e

mail, an outlet, a sales representative, a mail, an outlet, a sales representative, a distributor – to the next as we go along our distributor – to the next as we go along our

journey as customers’ journey as customers’

Source:Source: The multi channel challenge – Hugh Wilson, Rod Street, The multi channel challenge – Hugh Wilson, Rod Street, Lindsay Bruce (2008)Lindsay Bruce (2008)

Creating a competitive advantage from multi Creating a competitive advantage from multi channelchannel

Managers now find themselves faced with multiple Managers now find themselves faced with multiple routes and the opportunity to compete as much on routes and the opportunity to compete as much on innovation in channel strategies as on innovation in innovation in channel strategies as on innovation in products.products.

The upside: OpportunityThe upside: Opportunity The downside: Another area of business that now The downside: Another area of business that now

requires more consideration to ensure successrequires more consideration to ensure success Wilson, Street and Bruce identified seven key Wilson, Street and Bruce identified seven key

questions….questions….

Adapted from: The Multi channel challenge, Wilson, Street and Bruce (2008)

Buzz ActivityBuzz Activity

Think of an example of multi-channel Think of an example of multi-channel offering.offering.

What are your expectations of service?What are your expectations of service? Are they the same across the Are they the same across the

channels?channels? When do you use the different When do you use the different

channels?channels?

1.1. How do I know my current channel approach How do I know my current channel approach needs to change?needs to change?

Three strategic criteria for changeThree strategic criteria for change

Access

The ability to reach the number and range of potential customers for your proposition – to gain access to chosen customer segments – geographic, demographic or behavioural

Cost

The cost to serve a customer through all steps of the lifecycle

e.g. Dell and Ryanair are amongst many successful companies that made huge savings in becoming multi channel

Experience

The perception of the quality of the customers’ experience through the channel – by 2005 many executives had begun to target the customer experience as the most significant goal for revenue growth

Source: The Multi channel challenge, Wilson, Street and Bruce (2008)

2. What is the right combination of channels to offer 2. What is the right combination of channels to offer each customer group?each customer group?

How wide an overall choice should we offer? How wide an overall choice should we offer? Tesco v Tesco v Morrisons?Morrisons?

How much differentiation should be targeted between How much differentiation should be targeted between different customer groups? different customer groups? Seeing things from the Seeing things from the customer viewpoint is increasingly important in customer viewpoint is increasingly important in delivering good customer service…..delivering good customer service…..

Should channel coverage be controlled by the Should channel coverage be controlled by the supplier or left to customer choice? supplier or left to customer choice? TK Maxx TK Maxx customers are forced down one channel (retail) customers are forced down one channel (retail) Argos customers wanted and have been given a wide Argos customers wanted and have been given a wide range of channelsrange of channels

http://www.argos.co.ukhttp://www.argos.co.uk

Adapted from: The Multi channel challenge, Wilson, Street and Bruce (2008)

3. How do I build this into an integrated multi 3. How do I build this into an integrated multi channel strategy?channel strategy?

There are weaknesses in many multi channel operations;There are weaknesses in many multi channel operations; Direct mail from your insurance company assumes you are not a customer and Direct mail from your insurance company assumes you are not a customer and

offers you a better deal than the one that they are currently offering you as an offers you a better deal than the one that they are currently offering you as an existing online customer. existing online customer. How does that make you feel?How does that make you feel?

4. How do I build a business case for change?4. How do I build a business case for change? 5. How do I organise for successful change?5. How do I organise for successful change? When organising for successful multi channel implementation we essentially When organising for successful multi channel implementation we essentially

move from strategy to implementation and everyone within the organisation move from strategy to implementation and everyone within the organisation must be on board (must be on board (excellent excellent internalinternal customer service?) customer service?)

6. How do I measure effectiveness in a multi 6. How do I measure effectiveness in a multi channel environment?channel environment?

Decide which metrics will be linked to employee incentives – Decide which metrics will be linked to employee incentives – in 2003 118 188 in 2003 118 188 operators were criticised by the public for ‘cutting them off quickly’ but the staff operators were criticised by the public for ‘cutting them off quickly’ but the staff were being incentivised for cutting duration of calls….were being incentivised for cutting duration of calls….

Adapted from The Multi channel challenge, Wilson, Street and Bruce (2008)

7. How do I encourage customers to use 7. How do I encourage customers to use channels most effectively?channels most effectively?

‘‘Customers behaviour in the use of your channel configuration is Customers behaviour in the use of your channel configuration is the ultimate shape of the value gained by the company and the the ultimate shape of the value gained by the company and the customer themselves.’customer themselves.’

Find ‘win win’ outcomes where both the business and the Find ‘win win’ outcomes where both the business and the customer have gained from the choice of channel used – this is customer have gained from the choice of channel used – this is a mix of policies and practices: policy to avoid mis matched a mix of policies and practices: policy to avoid mis matched incentives and information and practices to encourage desired incentives and information and practices to encourage desired behaviours whilst always respecting the customers right to behaviours whilst always respecting the customers right to choose – choose – First Direct has used its outstanding service First Direct has used its outstanding service reputation in the telephone channel to help drive up usage of reputation in the telephone channel to help drive up usage of the web and SMS based services and by retaining the the web and SMS based services and by retaining the commitment o talk with customers – this has helped to push commitment o talk with customers – this has helped to push their internet channel into becoming their most popular (the their internet channel into becoming their most popular (the most efficient for them and the most efficient for the customers).most efficient for them and the most efficient for the customers).

The benefits to the firm: the The benefits to the firm: the relationship marketing ladderrelationship marketing ladder

Customercatching

Emphasis onwinning

customers

Customer keepingEmphasis ondeveloping andenhancingrelationships

PARTNER

SUPPORTER

CLIENT

CUSTOMER

PROSPECT

ADVOCATE

Customer relationship management systemsCustomer relationship management systems

Companies around the world are spending Companies around the world are spending millions on CRM technology;millions on CRM technology;

Data warehousesData warehouses Customer service systemsCustomer service systems Call centresCall centres E commerceE commerce Internet marketingInternet marketing Operational systems( order processing, Operational systems( order processing,

invoicing, etc)invoicing, etc) Sales systems (automated appointment making Sales systems (automated appointment making

and contact management)and contact management)

Source: Market Led Strategic Change by Nigel Piercy (2008)

Food for thought…Food for thought… CRM was supposed to be a ‘customer- responsive strategy’ gaining competitive CRM was supposed to be a ‘customer- responsive strategy’ gaining competitive

advantage through using personal interaction to delivering superior customer advantage through using personal interaction to delivering superior customer valuevalue

CRM has achieved excellent results in sharpening service response times and CRM has achieved excellent results in sharpening service response times and the ability to target customers more precisely in some markets.the ability to target customers more precisely in some markets.

But in reality;But in reality; It is people not software that build customer relationshipsIt is people not software that build customer relationships CRM has provided companies with the software to irritate their customers CRM has provided companies with the software to irritate their customers

faster than ever before!faster than ever before! CRM is not needed if people only purchase once; if customer lifetime value is CRM is not needed if people only purchase once; if customer lifetime value is

low; if the unit value of the product is low or of customer churn is high low; if the unit value of the product is low or of customer churn is high throughout the industry.throughout the industry.

Information collected can be largely historical and focused on your own Information collected can be largely historical and focused on your own customers (what about your competitors’ customers?) customers (what about your competitors’ customers?)

CRM is only a behaviour measure (i.e.) what people actually CRM is only a behaviour measure (i.e.) what people actually dodo rather than rather than what they what they think – this information is not a great basis for driving radical think – this information is not a great basis for driving radical innovations and coping with disruptive market change.innovations and coping with disruptive market change.

Source: Market Led Strategic Change by Nigel Piercy (2008)

Sky: A ‘good news’ CRM case studySky: A ‘good news’ CRM case study

Sky used CRM to eliminate ‘offer riders’ and Sky used CRM to eliminate ‘offer riders’ and ‘casual switchers’ from their customer base. ‘casual switchers’ from their customer base. The action happened quietly and resulted in a The action happened quietly and resulted in a three fold increase in the number of full price three fold increase in the number of full price subscription customers.subscription customers.

Pushing out the less affluent also helped to Pushing out the less affluent also helped to increase retention and increase average increase retention and increase average spending to am all time high of £421 per year. spending to am all time high of £421 per year.

Source: Market Led Strategic Change by Nigel Piercy (2008)

Egg: A ‘bad news’ CRM Case StudyEgg: A ‘bad news’ CRM Case Study

Egg withdrew credit cards from 161,000 people (7% Egg withdrew credit cards from 161,000 people (7% of its customers) in 2008of its customers) in 2008

Public LinePublic Line: Following the credit crunch they were : Following the credit crunch they were weeding out customers with a ;higher than acceptable weeding out customers with a ;higher than acceptable risk profile’risk profile’

Reality 1:Reality 1: Customers with faultless credit records who Customers with faultless credit records who paid no interest to Egg also appeared to be being culled paid no interest to Egg also appeared to be being culled leading to bad publicity.leading to bad publicity.

Reality 2:Reality 2: There was an increase in defaults as people There was an increase in defaults as people were likely to repay their other cards first since they were likely to repay their other cards first since they could no longer use their Egg card.could no longer use their Egg card.

Source: Market Led Strategic Change by Nigel Piercy (2008)

Greener marketingGreener marketing

Light green Dark green

Products, services havemodicum of respect for

social, ethical, environment

Incorporate recycling policiesUnderstand, respond to

Some aspects ecologicalefficiency

Understand ecological efficiencyIncorporate into produces.

Some social issues addressedShareholders take precedence

Fully integrated totalEnvironment quality programmeEthical, moral issues addressed

CSR models and techniques

Charter, Polonsky 1999

Corporate social responsibility CSRCorporate social responsibility CSR

Six steps to developing CSRSix steps to developing CSR

1.1. Recognise the trigger, make business caseRecognise the trigger, make business case

2.2. Scope issues – mapping on corporate radarScope issues – mapping on corporate radar

3.3. Signal commitmentSignal commitment

4.4. Integrate strategiesIntegrate strategies

5.5. Engage stakeholdersEngage stakeholders

6.6. Measurement – “Triple bottom line”Measurement – “Triple bottom line”

A look at some of the action being A look at some of the action being taken….taken….

http://www.thegreenstandard.org.uk/http://www.thegreenstandard.org.uk/

http://plana.marksandspencer.com/http://plana.marksandspencer.com/

lidllidl

GlobalisationGlobalisation Term coined by Theodore Levitt in 1983Term coined by Theodore Levitt in 1983 DemandDemand – tastes, preferences and – tastes, preferences and

pricemindedness are becoming increasingly pricemindedness are becoming increasingly universaluniversal

Supply Supply – products & services tend to be more – products & services tend to be more standardised and competition within industries standardised and competition within industries reaches developing or lesser developed countriesreaches developing or lesser developed countries

Marketing policy & control system designMarketing policy & control system design (MNCs) – should be appropriate so as to remain (MNCs) – should be appropriate so as to remain leaders of GLOBAL competition of GLOBAL leaders of GLOBAL competition of GLOBAL products for GLOBAL consumers products for GLOBAL consumers

7

Undifferentiated

Approaches to developing Approaches to developing international marketing international marketing strategiesstrategies

Product

Price

Promotion

Place

Undifferentiated market

8

Target 1

Target 3

Target 2

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Product1

Price1

Promotion1

Place1

Product2

Price2

Promotion2

Place2

Product3

Price3

Promotion3

Place3

Market segmentation

9

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Product1

Price1

Promotion1

Place1

Product2

Price2

Promotion2

Place2

Product3

Price3

Promotion3

Place3

Market segmentationBased on:Buyer motivationsBuyer preferencesBuyer behaviourBuyer price sensitivities

RegionLifestyle IncomeAgeetc.

Profiled on:

Company orientation…Company orientation…

Ethnocentric – The way the owner company Ethnocentric – The way the owner company culture would do business eg Peugeotculture would do business eg Peugeot

Polycentric – Adapting to local culture and Polycentric – Adapting to local culture and needs in all areas (Typical IM strategy – needs in all areas (Typical IM strategy – Think Global Act Local)Think Global Act Local)

Geocentric – Company is truly global and Geocentric – Company is truly global and staff and marketing do not fit a “nationality”staff and marketing do not fit a “nationality”

Strategic Market Entry methodsStrategic Market Entry methods

Indirect Exports:Indirect Exports: Export housesExport houses Specialist export managersSpecialist export managers UK buying offices of foreign stores and governmentsUK buying offices of foreign stores and governments Complementary exportingComplementary exporting

Direct Exports:Direct Exports: AgentsAgents DistributorsDistributors Direct to customerDirect to customer

Strategic Market Entry methodsStrategic Market Entry methods

Overseas Manufacture/Service provision:Overseas Manufacture/Service provision:

LicensingLicensing FranchisingFranchising Contract manufactureContract manufacture Joint VenturesJoint Ventures Wholly owned overseas productionWholly owned overseas production

International Marketing Mix analysisInternational Marketing Mix analysis

PRODUCTPRODUCT PLACEPLACE PROMOTIONPROMOTION PRICEPRICEPEOPLE & PEOPLE & PHYSICAL PHYSICAL EVIDENCEEVIDENCE

PROCESSPROCESS

Different cultural, Different cultural, climatic, technical or climatic, technical or economic issues will economic issues will affect product design. affect product design. Modification of product Modification of product policy ranges from the policy ranges from the obvious issues of obvious issues of electricity supply to electricity supply to more subtle cultural more subtle cultural differences (e.g. differences (e.g. Americans prefer top-Americans prefer top-loading washing loading washing machines; Europeans machines; Europeans prefer front-loaders).prefer front-loaders).

Distribution systems Distribution systems vary internationally. vary internationally. Germans have a Germans have a much higher much higher propensity to buy by propensity to buy by mail order than do mail order than do Italians; there are Italians; there are relatively few relatively few hypermarkets in Italy hypermarkets in Italy compared with compared with Spain.Spain.

Clearly, promotion Clearly, promotion issues are deeply issues are deeply affected by cultural affected by cultural differences. This is why differences. This is why advertisements shown advertisements shown on foreign TV stations on foreign TV stations seem humorous.seem humorous.

Pricing is usually Pricing is usually done in the done in the currency of the currency of the target country. This target country. This leads to problems leads to problems with exchange-rate with exchange-rate fluctuations, which fluctuations, which can be overcome can be overcome by buying or selling by buying or selling currency on the currency on the futures markets; futures markets; most banks can most banks can arrange this.arrange this.

Employing foreign Employing foreign sales staff, for sales staff, for example, can lead to example, can lead to problems in problems in motivation and motivation and management.management.

For many years For many years American banks have American banks have given free gifts to new given free gifts to new depositors; merely depositors; merely handing over a handing over a cheque book and a cheque book and a deposit book would deposit book would not be sufficient for a not be sufficient for a US customer.US customer.

In Brazil, it is normal In Brazil, it is normal for patrons of bars for patrons of bars and restaurants to and restaurants to pay the cashier for pay the cashier for meals or drinks, meals or drinks, receive a receipt, then receive a receipt, then order the items from order the items from the waiters. In Spain the waiters. In Spain it is normal to pay for it is normal to pay for drinks only when drinks only when leaving a bar. leaving a bar. Processes do not Processes do not necessarily cross necessarily cross national boundaries.national boundaries.

Marketing Week – July 2008Marketing Week – July 2008

Global consumer brands damage the economies Global consumer brands damage the economies of developing countries, distort competition, of developing countries, distort competition, drive out local rivals and create consumer drive out local rivals and create consumer aspirations which often lead people into debt.aspirations which often lead people into debt.

These negative perceptions are not just the views These negative perceptions are not just the views of some wild-eyed anti-corporate campaigner of some wild-eyed anti-corporate campaigner fresh from the latest G8 (now G20) riot, fired up fresh from the latest G8 (now G20) riot, fired up on reading No Logo, Naomi Klein's Jeremiad on reading No Logo, Naomi Klein's Jeremiad against global corporations.against global corporations.

Far from it. This downbeat assessment of the effects Far from it. This downbeat assessment of the effects of brand globalisation is shared by some of the of brand globalisation is shared by some of the world's most influential people, according to a survey world's most influential people, according to a survey conducted by brewing giant SABMiller.conducted by brewing giant SABMiller.

Conclusion:Conclusion:

The great globalisation debate is likely The great globalisation debate is likely to get increasingly heated in the tough to get increasingly heated in the tough economic conditions the world faces. economic conditions the world faces. Brands still have a long way to go to Brands still have a long way to go to persuade the most influential people persuade the most influential people that they are a global force for good. that they are a global force for good.