Session Customer Service
Jan 16, 2016
Session
Customer Service
Session
Quality Value Adding Transactional Experiences Value Potential Classification RFM Formula
This Session
Weekly Activity: e-Marketing Click on the following link: http://www.e-marketingclass.com/intro/e-mar
keting-introduction-presentaion.htm This is a presentation by Mykola
Sarazhynskyy on what is e-marketing. Answer the following:
How do people shop online? How are customers acquired? What are the pro’s and cons? Word Count: 200 – 300.
Customer Service
Saville & Reid “Customer service means giving
customers what they want, when and where it suits them and at a price they are willing to pay.”
Customer Experience
Explanation: It is the elements of customer service
that an organisation presents which are intangible, fleeting and experiential that the customer feels, senses and touches.
As a consequence, customers expect organisations to assume they fully understand their needs and requirements.
Organisations Lose Customers
Statistics: 1% die 3% move away 4% just naturally float 5% change on friend’s advice 9% can buy cheaper elsewhere 10% are chronic complainers and 68% go elsewhere because the people
they deal with are indifferent to their needs.
Topic Example Video
The following video discusses what is quality customer service.
Take note of the key points. http://www.youtube.com/watch?v=jFGxf1q-3y4
Quality Customer Service Reasons
Why it is important! Growth – more businesses providing
services than ever before Increased competition – provides a
competitive edge Better consumer understanding – increased
knowledge about buying/spending habits Economic sense – repeat business and
larger customer base ingredients for success.
Quality Customer Service
Why is it so rare? Lack of understanding/awareness Business focus on bottom line
profitability Organisations don’t want to spend
the money Organisations are unwilling to take
positive action
Quality Customer Service Quality
More than just keeping the customers happy It is the ability to sustain excellence in relation to an
established benchmark Within larger organisations this will relate to students eg
TQM Total Quality Management Why? Quality gives a company a competitive edge Keep your customers
Customer Internal/external
Service Face to face Telephone
Quality Customer Service Established expectation of service Equality & Diversity Physical access Information Timelines & courtesy Complaints Appeals Consultation & evaluation Choice Official language equality Co-ordination Incorporation of internal customers
Quality Customer Service
Organisations need to: Take it seriously at executive level. Ask customers what the business
does well, what it does badly and what it needs to do differently.
Value customer service staff and encourage them to assess situations and make decisions.
Fix things when they go wrong.
Quality Customer Service
Ensure that staff are courteous, friendly and helpful, and capable of providing quick service.
Provide customers with all available information.
Be open with customers about problems and provide alternative solutions.
Treat customers individually rather than as members of a group.
Quality Customer Service
Make customer feel important Acknowledge customers in friendly
and professional way Address customer by name (if known) Acknowledge waiting customers or
apologise to those who have been waiting
Quality Customer Service
Help customer in every way Demonstrate willingness to assist Use positive tone of voice, gestures
and other body language Volunteer additional assistance
whenever possible
Quality Customer Service
Empathise with customer Use reassuring and supporting
comments Explain what you are doing and
why/when
Quality Customer Service
Thank the customer Offer your future service, where
appropriate
Activity: Standards of Service
Why is it important to provide excellent standards of Customer Service?
Take a couple of minutes and list down all the reasons why you believe organisations should be aiming to provide excellent standards of service.
How many reasons did you come up with?
Topic Example Video
The following video highlights examples of poor quality and it’s costs.
Take note of the key points. http://www.youtube.com/watch?v=Xo0_8CNNT
Wk
“The degree of excellence of a thing” (Webster’s Dictionary)
“The totality of features and characteristics that satisfy needs” (ASQ)
Fitness for useQuality of design
What Is Quality?
Definitions of Quality
American Society of Quality: Product characteristics & features that affect customer satisfaction
User-Based: What consumer says it is Manufacturing-Based: Degree to which
a product conforms to design specification
Product-Based: Level of measurable product characteristic
Fitness forConsumer Use
Fitness forConsumer Use
Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective
Quality of ConformanceQuality of Conformance
• Conformance to criteria
• Cost
Quality of DesignQuality of Design
• Quality characteristics• Price
MarketingMarketingProductionProduction
The Meaning of QualityThe Meaning of Quality
The Meaning of Quality
Quality of Conformance
Ensuring product or service produced according to design
Depends onDesign of production processPerformance of machineryMaterialsTraining
OperationReliability & durabilityConformanceServiceabilityAppearancePerceived quality
Quality
Quality Dimensions for Goods
Under-standing
TangiblesReliability
CommunicationCredibility
Security
Responsiveness
Competence
Courtesy
Access
© 1995 Corel Corp.
Service Quality Attributes
Service Quality Determinants
Reliability – consistency and dependability Responsiveness – willingness/readiness of
employees to provide service; timeliness Competence – possession of skills and
knowledge required to perform service Access – approachability and ease of contact Courtesy – politeness, respect,
consideration, friendliness of contact personnel
Service Quality Determinants
Communication – keeping customers informed in languages they understand
Credibility – trustworthiness, believability, honesty
Security – freedom from danger, risk or doubt
Understanding/knowing the customer – making the effort to understands the customer’s needs
Tangibles – the physical evidence of the service
8 Service Quality Dimensions
Consistency
CourtesyOutcomeorientation
Accessibility / convenience
Accuracy Timeliness Responsiveness
Completeness
Time
8 Service Quality Dimensions
Time (length of waiting time for service) Timeliness (service delivery at agreed time) Completeness (everything delivered as ordered) Courtesy (in customer contact) Accessibility & Convenience (ease in obtaining) Accuracy (correct performance the first time) Consistency (each service delivery the same
way) Responsiveness (speed in reacting to
unexpected problems or circumstances).
Topic Example Video
The following video outlines quality management scenarios.
Take note of the key points. http://www.youtube.com/watch?
v=RlQw7FOe1is
Activity: Quality of Service
There is considerable concern and complaint about the level of service given within the hospitality industry.
Assume that you are trying out a new café on the recommendation of some friends.
For each of the eight dimensions of service quality, write a brief statement of your expectation.
The statements may be general statements about expectations of a café or specific to a previous experience.
Time: 15 minutes (approx.)
Topic Example Video
The following video discusses quality management.
Take note of the key points. http://www.youtube.com/watch?
v=QJNVrY_Z2NM
Measuring and Reporting QualityLabor index
Quality cost / labor hoursCost index
Quality cost / manufacturing costSales index
Quality cost / salesProduction index
Quality cost / units produced
Improving Productivity With Quality
Sales Gains Improved response Higher Prices Improved reputation
Reduced CostsIncreased productivityLower rework and scrap costsLower warranty costs
Increased ProfitsImproved
Quality
Costs & market share
Company’s reputation
Product liability
International implications
Costs of Quality Prevention costs - reducing the potential for
defects through planning, design, process, training, information
Appraisal costs - evaluating products, inspection and testing, test equipment, operator suitability
Internal failure - of producing defective parts or service, scrap/wastage, rework, process failure, process down-time, price reduction
External costs - occur after delivery, customer complaints, product returns, warranty, product liability, lost sales
Quality–Cost Relationship
Increased prevention costs lead to decreased failure costs
Improved quality leads to increased sales and market share
Quality improvement at the design stage
Higher quality products can command higher prices
Typical Quality Process
SpecifiesNeed
Customer
InterpretsNeed
Marketing
DesignsProduct
Defines
Quality
Engineering
ProducesProduct
Plans
Quality
MonitorsQuality
Operations
Quality is
Quality is
customer driven!
customer driven!
TQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing,
company-wide, drive toward excellence in all aspects of
products and services that are important to the customer.
Topic Example Video
The following video discusses the Edwards Deming philosophy to TQM.
Take note of the key points. http://www.youtube.com/watch?
v=GHvnIm9UEoQ
Total Quality Management
1. Customer defined quality2. Top management leadership3. Quality as a strategic issue4. All employees responsible for quality5. Continuous improvement6. Shared problem solving7. Statistical quality control8. Training & education for all employees
Organizational Practices
Quality Principles
Employee Fulfillment
Attitudes (e.g., Commitment)
How to Do
What to Do
EffectiveBusiness
EffectiveBusiness
CustomerSatisfaction
CustomerSatisfaction
Achieving TQM
Activities to Achieve TQM
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
Customer service, quality and marketing work in harmony, with:
Measurement of customer needs and competitor performance.
Quality determined through customer perspective.
The total quality concept associated with relationship marketing influences the process elements (e.g. managing the 'moments of truth' in the customer encounter).
Relationship Customer Service
Marketing
Customer Service
Quality
RM
RM Orientation
Topic Example Video
The following video discusses relationship marketing.
Take note of the key points. http://www.youtube.com/watch?
v=roVoOm4ivG0
Customer Service + Marketing Mix
CustomerService
Price
Promotion
PhysicalEvidence
Processes
People
PlaceProduct
4Ps to 4Cs
COMMUNIC’N
CONVENIENCE
COST TOCUSTOMER
CUSTOMERNEEDS/WANTS
PROMOT’N
PLACE
PRICE
PRODUCT/SERVICE
Adapted from Kotler et al 1999
Customer Encounters
Build relationships with customers through “service encounters”.
Frequently called the “moments of truth”.
Customers use encounters to evaluate the service.
Customers involvement can vary widely.
Successful relationship building dependent on the result of service encounters.
Topic Example Video
The following video discusses the importance of building and maintaining customer relationships.
Take note of the key points. http://www.youtube.com/watch?
v=parwarCy7Vk
Episodes The transition from a routine episode to
a critical episode determines the adequacy (or otherwise) of customer service performance.
A 'critical episode' can be defined as an episode that is of great importance for the relationship.
Critical episodes are specific interactions between customers and the firm's employees that are especially satisfying or especially dissatisfying.
Long-term relationships are made up of a 'string of episodes'.
Evolution of Relationships
Awareness
Exploration Commitment
Expansion (Re-invention)
Dissolution
Customer Value potential Value potential relates to the net benefits
compared to costs from each particular relationship classification.
Value Category Financial Process & Operational Knowledge, learning &
information Strategic
Relationship Style Price Product Need
Value
Financial Benefits Revenue
Gross profit Net profit Unit price Volume
Costs Costs
Variable costs Fixed cost (allocated) Unit cost
Process & Operational
Benefits Marketing
Effectiveness Predictable demand
referrals Related sales Price premium Long-term contracts Time to market Product development
Costs Operational
Effectiveness Supply Chain & Logistics
Production Logistics, transport distribution Cycle times Other time savings
Knowledge, Learning, Information
Benefits Customer
Information Product
Development Technology Network Effects
Costs Operations Learning Production
Strategic
Benefits Products Value Customer
Satisfaction Market Position
Costs Operations Production
Customer Worth
Kris Cole “Think in terms of a customer’s lifetime
value. Everyone likes to feel you value their business and are interested in looking after them for a lifetime.
See your customers as appreciating assets and appreciate those assets.”
Customer Value
What is it? Customer value is the difference between
the values that the customer gains from ownership and usage of a product or service offset by the costs involved in obtaining it.
The long-term or life-time value (LTV) of a customer relates to the total of all their financial transactions over the active life of that relationship.
Topic Example Video
The following video discusses customer life-time value (LTV).
Take note of the key points. http://www.youtube.com/watch?v=BHDblh9Y1-
o
Customer Lifetime Value The ‘lifetime value’ concept proposes that an
organisation should take a long-term of profit by considering the income derived from it’s lifetime association with the customer.
Retention strategy decisions need to be based on a customer’s estimated lifetime value potential. Cadillac customer worth $332,000 over lifetime Domino’s Pizza customer worth $5,000 over 10
years. Note, there is no guarantee that a customer will
continue to deal at same level or if at all with organisation.
Topic Example Video
The following video discusses the RFM formula.
Take note of the key points. http://www.youtube.com/watch?
v=vNiO9DHK_4A
RFM Formula
Recency/Frequency/Monetary Formula Recency - time since customer last
purchased. Frequency - number of times a customer
purchases within a given time period. Monetary - amount of money spent by
customer enabling identification of customer base segments offering the highest profit potential.
RFM Formula
RFM formula is used to evaluate the value of a clients transactions over a period of time. As a rule of thumb, the buyer who has purchased most recently is the one most likely to buy again.
Reasoning: All customers are not created equal.
(80/20 Rule)
Recap Video
The following video discusses service quality and how it is applied in a Chinese context.
Take note of the key points. http://www.youtube.com/watch?
v=UxLv4EaIovI
Self-Check Quiz
Answer the true/false questions accessed using the following link:
http://wps.pearsoned.com.au/au_pve_dwyer_buscomm_8/100/25624/6559918.cw/index.html
Next Session
Weekly Activity: Internal/External Customers Most organisations serve several kinds of customers:
final customers intermediate customers internal customers external customers and stakeholders.
The chain of intermediate customers places each organisation in a position of dependence. As satisfied customers are the best source of referrals it is important to differentiate between them. Thinking about customers as assets give examples of these differing customers and influencers in a retail, manufacturing and family environments.