Customer service is the provision of service being provided by the seller to customers before, during and after a purchase of any product. A customer is a person who buys products (goods or services) from a shop or a business organization. According to Turban et al. (2002), "Customer service is a series of activities designed to enhance the level of customer satisfaction - that is, the feeling that a product or service has met the customer expectation." It is also the process of assisting another person or persons who buys goods and services from a shop. In order to make the organization effective and productive, all the employees need to develop a positive service attitude towards customers. The goal of quality customer service in any organization is to send a positive message with a good attitude to the customers to make them more loyal and happy thereby. Such a message must focus on addressing the needs of customers and helping them in solving their problems. Having a positive customer service attitude requires an organization in the following lines:
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Be approachable forever
Be patient with people
Maintain a good sense of humor
Make the customer feel welcome
Remember the importance of the customer
Be sincere in helping to solve the customer's problem
Always put the customer first
Develop a customer service program that is focused on delivering good customer care and build it into your strategic plan.
Customer service guru Karl Albrecht describes customer service as a simple equation:
Quality = Results - Expectations
According to him, in order to deliver positive quality, a business must come up with a result beyond their customers' expectations. According to the American Productivity & Quality Center (2001) in their report titled Best Practices in New Customer Service, "The foundation of any successful customer service organization is the empowered customer service agent. Management in the best-practice organizations recognizes that external customer satisfaction requires granting power to those internal company representatives who serve as the critical link between the company and the customer."
Importance of customer service in small and medium scale organizations
Qualitative customer service is almost always identified as one of the key success factors for a small and medium enterprise (SME). Any business in which the total number of employees is less than 500 is called a small business enterprise. However different countries provide different definitions for a SME. In contrast, a micro-business is defined as a business with fewer than five employees. Any business, especially a small business, needs repeat customers to survive. To achieve this, a business needs to offer excellent customer service. Great customer service is essential to help small businesses attract and retain the customers they need to survive and compete against the big boys, and more so in a downturn economy (Isabel M. Isidro: 2007).
Indeed the cost of absence of customer is very high sometimes. For example, there was an incident with United Airlines disputing a claim with a customer (some musicians) and it involved damaging these band members' guitars even after it was proven beyond a reasonable doubt that they were indeed at fault. The customer went to every length to get UA to look into their complaint, but was met with some indifference. Their frustration finally boiled over and they recorded a video and uploaded in youtube. The entire episode culminated in UA finally deciding on paying the cost to replace the bands equipment, but only after the shareholders stock dipped 10% and lost a mere 180 million dollars in value. So if a large company like UA itself has faced huge problem like this in case of absence of customer service, one can imagine the vital importance of customer service in a SME. Normally, the following are the major reasons for explaining why customers leave:
1.) One percent of them die. Not much anyone can do to change that one.
2.) Three percent move away by relocating, perhaps for personal or professional reasons like getting married or job relocation etc.
3.) Four percent just naturally (for whatever) reasons like the rest of us, need a change every once and a while.
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4.) Five percent change based on the recommendation of someone's opinion like a friend, relative or associate that they trust and respect.
5.) Nine percent can buy it cheaper somewhere else, and this may be the result of them aggressively negotiating with another vendor to make this happen.
6.) Ten percent are just chronic complainers.
7.) Above all, the main reason why your valued customers become ex-customers is because of indifference which means that a staggering 68% of the time your customers leave simply because they are systematically made to feel like they are not important.
So a company should never discount the importance of answering customer inquiries, emails or answering their questions through any other means because it is the right thing to do, plus they can and will spread your experiences (good or bad) in the various forums etc. Therefore the possible benefits of providing superior customer service include:
Repeat business: Quality service leads directly to increased customer retention rates, which have a flow-on effect by reducing business running costs to service them and increasing overall profits.
Competitive edge: Quality customer service, if delivered on a consistent basis, can be a strong competitive advantage. If price is comparable, then customers will almost always choose to purchase from the business that provides the better service.
Reduced marketing costs: A number of studies have shown that it costs 3-5 times more to attract a new customer, than it does to make the same sale to an existing customer.
Creating ambassadors: Satisfied customers will tend to act as ambassadors to further promote the small business by word of mouth.
Main constituents and elements of good customer service
An organization has to properly design its own customer service strategy by including all the major important elements and constituents that a good customer service policy should contain. For that purpose the following information is useful. There are many little things that irritate customers according to literature survey. The items below are the most common and the organization should be careful and ensure that they do not appear in its day-to-day operations.
Rude and un-empowered service workers
Difficulty with exchanges
Promises that are not kept
Pushy sales people
Unqualified or untrained staff
Being put on hold
Good customer service is the lifeblood of any business. A business organization can offer promotions and slash prices to bring in as many new customers as it want, but unless and until it can get some of those customers to come back, the business won't be profitable for a long future. Therefore a good customer service is all about bringing customers back and sending them away happy - happy enough to pass on positive feedback about the business and its products to others. As a result, even those potential customers may then try the product or service that the company offers for them and in their turn become repeat customers. One can say that the essence of good customer service is forming a relationship with customers - a relationship that individual customer feels that he would like to pursue. Accordingly the main constituents of a customer service of an organization contain the following:
1) Answer your phone.
Always ensure that someone is picking up the phone when someone calls a company for any inquiry relating to the product.
2) Don't make promises unless you will keep them.
Reliability is one of the keys to any good relationship, and good customer service is no exception. If a salesperson says, "Your new bedroom furniture will be delivered on Tuesday", make sure it is delivered on Tuesday. Otherwise, don't say it. The same rule applies to client appointments, deadlines, etc. A customer service executive should think in all angles and directions before giving any promise - because nothing annoys customers more than a broken one.
3) Listen to your customers.
Is there anything more exasperating than telling someone what you want or what your problem is and then discovering that that person hasn't been paying attention and needs to have it explained again? From a customer's point of view, I doubt it. Can the sales pitches and the product babbles. Let your customer talk and show him that you are listening by making the appropriate responses, such as suggesting how to solve the problem.
4) Deal with complaints.
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No one likes hearing complaints, and many of us have developed a reflex shrug, saying, "You can't please all the people all the time". Maybe not, but if you give the complaint your attention, you may be able to please this one person this one time - and position your business to reap the benefits of good customer service. Complaining customers can be divided into three broad groups, according to the ways in which they communicate their dissatisfaction:
Aggressive: These customers tend to attack the person attending them, or anyone else whose attention they can gain. They convey their point of view very loudly. Aggressive customers tend to elicit a defensive response from the attending person, and consequently such interchanges often remain unresolved.
Constructive: These customers make a point of explaining the reasons for their dissatisfaction and perhaps even suggest possible ways in which to remedy the situation. This is a more positive and suggestible approach to the resolution of complaints, because both parties are able to gain a clear understanding of each other's points of view. They also generally lead to an improvement in that particular aspect of the business's operation.
Passive: These are perhaps the most difficult customers to appease, because most of the time the customer service executives are unaware of the fact that they have a complaint, until it is too late. Passive customers do not voice their complaint at the time, but rather demonstrate their dissatisfaction by going elsewhere.
6) Train your staff (if you have any) to be always helpful, courteous, and knowledgeable.
Do it yourself or hire someone to train them. Talk to them about good customer service, give every member of your staff enough information and power to make those small customer-pleasing decisions, so he never has to say, "I don't know, but so-and-so will be back at..."
8) Throw in something extra.
Whether it's a coupon for a future discount, additional information on how to use the product, or a genuine smile, people love to get more than they thought they were getting. And don't think that a gesture has to be large to be effective. The local art framer that we use attaches a package of picture hangers to every picture he frames. A small thing, but so appreciated.
According to IBM founder Thomas Watson, winning the customers through customer service is possible for any organization if they follow the following rules:
Rule #1: Listen! When customers complain there is a reason. More importantly, it is an opportunity to learn something, so hear them out without interrupting or arguing.
Rule #2: Don't take it personally. Customer complaints are about products or service that did not live up to their expectations or the marketing hype. Taking it personally, getting defensive, or getting angry only makes the situation worse.
Rule #3: Offer a sincere apology for the inconvenience. Put yourself in your customer's shoes. Remember what it feels like when something you have purchased did not do the job it was supposed to or caused an even bigger problem than the one it was supposed to solve.
Rule #4: Never say, "It's not my job or my department or my responsibility." If you work at the company that made the product or sold the service - it is your job! Make a personal commitment to do whatever it takes to fix the problem even if it is not in your job description.
From the above rules, it is clear that only those companies with an ongoing commitment to listen and serve can consistently keep their customers delighted and make them repeat customers.
Even customer feedback is the basic foundation stone for customer service. For ensuring the effective customer feedback, the following rules are relevant.
A) Make It Easy For Customers / Clients to Give Feedback
If possible, put up a customer hotline for your business, and also allow the customers to give feedback anonymously (not everyone likes to disclose their personal information). Moreover when they are able to remain anonymous, it leads to more honest feedback.
B) Thank You for your feedback
If a customer is giving feedback, even if it is in the form of a rude complaint, you must realize that you are benefiting from his/her frustrations. Do give some form of compensation as a nice thank you and note no matter what the feedback may be so that your customers feel appreciated for their time taken. In the end this will also show and create a feeling to your customers that whatever their thoughts and comments mean something important to you.
C) Analyze their feedback
After receiving the feedback from the customers, the executive has to analyze the feedback in the following lines:
Is this feedback based on an isolated incident?
Have you received similar feedback before from other customers?
Is this customer being reasonable in their requests and/or suggestions?
Will acting on this feedback benefit the organization as well as other customers, or just this one customer?
Once the analysis is done, it is not expected that a company has to act on all suggestions, but it certainly should consider all of them with care. Customer feedback should be used as just one of the sources of information in decision making, but never the primary source. There are times when you know your product better than anyone and your vision and determination will make it work despite an anonymous.
According to Beth Sears, in order to serve customers well, many qualities need to be present in an organization as below:
The culture of the organization must be structured in a manner that helps everyone know that customer service is the main priority. Many organizations look for ways to differentiate themselves from their competition and yet it is the experience that customer's get at your organization which determines whether or not they will return.
Impression Management is the attention paid to the perception outsiders have of your organization. Businesses need to focus on the impression they hope to give customers starting with the person answering the phone. Everything from your website to printed literature must reflect the image you hope to develop. Dixon-Schwabl, Fortune's 2010, Best Small Business in America calls their receptionist "Director of First Impressions" to highlight the importance of the position. In addition, the appearance of the organization, as well as the staff, makes a huge difference in the credibility others give you.
Once a customer service strategy is developed, there must be an implementation plan so every employee understands what observable behaviors are required to meet the needs of their customers. Also, each member of the team must recognize how their job works in concert with the overall mission of the organization. The key to job descriptions is they must be periodically reviewed and updated to make sure they meet the current needs of the organization, and ultimately the customer.
Once a company recruits the best applicants for the position you must provide ongoing training and tools for them to accomplish their work. This includes not only job specific training, but interpersonal skills as well.
Employees must get to know their internal and external customers. This include creating a feedback mechanism to help them not only understand their client's needs, but help them to develop relationships. The time spent on relationship development is often the characteristic that keeps customers returning time after time.
Supervisors must not only know the products and services of the organization, but how to clearly communicate with employees in a motivational manner. This includes coaching employees to reach higher competencies and empowering them to make decisions commensurate with their ability. The aptitude to make customer service decisions once guidelines and organizational goals have been established, will go a long way toward evolving employee ownership in the business. By empowering employees, customers are not frustrated by the "Run and Check" protocol that wastes time and leaves a bad perception in the eyes of the customer. Supervisors must be visible to employees and encourage open communication of both problems and potential solutions.
The leadership must develop a communication plan which keeps all employees abreast of challenges and information influencing the organization. This can be accomplished through regular communication practices which keep the entire organization abreast of any changes which would effect how they serve their customers.
The organization must develop a measurement system which helps the group understand if they are progressing toward the ultimate goal of world class customer service. This includes not only communication, but recognition for jobs well done. Progress should also be communicated to customers, so they understand their feedback was not only heard, but acted upon.
Effects of absence of good customer service in companies
Generally small businesses often complain that they cannot really compete with larger firms because of the large scale of economies to scale being enjoyed by the latter. Large firms are able to purchase raw materials and stock on a scale that a small business could never afford. However if they are able to offer better and more personal customer service than a large multinational corporation, they can easily enjoy the benefits of competitive advantage. Nancy Friedman, President and Founder of the Telephone Doctor, a St. Louis-based customer service training company says 'bad customer service can translate into lower sales and lost business.' There are some marketing theoretical principles, based on the vigorous survey, as below:
Dissatisfied customers tell an average of 10 other people about their bad experience
12 percent tell up to 20 people
Satisfied customers will tell and average of five people about their positive experience.
It costs five times more money to attract a new customer than to keep an existing one.
Up to 90 percent of dissatisfied customers will not buy from you again, and they won't tell you why.
96 percent of dissatisfied customers do not complain of poor service.
95 percent of dissatisfied customers will become loyal customers again if their complaints are handled well and quickly.
The first 30 seconds of a phone call or meeting sets the tone for the remainder of the contact. The last 30 seconds are critical to establishing lasting rapport.
The above principles explain as to how important the customer service is for any organization. In many industries quality of service is one of the few variables that can distinguish a business from its competitors. Providing high-quality service can save the business money as it leads to increased customer satisfaction which also leads to increased employee productivity. Customers are willing to pay more to receive better service and therefore good service leads to increased sales.
Benefits or Competitive Advantage of Customer Services for SMEs in the service industry
The importance of customer service is identified as very intensive in service industry when compared to other industries. Normally its importance varies by product, industry and customer. Even the quality and the nature of providing customer service from company to company in service industry. Some service-oriented companies allow the exchange of defective or broken merchandise often only with a receipt and within a specified time frame and some other companies may have relaxed policies towards the exchange. In case of engineering services companies, customer service plays an important role in an organization's ability to generate income and revenue. From that perspective, customer service should be included as part of an overall approach to systematic improvement. A customer service experience can change the entire perception a customer has about the organization and such perception creates a competitive advantage for a SME over its large counterparts. Similarly the customer service in hospitality and tourism industry is very important to build customer and brand loyalty which will lead to growth of the company. The customers will generally opt to choose other hotels because they are afraid of having a bad trip. Therefore in such a case, providing good customer service more than the expectations of the customers leads to substantial reputation, growth in sales and the good rating in the competitive market. Normally every customer expects that whenever he goes to a restaurant or a hotel, his dinner/lunch should be served with a smile. But most of the small businesses in the hotel industry fail to understand this basic expectation of the customer. A best restaurant identifies the need of customer service in such a way that the customer service should start from the kitchen. Every hotel or a restaurant should be very cautious in the usage of the high quality raw-materials.
The customer service in any service-oriented company provides good number of sales, return visits by the customers and the very effective word of mouth advertising. In case of an e-commerce company, there is a need of putting some extra attention into customer service. The more happy customers the company has, the easier it will be for it to grow. So the prior focus should be on the implementation of the right strategy and hiring the right customer service team. Therefore a SME belonging to any category of service industry should concentrate on increasing efforts to improve its customer service and to measure it from time to time so that proper and immediate measures can be taken if there are any deviations in its customer service.
A small enterprise has to calculate a customer service Return on Investment (ROI) very often to understand the cost of the investment of the company towards customer service and the resultant competitive advantage. Accordingly, the company has to answer two important questions as below:
1. How much is the cost of NOT providing perfect quality and service?
2. How much is the return on various investments in service?
Once you answer these questions as a small business owner, qualitative customer service is ensured to have cutting edge from your competitors. Even a small business can quantify the ROI of problem prevention, enhanced service accessibility and improved customer satisfaction with service. Across any industry, good customer service is needed to succeed with the small business. It will reap in the following benefits which will result in competitive advantage.
The best way to build customer loyalty in the small business is to provide good customer service. Customers who are treated with respect and feel important will return. For example, if you are running a hotel chain they will most likely seek out your hotel in other cities they visit. Perhaps they will even come back regularly to utilize your services.
Customers who receive good customer service at small businesses like hotels, restaurants and tourist attractions will tell other people about their experiences. It is then likely that others will come, expecting good customer service. If they enjoy their visit they will probably tell their friends and family, and ultimately your business can begin to boom.
The happier customers are the more likely they are to spend more money at the small business establishment. If they are given extra little perks, like a 15 minute massage for free, they are likely to come back the next day also for another massage or may pay for other services. If the hotel staff is friendly they may visit the hotel bar or restaurant because they know they will receive good customer service there also as well.