The term "customer service" encompasses a variety of techniques used by businesses to ensure the satisfaction of a customer, from friendly and attentive staff to prompt response when confronted with product defects. Successful small business owners often cite customer service as the factor most important in establishing and maintaining a prosperous company. A strong emphasis on customer service throughout a business will help to produce the sort of environment conducive to loyal customers. This is true for companies that sell to other businesses and to companies that sell to individual consumers.
The U.S. Small Business Administration provides, on its Web site, a variety of reports useful to small businesses. In one simply entitled Customer Service, the administration summarizes the importance of customer service to the small business this way: "The growing significance of meeting—or exceeding—customer demands for quality service has special implications for small business. For it is in this arena that small companies can, in the least expensive way, set themselves apart from the competition. In fact, a recent three-year study by the National Federation of Independent Business (NFIB) in Washington, D.C., showed that small businesses which put heavy emphasis on customer service were more likely to survive and succeed than competitors who emphasized such advantages as lower prices or type of product."
DEVELOPING A CUSTOMER-ORIENTED COMPANY CULTURE
In order to assure that there is a positive customer service attitude within every department or area of a company it is important to establish customer service goals for the company as a whole. Customers have contact with companies at many levels and at each they should meet courteous, friendly, and knowledgeable people willing to work with them. Customer service can be seen to be like a three-legged stool. The three legs of the stool are employees, sound practices, and training.
Many business observers contend that the most critical facet of ensuring good customer service lies in simply hiring personable and responsible employees. The use of pre-employment screening tests can enhance the hiring procedure by helping employers measure the skills and characteristics needed for success in customer service jobs before hiring a new employee. There are a variety of valid tests available, and consistently hiring people who score highest on these tests will ensure that new hires will represent the business in a positive light. In addition, business owners are urged to make sure that they adequately inform potential employees of any customer-relations obligations that they might have. This is typically accomplished through training programs.
Employee training is an important component of customer service. Customer service principles should be put in writing, and it should be made clear that all employees are expected to be familiar with them and be prepared to live up to them. Small business owners also need to recognize that customer service training should be extended to all employees who interact with clients, not just those in high-profile sales positions. Service technicians, for example, often regularly interact with customers, but all too often they receive little or no customer service training. "More companies are asking their technicians to fill gaps in sales efforts and to repair communication breakdowns," noted Roberta Maynard in Nation's Business. "Some companies are cultivating their technicians' abilities to clarify customer needs and identify and capitalize on sales opportunities…. Some managers are giving technicians greater authority to do what it takes to keep customers happy, such as occasionally not charging for a service call or a part."
Finally, businesses need to make sure that they work hard to ensure customer satisfaction on a daily basis. Customer service should be ingrained in the company, commented one entrepreneur in an interview with Michael Barrier in a Nation's Business article: "It has to be part of the organization's mission and vision, right from Day One. Then the rest tends to be simple—it carries over to your products, your advertising, your staffing, and everything else."
INSTILLING CUSTOMER LOYALTY
Business experts cite several tangible steps that small business owners can take to ensure that they provide top-notch service to their customers. These include:
- Build quality support systems—Companies armed with tangible, easily understood guidelines for establishing and maintaining quality customer service will go far toward satisfying clients.
- Communicate with customers—Communication with customers can often be accomplished more easily by smaller businesses than larger companies that are often slowed by layers of bureaucracy. Methods of communication can include telephone calls, postcards, newsletters, and surveys as well as face-to-face conversation. By keeping in touch with customers one is able to more quickly address problems that arise and anticipate some before they are even serious. And while such steps are perhaps most helpful when dealing with regular customers, consultants counsel business owners who specialize in making big-ticket sales to try and maintain communications with their customers as well. Such customers may not make a purchase every month, noted Frederick F. Reichheld, author of The Loyalty Effect, but those purchases that they do make carry a lot of weight. Reichheld notes that big-ticket purchases typically have a fair amount of service and financing associated with them, both of which provide small businesses with opportunities to nourish their relationship with the customer. In addition, consultants observe that communication with ex-customers can be helpful as well. "A defecting customer may offer a reason that points to a potentially serious problem [within your company]," wrote Barrier.
- Communicate with front-line employees—Employees who are kept apprised of changes in company products and services are far more likely to be able to satisfy customers than those who are armed with outdated or incomplete information.
- Retain employees—Many customers establish a certain comfort level over time with individual employees—a salesman, a project coordinator, etc.—and these relationships should be valued and nurtured by the small business owner. "Each customer has special needs," observed Barrier, "and the longer that employee and customer work together, the more easily those needs can be met. Companies that want long-term relationships with their customers need equally healthy relationships with their employees. In particular, they must encourage employee involvement."
- Invest in technology that aids customer service—Small businesses should choose voice mail systems that make it easy for customers to contact the person or department that they wish to reach. Technology systems can also help small businesses gather information about their customers.
- Cultivate an atmosphere of courtesy—Small gestures such as friendly smiles, use of the customer's first name, and minor favors can have a disproportionate impact on the way that a business is viewed. "Remember that small kindnesses can carry a lot of weight," said Barrier.
- Address mistakes promptly and honorably—No business is infallible. Errors inevitably occur within any business framework, and sooner or later a customer is apt to be impacted. But business experts contend that in many instances, these incidents can actually help strengthen the bond between a company and its customers. "In the normal course of a business relationship, the depth of a vendor's commitment will not be put to the test," wrote Barrier, "but a serious mistake will reveal quickly just how trustworthy that vendor is."
- Avoid equating price with customer service—Many small businesses find it difficult to compete with larger, high-volume competitors in the realm of price, but most analysts insist that this reality should not be construed as a failure in the realm of customer service. Moreover, most experts indicate that many small businesses can triumph over price differences, provided that they are relatively minor, by putting an extra emphasis on service. "For some customers, of course, price is all that matters," admitted Barrier. "Those are customers you probably can live without."
- Create a user-friendly physical environment—Writing in Entrepreneur, Jay Conrad Levinson counseled small business owners to "design your company's physical layout for efficiency, clarity of signage, lighting, accessibility for the disabled and simplicity. Everything should be easy to find."
By crafting a customer service policy that combines the practices listed above, a company is likely to leave a positive impression with customers. Over time, the cumulative effect of this positive impression will build loyalty.
CUTTING TIES WITH BAD CUSTOMERS
Although smart entrepreneurs and business managers recognize that customer service is an important element in ensuring company success, it is a reality of life that a small percentage of customers are simply incapable of being satisfied with the service they receive. Small business owners are generally averse to letting any customers go, but consultants contend that some clients can simply become more trouble than they are worth for any number of reasons. The solution to determining whether a business owner should sever ties with a problematic customer, observed Nation's Business, "may lie in defining the word 'customer' properly: Someone who costs you money isn't a customer but rather a liability."
Entrepreneur 's Jacquelyn Lynn listed several scenarios in which consultants recommend that small businesses consider ending their relationship with a troublesome client. Client attitudes and actions that should prompt an honest assessment include:
- Lack of respect or appreciation for the small business owner's work.
- Excessive demands, either on company or individual staff members.
- Unreasonable expectations in terms of monetary arrangements for work or goods provided.
- Proclivity for imposing difficult or unrealistic deadlines.
- Tendency to pay bills late (or not at all).
- Treats company as a commodity that can be discarded as soon as it ceases to be useful to the client.
Lynn noted that, in some instances, honest communication with the client can salvage a deteriorating relationship, but this does not always work. "If your attempts to make the relationship a mutually productive one don't work," said Lynn, "it may be time to move on and focus on more profitable clients or prospective clients. Calculate what you will lose in gross revenue, and decide if your business can stand the financial hit." If the business is able to withstand the loss of revenue, move forward to terminate the relationship in a professional manner. If not, then the company's leadership needs to develop a strategy to expand existing business relationships or garner new clients so that the company can sever relations with the offending customer down the line.
Barrier, Michael. "Ties that Bind." Nation's Business. August 1997.
Brown, Stanley E., ed. Customer Relationship Management: A Strategic Imperative in the World of E-Business. Wiley, 2000.
"Customers You Want to Lose." Nation's Business. August 1997.
Friedman, J. Roger. "Quality Service Is the Key to Earning Repeat Customers." Nation's Restaurant News. 1 September 1997.
Lee, Dick. The Customer Relationship Management Survival Guide. High Yield Marketing Press, 2000.
Levinson, Jay Conrad. "Taking Care: 17 Ways to Show Your Customers You Care." Entrepreneur. October 1997.
Lynn, Jacquelyn. "Good Riddance." Entrepreneur. October 1997.
Maynard, Roberta. "Are Your Technicians Customer-Friendly?" Nation's Business. August 1997.
Paajanen, George. "Customer Service: Training, Sound Practices, and the Right Employee." Discount Store News. 15 September 1997.
Reichheld, Frederick F. The Loyalty Effect. Harvard Business School Press, September 2001.
Stewart, Thomas A. "A Satisfied Customer Isn't Enough." Fortune. 21 July 1997.
Tschohl, John. "How to Succeed in Business by Really Trying." Canadian Manager. Spring 1997.
U.S. Small Business Administration. Customer Service. Available from http://www.sba.gov/managing/marketing/customer.html. Retrieved on 6 February 2006.
Wilhelm, Wayne, and Bill Rossello. "The Care and Feeding of Customers." Management Review. March 1997.
Zemke, Ron, and John A. Woods. Best Practices in Customer Service. AMACOM, 1999.
Hillstrom, Northern Lights
updated by Magee, ECDI
In the very competitive world of marketing a product or service, what consumers will buy and when, where, and how they will purchase it is often determined by the type, level, and quality of customer service provided by competing marketers. This purchase determination has become even more of a strategic issue with the advent of new marketing channels such as the Internet and television-shopping networks. A growing number of organizations are giving increased attention to customer service. Financial institutions, hospitals, public utilities, airlines, retail stores, restaurants, manufacturers, and wholesalers are just a few of the businesses that face the problem of attracting new customers and retaining the patronage of existing customers.
Building long-term relationships with customers has been given a high priority by the majority of America's most successful enterprises. These companies realize that customer satisfaction is an important key to success. Customer service can be defined as those activities that enhance or facilitate the purchase and use of the product or service. Today's emphasis on customer satisfaction can be traced to a managerial philosophy that has been described as the marketing concept.
THE MARKETING CONCEPT AND CUSTOMER SERVICE
The significant increase in the desire to provide effective consumer service is a direct result of a shift to the marketing concept in the early 1950s. The marketing concept has three major components: (1) identifying what the consumer needs and wants, (2) developing products/services to meet those needs/wants, and (3) designing marketing plans to effectively and efficiently deliver the products/services in a manner that will satisfy the customer and the long-term objectives of the organization. The foundation for the success of the marketing concept is a business philosophy that leaves no doubt in the mind of every employee that customer satisfaction is of primary importance. All energies are directed toward satisfying the consumer. The degree to which customer satisfaction is dependent on the quality of service varies greatly with different products/services. The service continuum (see Figure 1) shows the significant difference between a necktie (tangible product with little service involved) and a lawn mowing service (no tangible product).
Whether consumers patronize an organization on a continuing basis is often strongly influenced by the level and quality of service they receive from that firm. Since this service experience is an important determinate of future purchase behavior, then it becomes important to examine how consumers evaluate the service provided and how a business might assess how well they deliver quality service.
Research has found that consumers often evaluate the quality of the service they receive based on five criteria. Businesses and organizations should consider these criteria
when they examine how well they are satisfying their customer's needs:
- Tangibles —Physical facilities, equipment, employees' appearance, etc.
- Reliability —Dependable and accurate service
- Responsiveness —Prompt customer assistance
- Empathy —Firm/employees show concern about the individual needs of the customer
- Assurance —Employees instilling trust and confidence in the service provider through their knowledge, courtesy, and helpfulness
One method of examining the degree to which a firm is meeting the service expectations of the consumer on these five dimensions is called the gap theory. The gap theory first determines the difference between the customer's service expectations and the customer's perception of the service actually received. This gap is referred to as the service gap and is considered the most important because it determines the level of satisfaction/dissatisfaction with the service and, ultimately, the organization.
If a service gap exists, management should examine four other gaps that most likely are the reason for the service gap. These four gaps are:
- Knowledge gap —The difference between the consumer's service expectations and management's perception of consumer's expectations
- Standards gap —The difference between the management's perception of consumer's expectation and the standards established by the organization for service delivery
- Delivery gap —The difference between the established standards and the actual quality of service delivered by employees
- Communications gap —The difference between the actual quality of service provided and the quality of service communicated to consumers through promotional material and activities
If any of these gaps exist, a service gap will follow—with the probability of customer dissatisfaction.
THE NEW CUSTOMER
Customers, and the type and quality of service they demand, are constantly changing. This requires businesses to stay alert for changes and adjust to meet new service challenges. In an article by Ron Zemke (2002), the consumer of the twenty-first century was briefly characterized by customer service professionals. Zemke described new consumers as more knowledgeable about the products they purchase, possessing more sophistication, being a little more impulsive and less patient, wanting to be treated as individuals rather than numbers, and desiring to be treated fairly and like everyone else or knowing a clear reason why not.
At the end of the article Zemke presented a laundry list of fourteen customer needs identified by Chip Bell, a Dallas-based consultant and author of Customer Love: Attracting and Keeping Customers for Life.
- Make me smarter.
- Help me do it myself.
- Make the response fast … but don't sacrifice quality—quick and rushed aren't the same.
- Help me customize the experience like I want it.
- Anchor your offering to a cause I like and believe in. Good works sell.
- Entertain me. Make the experience bright, shiny, and memorable.
- Don't invade my privacy; never let me worry about whether you know too much about me.
- Respect my time by making your offer super easy to deal with.
- Anticipate my needs.
- Treat me with respect when things go wrong … not some cheap, generic atonement that is unmatched to the incident.
- Never take me for granted. I will drop you in a heartbeat.
- My time is as important as my funds … maybe more.
- Help me integrate … link stuff together to increase the efficiency of my life.
- Life is complex: Make service simple. Life is harried: Make service calm. Life can be shallow: Make service have resonance and depth. Life can be painful: Make service joyful. Life is too fast: Help me keep up. Life can be lonely: Make service a value connection. (quoted in Zemke, 2002, p. 49)
see also Marketing
Albrecht, Karl, and Zemke, Ron (2002). Service America in the new economy (rev. ed.). New York: McGraw-Hill.
Bell, Chip R. (2000). Customer love: Attracting and keeping customers for life. Provo, UT: Executive Excellence.
Hoffman, K. Douglass (2006). Marketing principles and best practices (3rd ed.). Mason, OH: Thomson South-Western.
Lascu, Dana-Nicoleta, and Clow, Kenneth E. (2004). Marketing frontiers: Concepts and tools. Cincinnati: Atomic Dog.
Lovelock, Christopher, and Wirtz, Jochen (2004). Services marketing: People, technology, strategy (5th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Manning, Gerald L., and Reece, Barry L. (2004). Selling today: Creating customer value (9th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Pride, William M., and Ferrell, O. C. (2006). Marketing concepts and strategies. Boston: Houghton Mifflin.
Reece, Barry L., and Brandt, Rhonda (2005). Effective human relations: Personal and organizational applications (9th ed.). Boston: Houghton Mifflin.
Sewell, Carl, and Brown, Paul B. (2002). Customers for life: How to turn that one-time buyer into a lifetime customer (rev. ed.). New York: Doubleday.
Solomon, Michael R., Marshall, Greg W., and Stuart, Elnora W. (2006). Marketing: Real people, real choices (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Zemke, Ron (2002). The customer service revolution. Training, 39 (7), 44–49.
Barry L. Reece