Customer service

Customer service is the provision of labor and other resources, for the purpose of increasing the value that buyers receive from their purchases and from the processes leading up to the purchase. With the rising dominance of the service sector in the global economy, customer service has grown in importance, as its impact on individuals, households, firms, and societies has become widespread.

History of Customer Service

The modern concept of customer service has its roots in the craftsman economy of the 1800s, when individuals and small groups of manufacturers competed to produce arts and crafts to meet public demand. The advent of mass production in the early 20th century, followed by an explosion in the demand for goods after the Second World War, increased the power of suppliers at the expense of consumers, and thus reduced the importance of customer service. A shift in this balance began in the 1970s, as international competition increased, and the dominance of western manufacturers was challenged, first by Japan, then by Korea, China and other developing economies. Producers responded by improving the quality of their products and services. The economic boom of the 1990s again increased the power of suppliers who, while not completely reverting to lower standards of service, were able to be more selective of which customers to serve, and of what levels of service to provide. The overall quality of customer service - in society and in specific industries - will continue to be determined by the relative balance of power between suppliers and consumers; it will improve as competition becomes more intense, and decline as competition decreases.

Strategic advantage through customer service

A company can outperform rivals only if it can establish a difference that it can preserve. Customer service can be such a difference. It is very difficult to control, and therefore difficult to imitate. It is difficult to control because of its variability. The level of service may vary greatly between two providers in the same organization. It may also vary from one moment to another, even as delivered by the same provider. The difficulty is compounded in multi-unit operations: in addition to variability within units, there is also variability among units.

That is both the challenge and the opportunity. The consistent delivery of superior service requires the careful design and execution of a whole system of activities that includes people, capital, technology, and processes. The few companies that can manage this system do stand out, and are sought out. This is the foundation of their sustainable competitive advantage.

Customer service culture

Acculturation is the principal means by which an organization develops an ability to deliver outstanding customer service. The quality of a customer’s experience cannot be sustained by a command and control system; it cannot be produced by fiat. The senior management of an organization does not have the power to directly control each customer’s experience. That power is possessed by the people who deal directly with the customers – the organization’s front line.

For an organization’s members to deliver superior service consistently, they must be acculturated, i.e. instilled with the values, traits, patterns, and behaviors associated with a service culture. The mechanisms of this acculturation include recruitment, training, empowerment, and accountability, within the framework of an organization’s ideology of service.

Service Ideology

An organization’s ideology comprises its purpose (Why are we here?) and values (What do we stand for?). Organizations renowned for customer service have typically defined their purpose in terms of service – to serve their customers, and to serve their members. Their values typically include integrity, trustworthiness, reliability, personal responsibility, industriousness, continuous improvement, respect, and consistency.

Recruitment

Outstanding service organizations invest more in recruitment than in other mechanisms of acculturation. In particular, they have rigorous processes to select people who already possess service values. Knowledge and skills may readily be developed on the job, whereas service values take years to take shape.

Training & Empowerment

Training is focused on enabling personnel to deliver service in manner that is beneficial to both the organization’s customers, and to itself.

Accountability

Whereas outstanding service organizations allow their people to make mistakes and learn from their failures, there is little or no tolerance for violations of its core service values. People who do not fit into the culture are removed.

What customers want

Category	Description
Good People	Friendly, helpful, courteous Empathetic Knowledgeable, accurate, thorough Resourceful, empowered Able to recommend solutions Able to anticipate needs Efficient Trustworthy, authentic Reliable Responsible Appropriate appearance and demeanor
Good Offering	Good selection Good quality In stock Available demos Clear descriptions & pricing Competitive prices Financing, deferred payments
Convenience	Convenient locations Long hours Available help, fast service Signage that facilitates self-service Fast checkout Shipping/delivery Installation Phone/web support On-site repair Hassle-free returns Quick resolution of problems
Good Environment	Clean Organized Safe Low-pressure Energy level appropriate to clientele

Delivering customer service begins with understanding what customers want. And this understanding begins with the understanding that they do not always know what they want, or why the want it. Traditional market research assumes that they do. Newer methods recognize that as much as 95% of our decision making is subconscious.

Common research methods (e.g. surveys and focus groups) more often reveal what customers think their motivations are, rather than what their motivations truly are. When respondents do not comprehend their true motivations, they tend to state how they think they ought to be motivated. Recent progress in neuroscience and in observational technologies have yielded more reliable, less biased, results.

Regardless of how they arrived at their findings, most researchers agree on the factors listed in this table to the right. Suppliers that meet these requirements are likely to give their customers a satisfactory experience.

In a competitive environment, however, satisfaction may not be enough. To stay in business, firms must be at least as satisfactory as their competitors. Moreover, firms that aim to gain profitable growth must increase the number of their customers, while reducing the cost of customer acquisition. This is particularly true of companies that compete in mature industries. The objective then is not merely to satisfy customers, but to convert them into promoters (customers who recommend a company to others). Promoters serve to increase a firm’s clientele, without increasing its cost of acquisition – i.e. with no additional marketing or promotional expense.

But customers do not make recommendations lightly. When they make a recommendation, they put their own reputations on the line. Firms must earn that recommendation through the consistent delivery of outstanding customer service.

Benefits of customer service

Beneficiary	Benefit
Providers	Higher income (more sales, repeat business, referred business) Recognition Personal satisfaction & fulfillment Less stress Higher self-awareness and self-control Greater authenticity Happier life at work Stronger social networks, family ties Happier life outside work
Organizations	Quality sales (more add-ons, more service sales) More repeat business More referred business Fewer returns Better reputation Higher morale, happier employees Lower employee turnover Higher caliber of job applicants Fewer complaints Higher productivity Better work environment Higher inventory turnover Higher profits
Society	Higher income from individuals and firms Higher productivity Stronger families and social networks Greater civility

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