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1. CUSTOMER SERVICE
The Customer
Customers are the obvious requirement for doing business. The customer is the most important
visitor on the organisation’s premises and the survival of any business organization depends on the
customer. These customers have varying need from the business organization.
Customer Service
Customer service refers to anything that business organizations do for the customer that enhances
the customer experience. Customer service must not be viewed from the organisation’s point of
view, but from the customers’ point of view.
Importance of Customer Service
"The customer is always right" is a famous business slogan. The underlying truth behind this
statement is recognizing that customers are the life blood for any business. Understanding the
importance of good customer service is essential for a healthy business in creating new customers,
keeping loyal customers, and developing referrals for future customers. .
Excellent customer service begins at the initial greeting, whether that's in person, on the phone, or
via email. In all of these situations, using good people skills will increase the chances for a positive
first impression. For example, saying hello with a smile to a customer who just walked in the door
will invite that person in and make them feel welcome. On the other hand, when an employee
doesn't acknowledge the client, or makes him/her feel like an inconvenience, that customer
immediately feels slighted. That negative feeling doesn't get the customer in a buying mood, and it
will most likely turn them away from ever coming back to that particular store, company etc.
.
If the employee is utilizing good customer service on the phone, the initial greeting will be
courteous. Again, this makes the client feel comfortable. In turn, the customer will appreciate the
pleasant greeting and usually be more agreeable on the other end of the phone. This is a much better
situation for the client instead of leaving messages on answering machines, never getting any
returned phone calls, or trying to extract some product information from an uncaring employee.
Of course, good customer service goes beyond the initial contact. When helping customers choose
the right product or service or answer their questions, assisting them with their needs is a great
example of going the extra mile. This kind of service establishes good will, and it'll eventually lead
to loyal customers. Even if that person doesn't purchase anything at that time, the good shopping
experience will bring the customer back again. .
Think about how you've been treated whenever you're the customer. If you've ever had a bad
experience with a company, you know that it's not easy to forget the encounter. Perhaps a clerk was
too busy stocking shelves to help you pay for your items. Maybe there wasn't anyone around to
answer your questions or help you with some additional information. You might have had to deal
with an employee that won't help you because of some company rule. In any of these instances, the
managers or the owner of the store usually aren't notified of the poor customer service. Instead, the
people that do hear about the negative experience are many of the customer's family and friends.
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When dealing with clients, sometimes there are situations that need to be resolved. If the customer
is upset about a product or service they've received from the company, the first thing an employee
should do is to listen. By taking the time to hear through the entire complaint, the customer feels
that you care. Occasionally, the issue is actually not related to your company at all, but the initial
problem is merely a catalyst for that person's frustration about other things. Either way, attentive
listening will break down that barrier and begin to build a bridge to fix the situation. Usually,
discussing different options will then bring about a positive outcome for both sides.
Good customer service leads to many benefits. Not only will you gain trust with your current
clients, they'll also become a wonderful referral system as they spread the word about your business
to other prospects. Especially with any internet business transactions, product reviews are quite
common. Whether it's positive or negative feedback about a product or service, people are writing
freely about their shopping experiences. In the long run, treating people fairly and with respect will
bring business to your company today and in the future.
Reasons for a good customer service
1. The provision of excellent customer service is the most effective and cost effective way to
maintain and grow a business organization.
2. Customer service is the positive elements that help business keep their customers.
3. The ability of the business organization to make profit depends to a large extend the services
provided to its customers.
4. Customer service help foster a good relationship between the business organization and its
customers.
Customer Satisfaction
In business, customer satisfaction may develop quickly or may be cultivated over a period of time.
Customer service providers should try to reduce customer’s stress, create a pleasant customer
experience, provide current information and help solve customer problems.
Customer satisfaction is therefore the customer’s overall feeling of contentment with a customer
interaction. Satisfaction is most often the customer’s afterthought. When the customer thinks back
his interaction with the service provider and feel pleasant then the customer is satisfied. However,
if the think back makes the customer feels unpleasant, then he is dissatisfied.
Customer service is a highly important part of every small business. Companies that are unable or
unwilling to properly service their customers stand to lose the customers' business. However,
several key variables or characteristics set excellent customer service apart from mediocre customer
service. A company that best demonstrates these excellent customer service characteristics will have
a distinct advantage over its competition.
Customer satisfaction is the overall essence of the impression about the supplier by the customers.
This impression which a customer makes regarding the supplier is the sum total of all the process he
goes through, right from communicating with the supplier before doing any purchase to post
delivery options and services and managing queries or complaints post delivery. This helps the
customer to form a strong opinion about the supplier which finally results in satisfaction or
dissatisfaction. Customer’s perception on a supplier helps the customer choose among the supplier
on basis of money, value and how well the delivered products suit all the requirements.
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Excellent Customer Service
This involves providing outstanding services to meet customer’s expectations. Excellent customer
services include having a great attitude and being people centered.
Steps in Providing Excellent Customer Service
1. Develop skills to be successful.
2. Assess the current level of customer service and determine if it appropriately meets their
current needs. This will help in developing strategies that meet today’s customer’s needs.
3. Empower employees to make decisions that benefit the customers.
4. Use technology and current information systems that will help facilitate the provision of
excellent customer services.
5. Individual employees must periodically examine their own performance to ensure that they
are still practicing the provision of good customer service as required.
Customer Needs
Customers of all categories and classes have five basic needs. These are; service, price, quality,
action, and appreciation.
1. Service: For any level of purchase, the customer expects an appropriate level of service.
2. Price: Customers always want to use their financial resources efficiently. This means that
the price of the products that the customer is to pay is very important.
3. Quality: Customers want the products that they purchase to be durable and functional until
the customer decides to replace them. This means that manufacturers and distributors
should produce products that live up to the customers’ expectations of durability.
4. Action: Customers are human beings and like to think that they are important, and that
when a need or question arises, someone will be ready and waiting to help them.
5. Appreciation: Customers need to know that their business with you is recognized and
appreciated. Try to always say ‘thank you’ to customers. Let the customer know you are
glad that he has chosen to do business with you.
Types of Customers
Customers are grouped into two: External and Internal customers.
External Customers
External customers are the customers we do business with outside the organization. External
customers are the customers we most commonly think of when we consider whom to serve. They
are the people with whom the organization interact and share their knowledge and positive attitude.
External customers have the power to enhance our reputation and to bring us new business, but they
are not the only customers that we have.
Internal Customers
Everyday, the organization interacts with a special group of customers who frequently go
unrecognized. These customers are the organisation’s internal customers. Internal customers are
the people who work throughout the organization. They are important to the organisation’s success
in providing the external customers with what they need. If internal customers do not see the
importance of completing work promptly and of treating other with respect, it becomes very
difficult for the organization to provide outstanding customer service to external customers.
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By developing a positive relationship with the internal customers we are showing them that we
value their importance in the overall organization. We can apply a slightly modified version of the
Golden Rule to our internal customers, “Do unto our internal customers as we would do unto
ourselves.” This rule suggests that as customer service providers we will strive to determine what
our internal customers’ needs and expectations are and place the same level of importance on their
needs as we would do unto ourselves.
Management has an important role in creating an environment that recognizes the importance of
internal customers. By providing opportunities for internal customers to experience the challenges
of each other’s responsibilities, an increased respect can develop. It also helps everyone involved to
see the big picture. By satisfying our internal customers we create an excellent foundation on which
to begin meeting our external customers’ needs. Fewer apologies have to be made, work gets done
more efficiently, and an overall positive atmosphere develops.
Customer Attributes
These are characteristics that allow customers to be grouped according to demographic,
psychographic, and firmographic information.
Demographic information include characteristics like age, income, marital status, education, stage
in the family cycle, home ownership, sex occupation, household size, mobility patterns, ethnic
background, and religion. Demographic information is a straightforward and basic method of
identifying customers.
Psychographic information focuses on lifestyles, modes of living, needs, motives, attitudes,
reference groups, culture, social class, family influences, hobbies, political affiliation, etc.
Psychographic information can provide a more thorough picture of the customer.
Firmographic information includes characteristics about a company such as how many employees
they have, the kind of business they are in, whether they are retail, wholesale, or a service provider,
their hours of operation, etc.
Cost of Losing a Customer
1. Loss of the current cedis (dollars) that business relationship created. At the initial stage,
these losses seem insignificant, but with time, this loss becomes more damaging
cumulatively.
2. Loss of the Jobs that our clients provide: If business goes elsewhere, we do not need to
employ the people who were working on the customer or customers. This can result in the
closing of the business organization.
3. Loss of business reputation: Words travels faster in this our information-based society. Our
clients will possibly share their experiences with their clients and friends. This loss may
result in the immediate departure of other business or simply in a lack of trust among our
clients and any potential customers.
4. Loss of future business: This is an intangible variable because it is difficult to assess the
long term effects of what might happened in the future. Whether it is one dollar, hundred
dollars, million dollars or billion dollars, it is important to recognize the value of this loss.
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2. CHALLENGES OF CUSTOMER SERVICE
Customer service is rare because it require spending money and taking action which average
organizations are unwilling to commit themselves to. Barriers to excellent customer service are
grouped into two.
1. Barriers that are beyond the control of the customer service provider, and
2. Barriers that are within the control of the customer service provider.
Barriers that are beyond the customer service provider include the following:
1. Management philosophy; making it difficult for customers with problems to contact a
company or the person who can really help.
2. Unreliable equipment
3. Restrictive company policies.
4. Difficult-to-understand warranties or owner’s manuals.
5. Out-of-date procedures.
6. Lack of understanding of the value of service beyond the control of the customer service
provider, but constitute the common part of doing the job.
Barriers that are within the control of the customer service provider:
There are some barriers to excellent customer service that are within the control of the customer
service provider. These barriers include laziness, poor communication skills, poor time
management, moodiness, lack of adequate training, insufficient authority, inability to handle stress,
and inadequate staffing. Overcome through diligent effort, allowing the customer service provider
to do the best possible job.
Customer service providers must therefore perform periodic self-evaluations to assess their
effectiveness and to identify areas that need improvement.
Perceptions
A perception is the way that we see something based on our experience. People perception of a
situation will vary at least slightly. Our perceptions are developed over a period of time and they
reflect the way that we have been treated, our values, priorities, and sensitivity to others.
Perceptions are not based on rational ideas. They are influenced by momentary frustration and
anger, and full of mystery.
Customers perceptions are formed based on their prior interactions with the organization.
Therefore, always work to provide the customer with excellent service so that their most current
perception is a positive one.
Try to deal with your customers as individual human beings. Respect their time, circumstances, and
perceptions that are based on their prior interactions.
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Expectations
Expectations are a persons’ vision of the result that will come from our experience. A person’s
expectations may be positive or negative. Expectations are based partially on a person’s
perceptions.
If one last experience with a company was negative, you may approach a new situation with the
expectation that you will again be dissatisfied. Sometimes companies and individuals wrongly
assume that they cannot live up to their customers expectations. It is however important to note that
what customers expect is frequently much easier and less costly to provide than we think.
Levels of Expectations
There are basically two levels of expectations. These are primary and secondary levels of
expectations.
Primary expectations are the customers’ most basic requirements of an interaction. For example,
dining in a restaurant satisfy hunger.
Secondary expectations are expectations based on our previous experiences that are enhancements
to the customer primary expectations.
Scope of Influence
Scope of influence is our ability to influence others based on our perceptions or experience. It is
important for businesses to recognize the influence their customers have on other customers. Some
customers have a large scope of influence because they interact with a large number of people. It is
therefore extremely important to do all we can to make our customers happy and keep their
business. The recognition of the power of word-of-mouth supports the importance of scope of
influence.
Reputation Management
This is the process of identifying how a company is perceived and establishing an action plan to
correct, maintain, or enhance the company’s reputation.
A good reputation is cultivated over a period of time through a company, or individual performance.
To manage reputation, the company must survey its customers and the community at large to assess
what its reputation really is.
A company with good reputation has some of the following characteristics:
 Is very responsive to customers.
 Delivers its promises to customers.
 Provide excellent value to customer.
 Has excellent communication.
 Conducts business in a humane and caring way.
 Treats employees with respect.
 Is committed to the environment.
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Techniques for Exceeding Customers Expectations
To provide customer service beyond the customer expectations, the organization can undertake the
following;
1. Become familiar with your customers. Try to find out who your customers are and why they
do business with you. Get to know their likes and dislikes.
2. Ask the customers what their expectations are. Find out what they see as benefits of doing
business with you. What is it that they want that you are not providing?
3. Tell the customers what they can expect. Convey to them what your commitments to them
are.
4. Live up to their expectation. Try and accomplish what you said you would provide for
them.
5. Maintain consistence. Do not promise what you cannot deliver. Always deliver a consistent
service.
One important key to exceeding customers’ expectations is to remember that expectations are
always changing and not constant.
Credibility
How believable we are, and how reliable we are translates into how credible we are to others.
Credibility is the combination of our current knowledge, reputation, and professionalism.
Credibility encourages trust.
Key Tips for Cultivating Credibility
1. Practice Consistency: Strive for fairness and approach similar situations in the same
manner. Be positive, professional and control your personal emotions all the time.
2. Keep your word: Keep your promise. People will not have faith in you if you break your
promises. Follow through with the commitments that you make.
3. Develop your Expertise: Maintain a high level of knowledge about your products, your
company, and the industry at large.
4. Become a Teammate with your Co-workers: Working successfully with others shows that
you have common goals and can benefit from each individual specific skill.
5. Show Dedication to Customers: Let customers know what you will do for them, and take
every customer’s request seriously.
6. Treat all Customers and Co-workers with the same level of respect. Showing that you
respect others create an environment that allows others to respect you. Be sensitive to your
effect on customers.
7. Apologies if you are wrong: Being honest will impress others and they will respect you for
who you are.
8. Remember that credibility is hard to regain than it is to keep.
Importance of Values
Values are a combination of our beliefs, perceptions, and ideas about the appropriate response to a
situation. Companies must effectively communicate their own specific values. This is made
possible through the use of employee manuals or policy statements. However, real corporate values
can be conveyed through the actions of management in an organization. Employees must recognize
their own values and beliefs and attempt to identify organizations that have similar priorities.
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To facilitate excellent customer service, there is the need to join corporate values and employee
values. Individual values are personal. In the customer service industry, some organizations have a
very distinct set of dos and don’ts. Other organizations may be more vague in expressing corporate
priorities to employees. In either instance, the customer service provider must recognize that they
are both representatives of their company and also individuals. Their behaviours and philosophies
illustrate the persons they are.
Ethics in Customer Service
Ethics are a set of principles that governs the conduct of an individual or group of people. Ethical
decisions are easy to recognize and are perceived as popular choices of behaviour by the people
around us. At other times the spectrum of potential choices falls into gray areas in which the ‘right’
or ‘wrong’ course of action is difficult or nearly impossible to identify. The challenge of ethical
decision making becomes even harder when it is not just an individual’s personal judgment that is
involved, but also carrying out the instructions of a supervisor, request of a customer, policy of the
organization, or some other situation in which a threat , real or perceived, is involved.
There are really not shortcuts when it comes to telling the truth and determining an appropriate
course of action. Individuals in business must be seen by those around them as honest or they will
not succeed for long. The bottom line in decision making is that individual must face the
consequences of their decisions – good or bad.
When faced with an ethically challenging situation, ask yourself the following questions:
1. It is legal?
2. Is it fair?
3. How do I feel about it?
4. Would the court of public opinion find my behaviour incorrect?
5. Am I fearful of what those I trust would say about my action?
The above questions can be quite revealing when attempting to choose an ethical course of action.
One final consideration regarding ethical behaviour is that it is not always popular to “do the right
thing”, but maintaining individual integrity and an organisation’s reputation will allow all involved
to know that they examined all possibilities and chose the most appropriate course of action.
Current Status of Customer Service
Customer service providers mostly do little to improve upon the situation due the following reasons:
1. It is difficult to measure the financial benefits of customer service. It may be challenging to
convince some financial managers of the long-term payoffs of providing customer service.
2. Customers have high expectations, but most often customer service providers do not know
what those expectations are.
3. The cost of providing excellent customer service is prohibitive for many businesses.
4. Technology provides the opportunity for faster responses to customer questions, but it also
creates the requirement that customer service providers have additional training to become
proficient in using new systems.
Customer service is an opportunity that no professional can afford to ignore. It is frequently the
distinguishing difference between two or more companies that offer the same product or service.
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New Trends in Customer Service
New trends are emerging in the customer service industry. Some of these trends include
accessibility for the customer, immediacy of responses, feedback from customer service provider,
outsourcing of all or part of customer service functions, and non-traditional examples of customer
service.
1. Accessibility for the Customer: Customers today have more access to information about
their account status, billing, delivery, and product availability than before. This reduced the
questions that customer service providers must respond to.
2. Immediacy of Response: With technology, customers can have questions, or problems
resolved immediately. Customer service providers are also more fully empowered to make
decisions in response to customers’ inquiries.
3. Feedback from Customers: Feedback is important to all businesses and provides
opportunities for growth in the customer service department. Customers’ suggestions are
now frequently requested and encouraged. Most customers appreciate the chance to share
their ideas and to see changes being made.
4. Outsourcing of all or part of Customer Service Functions: This involves the giving out
of some customer service functions to outside firms to perform on behalf of the
organization. Some functions outsourced include data processing, billing, maintenance,
marketing, accounts receivable, etc.
5. Development of Non-Traditional Approaches: The importance of customer service has
led to the development of non-traditional approaches to customer services. Some of these
include offering informational newsletters to customers. Others are new product or service
offerings, new systems, or service hours.
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3. THE ROLE PROBLEM SOLVING IN CUSTOMER SERVICE
Problems are challenges that we would prefer to avoid, but in most cases, this is not a possibility.
Problem solving is an active resolution to a challenging situation. Problem solving is an
individualized process. Every individual may have his/her own method of determining an
appropriate course of action. What is important is the end result, not the process of determining the
solution.
To actively confront the challenge of problem solving, organizations must prepare employee with
training. Employees must be encouraged to develop solutions that are positive for both the
customer and the company.
One main challenge to problem solving is the speed with which decisions must be made.
How to Effectively Solve Problems
Customer service providers can effectively equip themselves to make decisions and to sole
problems by:
1. Learning problem-solving strategies.
2. Develop negotiation skills.
3. Learn how to deal effectively with conflict.
4. Recognise the importance of follow-up.
Creativity and Problem Solving
Creative problem solving suggests that through a open approach to finding solutions, an appropriate
and innovative result may be discovered. Creative problem solving requires that employees work in
a culture that allows new ideas to flow freely and to be considered realistically. Creativity requires
effort and commitment to creating new idea or solutions.
Problems as Opportunity
As customer service providers, always consider criticism as an opportunity to obtain valuable
information. A productive method of response to criticism as productive input to the creation of a
problem-solving environment.
Note that customers have ideas about how a problem might be avoided in the future. Offer
customers the opportunity to share their ideas, give customers the opportunity to participate in the
process of improving a situation or system that has disappointed them.
Confronting Conflict
Conflict is a hostile encounter that occurs as a result of opposing needs, wishes, or ideas. Conflict is
a reality in a problem solving situation. When faced with conflict in problem solving, it is
important to proceed with caution.
When encountering conflict, remember the following suggestions:
1. Listen to the other viewpoints that are being presented.
2. Do not bring up old problems from the past or assign blame.
3. Use tact as you respond to others.
4. Do not repress your own anger, instead use it productively.
5. Focus on finding the best solution to the conflict.
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Problem-Solving Process
After determining that a problem exists, it is important to respond to the problem using the
following guideline:
1. Identify the problem.
2. Understand the problem unique characteristics and the possible outcomes.
3. Define the requirements of a possible solution considering the company policies currently in
place.
4. Identify possible solutions.
5. Select the best solution.
6. Implement the solution, informing the customers of the details and how the customer will be
affected.
7. Observe and evaluate the solution’s impact.
Problem-solving Strategies
There are two common strategies of problem solving. These are brainstorming and diagramming.
1. Brainstorming
Brainstorming strategy is used by groups of two or more. The premise behind brainstorming is that
the more ideas that are shared in an open and accepting environment, the more creativity will result.
The Brainstorming Process
1. A specific problem is identified.
2. One person is designated as the recorder
3. Someone share the first idea. Other ideas should follow.
4. There is no criticism allowed at the free-wheeling of ideas stage.
5. Generate a master list of ideas shared.
6. Display it on a chalkboard or flipchart. It can also be compiled and distributed to group
members for later discussion.
7. Members can review the ideas and make additions.
8. Convene a next meeting to recommend the most appropriate solutions.
9. Implement the chosen possible solutions.
Diagramming
This strategy provides a visual representation of the problem and the facts related to it. Visual
representations are easy to work with because they allow visual examination as well as discussion.
There are four main methods of diagramming problems in search of appropriate solutions. These
are pro/con sheets, flowchart, organizational charts, and mind mapping.
Pro/Con sheets
Pro/con sheets are best when used to choose a specific course of action as the resolution to a
problem. To create a pro/con sheet, write the problem and the possible solution on the sheet of
paper. Draw a line down the centre and write the pro on one side and con on the other side. Write
all the possible reasons that the solution would work on the pro side of the line. List all the reasons
that the solution would not be appropriate on the con side.
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When all these are listed, it can be determined whether the solution is appropriate or not.
Example of Pro/Con Sheet:
Pro Con
(Arguments for) (Arguments Against)
Flowcharts
This strategy in the problem-solving process is helpful to diagram what the process of flow of a
problem is. Listing how a situation is processed and who must be involved is enough to identify
why a problem is occurring. Flowcharts are helpful in identifying who would be affected by a
change in the method of processing information.
To create a flowchart, include in a box on the top of a sheet of paper the points where a process
begins.
Below is an example of student fee payment extension problem.
Extension to pay
school fees
requested by
Request send
HOD by student
Student payment
history checked
Positive
Yes Payment No
History
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Inform student
that request is
granted
Inform student
that request is
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Organizational Charts
This is a diagram of who reports to whom within an organization or department. Even though
organizational charts will not assist in solving specific problems, they can provide a visual
illustration of areas of employee overload and can reveal possible snags (obstacles) in a system’s
success.
Mind Mapping
This is an extremely creative approach to diagramming a problem.
The Mind Mapping Process
1. Place the problem or decision in an oval in the centre of a large piece of paper.
2. Place lines going out of the centre in different directions.
3. On each line, write important words or phrases that pertain to finding a solution to the
problem.
4. Record as many ideas as possible.
5. Review the ideas and make additions if any are suggested.
6. Put your mind map aside for an hour or a day and then review what you have written.
7. Begin to draw conclusions from your mind map.
8. Implement the solutions arrive at.
In mind mapping, it is important to exercise an open mind and a willingness to think creatively.
Product Industry
Knowledge Knowledge
Good Knowledge
Communication Level
Reliable CREDIBILITY Honesty
Reputation Values
Hardwork Good Building Trust
Performance
Consistency Quality Product
Above is an example of a mind mapping on credibility problem facing an organization.
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Developing Negotiating Skills
Negotiation is the evaluation of the possible solutions to a challenge and the selection of the
solution that is mutually beneficial. It involves discussion between parties. Negotiation must allow
for give and take on both sides of the issue.
How to Improve Negotiation Skills
1. Know your customer: Know the parties involved. Past relationships can shed valuable
light on how a person/customer may approach a current situation. The greater the awareness
of customers and their needs, the more effective one can begin to solve their problems.
2. Ask questions and listen to the spoken and unspoken messages: Asking customers’
questions and actively listening to their responses provide an informed understanding of the
situation.
3. Know the policies of your organization and in which areas flexibility is allowed. To
negotiate with customer, it is important to be familiar with your company policies. The
customer service provider should know when and where flexibility is allowed with regard to
policies.
4. Demonstrate the willingness to be flexible: This is the ability to react to situations as they
occur.
5. Learn to handle your anger and your customer’s anger appropriately. Anger is always
a possibility during negotiation. When anger is revealed, it is best to defuse it as possible.
Anger may express frustration, anxiety, or unmet expectations. You can defuse customer’s
anger by trying to anticipate the course and to confront it carefully. As the customer service
provider, consider the role you play as representative.
6. Consider what the customer may lose in the negotiation process. Negotiation is a give
and take affair. Try to understand what the customer will see as compromise. When
negotiating, stress that the goal is a positive resolution for all.
7. Determine mutually beneficial solutions to challenging problems and situation. When
concluding negotiation, seek solution that will benefit both the company and customer.
Explain to the customer how the agreed-upon solution will work.
Approaches to Apologising and conveying bad news
Effective problem solving acknowledges the fact that the customer may have legitimate concerns
and that the customer was treated inappropriately. At this time, an apology is due to the customer.
Note that apology is not a sign of weakness, but a productive method of continuing the opportunity
to communicate.
When the need arise to apologise, consider the following suggestions:
1. Acknowledge customers’ feelings: Indicate to the customers that you recognize their
feelings and emotions, and send the message that you care.
2. Express to the Customer that you Share the responsibility for the problem. Even if you and
the company were loosely associated, note that you are part of the problem and its
resolution.
3. Convey sincerity: When apologizing, it is important to convey care and concern. If
showing regrets, the manner in which you say it should demonstrate your regret.
4. Ask for the opportunity to correct the problem. Give an offer to correct the error or to make
changes in the future.
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5. Request the opportunity to continue doing business in the future. This request gives the
customer the opportunity to share other concerns that might keep them from doing business
with you.
Barriers to Problem Solving and Decision-making
1. Resistance to Change: This can prevent people from taking chances and from considering
new possibilities.
2. Habits: This limits our vision of what can be accomplished and may stand in the way of
solving a problem.
3. Individual Insecurity: This may deter individuals from taking risks or from pursuing
behaviour that may require them to take a stand. This may come from overall lack of self-confidence.
4. Past History: Knowing what has happened before and what worked and did not work can
inhibit an individual’s desire to try new methods of problem solving or decision making.
5. Fear of Success or Failure: The unknown can be a frightening thing. When a new way of
doing something is attempted, the possibility exists that it may work well or not at all.
6. Jumping to Conclusions: This is making assumptions about what might or might not
work. Assumptions may take on negative perspectives.
7. Perceptions: Perceptions are the way that we see things based on our experience. We may
be unable to see something because we are so blinded by our own perception.
Follow-up is checking back to determine whether or not a situation is operating according to the
initial plan.
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4. STRATEGY FOR FORMULATING A PLAN FOR SUCCESS
What is a Strategy?
A strategy is a plan for positive action. A strategy can help a business to determine the proper level
of customer service.
Variable of Customer Service Strategy
1. Planning
2. Infrastructure
3. Culture
4. High-touch and low touch customer
5. Consumption behaviour
6. Market segmentation
Planning
Planning is finding a recognizable direction to focus on. It is the establishment of specific customer
service goals. These goals may vary from reducing customer complaints to answering customers
calls in 20 seconds or less. Establishing customer service goals will help customer service
providers to define what they would like to accomplish.
Infrastructure
An infrastructure is made up of the network of people, physical facilities and information that
support production of customer service. Customer service depends on the existence of an
appropriate infrastructure. Infrastructure is the ‘highway’ that gets you where you need to go.
Infrastructures require a lot of planning. If future needs are not anticipated, future costs may be
greater. Very few infrastructure investments show a positive return in less than three to five years.
The infrastructure should meet the needs of the customer. Infrastructure must be used to its fullest
potential. If current technology is in place, but employees have not been trained, it is wasted.
Culture
Culture is composed of the values, beliefs and norms shared by a group of people. Every business
has its own unique culture. If the culture does not encourage excellent customer service, excellent
customer service will not exist. Three ways of creating a customer friendly culture are:
1. Practice the Golden Rule: Do onto others as you would have them do unto you, both
internally and externally.
2. View internal Customer as number one. If you take care of the internal customers, they will
automatically take care of the external customer.
3. Work hard, play hard: Celebrate successes, offer incentives, and give people a reason to
work hard.
High-touch and Low-Touch Customers
High-touch customers require a high level of customer interaction. These customers demand high
level of service. These customers come into their customer service experience expecting a high
level of service. They perceive that the cost of providing the service is included in the price.
A high-touch customer may not be capable of completing the interaction without assistance.
Low-touch customers expect a low level of customer interaction. Low-touch frequently exists
because of technology. It tends to have high usage and low cost per use.
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Consumption Behaviour
This refers to the customer’s usage and payment patterns. This involves collecting information
about a customer. This requires the company to maintain a customer database. The more
information an organization has about their customer’s consumption patterns, the better prepared
they are to create a strategy to better serve that customer. Most companies service a variety of
different customers with unique consumption patterns. It is not appropriate to serve all customers in
exactly the same way. Most companies end up hurting their business opportunities because they do
not consider their customers’ consumption bahaviour.
Segmentation of Your market
Market segmentation is dividing customers into groups with similar characteristics. Segmentation
helps to divide customers into serviceable groups, making it easier to assess the appropriate services
to provide. Segmentation helps identify common and less common customers’ service needs.
Development of a Customer Service Strategy
To create a customer service strategy, the following guidelines can of helpful:
1. Segment your customers. Divide your customers into groups with similar characteristics.
2. Identify the largest and most profitable customer groups. It is better to serve the largest
customer group, representing the majority of your business first.
3. Determine your customers’ expectations. Find out what your customers want from their
experience with you.
4. Develop a plan to achieve their expectations efficiently. Create an innovative strategy that
will allow you to serve customers effectively.
5. Implement the plan. Put your new strategy into practice, implementing all aspects of the
strategy at the same time.
6. Set an evaluation timetable. Before implementing your strategy, determine when an
evaluation of its success will be conducted.
7. Evaluate and continue to improve the strategy. Evaluate the effectiveness of the new
customer service strategy and make appropriate improvements. Keep making changes to
keep the new strategy as current as possible.
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5. EMPOWERMENT
Empowerment is to enable or permit customer service providers to make a range of decisions to
assist their customers. Through empowerment, customer service providers are given the discretion
to make decisions to further assist their customers. It allows customer service providers to decide
on their own whether or not customers’ request should be granted. Where empowerment is
practiced;
1. It avoids a situation where customers have to wait or retell the stories.
2. It avoids a situation where service providers experience the feeling of helpless middlement.
3. It avoids the situation where the supervisor hears or is given a hurried explanation of the
situation.
Purpose and Mission Statement
Purpose statement expresses the reason for the organisation’s existence. The mission statement
indicates the means by which the organization will fulfill its purpose.
Empowerment = Opportunity
Empowerment is a true opportunity. If customer service providers are given the power to deal
directly with some of the more routine issues, more time is available for them to handle the more
unique situations. Empowerment also frees the time of supervisors who may otherwise be less
productive because they have to deal with issues that could be handled more quickly by the
customer service providers.
Steps in Empowering Customer Service Providers
Empowerment is the result of a company’s focused efforts to establish guidelines, train employees,
accept consequences and cerebrate positive results.
There are four steps involved in empowering customer service providers:
1. Paint a picture of what you hope to accomplish. This picture can be an inspiring reminder of
what your organization is trying to accomplish and how it can benefit each member of the
organization.
2. Allow workers own their empowerment choices. Give them responsibility they can handle
and give them feedback on their choices. Do not punish when mistakes occur, but instead
retrain. Employees will avoid taking empowerment chances if they fear repercussions.
3. Reward and recognize positive examples and results of empowerment. You will show those
in your organization that you are committed to the empowerment process.
4. Commit for the long haul. Positive results will not necessarily appear overnight, but they
will be worth the wait.
Coproduction of Customer Service
This means that the customers participate in providing at least a part of their own service. This
concept suggests that a customer service system should be designed so that customers are allowed
and encouraged to provide their own customer service. Customers are often willing and interested in
participating in the customer service process.
Why Coproduction of Customer Service Works
1. When customers participate in the process, they have some degree of ownership of the
situation.
2. Coproduction makes customers feel occupied and contributing something, instead of waiting
endlessly.
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6. COMMUNICATIONS IN CUSTOMER SERVICE
Communication is the process in which information, ideas, and understanding are share among two
or more people. Customer service providers must develop their communication skills so that they
are proficient in all methods of communication.
Building Customer Intelligence
Customer intelligence is the process of gathering information, building a historical database, and
developing an understanding of current, potential and lapsed customers. This allows organizations
to better serve their customer groups. Customer intelligence helps improve relationship marketing.
Relationship marketing
This is cultivating a lasting mutually beneficial connection with customers. Customer intelligence
and relationship marketing are necessary tools in creating a personal or business relationship. With
business relationship, the more we get to know and understand others, the better we can
communicate with them. Also, the more positively and appropriately we approach our
communication efforts with customer, the more likely that we will succeed in effectively serving
our customers.
Methods of Communication
There are five main methods of communication used in effective customer service interaction.
These are listening, writing, talking, reading, and non-verbal expression.
1. Listening: This refers to the ability to hear and understand what the speaker is saying.
2. Writing: This is communication by using the written words so that others can understand
the intended message.
3. Talking: This refers to speaking, using words and terminology that others can understand.
4. Reading: This is the ability to read and comprehend the written words.
5. Non-verbal Expression: This refers to facial expression, posture, eye contact, tone and
inflection of voice. Non-verbal communication can contradict the message conveyed
through another method of communication.
All these methods mentioned above are used by customer service providers in communicating,
however, expects believe that listening is the most important methods in communication.
As customer service provider, to listen to your customers is to show them that you care and respect
their questions and concerns. It takes practice and dedication to improve your listening techniques.
There are several barriers to good listening. These barriers distract the listener from what is being
said.
How to overcome barriers to listening
1. Pay attention to the speaker. By focusing on the speakers and on what is being said, one is
less likely to miss the message being delivered.
2. Avoid thinking of the ‘To do list’. These are called visual distraction and they are very
appealing and they require little effort to receive and may promote new ideas and thoughts.
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How to improve your listening skills
1. Focus on the speaker and what he or she is saying.
2. Look at the speaker and make eye contact when possible. If you are listening on the
telephone, make notes as you listen.
3. Listen with an open mind.
4. Rephrase what was said to clarify that you understood the intended message.
5. Control your body language. Do not show impatience or disapproval.
A good listener knows the joy of sharing and communicating with others. Work to become the best
listener you can be.
Voice Inflection as a Customer Service Tool
Voice inflection is a variation in the pitch, timing, or loudness of the voice. Pitch is made up of the
highs and lows of your voice. Many communicators have a hard time conveying their spoken
message to others. If others frequently ask you to repeat what you said, cut you off before you are
finished speaking, or do not take you seriously, the problem may be the way you use you voice.
Note that your voice and message reveal some very important characteristics about the person you
are. Many people believe that our voices reflect our personalities.
Telephones and Customer Service
When you are on the telephone, you are selling yourself. A large percentage of customer service
interaction takes place by phone. Due to this fact, customer service providers must have
outstanding telephone skills. When communicating with customers by phone the advantages of
face-to-face communication do not exist because there are no visual aids or body language. Instead,
the communicator must depend on the listening skills, the ability to respond effectively to questions,
and voice inflection. The following are seven steps to answering a call successfully.
1. Smile: Your voice will sound friendlier if you have a smile on your face.
2. Answer the call with an enthusiastic and professional greeting. Your entire organization is
depending on you to make a positive first impression.
 Great the caller
 Identify your organization or department
 Introduce yourself
 Offer your assistance.
3. Ask questions about anything that is not clear to you. If additional information is needed,
ask for it and explain why it is needed.
4. Give answers and assistance as quickly as possible. If you ca not solve the problem or
answer the question, let the customer know what will happen next.
5. Thank the caller. Ask if you may be of further assistance.
6. Conclude the call in a positive manner. Think of every call as the beginning of a new
relationship.
7. Follow up on the call to make sure that the customer is pleased with the result and to make
sure that everything you promised was delivered.
The Power of eye contact
Eye contact is always important when we are communicating with others. Eye contact is allowing
our eyes to make contact with someone else’s. In our culture, eye contact conveys sincerity and
interest. Avoiding eye contact may suggest a lack of concern or lack of honesty. Our eyes can also
convey compassion and caring. Customer may perceive that a customer service provider is not
interested in what they are saying if they do not periodically make eye contact with the customer.
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Even when a customer service provider deals with customers by telephone, he or she must be
concerned with eye contact because of interaction with internal customers. When dealing with
people from other cultures, customer service providers should be aware of cultural differences. In
many cultures, eye avoidance is a sign of respect. Be sensitive to others use of eye contact
whenever possible.
Appeal to the Senses in Communication
When attempting to communicate with customers, it is helpful to appeal to as many senses as is
possible. A waiter in a restaurant can create a dramatic picture of a food item if he describe it
vividly for you and then shows it to you. He is appealing to your senses of sound, sight, and
possibly smell. The combination creates more impact than appealing to just one of the senses.
Communication and Technology
The customer service industry has been greatly impacted and enhanced by technological advances.
Customer service providers must familiarize themselves with the technological opportunities that
they have available to them. Three main areas of technology have emerged as being important to
the customer service industry. Voice mail, fax machine, and electronic mail are actively in use on a
daily basis. Customer service providers must become proficient in using these technologies so that
they can enhance their productivity and ability to serve the customer efficiently.
Voice Mail
Most companies have some type of voice messaging system in place. Customer service providers
must be comfortable using their customers’ voice mail systems and must understand their own
system.
Voice mail system provides customers and customer service providers with wonderful opportunities
for interaction. When customers are not immediately available, messages can be left to provide
faster feedback. For customers, voice mail system can allow their calls to be answered faster and
the customers know that the calls will either be answered soon or that they can leave a recorded
message detailing their situation. When leaving a message on voice mail, practice the following
steps to increase customer responsiveness.
1. Speaking clearly and slowly, identify yourself, your company, the day and date, and the
time.
2. State the reason for your call.
3. Suggest to the customer what the next step should be. Does he or she need to call you back
or wait for more information?
4. Leave your name and the phone number where you can be reached. You have already given
the customer your name, but in case he or she did not write it down give it again with your
phone number.
5. Close with a positive farewell.
Remember that when leaving a recorded message, time may be short, so be as brief and to the point
as possible.
Fax Machines
Fax machines have become necessary fixtures in most offices, but surprisingly many people do not
know the basic guidelines for using them. When using a fax machine, a fax cover sheet should
always be used. A fax cover sheet does not need to be fancy, but include several pieces of key
information. Include the following: your name, title, department, company, address, phone number,
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number of pages in your fax (including the cover sheet), and an introductory message. If the
information you are faxing is confidential, place a warning statement or disclaimer on the cover
sheet. The fax cover sheet is the first impression that the recipient has of your company. If your
company does not have an official fax cover sheet, create one including all the information and
possibly your company logo. When faxing information, strive for accuracy. Double check the
number you are calling. A fax will not go through unless you reach another fax machine, and it is
unlikely that you would reach another machine if you dialed incorrectly, but it could happen. Make
sure that the faxed machine is readable.
Electronic Mail
Many companies have incorporated electronic mail programs into their computer system.
Electronic mail, or e-mail, has in many cases eliminated the need for the paper memoranda that
clutter employee’s mailboxes, desks, and trashcans. It has also shortened the time spent on
communications between people and departments. Electronic mail is probably most beneficial when
we are interacting with our internal customers. A response that previously would have taken a few
days to flow through the company mail system can now be delivered almost immediately. As with
other communication technologies in use in customer service, electronic mail requires that the user
understand how the system works. When using electronic mail, users should become familiar with
the usage policies of their organization. There are several practices that are considered appropriate
among all electronic mail users. The following are some of the most common:
1. Never type in upper case. Using capital letters is considered poor etiquette and is harder to
read.
2. Remember to periodically clean out your mailbox. By cleaning out your mailbox you will
be sure to discard old mail and will be reminded of what is current and pending.
3. Avoid sending personal messages over the system. When you are communicating
electronically you are usually using someone else’s resource. You may also accidentally
send your message to the wrong mailbox. Even a secured message can be broken into.
4. Since electronic mail has no provision for voice inflection, it is incapable of showing
emotion. Some users like to use emotions, or icons that add emotion to the screen, to add
personality to their messages.
5. Most e-mail can ask for confirmation that mail has been received. Use this feature
whenever possible.
Electronic mail has added a new dimension to the challenges of communicating with both internal
and external customers. Familiarize yourself with the system in your organization.
Developing excellent communication skills can give a customer service provider the best
opportunity to communicate with customers in a manner that encourages understanding.
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7. COPING WITH CHALLENGING CUSTOMERS
Who is a Challenging Customer?
As we interact with others in our daily lives, we become painfully aware that some individuals are
easier and more enjoyable to be around and to spend time with than others. In private life, we most
often try to avoid those people who in one way or the other bother us. Unfortunately, we cannot
avoid these types of people (customers) in business. In business, we are frequently required to
spend the greatest of our time with these types of customers. They are called challenging
customers.
Challenging customers are those customers with problems, questions, fears, and personalities that
require us to work to achieve true communication. Because all individuals have their own unique
personalities and sets of past experiences, individuals will not find the same customers challenging.
In spite of the fact that challenging customers are difficult to interact with, the reality is that they are
still our customers and our overall goal is to provide them with excellent customer service and a
feeling of satisfaction with their experience.
Customers may be seen as challenging for a number of reasons. They may have personalities or
communication styles that we find difficult to interact with. Customers may be perceived as
challenging because;
1. They do not speak our language.
2. They do not have expertise or an understanding of the specific product or situation.
3. They are openly hostile.
4. They may be upset about something that has nothing to do with you or your company.
(Negative transfer of anger)
5. They are very quiet and non-communicative.
6. They show an attitude of superiority.
7. They are impatient.
8. They imply that they are doing you and your company a big favor for doing business with
you.
9. They appear to be type of people you have a personal bias against.
10. They have difficulty in making a decision.
Everyone is someone’s challenging customer. As we strive to provide excellent customer service,
every customer should be the most important person at the moment. Note that challenging
customers are never challenging by accident. They came into our interactions with past
experiences, perceptions, expectations, frustrations, the stresses of daily life, and the desire for us to
show that we care and value them as our customers. Customer service providers also bring their
own sets of ideas to an interaction. The difference between the two is that the customer service
provider is responsible for building the bridge of communication.
Note that some customers are just challenging no matter what we do or do not do for the. However,
it is important to note that sometimes, the customer service provider creates many of the customer
problems that we experience. The customer service provider mannerisms or comments may ‘rub
customers the wrong way’ or really offend them and cause them to become irritable or
uncooperative.
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How to Avoid Creating Challenging Customers
1. Respect the customer’s time. Always work at peak efficiency. It is easy to fall into a laid-back
manner of dealing with those that we feel comfortable with. Stay focus on the
customer.
2. Do not impose your bad or negative mood on anyone else. Though everyone has bad day
once in a while but customer should never be able to tell that you are having a rough day.
People will avoid dealing with you if you earn the reputation of being moody or having up
and down days. Generally, if you immerse yourself in doing your job and being positive,
you will forget what was bothering you and will have a better day than you expected.
3. Recognise regular customers with a smile and try to learn their names. Customer must
value the experience they have by doing business with you and your organization. Giving
someone a look of recognition is a great place to start. Everyone feels more welcome if they
think that someone else recognizes them. Try for one week to call everyone possible by
name, including your internal customers, and you will see positive results.
4. Avoid destructive remarks. Insults and certain comments may make some customers try
avoiding you. The Golden Rule is a good one to follow in this situation. If you would not
want someone to say it to you, do not say it to them.
5. Show initiative. Show the customer that you are willing to complete a task or go the extra
mile for them.
Remember that challenging customers are challenging because of who we are, not who they are.
Characteristics of Challenging Customers
1. Language and/or Cultural barriers. As our society continues to include people from
other cultures, we will increasingly come into contact with individuals who barely speak our
language. Communication can even be challenging when we speak the same language.
When attempting to communication with others who have difficulty in our language, speak
slowly and clearly. Do not pretend that you understand what the customer said if that is not
the case. Ask questions and repeat what you understood. Try not to become frustrated.
Learn about the cultures of your customers.
2. Older Customers. What does it mean to be older? Different people will give different
responses. For the purpose of this course, older customers are defined as those customers
who are 65 years of age or more. Today, 65 years and above customers are dependent,
active, self-sufficient, and living lives to the fullest. When dealing with older customers,
customers service providers must remember to treat them with respect and attention because
their purchasing power is extremely significant. Older customers may require special
attention. They may have some problem reading fine print, may have slightly slower
response time, or may be slightly hard to hearing. When interacting with them, always
show a high level of respect. Recognize the individual’s need for self-respect.
3. Impatient Customers: People today operate at a fast pace. People are often tempted to
accomplish many tasks within a short time. Note that our customers are attempting to do
the same thing. The rush to fit everything in can cause customers to become impatient.
When customers are impatient or irritable, it is important to remember that they may be
bothered by something beyond our control – traffic, a headache, or a dread of completing
the task at hand. There are times when their impatience is due to something that we have
done or due to an antiquated system of doing business. To control this, tell impatient
customers that you have their interests in mind. Emphasize to them that your goals is to
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work with them as efficiently as possible. Stay on the task at hand and complete their
business quickly and accurately.
4. Angry Customers: Anger is a common emotion in customer service. Both internal and
external customers experience anger from time to time. Anger among internal customers, if
not properly managed can create an all-out war between departments. To respond to a
customer’s anger, try to calm the customer. It is important for the customer service provider
to stay calm. Angry customers have the ability to bring out anger in everyone with whom
they come into contact. Ask the customer to explain his or her situation. Allow customers
to vent their situation and feelings. They will feel better when they get it all out. Do not
interrupt them. Angry people can become abusive or may resort to the use of profanity.
This puts the customer service provider in a difficult situation. Always approach the
customer with respect, even when they are behaving in an unprofessional manner.
Acknowledge their emotions, but as quickly as possible, look for an opening to gain control
of the conversation.
5. Analytical Customers: Customers who are analytical tend to need facts and like to know
that they are speaking with someone who is knowledgeable about his or her product or
company. Analytical customers like consistency and proof. When dealing with customers
who want facts and definite answers, treat them with respect and give them what they want.
Ask them if they have additional questions and answer them efficiently.
6. Noncommittal Customers: Some customers have difficulty in making decisions. They
may be unwilling to commit because they are seeking information from several sources, or
they may be hesitant in making a decision. Individual seem noncommittal for a variety of
reasons. When interacting with noncommittal customers, keep in mind that customers are
not slow to decide because they want to frustrate you. They have their own reasons for
being hesitant to commit. Help them to speedier decision by detailing the possible options.
7. Superior Customers: Some customers may present to the customer service provider the
impression that they are in some way superior. It is important not to take this type of
attitude seriously. Customers who show an attitude of superiority can be frustrating to
interact with. They may be rude or may make condescending remarks. In reality,
customers who present themselves in this manner are frequently very insecure and feel as
thought they can somehow seem better if they put someone else down. They want you to
know how important they consider themselves. When dealing with this type of customer,
the customer service provider must recognize his or her self-worth. The temptation is strong
to enter into a competition with the customer to see who really is better, but this is an
unproductive waste of time, and no one really wins in the end. Use their attitude to your
advantage. Praise their accomplishments and importance. Suggest that your resolution of
their situations will enhance their positions.
8. Immature Customers: It is possible that a customer service provider will have the
opportunity to interact with many immature customers. Late or unpaid bills, excuses, or
blaming others for their problems are common occurrences among immature customers.
When interacting with immature customers, listen to their explanation of the situation before
responding. Allow them to fully describe their problem or question. Be frank about the
consequences that may result when responding. Be firm with immature customers. They
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may not appreciate your enforcing your company’s policies now, but in the future they will
learn from the experience.
9. Talkative Customers: Talkative customers can be exciting to be around. They may be
outgoing and may have interesting stories to tell. They are often good storytellers and may
secretly enjoy hearing themselves talk. In spite of the fact that we may periodically enjoy
being around talkative people, we must still conduct business efficiently. When
communicating with talkative customers, approach them in a positive and open manner.
Allow them to share their questions or concerns. Help them to stay on the subject by asking
specific questions that further explain the situation.
10. Customers with Special Needs: Customer service providers may from time to time have
customers who require additional assistance because of a special need. Special needs
customers include all customers who, because of individual circumstances, require our
productive cooperation. It may be difficult to recognize a special needs customer, since
many individuals who are viewed by society as having special needs do not perceive
themselves in this way.
How to Cope with Challenging Customers
1. Listen: Allow customers to express their concern or to share their side of the story.
2. Ask Questions: Seek clarification of the problem. Determine the variables involved.
3. Show Empathy: Attempt to understand what the customer is experiencing and take action to
assist in resolving the situation.
4. Solve the Problem: Determine the most appropriate solution to the situation. Use creativity
and follow company policies as you seek to create a positive outcome for both the customer and
your organization.
5. Follow up: Restate what has been decided and how the situation is being resolved. Ask the
customer if he or she has any more questions.
6. End on a Positive Note: Thank customers for their understanding. Bid them farewell in an
enthusiastic manner so that they remember the professional manner in which you resolved their
problem. Customers are more likely to remember the end of an interaction than the beginning.
What to do when you are wrong
As a customer service provider interacts with his or her customers, the possibility exists that he or
she will not treat all customers as well as they should be treated. Customer service providers are
only human and may be tempted to take out their frustrations on their customers, or they may make
mistakes. When you believe that you have treated a customer inappropriately, try the following:
1. Review the Situation: Examine your behaviour and the words that have been spoken. Try
to look at the situation from the customer’s point of view.
2. Observe the Customer’s Reaction: Is the customer visibly upset? Does the customer
seem surprised or hurt by your actions?
3. Admit the Mistake: Whether or not it was an error in your information or judgment, it is
always best to acknowledge that you are aware of it.
4. Apologise for your Actions or Error: Express to the customer that you regret the problem,
but do not make excuses for why it occurred.
5. Find a Solution and Implement it: The most effective way to undo the improper treatment
of a customer is to create an effective solution and to put it into effect as quickly as possible.
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8. CUSTOMER RETENTION & MEASUREMENT OF SATISFACTION
Introduction
One of the key principles in sales is that, it is better to keep an existing customer happy and prevent
him from going to your competitor brands rather than depending solely on making new customers.
What is Customer Retention?
For example, in the stock brokerage industry, a customer may not buy a particular scrip in the given
period of time but is tended to buy the same when the conditions to buy the scrip becomes favorable
and when the customer evaluates that now this scrip could be profitable to buy. In this case, the
definition of customer retention could be ‘customer retention is the process when customer is
intended to buy the product and services at next favorable buy occasion’. Such products are
known as long purchase cycle products.
“Customer retention is a strategic process to keep or retain the existing customers and not letting
them to diverge or defect to other suppliers or organization for business and this is only possible
when there is a quality relationship between customer and supplier. Usually a customer is tends
to stick to a particular brand or product as far as his basic needs are continued to be properly
fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to
retain customers the more is the probability of net growth of business”.
Value of Existing Customers
It costs six or seven times more to acquire a new customer than to maintain an existing one and a
slight increase of 5% in customer retention can result in a profit increase of up to 95%.
Peter Drucker stated that the purpose of business is to create and keep customers. Business needs to
understand customer acquisition is important. For without customers, no business will survive.
Business also needs to understand customer retention is even more vital as if you are losing them,
you are back to ground zero, Loyal customers are the life blood of any business and they create real
values and drives revenue. Businesses need to work their due diligence to keep them and the cost of
losing one customer translates to a spending of 6, 7 times more acquiring a new one.
Your loyal customers will spend more money with you, they cost you less to gain repeat business
from, and they’re probably more loyal and less sensitive to price than new customers.
Loyal customers always return and become a dependable lifetime sales stream and they brag about
your service/product creating Word of Mouth advertising which is the most effective advertising,
and it is free! Every business should put their existing customers at the heart of their marketing
strategy. Customer Loyalty is the strategic competitive advantage of any business.
Customer Interactions and Churn Management
There are various types of customer interactions that the customer may have with a supplier.
Organizations need the capability to correlate churn to any of these interactions across any channel.
And once the interactions that are root causes of churn have been analyzed, they must devise
policies, processes, and tools that support the delivery of a better customer experience.
For better customer retention, organizations must improve two types of customer interaction:
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Retention interactions can be either proactive or reactive. However in both the cases reducing churn
depends upon the following:
• Increasing the self-service interaction channels through which retention offers can be made
such as Web, social media etc.
• Aligning employee incentives to company churn objectives
• Improving the delivery of channel-specific training material
• Keeping the channel processes and system capabilities consistent with each other
• Identifying and resolving issues early and swiftly by providing on-site execution support
• Providing offers that are effectively differentiated by channel by using campaign
optimization and real-time decision-making tools
One of the main root causes of churn or the customer defecting are the customer lifecycle
interactions. The following are some of the phases of customer lifecycle interactions:
• Early Life: This is one of the initial phases in the customer lifecycle interactions. It is one
of the earliest interactions that the customer has with the supplier. This occurs when the
customer is “trying out” a recently purchased product or service. It is a critical moment in
the customer’s decision making.
• Change of Life Events: This is the next phase of the customer lifecycle interactions. It
involves interactions due to change of major life events such as marriage, divorce, a change
of profession or geographic location etc.
• Mature Life: This is the phase that occurs towards the end of the customer lifecycle
interactions. It involves interactions when a customer is nearing the end of a contract or the
end of the useful life of the product they are using.
What is Customer Loyalty?
Loyalty also means that customer sticks to the supplier on certain grounds though he may be having
other options also. It may be possible that the supplier may not have the best product or the
customer may have some problems with the supplier, in respect of his supply of the product but the
customer likes to ignore other options and prefers to continue with the same supplier as the
customer thinks the supplier provides him more value and benefit than others. Such loyal customers
tend to spend more money, buy more, buy longer and tell more people about the product or
supplier. This type of long-term customer loyalty can only be created by making the customers feel
that they are the number one priority with the supplier.
In case the business is done directly the relationship is direct so also the loyalty. But if the selling is
through two or more intermediaries then the loyalty has to be measured at different levels. In that
case the end customer loyalty is influenced by the loyalty of the intermediate customers. Then the
supplier has to focus his loyalty retention plan accordingly and has to judge and analyze the
loyalties of the intermediaries. This process depends on what amount of importance he gives to each
of the intermediaries and how much to the ultimate customer. But it is certain that well-managed
customer retention programs are sure to give the ultimate customer loyalty.
• Therefore, the customers who are targeted by a retention program demonstrate higher
loyalty to a business.
• Therefore such customer retention programs should include regular communication with
customers and provide them opportunities to remain active and choosing to do business with
the supplier.
• Measuring customer loyalty and developing a retention strategy are of great importance to
an organization’s success.
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Customer Loyalty and Satisfaction
Loyalty is demonstrated by the actions of the customer. But it doesn’t mean that the customer
satisfaction level can measure his loyalty. Customer loyalty is not customer satisfaction. Customer
satisfaction is the basic entry point for a good business to start with. A customer can be very
satisfied with the deal and still not be loyal. On the other hand, a customer may not express
satisfaction but wants to remain loyal to the supplier due to some reasons which keeps him
benefited from that supplier. For the same degree of satisfaction, the loyalty level may also be
different for different suppliers.
• Most of the organizations believe that both ‘customer loyalty’ and ‘customer satisfaction’
are same and a satisfied customer is always loyal to them.
• But this is not true as the customer can be delightfully satisfied but he may be or may not be
loyal
• This is because satisfaction an emotional and slushy feeling over the job done.
• But loyalty is related to the action taken by the customer future.
• For an organization to be in business and make profit, it is a very important aspect for them
to gain customer loyalty.
• Even if high satisfaction may not guarantee loyalty but satisfaction is a prerequisite for
loyalty.
Myths about Customer Retention
Customer retention is a crucial factor for organizational success in business. Many companies have
misconceptions about customer retention in regard to assessing customer satisfaction in order to
enhance business. Following are the most prominent myths about customer retention in the business
world:
An organization should endeavor a perfect 100% customer retention
• The philosophy that an organization should endeavor 100% retention is unreasonable.
• There are many factors within the scope of the organization and outside its scope that
substantially affect customer retention.
• Hence, making the presumption of achieving 100% retention rate wrong.
Enhancing customer retention and enhancing organizational profit is equivalent
• It is also incorrect to assume that enhancing customer retention will automatically enhance
organizational profit.
• In normal situations, the philosophy that by increasing customer retention, business profits
also increase does not stand good.
• However, it is crucial for an organization to create strategies to manage customer retention
and always aim at increasing business profit.
Challenges of Customer Retention
• Trying to satisfy demanding customers who want it all like: competitive pricing, value for
money, and above all, high quality service.
• Challenge of fulfilling customer’s expectations as the today’s customers won’t hesitate to
switch providers if they don’t find what they’re looking for.
• Declining loyalty levels in customers even where satisfaction is relatively high
• Individual switching decisions which are greatly influenced by social media and word-of-mouth
communication
• Lack of understanding of exactly why customers leave them and what to do about it
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• Lack of tools to identify the drivers of churn
• Ability to correlate churn to actionable customer segments
• Ability to deploy highly targeted offers in-market across multiple channels at speed
• To identify and learn which offers work most effectively and scale them
• To take full advantage of customer initiated contacts in order to make highly-targeted
retention offers
• Inconsistently executed loyalty programs
• Lack of cohesion across their customer interaction channels
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