RISHAANA DHAVANATHAN

EU/IS/2008/MS/57

Customer Service

DISCIPLINE OF MARKETING

FACULTY OF COMMERCE AND MANAGEMENT

EASTERN UNIVERSITY,

SRI LANKA

QUESTION: 01

a) What is Customer Service?

Customer service is the service provided to customers before, during and after purchasing and using goods and services. "Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation.

"The importance of customer service may vary by product or service, industry and customer. The perception of success of such interactions will be dependent on employees "who can adjust themselves to the personality of the guest. Good customer service provides an experience that meets customer expectations. It produces satisfied customers. Bad customer service can generate complaints. It can result in lost sales, because consumers might take their business to a competitor.

The key to good customer service is building good relationships with your customers. Thanking the customer and promoting a positive, helpful and friendly environment will ensure they leave with a great impression. A happy customer will return often and is likely to spend more. From the point of view of an overall sales process engineering effort, customer service plays an important role in an organization's ability to generate income and revenue. A customer service experience can change the entire perception a customer has of the organization.

There are many models of customer service but all agree that organisations should have clear answers to the following basic questions:

Do customers have a clear idea of the service they can expect from you? Do you gather high quality information about your customers and what they want

on a regular basis? Can you be contacted easily? Do you have competent and well trained staff? Do you respond quickly to queries and requests? Have you made it easy for customers to complain and make suggestions about the

quality of your services? Do you involve your customers in the development of products and services? The next question is always - How can I do all of these things better?

Customer service can be used as a framework to look at all aspects of your business:

Image and presentation Promotion of services Contact and communication with customers Service delivery Monitoring and improving services

Resolving customer problems Customer relationship management

Key to customer service is getting all members of your organisation to embrace it through training and development, at individual and team level. Creating a culture of customer satisfaction starts with effective management and leadership and having clear measures for customer satisfaction in all aspects of the business.

This can be encouraged through:

Creating your own Customer Charter or Code of Practice Benchmarking your activities against other organisations Creating and monitoring specific measures of customer satisfaction know what your customers consider to be good customer service take the time to find out customers' expectations follow up on both positive and negative feedback you receive ensure that you consider customer service in all aspects of your business Continuously look for ways to improve the level of customer service you deliver.

The following are some of the main elements of good customer service.

Customer relationships

To build good customer relationships you need to:

greet customers and approach them in a way that is natural and fits the individual situation

show customers that you understand what their needs are accept that some people won't want your products and concentrate on building

relationships with those who do help people - even just letting a customer know about an event that you know

they're personally interested in is helpful continue to keep customers aware of what's in it for them to do business with

you. Staff

If you want to provide the best customer service, all of your staff need to have good communication and sales skills. You will also need to show leadership by personally providing excellent customer service at all times. Learn more about the sales process.Complaints

Listen to customer complaints; you may learn something about your product or service. Let customers know that you appreciate feedback.

Overcome any objections. Listen to what the customer is objecting about (often price, merchandise or time). Confirm the validity of each concern and offer a solution. Find out more about managing customer complaints.

Products

Know your products - where everything is located, brand names, place of manufacture and price. The more you know, the more confidence you can build in the customer.Recognise product features. Turn these features into benefits for the customer. Ensure your staff can tell customers about the product features and benefits.

b) Since the customer must always be put first, why is it that most organization

charts put the CEO/Chairman/MD on top?

Most businesses are thinking only of their own organization, communication and

delegation when constructing an organization chart. They think that everything must

come from the CEO or Chairman and draw the chart accordingly.

A business that is truly customer focused will put its customers first. This means drawing the organisation chart as an inverted pyramid. Customers go at the top of the chart and underneath them are the people in the front line. The CEO is at the bottom of the chart.

When the organisation is looked at in this way it becomes clear that the role of management is to support the front line people.

This is due to businesses considering only their own organisation, communication and delegation when constructing a chart. They believe that everything comes from the top management; however, if they were truly customer focussed the organisation chart would be an inverted pyramid i.e. customers at the top, then the people in the front line and at the bottom the CEO. Once viewed this way it becomes clear that the role of management is to support the front line staff. 

It might sound surprising, but many business leaders act as though their employees work at the company to serve them vs. serving the customer. These organizations eventually lose touch with customers and become less competitive, as well as less nimble in reacting to market changes. They also tend to see revenue and profit margins shrink as they lose business to more customer-focused organizations.

When businesses first launch, leaders spend most of their time performing primary functions on the front lines. As the company grows, however, leaders find themselves at the top of the organizational chart, and then they are as far away from the customer as they can possibly be.This can cause them to lose touch with what matters most to customers, and that can have adverse ripple effects throughout the entire company culture. Such organizations can become too internally focused, and leaders might not even be aware of it.

One way that business leaders can start to change this environment is by literally turning their organizational pyramid upside down. This symbolizes that the people at the top (the customers) are most important, followed closely by those who interact with customers.The rest of the organization exists to support the people who interact with customers. The organization's goal should be to maximize front-line time with customers and to empower

those employees to delight the customer — rather than having them too focused on internal efforts.

Within an upside down pyramid, front-line employees support customers while management supports the front-line employees. Senior leadership supports management by thinking ahead, creating a winning culture, establishing key external relationships, leveraging key research and prioritizing the implementation of activities that create additional value for customers and other stakeholders.

Realigning to focus on customers: One company I worked with used a customer presentation that focused on how large the company had grown. It conveyed a sense that any customer should feel lucky to do business with them. After considering the inverted organizational chart approach, I helped the company revamp the presentation to focus on themes such as what they do to support customers in addressing major challenges. The company also removed all references to irrelevant internal accomplishments. The reception to the new presentation by customers and prospects was highly positive.

Business leaders also need to stay involved at the customer level for an appropriate percentage of their time. As the company of another client of mine began to experience rapid company growth through acquisitions, the CEO focused on merging the boards of directors, revising the organizational chart and adjusting internal processes. He lost touch with the front line and did not realize that issues related to a new software deployment negatively affected employees trying to serve customers.

To correct the situation, the CEO began to spend time in each department to clearly understand the impact of the software and merger. By sitting side-by-side with front-line personnel, he also reconnected with those who matter most — the customers.

The customer touch test

To determine if your business has lost its focus on customers, answer the following questions:

Do you have valid customer feedback?

Surveys and other feedback tools should provide the real truth as to how customers feel about your products and services as opposed to sugar-coated comments. Rather than using front-line personnel to conduct surveys, it's best to rely on third-party resources that allow customers to submit feedback anonymously.

What is your customer retention rate?

Your revenue might be increasing, but if customer churn is higher than the industry average, this might signify your products and services do not meet customer needs and/or you don't listen sufficiently to their challenges.

What is your track record for selling additional products and services?

Satisfied customers typically purchase additional products and services. Those who use just one product or service might do so just because there's no alternative. But when a better alternative comes along, they could jump ship.

Do you involve customers in product development during all the major phases?

Interacting with customers at the concept, business plan and implementation stages of new offerings can help test if new concepts will work, generate better profits, create product advocates and build customer loyalty.

C) Does putting the customer first imply complete surrender to his/her needs and

desires? Comment.

No it indicates a need for partnership. For a valuable customer who asks you to jump you ask ‘How high?’ If a business fails to resolve a customer’s problem the costs involved may include the loss of considerable further business and this consideration must be incorporated into any decision-making. 

Not capitulation but partnership. If it's a good customer (one that you value) who asks you to jump then the only question is, "How high?"

Businesses need to remember that there is a cost involved of not resolving a customer's problem. When dealing with a problem, think about the lifetime value of the customer before making a decision.

Customer lifetime value (CLV) can also be defined as the dollar value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value is an important concept in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships. Customer lifetime value is an important number because it represents an upper limit on spending to acquire new customers.

What do customers want from the organization?

Organisations are created to achieve a goal, mission or objective but they will only do so if they satisfy their stakeholders. Their customers, as one of the stakeholders, will be satisfied only if they provide products and services that meet their needs, requirements and expectations. They will only retain their customers if they continue to delight them with superior service and convert wants into needs.

Needs are essential for life, to maintain certain standards, or essential for products and services, to fulfil the purpose for which they have been acquired.

Everyone’s needs will be different and therefore instead of every product and service being different and being prohibitively expensive, we have to accept compromises and live with products and services that in some ways will exceed what we need and in other ways will not

quite match our needs. To overcome the diversity of needs customers define requirements, often selecting existing products because they appear to satisfy the need but might not have been specifically designed to do so.

In the new rapidly changing economy, however, customer predictability is dead. "Whatever a customer wants today may not be what he or she wants tomorrow. Or he or she may want more of it. If you're offering low prices, customers want those prices slashed further. If you're offering state-of-the art products, they want them newer still. In meeting ever-increasing customer demands for lower, faster, better, and newer, companies need to be the first in their market to identify their customer needs

The Importance of Meeting Customer Expectations

Customers expect certain things when they walk into a business, and those with the highest level of service will know how to identify those expectations and meet them to the customer's satisfaction.

However, this process is not as easy as it sounds – customer expectations are a dynamic feature that ebbs and flows regularly in accordance with a wide range of factors. However, when expectations are not met by the performance of your customer service representatives, customer dissatisfaction is the result.

Customer Expectations + Service Performance = Customer Satisfaction

Small businesses often fail to consider the importance of understanding their customers. However, measuring lifetime customer value is vital to the long-term success of small businesses, just as it is for large corporations. Lifetime customer value provides a guide for marketing and building customer relationships.

Increasing the Lifetime Value of the Customers

Organizations, using this CLV model, can now view customers as assets with a specified value that, in turn, becomes the basis for making business decisions. The goal for management, then, is to maximize the CLV to the company. To increase the lifetime value of the customers, organizations can do one or more of the following four things:

Increase size of the customer base (or customer segments)

Increase the number of purchases customers makes

Increase the average customer life

Increase profits per sale

Measuring Customer Profitability

Customer Lifetime Value equation by focusing on two of its core components:

Margin on customer revenue customer cost

Which determine overall customer profitability? Both the revenue and cost components have strategic objectives related to CLV. They also have key performance indicators (KPIs) that can be measured across business, operations, and technology.

C) What is Marketing Myopia?

According to Philip Kotler Marketing Myopia is “The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.”

Rather than defining the company and its products to respond to the customers’ needs and wants, this is a short-sighted, inward, myopic marketing approach focusing on the company’s needs. The failure to see and adjust to the rapid market changes is typically the unfortunate results.

Medical professional have described Myopia as shortsighted vision. Marketing myopia is a term coined by late Theodore Levitt, professor at the Harvard Business School, to describe organizations not seeing far in terms of companies and industries they are in.

The theme of this landmark article was that the vision of most organizations was constricted in terms of what they, too narrowly, saw as the business they were in. It exhorted business leaders to re-examine their corporate vision, and redefine their markets in terms of wider perspectives. Levitt accused organizations of ‘marketing myopia’ and told them that their central preoccupation should be with satisfying customers rather than simply producing goods and that the idea of marketing should pervade their whole organization.

It was successful in its impact because it was, essentially practical and pragmatic. Organizations found that they had been missing opportunities which were plain to see once they adopted the wider view. The impact of the paper was indeed dramatic. The oil companies, which represented one of his main examples in the paper, redefined their business as energy rather than just petroleum.

Essence of this article is analyzed in to five different spectrums. Circumstances that typically cause managements to lose clarity of sight are product orientation, selling orientation, narrow focus on industry, inside-out approach, ignorance of customer needs, and lack of visionary leadership.

Marketing Myopia Today

• Airline Industry

Southwest Airlines vs. American Airlines

Customer satisfaction low in this industry

Airlines vs. Cable T.V : Tie

IRS ranked higher than airlines in customer satisfaction

• Technology Industry

More focused on the customer today than in 1960

Apple

E-commerce and E-Business ranked high in customer satisfaction report

QUESTION: 02

a) Why do some Sri Lankan banks have still not involved in even the evolution of

technological advancements?

Our society is being transformed by continuously evolving technologies that are

changing the way we do things at the most fundamental levels. This transformation is

precipitated by a number of trends: a shift from manufacturing to a service economy; the

usage of information as a resource, factor of production, and commodity; and the

propulsion of our economic growth through technical innovation and scientific discovery.

On an individual level, every aspect of our daily lives is subject to technological

innovations. We have become dependent on the flexibility, access, and services that they

provide us. Computers, fax machines, networks, cable television, fiber optics, and ATMs

have all played a pivotal role in the way we communicate, work, play, and do business.

As the information age progresses we increasingly owe more of our economic and

technological progress to the free flow of ideas and knowledge. Consequently, it becomes

more important that we have access to superior and timely information. As a nation our

toehold in the information age relies heavily on technological progress and scientific and

technical information.

From an organizational standpoint, the information age is in full swing and both

public and private institutions are experiencing an increase in the use of a variety of

information technologies (ITs). Realistically, it has become nearly impossible for an

organization to operate without the use of one or more ITs. What is too often ignored or

forgotten amidst all the discussion is that although ITs can provide a number of solutions

and benefits, they also introduce their own special problems and concerns into the

organizational setting.

It is only through careful design, planning, acquisition, and implementation of ITs that we

may benefit from more effective operations and solutions to problems.

Description of Issues

Organizational Directives-This issue refers to the missions, objectives, and plans

which a particular organization may possess for the implementation of IT.

Organizational IT Expertise-This issue refers to the overall technological savvy of the

organization. In addition, it could also refer to how progressive in its nature the

organization may be. That is, whether or not this is an institution that has focused

resources to enhance ITs ability to stay on the cutting edge of technological

developments. Organizational IT expertise is related to organizational support,

organizational culture, individual IT expertise, individual support, existing systems,

and rapidly changing technology.

Organizational Support- The organizational support issue includes: fiscal concerns,

organizational directives, organizational culture, and individual support.

Organizational Culture- Organizational culture issues include: organizational support,

politics internal/external, organizational directives, and organizational IT expertise.

Individual IT Expertise- This issue is related to training, resistance to change,

organizational support, and internal leadership.

Written Procedures/Guidelines- This issue refers to any state or federal mandates

which affect local government with regard to information technology and it’s

planning, procurement, and implementation.

Fiscal/Budgeting Issues- This issue includes organizational support, rapidly changing

technology, existing systems, standardization, and planning.

Rapidly Changing Technology- Rapidly changing technology issues are related to

fiscal concerns, timeframes, standardization, existing systems, training, individual and

organizational IT expertise.

Timeframes and Scheduling- This issue is related to rapidly changing technology,

internal leadership, organizational support, individual support, training, and IT

expertise.

Politics, Internal/External- This issue includes personnel issues, interdepartmental

coordination, organizational culture, and external consultants.

Individual Support- The individual support issue includes resistance to change,

training, politics, leadership, and support.

Existing Systems- The issue of existing systems is related to standardization,

computability, resistance to change, rapidly changing technologies, and

interdepartmental coordination.

Standardization- Standardization issues are related to existing systems, computability,

politics, and rapidly changing technology.

Personnel Issues- Personnel issues include resistance to change, fear of technology,

training, recruitment, and retention of quality employees.

Adequate Staffing- Adequate staffing issues relate to number of qualified staff,

employee/individual IT expertise, recruitment, and training.

Training- Training issues include: resistance to change, fear of technology, rapidly

changing technology, retaining quality employees, decision-making and

individual/organizational IT expertise.

Resistance to Change- Resistance to change includes training, individual expertise,

standardization, existing systems, individual and organizational leadership.

b) How can it be myopic thought that a Company focuses only on making superior

products? Explain.

Narrow Focus: Levitt has described narrow focus-ness of companies through examples. What

he emphasized is that companies conventionally did not look at a business in a holistic view,

but they were confined to their own comfort zones. A good example in the local context is the

Sri Lanka Broadcasting Corporation (SLBC). SLBC was very product oriented and ignored

customer needs and expectations. SLBC reflected what was described in this article as narrow

focused, inward looking, and shortsighted. They did not question “what business are we in”,

but continued to be in the broadcasting business as oppose to providing information and

entertainment, which were listener expectations. The present day listeners desire the services

of SLBC primarily when they step “beyond life” for obituaries.

Selling orientation: Theodore Levitt said it best, "Selling, focuses on the needs of the seller;

marketing on the needs of the buyer. Selling is preoccupied with the seller's need to convert

his product into cash; marketing with the idea of satisfying the needs of the customer by

means of the product and the whole cluster of things associated with creating, delivering and

finally consuming it."  A Sri Lankan example is the insurance industry. Conventionally the

insurers sold packages without focusing on the needs of the customer, such as affordability,

desired risk and speedy claim settlements. Today the industry has transformed to offer tailor

make packages addressing the needs of the customer.

Inside-out approach: To be internally focused, and to think of the advantages and benefits of

any product or service in one's own terms, rather than the customers, is bound, sooner or

later, to become a self-imposed trap or imprisonment of the mind. In a local context, Celltel

the first entrant to the mobile communication industry defined its business as selling phones,

whereas Dialog GSM a latter entrant defined its business as connecting people.

Ignorance of customers needs: Levitt said that organizations must be customer centric.

Therefore, organisations must constantly monitor and anticipate changes in customer needs,

with a deep understanding of customer “whys”. More often, organizations study the “whats”

and the “hows” – what their customers are doing or how they’ve behaved in the past, vs.

understanding why they behave in a certain way, and the implications for the future.

Industries are riddled with companies that collapsed because of failure to understand and

align with core target requirements. Company managers and senior executives need to get out

of the office and start “living” with their customers to discover new ways to gain alignment.

To meet the emerging needs of the customer, the entire banking industry in Sri Lanka is

reshaping and realigning with a more customer centric approach.

Myopic leadership: Many business leaders make their decisions based on current

circumstances. They do not think about what will likely occur in their industry in the future.

Levitt said there is no such thing as a growth industry. There are only companies organized

and operated to create and capitalize on growth opportunities. Organizations found that they

had been missing opportunities, which were plain to see once they adopted the wider view. A

good example is how Mr. Meril J Fernando, with his vision of making Sri Lankan tea as the

most preferred tea, turned around the tea export industry from bulk exports to value added

branded consumer teas.

Levitt also said that evidence have shown that every dying growth industry has shown a

self deceiving cycle of expansion and undetected decay and there are four conditions that

guarantee this cycle:

1. Population myth: assumption of growth due to an expanding and more affluent

population.

2. Indispensability: absence of a competitive substitute for the major product.

3. Production pressures: mass production and lower unit cost, with the focus on the

needs of the seller and not the buyer.

4. Preoccupation with the product: to reduce the cost of production.

In a modern day context marketing is not optional, marketing comes first, marketing looks

with a hard look at current reality and marketing focuses on the buyer needs.

Marketing has changed from an inward focused mechanistic structure to a customer centric

personalized structure. With the instant flow of information and mass circulation,

organisations have revised their corporate strategies to satisfy customer needs by offering

superior value and building profitable relationships. Today marketing is not merely a function

but an organization-wide philosophy.

Reference

Buchanan, Leigh (1 March 2011). "A Customer Service Makeover". Inc. magazine. Retrieved 29 Oct 2012.

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