1. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
1
Chapter 4:
Customer Service Management
Process Management: Creating Value Along the Supply Chain (1st
edition)
Wisner and Stanley

2. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
2
Chapter Outline
 Introduction
 Customer Service Defined
 Customer Behavior and Expectations
 Customer Perceptions and Satisfaction
 A Framework for Managing Customer Service
 Integrating the Customer Service Process
along the Supply Chain
 Summary

3. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
3
Learning Objectives
After completing this chapter, you should be
able to:
 Define customer service and describe its
contributions to firm success.
 Understand how customer behaviors and
expectations influence elements of customer
service.
 Describe several customer service strategies.
 Explain how customer service audits are
conducted.

4. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
4
Learning Objectives (cont.)
After completing this chapter, you should be
able to:
 Define customer service quality and explain
how it is measured and improved.
 Describe some of the trends in customer call
centers.
 Understand the importance of customer
service integration throughout the supply
chain.

5. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
5
Introduction
 Companies spend a great deal of time, money to
deliver great or acceptable customer service
 Customer service is generally presumed to be a
means by which companies attempt to
differentiate their product, keep customers loyal,
increase sales, and improve profits
 Customer service means :
 Allowing customers to access products in the most
fair, effective and satisfying way
 Activities that support orders
 Product delivery, advice, handling complaints

6. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
6
Customer Service Defined
 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.
 Logistics plays a vital support role.
 Pretransaction customer service
elements (before sale) : occur prior to
or apart from the sale of
products/services.

7. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
7
Customer Service Defined (cont.)
 Transaction elements of customer
service (during sale): occur during
order cycle.
 Posttransaction customer service
elements (after sale): occur after the
product or service has been sold.

8. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
8
Customer Service Elements
Customer
service
Pretransaction
elements
• Designing and using
CS policies
• Written statement of
policy
• Statement in hands
of customer
• System flexibility
• Hiring/training CS
personnel
Transaction
elements
• Ability to back
order
• Delivery
• Elements of order
cycle
• Time
• Order entry
• System accuracy
• Warehousing
• Product substitution
Posttransaction
elements
• Installation, warranty
alterations, repairs,
parts
• Product tracking
• Customer claims,
complaints
• Product packaging
• Temporary
replacement of
product during repairs
4-4

9. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
9
 Customer service failures
 Neglecting or performing customer
service activities poorly
 Stockouts, unwillingness to honor
customer service policies, lost orders,
late deliveries.
 Effective hiring practices, increased
general communication, training, better
design of service activities help
minimizing such failures.
Customer Service Defined (cont.)

10. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
10
Customer Behavior and Expectations
 Customer behavior: Mental, physical activities that
result in purchases (affected by needs, wants)
 Important to understand the motivations
behind each customer purchase
 Customer wants: desire to make an already
satisfactory condition better
 Vary based on financial resources, cultural
influences, availability of technology
 Customer needs: desire to make an
unsatisfactory condition better
 Vary based on age, gender, culture,
experiences, perceptions

11. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
11
 Customer expectations: can be formed
and modified by knowledge of products,
based on previous experiences, advertising,
reputation of firm
Customer Behavior and
Expectations

12. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
12
Four types of customers based on
expectations
 Economizing Customer
 Pricing is important
 Ethical Customer
 Social & environmental responsibility is
important
 Personalizing Customer
 Recognition & conversation is important
 Convenience Customer
 Fast service is important
 Firms need to consider ways to design
products/services to appeal to customer
classifications.

13. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
13
Customer Perceptions and Satisfaction
 Customer interpretations of product, service information
 Influenced by senses, memories, the setting of the item, or prior
expectations
 Perceptual biases causes selective bias
 Perceptual biases
 Selective exposure:
 People's tendency to expose themselves predominately and
preferentially to information that is consistent with their own beliefs and
attitudes.
 Selective attention: individuals have a tendency to orient themselves
toward, or process information from only one part of the environment
with the exclusion of other parts.
 Selective interpretation, perceptual distortion
 Companies must be mindful of how perceptual biases can be
influenced.

14. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
14
Customer Perceptions and Satisfaction
(cont.)
 Customer satisfaction
 Result of comparing product’s perceived
performance or outcome relative to expectations
 Raising the bar of expectations too high
 Service-profit chain: The Service Profit Chain is a
concept developed by authors at the Harvard Business
Review which directly addresses the relationship of
customer loyalty and profitability. The concept requires
a paradigm shift from the traditional focus of quantity of
market share, instead focusing on the quality of market
share.

15. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
15
Customer Perceptions and Satisfaction
(cont.)

16. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
16
A Framework for Managing Customer
Service
 Evaluate and improve employee satisfaction:
derived from the internal work environment,
including comfort factors, hiring and training
practices, reward system
 Happy-productive worker hypothesis: job
satisfaction increases employee service
performance.
 “Steady Eddies”
 Employee satisfaction surveys - analysis and
strategies

17. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
17
A Framework for Managing Customer
Service (cont.)
 Conduct customer service audits
 Determining customer service requirements through focus groups,
interviews, surveys, records of complaints, call center comments
 Topics to consider:
 Customer service requirements
 Customer service characteristics
 Average performance requirements from each characteristic
 Type of customer
 External customer service audits:
 To identify any changes in customer service requirements
 To determine current customer service performance of the firm and
competitors
 Example: McDonald’s
 Internal customer service audits: Reviewing company's current
customer service measures, policies, and practices
 To identify any inconsistencies between the firm’s view and practice
of customer service and the actual requirements of customers

18. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
18
A Framework for Managing Customer
Service (cont.)
 Creating a customer service strategy
 Based on customer service audits
 To create value through optimum service levels
 The law of diminishing returns: as customer
service levels increase, the incremental value and
benefit created by even higher levels of customer
service becomes smaller.
 Should concentrate on high quality customer
service
 Reliability, recovery, fairness, wow factor
 Creating value with customer service
 Example: Overstock.com

19. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
19
A Framework for Managing Customer
Service (cont.)
 Creating a customer service strategy
(cont.)
 Fostering achievements in customer
service: training, communicating
successful service recoveries, rewarding
innovative customer service activities
 Aligning customer service with the
mission: firms must live their strategy.

20. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
20
A Framework for Managing Customer
Service (cont.)
 Creating a customer service strategy
(cont.)
 Customer service departments:
provide direction and coordination to
customer service assessment and
improvement efforts.
 Importance of personnel: must be
motivated to get the job done, posses a
service mentality, have the necessary
product knowledge and skills, and be
well-respected within the organization.

21. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
21
A Framework for Managing Customer
Service (cont.)
 Customer service teams: consists of executives,
department managers, design engineers to react to a
significant customer service problem.
 Customer contact centers: all of the methods
customers can use to contact a business
 Focal point for developing, monitoring and improving
customer service strategy
 Automated agent (interactive voice response, speech
recognition)
 Value of optimizing customer interactions
 Customers should be able to contact with the
company easily

22. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
22
A Framework for Managing Customer
Service (cont.)
 Creating a customer service strategy
(cont.)
 Customer participation and self-service
 ATMs, website purchases
 Web-based customer service applications
 Outsourcing customer service: automated
contact center services, web services
 Offshore and virtual call centers

23. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
23
A Framework for Managing Customer
Service (cont.)
 Implementing the customer service
strategy
 Organizational commitment,
management support, commitment,
providing financial resources required
 Pilot customer service initiative
 Training, equipment and leadership

24. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
24
A Framework for Managing Customer
Service (cont.)
 Measuring and improving customer
service performance
 Customer service measures
 Mystery shoppers who pose as
customers to asses the customer
service performance of employees and
the work environment
 Total quality management (TQM)
 Fishbone diagram

25. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
25
Integrating the Customer Service
Process along the Supply Chain
 Share information, make joint decisions
regarding customer service activities
with key supply chain customers
 Software applications and use of the
Internet, CRM programs

26. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
26
Examples of good customer service
 personalized attention
 vision and goals clear
 going the distance/ making an extra effort/ thorough/ following up later if you couldn't give an answer immediately
 good humored/ relating personally/ putting people at ease
 positive attitude/ friendliness/ smiling
 courteousness/ respectful/ humane
 accommodating special needs
 organized
 affordable
 cleanliness/ attractive space/ clean bathroom with supplies
 compensate user for slow or unsatisfactory service
 quick response to request or complain
 damage control: trying to make the best out of a situation that is mostly out of the hands of those providing the service
 dumb it down: describing technical/complicated processes in layman's terms
 lots of information and frequently/ providing updates on issues or situations
 good signage/directions/ instructions
 advance notice/ planning/ anticipating needs
 putting customer needs before what you are doing
 timely and convenient
 really listening/ tuning in
 being intuitive
 specialized knowledge
 familiarity with procedures/ being able to explain and enforce rules without alienating the customer
 staff supportive of each other
 offering refreshments
 accuracy about services offered
 patience
 involvement in services by customer/ customer able to evaluate service
 avoiding assumptions
 flexibility/ making exceptions
 share written information
 concerned for safety
 delivery
 world wide access and service

27. COPYRIGHT © 2008
Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
27
Examples of bad customer service
 getting the right person is not obvious/ service providers inaccessible
 bureaucracy that slows everything down/ infighting/ rigid hierarchy
 overdoing the personal touch
 filth
 no eye contact/ apathy towards customer/ ignoring the customer/ minimal aid
 personal income and financial gain is above care for the client
 not getting what you paid for/ charging for what should be free/ unexplained fees
 untrusting behavior
 discrimination/ xenophobic
 inflexibility/ rigid/ unimaginative
 incompetence/ untrained/ lack of knowledge
 under staffing
 automated systems that don't work (phone trees, etc)
 being off schedule (and not acknowledging it)
 no advance warning of problems
 lying/ blaming/ denying about problems
 poor communication (inc. not listening)
 transition to new services poorly handled
 promised service not available/ false advertising
 expert presumes last word
 no focus on or consideration for user/ not knowing your audience's needs
 failure to follow through/ no response to feedback
 callousness/ arrogance/ rudeness/ disrespect/ inconsiderate
 poor survey design
 inconvenient hours
 long lines
 customer does not know what the next step is; information service requires prior knowledge
 unfairness/ unevenness of service
 service provider allows his/her mood to affect the service
 no compensation for foul-up
 lack of preparation
 ambiguity of information
 information overload