The Importance of Customer Care Service and the Effect of It on Our Culture and Society - Essay Example

? The importance care service and the effect of it on our culture and society Table of Contents Introduction 3 The importance care service and the effect of it on our culture and society- Critical Analysis 4 Customer Satisfaction- Effects on customer loyalty and retention 8 Customer Relationship Management- Theory and Practice 9 Organizational Examples- Apple and Samsung 11 Conclusion 14 Reference 15 Introduction Most people would agree with the fact that customer service accounts for one of the most important component of an organization’s overall business strategy. Without customers organizations cannot go forward to continue their businesses. Every organization generally has the thought that they provide good customer service; however, inadequacy of certain necessary steps to ensure this can make the situation far worse than their present perceptions. However, the commitment towards customer service must begin at the top and trickle down towards the lower levels of the organization. It is crucial that business leaders buy into the fat they are not only required to meet customer expectations but must also strive to gain excellence in the domain. For this it is important that they must create an organizational culture which strives to understand, execute and implement high quality customer service in the system. In today’s world of cut throat competition, organizations regard high quality service customer service as a prerequisite for having an extra edge over competitors. When customers are not satisfied with the service provided by a company they have ample choice to choose from another company. Initiative from the top management coupled with proper training and development program, a company would be successful in developing a culture which is conductive and embraces excellent customer services. Proper training and development program is an excellent way of creating a culture in which employees understand organizations; expectations of them whole interacting with customers. The need for customer feedback for tracking and measuring business performance through the level of service is considered to be equally importance. The present assignment seeks to bring forth critical analysis regarding the use and importance of customer care services in organizations. This is done in the light of previous research on the subject, empirical evidences and examples of such electronic companies such as Apple and Samsung. It brings forth the impacts of such services in these organizations o their businesses and customer perceptions. The importance of customer care service and the effect of it on our culture and society- Critical Analysis The present study synthesizes and builds on efforts for conceptualizing the impacts of quality, value and satisfaction on the behavioural intentions of customers. The study depicts recent advancement made in the areas of customer care services in organizations in the light of service marketing theories and also puts forth notable findings on the subject. One of the key features noted by researchers to stay competitive in the market is to deliver a product or level of service which is unique or, which distinguishes the company’s business from the others. The idea is to draw a distinct line between one’s own services from that of the other firms. This must be in terms of catering to customers’ needs and requirements, maintaining quality of the services and also providing after sales services to customers. Extensive research has been conducted on the subject and they typically are of the opinion that customer satisfaction can have a positive opinion on the profitability of an organization. Because of this reason, the reasons for customer satisfaction or dissatisfaction must always be considered. Research shows a positive correlation between customer satisfaction, loyalty and customer retention. Thus the three aspects of satisfaction, loyalty and retention are some of the key factors on which organizational success depends (Singh, 2006, p.1). According to the views of Hansemark and Albinsson (2004), the overall attitude of a customer’s towards a company’s services is regarded as satisfaction. On the other hand customer loyalty is the actual result that the company’s ability to create benefit for the customer such that they increase and maintain their purchase from the organization. Oliver (1997) puts forth that customer loyalty is nothing but a deeply help commitment to re-patronise or re-buy a preferred service or product from the company without coming under the influence of situations or marketing efforts having the potential to change his preference. The researcher has defined true loyalty of a customer as one when he becomes an advocate of the organization without having any incentive (Singh, 2006, p.1). Hoyer and MacInnis (2001) emphasizes on the need for businesses to satisfy customers with the aim of developing long term relationships with them (Singh, 2006, p.2). Numerous factors are seen to affect the satisfaction of customers on the services provided by an organization. As per the views of Hokanson (1995) few of these factors include a friendly working atmosphere, courteous and knowledgeable employees, accuracy of services, quality of service, billing timeliness, billing clarity and even retention. The identified factors influencing customer satisfaction are shown in the below figure (Singh, 2006, p.2). Figure 1: Factors affecting customer satisfaction (Singh, 2006, p.3) For the sake of attaining customer satisfaction organizations must strive to satisfy their needs and wants. Customer’s needs are their deprivations as according to the views of Kotler (2000). On the other hand customers’ wants is the form attained by a human being under the shape and influence of culture and individual personality (Singh, 2006, p.3). According to the views of Codwell (2001), GSI, Growth Strategies International conducted a statistical analysis on customer satisfaction data encompassing the findings on more than 20,000 numbers of customer surveys conducted across more than 40 nations. The study revealed that a customer who was completely satisfied contributed 2.6 times of a company’s revenue compared to a customer who was partially satisfied; a totally satisfied customer makes a contribution seventeen times of a company’s revenue as that of a somewhat dissatisfied customer; finally, a completely dissatisfied customer lowers revenue of a company 1.8 times more than the contributions of a totally satisfied customer to the company’s business (Singh, 2006, p.3). Numerous numbers of studies have been conducted to find the impact of satisfaction of customers on loyalty, repeat purchase and retention. They have conveyed similar messages. In this context, three main factors have been identified. Firstly, a customer who is satisfied is likely to share his experience with his associations which can e around five or six people. Similarly a customer who is dissatisfied is also likely to do the same and share is poor experience with his own associations (Singh, 2006, p.3). Secondly it is important to realize there are many customers who are not likely to complain or share his favourable or unfavourable experience with others and this can differ from one industry to another. Lastly, researchers are also of the opinion that if people consider that handling customer complaints or satisfaction is a costly process; it is also crucial that they realize that the cost of recruiting a new candidate costs 25 times more than that (Singh, 2006, p.3). Aaker (1995) suggested that the strategic dimension of any organization should include such aspects as attainment of competitive edge through customer satisfaction, product and service quality, brand loyalty, manager and employee capacity and also performance and also new productive capacity. These aspects are provided in the figure below. Figure 2: Performance which reflect long term profitability (Source: Singh, 2006, p.3) Hoyer and MacInnis (2001) have particularly put forth the positive impact of customer satisfaction and profitability of businesses. They consider that customers make the foundation of any successful business as these satisfied customers create repeat purchases, loyalty towards the brands and spread positive word of mouth. In other words, satisfaction influences the intentions of a customer to repurchase while dissatisfaction causes them to discontinue their purchase (Singh, 2006, p.3). Customer Satisfaction- Effects on customer loyalty and retention Chen and Bown (2001) regards that satisfied customers is not sufficient for an organization. They must have extremely satisfied customers. Only then can satisfied customers be converted into loyal customers. In fact the building of customer loyalty is no longer considered to be choice before businesses; rather it is referred to as the only single way of creating sustainable competitive advantage of a business. It has emerged as one of the key marketing objectives of businesses irrespective of the sectors in which they are. Some of the strategic imperatives in creating brand loyalty are to focus on customers; proactive generation of high extent of customer satisfaction through all interactions; anticipate the needs of customers and them react to it before competitors respond; create close ties with the customers and finally create value perceptions n the minds of customers. Customer Relationship Management- Theory and Practice In today’s world of increasing and cut throat competition, organizations have realised the need for having customer centric strategies in their organizations and are willing to make large investments for the purpose too. They invest huge money and resources in the implementation of the customer relationship management system for bettering their customer management processes. A large number of organizations have been successful in implementing CRM systems in their businesses and have gained substantially through the consequent improvement of customer satisfaction, loyalty and retention. However, the steps on implementing the system is very crucial and vital and can ruin the results if not implemented properly. Chen and Popovich (2003) define customer relationship management as a cross-functional technology integrated and customer driven business process management strategy which maximizes relationships (Prasongsukarn, n.d., p.17). It is a combination of information systems and strategies which is completely objected towards the customers with the aim of serving them better. Through the CRM system companies are able to collect data related wit customers and identify those who are most valuable for them and consequently provide them with customised products and services. Kumar and Reinartz, (2006) have brought forth the main advantage of CRM as being strategically selective in selecting customers such that firms can be shape the interaction between the company and customers most profitably with the aim of optimising the present and future value of these customers for the company (Prasongsukarn, n.d., p.17). One of the organizations which has considerably benefited from the CRM system is the Royal Bank of Scotland. Through this system it has been effectively able to provide specific information to the customer service representatives. It has been able to develop excellent customer analytical power through the development of 80 customer models which are further divided into tactical and strategic types. The aim of these models is to identify the tactics and strategies at the segment level fulfilling the service, revenue and cost saving goals. The models translated into actions have been effective in providing better service quality towards customers thereby improving productivity and profitability of the organization. The success of the CRM model applied in the Royal Bank of Scotland has consequently a rise in the company’s customer profitability. Since the last there has been an annual increase in customer profitability by 11%. The long run objective is to continue improving accuracy of the system through reviewing the enterprise wide view of the customers (Grealish, 2006, p.6). One of the other sectors in which customer service has played a prominent role in business profitability is the healthcare sector. A strong customer focus is seen to be effective in saving or eliminating substantial amount of recruiting and advertising costs of the firm (Howard, 2000, p.7). The USA Contact Centre Operational Review, 2007, have shown that the healthcare organizations spend greater time on administration (18%), wrap-up (19%) and idle time (23%) than the actual time that spend on calls (40%). Due to inefficiencies of processes such as manually looking up for medical records, inadequacy of streamlined flow of activities and information between the firms and their thirds parties, customer services remain poor and inefficient leading to undesirable errors and redundancies (GENESYS, n.d., p.7). Organizational Examples- Apple and Samsung The consumer electronics industry is presently under high pressure arising out of fluctuating market conditions coupled with customer demands which have dramatically the bottom-line of the companies and resulted in the fragmentation of the high technology supply chain and making difficulty in managing the global supply chain of these companies. The highly competitive landscape demands innovative approaches for fulfilment of customer demands which the manual systems cannot support. Customers increasingly demand products and services tailored to their needs and requirements, accuracy of promised orders, visibility of orders, shorter lead times, and timely delivery of quality products. Oracle has developed a customised supply chain solution for customers, eliminating communication latency, allowing real time collaboration between the trading partners across its supply network, which has significantly improved its bottom-line and top-line performance (Oracle, n.d., p.3). Most companies belonging to the consumer electronics sector have realized the necessity of interactions among the sales, service, technology and marketing functions with three quarters of them believing that sales and marketing would emerge as strategic partners in customer service in the near future. Among the telecommunication companies, 72% of them believe that possessing a detailed data of customers would be an absolute necessity in the coming five years. Since the customer services provided particularly by the electronics companies travel through the various touch points across the relationship lifecycle it must have a unique ability to understand customer requirements and needs in a holistic manner and cater to their complaints successfully (Holbling, et al., n.d., p.11). Samsung, which is one of the leaders in the domain of consumer electronics, implements the customer relationship strategy as one of its major business strategies. The company has successfully inculcated a culture which is completely customer driven and customer focused initiated from the top management position down the hierarchy. The enhanced customer service management of the company has helped it attain a competitive edge over its competitor, Apple and get to the top position in the market occupying 23.8% of the global market share against Apple’s which is 14.6% in 2011. The brand image of the company has been actually built through high quality customer service and creation of a culture which is completely customer centric and customer focussed. While competitors like Whirlpool, LG had been flooding the markets with great marketing efforts introducing new technology and new features making huge investments on research and development to position their brands in the minds of customers, Apple and Samsung continued to strive to attain customer service excellence. Samsung operates through a wide network and has 150 and 11,900 service centres across Korea and other parts of the world respectively. While in Korea only Samsung exclusive service centres operate, the situation in overseas service centres are different. In these markets multiple brands are served. However, the company has trying to expand its own service centres across the overseas markets. The company has incorporates the real time repair management system for meeting customer expectations in a better way. During cases when repairs get delayed for any reason, the relevant departments are notified for taking up quick and accelerated actions through their automated warning systems. For the promotion of greater and more accurate repairing processes, Samsung provides tailored and technical training for the engineers. The company has particularly developed skills and education focussing on most common and tricky types of repairs coming from customers. In favour of their overseas practices, the company built the global technology information systems (GTI) which were based on the Korean best practices allowing the engineers at the headquarters to put forth answers to practical and technical questions from the overseas countries on real time basis. This was particularly effective in attaining higher speed and convenience customer service (Samsung, 2008, p.20). The Korea Trade Fair commission has certified the Customer Complaints Management System (CCMS) for ensuring that each and every customer complaints were addressed and on time. Through this system all corporate functions including logistics, sales, and business divisions were linked together. Clear and transparent criteria for customer protection were developed, and complaint resolution was created in a global and standardized guidance format. This was distributed for educating employees in all its offices across the world (Samsung, 2008, p.21). On the other hand, Apple also seeks to develop its core capabilities in the domain of customer service and catering customer needs and requirements. This includes product tours, consultations with customers on their choice of a product, workshops for trouble shooting software and hardware problems (Wooten, n.d., p.3). The technical support team in Apple located across the retail stores of the company provides unique experience to its users for attaining, retaining and expanding its customer base. The sales and support staffs of the organizations are provided with universal training for using the in-store customer interaction and for promoting additional sales. The technique is an example of sales and service integration and is often referred by Apple’s management as being the ‘heart and soul’ of the store experience at Apple (Holbling, et al., n.d., p.10). Conclusion With the increase in globalization and the spread of cut throat competition in the market, organizations are striving to make their position unique through attainment of competitive position. However, even the smallest of mistakes has been causing customers and service users to shift their focus to other companies offering similar products or services. This has consequently led to the emergence of the necessity to provide superior quality customer services to attain their loyalty, faith and appreciation. The provision of diverse features, products and services are considered inadequate today in the world of cut throat competition, Extensive research has gone into the subject. Almost all researchers have come up with the finding that superior quality customer care service contributes significantly to a company's position, productivity and profitability. The need for superior quality customer services is seen to exist particularly in the electronic goods sector. Some of the leading examples are Apple and Samsung. Despite numerous competitors in the field like LG, Whirlpool etc, these two companies have made their way to the top two positions primarily on account of their high quality of customer centric strategise and services. Samsung is particularly known for its repair management system which distinguishes it from its competitors not only in the home country but across overseas nations as well. Apple on the other hand provides and establishes a transparent culture across its units on the importance and need for the best quality customer service and excels in the field through training and development programs. Reference GENESYS. (No Date). Customer Service Strategies for the Healthcare Industry. [Pdf]. Available at: http://www.genesyslab.com/private/active_docs/2726_ISG_US_Healthcare_screen.pdf. [Accessed on March 24, 2012]. Grealish, A. (2006). Example of a Customer Profitability Olympian: RBC. CELENT. [Pdf]. Available at: http://www.teradata.com/case-studies/Example-of-a-Customer-Profitability-Olympian-RBC/. [Accessed on March 23, 2012]. Holbling, K. (No Date). Next-Generation Customer Service. [Pdf]. Available at: http://www.booz.com/media/uploads/Next_Generation_Customer_Service.pdf. [Accessed on March 24, 2012]. Howard, J. E. (2000). Customer Service: The Key to Remaining Competitive in Managed Care. Managed Care Quarterly 2000; B(2): 22-28. [Pdf]. Available at: http://www.uta.edu/faculty/munch/Customer%20%20Servic-%20The%20Key%20to%20Remaining%20Competitive%20in%20Managed%20Care.pdf. [Accessed on March 24, 2012]. Oracle. (No Date). Oracle & Consumer Electronics. [Pdf]. Available at: http://www.oracle.com/us/industries/high-tech/022560.pdf. [Accessed on March 24, 2012]. Prasongsukarn, K. (No Date). Customer relationship management from theory to practice: implementation steps. [Pdf]. 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