The Importance of Customer Service to Service Companies - Coursework Example

The Importance Service to Service Companies Introduction This brief essay is about service and the importance of services management to service companies. Service companies directly deal with customers and they have customer service departments which have to continuously improve service to meet customers’ needs and gain their loyalty. There are several topics and theories underlying the subject of service management. Service management is about delivering customer needs, and delivery means how these supplies (product or service) are delivered in the hands of the customer and according to customer’s specifications and demands. This essay aimed to provide definitions and explanations on the concept of service management, the theories, and real-life experience of service delivery, particularly the frontline employees. The importance of customer service for service companies Service can be defined in terms of customer satisfaction. If the goods delivered by the company meet customer specifications and the customer is satisfied, the customer is retained and may have that loyalty the service company needs. A common inspirational belief among sales people is the more loyal the customer, the more profits for the company. Moreover, firms must compete for quality. In this time of intense globalization where products and services, including information about the products and services, are available by the touch of a button, quality service is most important. After World War II, when Japan was still struggling to compete with the products dominated by the United States and Europe, the term quality was not so popular. But Japanese firms introduced service quality which attacked American and European products and services. Quality-oriented service met customer needs and improved quality of life. Japanese firms became popular and profitable. Other firms had to introduce quality in their services and products. Quality management became a phenomenon which captured the attention of firms and researchers (Verma, 2012, p. 21). Employees involved in service are crucial to the success of a service firm – they are the frontline personnel, people in the field directly serving and talking with customers about their product or service. Whatever happens in their “confrontation” directly affects the customer’s attitude towards the product and the firm. These frontline employees should be alert about any customer requests or demands, and determine what attracts customer’s taste and attention. The success of these employees in dealing with the customers can create a competitive advantage for the firm (Lovelock & Wirtz, 2007, p. 359). In a restaurant, service employees or waiters can make or break the restaurant, so to speak. Whatever words or acts that destruct a customer’s appetite will destroy the image of the restaurant. Waiters are frontline employees who can capture the customer’s enthusiasm and loyalty for the restaurant (Lovelock & Wirtz, 2007). Employees who have face-to-face with customers should know what customers need. They should know how to hold to that personal relationship: the customer is not regarded as a customer but should be considered as member of the family, which means any need of that “family member” is immediately responded to. This situation results into a unique relationship that may rebound into customer loyalty. In the years after the term quality became popular, managers focused on tracking operational quality and measuring other marketing activities. But well meaning marketers and researchers introduced the term SERVQUAL which measured the difference between probability and perceptions of customers, to dig deeper into service quality. To date, this subject of analyzing expectations and gap has remained a topic of discussion (Danaher & Mattson, 2005). Theories of service Flower of service In Lovelock’s concept, there are two types of service or product – the core product and the supplemental product or service. The supplemental one should enhance and support the core service so that the customer gets additional benefits from the core product. An example of this is quite inspiring on the part of customer. If the customer needs information, an enhancing service could be consultation. Hospitality can support order-taking. The sales force must be creative in providing service and this is the aim of flower service - to motivate and drive the customers to buy more of the product. Consumers are now well informed and experienced in determining quality or benefits of the product; they cannot be fooled. The main objective of the service should be to satisfy the customer. An example of flower of service is Starbucks’ strategy. This company serves a different of coffee. The brand of coffee has been Starbucks’ pride, but coffee alone cannot provide the driving force for the customers to stick to Starbucks’ many shops in many parts of the globe. So it applied the flower service by making its stores places for entertainment, which have drawn the young and the old to order coffee and enjoy the ambiance of their stores. A new sub-sector is created in the process, the pop culture. Starbucks’ stores sell CDs which are popular to this segment, and even to the not-so-young population. Service blueprint Service blueprinting is a common practice of sales people and marketers to trace customer activities. This is actually a flowchart to track down what happened in the sales process. It is similar to a record of a supply chain process which tells the activities of delivering service to the customers wherein the steps, activities, and the different roles of sales people and the customers are enumerated or narrated in blueprint (Bidgoli, 2010). This is effective in analyzing what has happened and what should be done to determine if the customers’ needs and wants have been met during the time the customers made contact and may make another purchase. The gaps model The gaps model can tell management the steps in service where there is high value creation. This process involves assessment of performance in the service activity. Some benchmarking is involved here wherein a responsible team composed of competent members chosen by the management will conduct the value drivers, such as improvement of revenues, profitability, use of fixed asset, and so-called ‘cash-to-cash cycle time’ (Losbichler & Mahmoodi, 2010, p. 201). The problem with gap analysis is that it involves a “high-level financial performance” assessment and this requires the expertise of a trusted group within the organization. Compared to service blue printing, gap analysis is rather complicated but the results can be more rewarding. Mapping gaps should be included in the supply chain process. Service profit chain Can loyalty be transformed into profits? The analysis of Reichheld and Sasser (as cited in Lovelock & Wirtz, 2007) target the profits drawn from the years the customers have been with the company. The researchers indicated that the customers were more profitable if they stayed longer with the company, and the latter also company acquired more profits if the customers became more loyal with the company. There are four factors for suppliers to get more profits: 1. Profit drawn from more products bought by customers; 2. Profit as a result of less operating expenses; 3. Profit gained through new customers; 4. Profit taken from products’ prices. Wheel of loyalty Firms spend millions to build customer loyalty, because if this loyalty becomes a cycle it also creates a cycle of profitability. Customer loyalty is an objective of customer relationship management (Pitta et al., 2006 as cited in Khan, 2013). Firms usually create a network between them and the customers. CRM is enhanced through the Internet. By creating websites, companies can build trust and answer to suggestions and complaints from customers. A constant interaction between customers ensues. Customer loyalty is not difficult to attain with experienced employees; experience means having personal touch, without thinking of profits or money in return. But marketers and managers should not be worried because customer loyalty always results into profitability and changes in loyalty can affect profitability (Reichheld & Teal, 1996; Reichheld, Markey, & Hopton, 2000 as cited in Zhang, Dixit, & Friedmann, 2010). The wheel of loyalty has to be based on a strong framework to create customer loyalty which includes: providing the right case of the target customer drawing the correct customers leveling the right service, and providing perfect satisfaction for the customer (Lovelock & Wirtz, 2007). The firm also needs to create strong and lasting relationship with its customers by tapping on such aspects of selling (e.g. “cross-selling and bundling”) or other strategies like the rewards program. If the firm loses some customers, it should find ways to draw new customers. Companies should target the customers suited to their product; if there is mismatch, i.e. the product does not fit for the right customers, managers should find ways to correct this. They should know what kind of customers to serve and focus on their preferences. Firms seek loyalty in their customers to increase profitability. Loyalty can be attained if customers find that their needs are met through the products and services offered by the firm. Marketers sometimes offer reward program to encourage customers to buy their product or services. An example is the reward offered by the airline industry, the frequent flyer program (Kim et al., 2001; Browne et al., 1995 as cited in Kristiani et al., 2013). Airline industries use this strategy to encourage customers to “fly,” at the same time gain loyal customer and increase profitability. Through FFP, customers are given loyalty currency which they can use as payment for free flights and other programs of the airlines. Most marketers consider loyalty as repeat purchase, although in others loyalty has a broader meaning. In restaurants or cafes, owners would usually consider that they have many loyal customers if they constantly see the same customers day in and day out. In large firms, marketers introduce a software where they can detect the same customers patronizing their products. An example is online companies who can detect the same customers buying their products over and over. We can see in the Amazon website something like this: “Customers who like this product also purchased other products like …” The service experience I had experience with fine dining at L’Ecu, Bulle, Switzerland. With careful evaluation, I recorded in paper the performance of the restaurant’s staff and management. What I can say is that the service and customer of this restaurant is excellent. Customer Service Assessment of L’Ecu My assessment for the restaurant is a formal assessment divided into 3 sections: 1.) A – “Welcome” 2.) B – “Selling Skills”; and 3.) C – “Customer Care” For the first section, I had strong feeling that the restaurant’s staff had good relationship with the customers. The show window was attractive. It had 9 staff members immediately greeting the customers and the staff was cordial who greeted us customers with a smile. As a whole, my first impression for the restaurant was that the appearance was attractive, easy to locate, and the staff, including the waiters and waitresses, were warm and friendly. The customers have the impression of coming back. The second section of my assessment of L’Ecu, which was about selling skills of the staff, also had impressive results. Questions 1 to 5 all had positive answers, and I noted the fourth question that the staff had a “very good knowledge of wine.” There was a negative response except the question on warranty of one of the products in which the owners could not provide. The third section was about “Customer Care” and the score was almost excellent for the restaurant, except 3 questions which had negative answers. The staff acknowledged other customers while serving other customers. This means they were accommodating all of the customers. They were professionally dressed and had presentable uniforms with name badges on the dresses. Sales persons had positive and pleasant personality and were helpful to their customers. Waiters and assistants were smiling as they served the customer’s orders. The names of customers were not checked in their cards and the waitress did not ask for the customer’s address, a sign of respect and professionalism. The restaurant did not have Loyalty Cards for customers. I had “yes” answers to the question whether I felt welcomed and valued as a customer. The staff let us felt that they had a sincere ‘goodbye’. Overall, I felt delighted of their service. My note for the fifth question of Section C is that: the restaurant had “excellent service” and “the chef personally asked if food was good”. I was not in any way disappointed with the service. My last comments are: “change menu and add more items”. Conclusion My recent experience in the restaurant provided an explanation for the relation of loyalty and profitability. The staff and, of course, management were not concerned of other things except good service for their customers, because by good service and a wonderful experience the customers attained in their short stint in the restaurant, they would surely come back and ask for more of their service. That is loyalty and retention. On my part, I really would want to come back and expect more of their service and good food and wine. That will make me a loyal customer. References Danaher, P. & Mattson, J. (2005). Customer satisfaction during the service delivery process. European Journal of Marketing, 28(5), 5-16. Desa, S. (2010). Competitive strategies in technology management. In H. Bidgoli (Ed.), The handbook of technology management: Supply chain management, marketing and advertising, and global management (vol. 2) (pp. 384-400). New Jersey: John Wiley & Sons, Inc. Khan, M. (2013). Customers loyalty: Concept & definition (a review). International Journal of Information, Business and Management, 5(3), 168-191. Kristiani, E., Sumarwan, U., Yulianti, L., & Saefuddin, A. (2013). Customer loyalty and profitability: Empirical evidence of frequent flyer program. International Journal of Marketing Studies, 5(6), 62-72. Losbichler, H. & Mahmoodi, F. (2010). Metrics for measuring supply chain performance. In H. Bidgoli (Ed.), The handbook of technology management: Supply chain management, marketing and advertising, and global management (vol. 2) (pp. 194-205). New Jersey: John Wiley & Sons, Inc. Lovelock, C. & Wirtz, J (2007). Services marketing: People, technology, strategy (sixth ed.). Retrieved from http://bschool.nus.edu.sg/Departments/Marketing/Jochen%20papers/sm6coverloyalty.pdf Verma, H. (2012). Services marketing: Text and cases (2nd ed.). New York: Pearson Education Ltd. Zhang, J., Dixit, A., & Friedmann, R. (2010). Customer loyalty and lifetime value: An empirical investigation of consumer packaged goods. Journal of Marketing Theory and Practice, 18(2), 127-139. Read More