Moments of Truth in Customer Service - Coursework Example

Moments of Truth in Service There is wisdom in the adage s know best”. It is a philosophy that expresses acknowledgement and respect for customers and a willingness to satisfy their expectations. Every business needs customers to thrive and grow. In order to attract customers, the business needs to market itself- its superior products and/or excellent service and deliver customers’ expectations, if not go beyond it. “Moments of Truth” are times for businesses to prove themselves to the customers, as these are opportunities that they are assessed of the quality of their service. It is in those moments of truth when service delivered meets customer expectations, exceed such expectations, or worse, completely fail to meet the expectations. Such moments of truth spell the difference between the success or failure of a business. Hence, it is wise for businesses to be on the safe side and be customer-driven (Carlzon, 1989), as it is the customer that makes the business. Without customers, there is no business to speak of. No one else knows this better than Jon Carlzon who wrote about his legendary move to save Scandinavian Airlines System (SAS) from the depths of desperate losses to the sweet bed of humongous profit in just one year. Carlzon adopted a drastic paradigm shift from providing customers with the basic service of flying them safely to their destinations to being pampered with punctuality, comfort, convenience and decent meals. Every need was anticipated including the attention given to their travel needs during their journey. Customers were given the option to book themselves into SAS-owned hotels and have all their travel and flight needs attended to without any worries (Ghiselin, 1987). Carlzon’s impressive marketing approach effectively brought out the company out of the red, from an $8 million loss in 1981 to a staggering $71 million profit in less than a year. More than taking risks in terms of grand expenditure for such a move, what really worked in this strategy was adopting a change internally instead of externally putting up a more sophisticated façade. Carlzon realized the need to shift from an inward, production-oriented airline to a more customer-driven and service oriented company. People need more humanized service instead of a more technologically advanced aircraft to ride on. Carlton’s team closed gaps in customer service that caused the company to lose revenue from the customer’s defection to other airlines or from simply losing the trust and confidence of their customers. Gronroos (2001) identified common gaps between customer expectations and the perceptions of the actual service delivery as management perception gap; translation gap in quality specs; service delivery gap, gaps in “promises” made in marketing; and overall gap between perceived service and expected service. In each gap, customer satisfaction hangs on a thread and if not filled immediately, the company stands to lose the customer who has the power to spread the word of his or her dissatisfaction to others who could be prospective customers. Moments of truth usually occur within encounters between customers and company staff. Thus, each member of the company should be thoroughly trained in the provision of quality customer service. Empowering the staff with the trust that they can use their better judgment in satisfying customers, they must be authorized with decision-making powers under various moment of truth situations with customers. Having knowledgeable, courteous and happy staff brings about happy and satisfied customers. These customers know that they are in good hands and with efficient staff who are able to provide them with their needs, it is likely that their satisfaction will bring in more business. To take the advise of Nilsson, the person responsible for the resurrection of Scandic Hotels, decision-making power should be shared with sales and service-front-line workers “right at the customer level” (Goodman, 2000). Nilsson recommends a decentralized management system to focus on total customer satisfaction. So if a customer requests for something, the staff is able to decide on its provision without having to refer the customer to a higher authority. Richard Branson, owner of the chain of companies under the Virgin label agrees. He practices devolvement with his employees by delegating tasks and making them responsible for the outcome of those tasks. Branson believes in doing away with time-consuming analysis and prolonged decision-making. He believes in speed and expediency in getting things done especially when customer satisfaction is at stake (DeVries, 1998). Of course there is a ceiling limit to this kind of decision-making and it has to be known by all staff. Rust et al. (1995) have come up with the Return on Quality (ROQ) model which incorporates the costs associated with improving service and satisfaction with finances. The model argues that satisfaction and quality efforts have a positive financial impact only if the financial benefits of satisfaction improvements exceed the cost of the quality program and achieving the desired satisfaction level. Rust et al. (1995) advice that instead of concentrating on the revenue impact of the upgrading of services and facilities profit impact of satisfaction and service investments should also be examined. Rust et al (2002) have pointed out a dual emphasis on cost reduction and revenue enhancement would bring in more profit for the business. Cost reduction brings in profits from operational efficiencies and improvements that decrease costs such as standardization, efficiency improvements and defect reduction (Rust et al, 2002). Revenue emphasis on the other hand, argues that improved products and services that enhance customer satisfaction lead to higher revenues and positive financial benefits. This is possible when products and services exceed customer expectations and its effect is retaining customers, improving sales to already retained customers and attracting new customers. Mahatma Gandhi has shared a very important insight regarding customer service (as cited in Fall, 2005): “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not interruption in our work—he is the purpose of it. We are not doing him a favor by serving him. He is doing us a favour by giving us the opportunity to serve him.” –Mahatma Gandhi, 1980 Gandhi has captured the true essence of customer service in his statement. It is an enlightening view that helps customer service providers to appreciate their work and their customers more. Fayerman (2002) defines customer relationship management (CRM) as “an enterprise-wide business strategy designed to optimize revenue and customer satisfaction by organizing the institution around customer segments” (p. 58). This strategy may yield changes in existing organizational culture and behaviour should personnel enact innovations in their customer relations. “The resulting transformation allows organizations to more effectively select, attract, retain, and even grow customers” (p. 58). Pozza & Noci (2006) simply define CRM as “an organizational effort aimed at improving customers’ retention through a better management of the relationship lifecycle” (p. 144). This only proves that even if organizations revolve around business, the element of human relationships still matters a lot if the business projects are to be successful. Mackay (as mentioned in Schlossberg, 1991) says, “People don’t care how much you know about them, once you realize how much you care about them” (p. 5), advocating a caring approach to service provision. Blanchard (as mentioned in Schlossberg, 1991) agrees and contends, “You will not beat your competition today because you have better products, facilities or equipment. You’ve got to beat your competition in ‘moments of truth’ (p. 5). Fall (2005) shares that providing customers opportunities for feedback and the two-way flow of communication is essential especially during moments of truth. Examples of strategies in soliciting open communication include providing customers with comments cards, a link to provide online feedback via the organisation’s Web site, 1-800 consumer hotlines, focus group interviews, follow-up telephone calls and satisfaction questionnaires (Fall, 2005). Having on-site managers available to personally talk with customers offers yet another chance for consumers to “connect” with the organization. Although one of the goals of businesses is to acquire a wider market traversing customers from various backgrounds, current customers should still be given priority in service. From a quantifiable standpoint, the value of a faithful consumer equates to repeat business—business that is much more cost effective to capture compared with the costs associated with generating new business. The Technical Assistance Research Program (TARP) studied the cost of getting new customers as compared to retaining current ones and found out that it is five times more expensive to obtain a new customer than to keep a current one. It was also revealed that at least 50 percent of costumers who experience problems will not complain or contact the organisation and simply take their business elsewhere. Their statistics report that the average organisation loses 10 to 15 percent of customers per year due to bad service experiences. Customers are more apt to return (or stay) if they feel some kind of a personal connection to the product, service, or organization. It is but normal for customers/ consumers to desire individualized, personalized service combined with individualized, personalized information. If customer service is not fulfilled, then they move on to another company which can (Fall, 2005). TARP research also reveal that those customers who experience bad service will tell as many as 16 friends about the negative experience. Another study conducted by the White House Office on Consumer Affairs indicates that 13 percent of dissatisfied customers will tell 20 people about it and that this multiplier effect redounds to loss of revenue (Fall, 2005). The key element here is to keep customers satisfied. Popli (2005) claims that the best measure of quality of one’s service or product is customer satisfaction. Satisfaction, in this view is a function of perceived performance and expectations (Kotler & Fox, 1995). It should be the goal of any business to go beyond the expectations of customers. When customers are delighted or highly satisfied, it creates an emotional bond with the company, not just a rational preference, and this result in high customer loyalty. This loyalty may push customers to speak highly of the business to others, actively endorsing it to them and it becomes the best form of advertising. It has been established that the best form of advertising is by word-of-mouth testimonies of happy customers. All businesses, especially those that deal directly with the provision of customer satisfaction such as in the tourism and leisure industry need to be able to meet the high expectations they have set up for themselves when they market services that promise rest, relaxation and ultimate comfort and convenience. Management needs to come up with effective strategies to attract their target markets with innovative services and events. They also have to revisit their system of lowering costs and maximizing revenue. Most importantly, the business needs to focus on its customers. The literature, and common sense, point to establishment of harmonious and fulfilling interpersonal relationships as key to successful customer relations. Meredith (1998) spells out the core of any breakthrough business as “an understanding of the need to ensure the outcomes of its Moments of Truth are not left to chance” (p.55). Businesses need to thoroughly plan out the successful outcomes from the customer’s perspective and set up systems to ensure that such outcomes are achieved by making sure no gaps are left unattended, no stones left unturned and that that no one is caught unprepared for any challenge customers may pose. When moments of truth turn out to be ripples of successes in the satisfaction of customer needs and preferences, any business can expect that their customers will “keep coming back for more!” References Carlzon, J (1989) Moments of Truth. Ballinger DeVries, K. (1998) Charisma in Action:The Transformational Abilities Of Virgins Richard Branson And ABBs Percy Barnevik, Organizational Dynamics (Winter, 1998) Fall, L.T. (2005) Consumer/ Customer Relations, Encyclopedia of Public Relations, Robert L. Heath (Ed.) Vol. 1, Thousand Oaks, CA: Sage Reference. Fayerman, M. (2002) Customer relationship management. New Directions for Institutional Research, no. 113, Spring 2002. Ghiselin, B. (1987) Innovations, Issues & Observations, Vol. 7 Issue 1, p9-10, 2p Gronroos, C. (2001) Service Management and Marketing (2nd ed). Wiley Kotler, P. & Fox, K.F.A. (1995) Strategic Marketing for Educational Institutions, 2nd edn. (New Delhi, Prentice Hall) Meredit, B.H. (1998) Moments of Truth, New Zealand Business (November, 1998) Popli, S. (2005) Ensuring Customer Delight: a quality approach to excellence in management education, Quality in Higher Education, Vol. 11, No. 1 Pozza, I.D. & Noci, G. (2006) The impact of customer relationship management on performance, American Marketing Association. Winter 2006. Rust, R. T, Moorman, C., Dickson, P.R.(2002) Getting returns from service quality: Revenue expansion, cost reduction, or both, Marketing 66(October) 7-24. Rust, R. T.,. Zahorik, A.J., Keiningham, T. L. (1995) Return on quality (ROQ): Making service quality financially accountable, Marketing 59(April) 58- 70. Schlossberg, H. (1991) Authors blast those who make excuses for poor business., Marketing News, Vol. 25, No. 15, p. 5 Technical Assistance Research Programs (TARP) Case studies and white papers. Retrieved July 1, 2011 from http://www.tarp.com/research.asp Read More