Chapter 18: Customer

Service
MKT 216 (Retailing Management)

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2 Introduction To Customer Service
 Customer service is the set of activities and programs undertaken by
retailers to make the shopping experience more rewarding.

 These activities increase the value customers receive from the merchandise
and services they purchase.

 Some of these services are provided by store and call-center employees

interacting directly with customers, while others are provided by the design
of the retailer’s store and/or website.

value is linked to customer satisfaction

 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE
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 Many stores differentiate their retail offerings, build customer loyalty, and
develop sustainable competitive advantages by providing excellent
customer service.

 Customer service provides a strategic advantage because:

 Good service can be important to customers. good service highly valued by customers
 Difficult for competitors to duplicate. high quality employees can't be copied
 Keeps customers returning to a retailer. good service encourage loyalty
 Generates positive word-of-mouth communication, which attracts new
customers.

 Customer service is a double-edged sword. Poor service by retailers

increases negative word of mouth in addition to reducing future visits.
 Some of The Services Provided by Retailers
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 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE (cont’d)
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 Perceptions of customer service are often developed through interactions

with frontline employees. good service effect the way a customer see our business
 Managing these employees to provide consistent good service is challenging.

 All employees of a retail firm and all elements of the retailing mix can
provide services that increase the value of merchandise to customers.
 Employees in the distribution center contribute to customer service by making
sure the merchandise is in stock at the retailer’s stores.
 The employees who choose store locations and design their interiors contribute
by increasing customer convenience.
 Providing high-quality service is difficult for retailers.

 The quality of retail service can vary dramatically from store to store and
from sales associate to sales associate within a store.
 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE (cont’d)
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 For retailers, it becomes difficult to control the performance of employees

who provide service because they are not machines that can be
programmed. we can't make sure that employees are consistent with their good service
 Sales associates have good days and bad days and, thus, may provide great
service to one customer and poor service to the next.

 Intangibility makes it hard to provide and maintain high-quality service

because retailers cannot easily measure or check the service before it gets
delivered to customers.

 The challenge of providing consistent, high-quality service offers an

opportunity for retailers to develop a sustainable competitive advantage.
 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE (cont’d)
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 Customer Service Approaches (cont’d)

 To develop a sustainable customer service advantage, retailers offer a
combination of personalized and standardized services.

 Personalized service requires that service providers tailor their services to meet
each customer’s personal needs. giving a customized service based on the customer need
 Successful implementation of the personalized service relies on sales associates or the
“personalization” offered by the retailer’s electronic channel.

 Standardized service is based on establishing a set of rules and procedures for

providing high-quality service and ensuring that they get implemented
consistently. giving all customers the same level of service
 The effectiveness of standardized services relies mainly on the quality of the retailer’s
policy, procedures, and store, as well as its website design and layout.
 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE (cont’d)
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 Customer Service Approaches (cont’d)

 Personalized Service
 Personalized customer service is less consistent than standardized service.

 The delivery of personalized service depends on the judgment and

capabilities of each service provider.

 providing consistent, high-quality personalized service is costly because well-

trained service providers or sophisticated computer software generally are
needed to implement the service.

high quality personalised is expensive due the training of staff

 STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE (cont’d)
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 Customer Service Approaches (cont’d)

 Standardized Service more consistent than personalised services
 Retailers standardize the service they offer to increase the consistency of the
service quality and avoid the costs of paying the more skilled service
providers required to effectively personalize customer services.

 For example, McDonald’s and other quick-service restaurants develop and

strictly enforce a set of policies and procedures to provide an acceptable,
consistent service quality.
rules and regulations govern our delivery of service and make sure its consistent
 Store or website designs and layout also play important roles in the delivery
of standardized service.

 IKEA uses a standardized, self-service approach with some unique elements

to attract customers who expect the traditional personalized approach
commonly used in furniture retailing
 CUSTOMER EVALUATIONS OF SERVICE QUALITY
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customers should receive customer service that matches their expectations

 When customers evaluate customer service, they compare their

perceptions of the service they receive with their expectations.
 Customers are satisfied when the perceived service meets or exceeds their
expectations.
 They are dissatisfied when they feel that the service falls below their
expectations.

 When retailers attempt to differentiate their offerings by developing a

reputation for outstanding customer service, they need to consider both
the perception of the actual service offered and the expectations of their
customers.
 CUSTOMER EVALUATIONS OF SERVICE QUALITY (cont’d)
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 Perceived Service
 Customers’ perceptions of a retailer’s customer service depend on the actual
service delivered.

 Five customer service characteristics that affect perceptions of service quality

are:
 Reliability
 Assurance
 Tangibility
 Empathy
 Responsiveness
 CUSTOMER EVALUATIONS OF SERVICE QUALITY (cont’d)
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 Perceived Service (cont’d)

 Reliability is the service provided as expected ?
 Is the ability to perform the service dependably and accurately, such as performing
the service as promised or contracted or meeting promised delivery dates.
 Assurance do employees know what they'r doing
 Is the knowledge and courtesy of employees and their ability to convey trust and
confidence.
 Tangibility appearance of facility ,equipment
 Is associated with the appearances of physical facilities, equipment, personnel, and
communication materials.
 Empathy the way an employee care of customers
 Refers to the caring, individualized attention provided to customers.
 Responsiveness do employees respond fast to customers
 Means to provide customer service personnel and sales associates that really want
to help customers and provide prompt service.
 CUSTOMER EVALUATIONS OF SERVICE QUALITY (cont’d)
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 Role of Expectations
 Expectations affect the judgment of service quality.

 Customer expectations are based on a customer’s knowledge and experiences.

 Customers have different expectations for the quality of service offered by

different types of retailers.
 Customers expect a traditional supermarket to provide convenient parking, be open
from early morning to late evening, have an intuitive layout, position and display
products so they can be easily found, and offer a fast and pleasant checkout
experience.
 They do not expect the supermarket to have store employees stationed in the aisle to
offer information about groceries or show them how to prepare meals.
 When these unexpected services are offered, and the services are important to them,
then customers are delighted.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY

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 When the customer’s perception of the service delivered by a retailer fails to
meet the customer’s expectations, a service gap results.
 Four gaps that contribute to the service gap:
 The knowledge gap: reflects the difference between customers’ expectations
and the retailer’s perception of those customer expectations. employees not knowing the
customer expectation
 Retailers can close this gap by developing a better understanding of customer
expectations and perceptions. we must make market research and collect data about customer
in order to understand their perceptions
 The standards gap: the difference between the retailer’s knowledge of the service standard
customers’ perceptions and expectations and the service standards it sets. doesn't match the
customer expectation
 By setting appropriate service standards and measuring service performance, retailers
can close this gap.

 The delivery gap: is the difference between the retailer’s service standards and
the actual service it provides to customers. the service does't match the standard we made
 This gap can be reduced by getting employees to meet or exceed service standards
through training and/or appropriate incentives.

 The communication gap: is the difference between the actual service provided
to customers and the service that the retailer’s promotion program promises.
the service provided
 When retailers are more realistic about the services they can provide, customer is not what were
expectations can be managed effectively to close this gap communicated
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Knowing What Customers Want: The Knowledge Gap

 The first step in providing good service is knowing what customers want, need,
and expect and then using this information to improve customer service.

 Retailers can reduce the knowledge gap and develop a better understanding of
customer expectations by:
 Undertaking customer research.

 Increasing interactions between retail managers and customers.

 Improving communication between managers and the employees who

provide customer service.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Knowing What Customers Want: The Knowledge Gap (cont’d)

 Retailers use a variety of approaches for assessing customer perceptions and
expectations of customer service include:
 Social Media

 Surveys, Panels, and Contests

 Interact with Customers, Either Directly or through Observation

 Customer Complaints

 Feedback from Store Employees

 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Knowing What Customers Want: The Knowledge Gap (cont’d)

 Social Media
 Retailers can learn a lot about their customer expectations and perceptions
of their service quality by monitoring what they say about the retailer’s
offering and the offerings of competitor.

 Sentiment analysis is to assess the favorableness (or lack of favorableness) in

their customers’ sentiments by monitoring these social media.

 Surveys, Panels, and Contests

 Many retailers survey customers immediately after a retail transaction has
occurred.

 Some retailers use surveys as just described, others interview panels of 10 to

15 customers to gain insights into expectations and perceptions.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Knowing What Customers Want: The Knowledge Gap (cont’d)

 Interact with Customers, Either Directly or through Observation
 Owner-managers of small retail firms typically have daily contact with their
customers and get accurate, firsthand information about them.
 In large retail firms, managers often learn about customers through reports,
so they may miss the rich information provided by direct contact with
customers.

 Customer Complaints
 Complaints allow retailers to interact with their customers and acquire
detailed information about their service and merchandise.

 Feedback from Store Employees

 Salespeople and other employees in regular contact with customers often
have a good understanding of customer service expectations and problems.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Knowing What Customers Want: The Knowledge Gap (cont’d)

 Using Customer Research
 Collecting information about customer expectations and perceptions is not
enough.

 The knowledge gap diminishes only when retailers use this information to
improve service.
 Store managers need to review the suggestions and comments made
by customers daily, summarize the information, and distribute it to
service providers and managers.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Setting Service Standards: The Standards Gap

 After retailers gather information about customer service expectations and
perceptions, the next step is to use this information to set standards and develop
systems for delivering high-quality service.

 Service standards should be based on customers’ perceptions rather than

internal operations.

 To close the standards gap, retailers need to:

 Commit their firms to providing high-quality service.

 Define the role of service providers.

 Set service goals.

 Measure service performance.

 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Setting Service Standards: The Standards Gap (cont’d)

 Commitment to Service Quality
 Service excellence is achieved only when top management provides
leadership and demonstrates commitment.

 Top management must be willing to accept the temporary difficulties and

even the increased costs associated with improving service quality.

 This commitment needs to be demonstrated to the employees charged with

providing the service.

 Top management’s commitment sets service quality standards, but store

managers are the key to achieving those standards.

 Store managers must see that their efforts to provide service quality are
noticed and rewarded.
 Providing incentives based on service quality makes service an important personal
goal.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Setting Service Standards: The Standards Gap (cont’d)

 Defining the Role of Service Providers
 Managers can tell service providers that they need to provide excellent
service but not clearly indicate what excellent service means.
 Without a clear definition of the retailer’s expectations, service providers are
directionless.
 Setting Service Goals
 To deliver consistent, high-quality service, retailers need to establish goals or
standards to guide employees.
 Service goals should be related to customer-based criteria.
 Employees are motivated to achieve service goals when the goals are
specific, measurable, and participatory in the sense that the employees
participated in setting them.
 E.g. All e-mails should be responded to within three hours.

 Employee participation in setting service standards leads to better

understanding and greater acceptance of the goals.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Setting Service Standards: The Standards Gap (cont’d)
 Measuring Service Performance
 Retailers need to assess service quality continuously to ensure that goals will
be achieved.
 Many retailers conduct periodic customer surveys to assess service quality.

 Retailers also use mystery shoppers to assess their service quality.

 These professional shoppers visit stores to assess the service provided by
store employees and the presentation of merchandise.
 Some retailers use their own employees as mystery shoppers, but most
contract with an outside firm to provide the assessment.
 The retailer typically informs salespeople that they have “been
shopped” and provides feedback from the mystery shopper’s report.
 Some retailers offer rewards to sales associates who receive high marks
and schedule follow-up visits to sales associates who prompt low
evaluations.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Meeting and Exceeding Service Standards: The Delivery Gap
 To reduce the delivery gap and provide service that exceeds standards, retailers
must:
 Give service providers the necessary information and training.

 Empower employees to act in the customers’ and firm’s best interests.

 Provide instrumental and emotional support.

 Provide appropriate incentives.

 Improve internal communications.

 Use technology.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Meeting and Exceeding Service Standards: The Delivery Gap (cont’d)
 Give Information and Training
 Service providers need to know about the retailer’s service standards and
the merchandise it offers, as well as the customers’ needs.
 With this information, employees can answer customers’ questions and suggest
products.

 Service providers also need specific training in interpersonal skills.

 Dealing with customers is hard—particularly when they are upset or angry.

 Empower Service Employees

 Empowerment means allowing employees at the firm’s lowest levels to make
important decisions regarding how service will be provided to customers.
 When the employees responsible for providing service are authorized to make
important decisions, service quality improves.

 Sometimes empowering service providers can be difficult.

 Some employees prefer to have the appropriate behaviors clearly defined for
them.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Meeting and Exceeding Service Standards: The Delivery Gap (cont’d)
 Provide Instrumental and Emotional Support
 Service providers need to have instrumental support (appropriate systems
and equipment) to deliver the service desired by customers.
 Service providers also need emotional support from their coworkers and
supervisors.
 Emotional support involves demonstrating a concern for the well-being of others.

 Provide Incentives
 Many retailers use incentives, like paying commissions on sales, to motivate
employees.
 But commissions on sales also can decrease customer service and job
satisfaction while motivating high-pressure selling, which leads to
customer dissatisfaction.
 If service personnel feel incentivized and satisfied with their rewards, they
likely offer improved productivity.
 Incentives should aim to improve customer service more effectively.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Meeting and Exceeding Service Standards: The Delivery Gap (cont’d)
 Improve Internal Communications
 When providing customer service, frontline service providers often must
manage a conflict between customers’ and their employer’s needs.
 Retailers can reduce such conflicts by issuing clear guidelines and policies
concerning service and explaining the rationale for these policies.
 Conflicts can also arise when retailers set goals that are inconsistent with the
other behaviors expected from store employees.
 Conflicts can arise between different areas of the firm.
 Use Technology
 Retailers have been actively engaged in implementing a vast variety of
technology tools in their stores and websites to help their customers.
 These technologies help customers find and learn more about products and
services offered. They also enable faster and more efficient payment.
 For the service personnel, these technologies improve their ability to offer
good service to customers.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Communicating the Service Promise: The Communications Gap
 The fourth factor leading to a customer service gap is the difference between
the service promised by the retailer and the service actually delivered.

 Overstating the service offered raises customer expectations.

 If the retailer fails to follow through by improving actual customer service, expectations
exceed perceived service, and customers are dissatisfied.

 Raising expectations beyond what can be delivered might bring in more

customers initially, but it can also create dissatisfaction and reduce repeat
business.

 The communications gap can be reduced by:

 Making realistic commitments.
 Managing customer expectations.
 THE GAPS MODEL FOR IMPROVING RETAIL CUSTOMER SERVICE QUALITY
(cont’d)
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Communicating the Service Promise: The Communications Gap (cont’d)
 Realistic Commitments
 Promotion programs are typically developed by the marketing department,
whereas the store operations division delivers the service.
 Poor communication between these areas can result in a mismatch
between a promotional campaign’s promises and the service the store can
actually offer.
 Managing Customer Expectations
 Information presented at the point of sale can be used to manage
expectations.
 Online retailers tell their customers whether merchandise is in stock and when
customers can expect to receive it.
 Providing accurate information can increase customer satisfaction, even
when customers must wait longer than desired.
 Communication programs can inform customers about their role and
responsibility in getting good service and give tips on how to get better
service.
 SERVICE RECOVERY
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 The delivery of customer service is inherently inconsistent, so service failures
are bound to arise.

 Service problems and complaints are an excellent source of information

about the retailer’s offering.
 Armed with this information, retailers can make changes to increase their
customers’ satisfaction.

 Service problems also enable a retailer to demonstrate its commitment to

providing high-quality customer service.
 By encouraging complaints and handling problems, a retailer has an opportunity
to strengthen its relationship with its customers.

 The steps in effective service recovery are:

 Listen to the customer.
 Provide a fair solution.
 Resolve the problem quickly.
 SERVICE RECOVERY (cont’d)
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 Listening to Customers
 Retailers should allow customers to air their complaints.
 Customers want a sympathetic response to their complaints.
 Providing a Fair Solution
 Customers like to feel that they are being treated fairly.
 Customers’ evaluations of complaint resolutions thus are based on distributive
fairness and procedural fairness.
 Distributive fairness is a customer’s perception of the benefits received
compared with his or her costs in terms of inconvenience or monetary loss.
 Procedural fairness is the perceived fairness of the process used to resolve
complaints.
 Resolving Problems Quickly
 Customer satisfaction is affected by the time it takes to get an issue resolved.
 Empowering the first contact employee to move quickly to solve a problem increases
customer satisfaction.