Study Unit 1: Understanding Customer Service
1. Introduction to customer service
Customers are the lifeline of every organisation.
Customer service defined
a. The process whereby value is added by delivering service to internal and
external customers in support of the organisation’s core products and service
offerings, whenever customers engage with the organisation.
b. The customer is central to all of the abovementioned definitions -Whether
the service provided is seen as good or bad is very much based on a
customer’s expectations and perceptions of the service received.
Crucial for organisations to understand what customers expect from the
organisation, so that they are able to deliver better customer service.
c. Organisations should strive to deliver good customer service whenever
and wherever a customer engages with an organisation - might be before,
during or even after a product or service has been purchased.
d. Both internal and external customers receive customer service.
External customers are the groups of individuals outside the organisation
that the organisation does business with, and internal customers are the
groups of individuals who work inside an organisation and with whom
other employees interact on a daily basis.
e. Customer service is delivered in support of an organisation’s core
product and service offerings.
Whether you are selling physical products or selling a service, customer
service should be an essential part of the organisation’s overall offering.
f. Customer service is a planned, well-structured activity that needs to be
continuously evaluated to ensure that the organisation is still on track in
delivering excellent customer service.
Employees play a key role in delivering customer service; management
therefore needs to ensure that the right people are employed, and that
the employees are skilled, knowledgeable and enthusiastic when dealing
with customers.
g. Ultimately customer service aims to improve the overall customer
experience as a means to increase customer satisfaction, which can then
lead to positive word-of-mouth, repeat business and loyalty.
Types of customers
,a. External customers
External customers are the groups of individuals outside the organisation
that the organisation does business with.
Purchases of a product or service at an organisation.
Each customer has a unique set of wants and needs, different
expectations and a different personality, which will have an influence on
the customer’s service experience.
, b. Internal customers
Internal customers are the groups of individuals who work inside an
organisation and with whom other employees interact on a daily basis
2. Importance of excellent customer service
Excellent customer service should therefore be seen as a priority, which brings two
questions to mind:
a. Why should one organisation invest more time and money in establishing a
culture of excellent customer service in relation to their competitors, who are
just striving for good customer service (as opposed to excellent)? In other
words, what are the rewards involved in pursuing excellent customer service
rather than just good customer service?
Ultimately, the main goal of excellent customer service is customer
satisfaction.
Customer satisfaction then leads to a long list of benefits that the
organisation can enjoy.
o Lower customer acquisition costs: Acquisition cost is the amount
of money that needs to be spent in attracting or recruiting new
customers.
o Higher levels of customer retention: customer retention is the
process involved in retaining customers – which is the continual
effort to make sure current customers are satisfied and will keep on
coming back to do business with the organisation.
o More profitable: The more satisfied the customer is with an
organisation, the more they come back for repeat purchases, the
more profitable the organisation becomes.
o Increase in sales/revenue: If customers are satisfied with an
organisation, they tend to come back to purchase again and again.
Over time, the amount of money that customers spend at these
organisations will increase.
o Cost savings: The more customers get to know an organisation,
the less information and advice they require from employees,
ultimately saving the organisation time and money.
o Generating positive word-of-mouth: Customers who are satisfied
with an organisation’ products and services tend to recommend the
organisation to family and friends, known as word of- mouth.
o Willingness to pay a premium price: If a customer is satisfied with
an organisation and its products and services, they are willing to pay
a premium price for the value that they receive. These customers
tend to be less price-sensitive, as they know what they will receive
for their money.
, o Higher employee morale, leading to an increase in productivity:
Morale is an individual’s or a group of individual’s attitude towards a
job, manager or organisation. High morale also leads to greater
levels of productivity, which means that employees are less likely to
miss work, and really play their part in making the organisation work.
b. Secondly, what characteristics are necessary to become an excellent customer
service provider?
Six characteristics that organisations that are renowned for excellent
customer service possess:
o Customer service is an organisation-wide initiative and there is no
one specific department within an organisation that is only
responsible for delivering excellent customer service. It is a team
effort and everybody throughout the organisation has a role to play.
o All the necessary processes should be in place, with a minimum of
product defects and returns. Employees are therefore able to focus
only on pleasing their customers.
o Organisations that strive to be excellent customer service providers
realise the importance of continually looking for ways to improve
their customer service.
o Customer service should be the organisation’s main selling point. It
is the key element that customer- focused organisations use to
differentiate themselves from others, and is therefore their main
competitive advantage over their competitors.
o Building relationships with customers is key to becoming an
excellent customer service provider.
o Using the latest technology is a way to assist the customer service
delivery process. Through these technologies, organisations are
able to better interact with customers and satisfy their specific needs
more appropriately, thus improving on the customer service
experience.
3. Customer service as part of an organisations marketing strategy
a. Marketing is “the activity, set of institutions, and processes for creating,
communicating, delivering and exchanging offerings that have value for
customers, clients, partners and society at large”.
