PowerPoint presentation Unit 324 (CS 26): Understand the customer service environment Handout 5: The costs and benefits of customer service; the impact of organisational values on how customers create their expectations; and how organisational values impact on meeting customer expectations

Understand the customer environment Good customer service is vital to ensure an organisation is successful. The benefits are many but there are also costs to an organisation to committing to a high-quality service. Costs are not just related to financial outlay. Poor customer service can cost reputation, customer loyalty and ultimately market share. The benefits of good customer service are easy to see in customer retention, repeat business and customer feedback.

Understand the customer environment The cost of customer service. It’s not always about budget It is not always the organisations with the highest budgets who have the ability to maintain customer satisfaction to the highest levels. In a recent survey carried out by Which? magazine, it was shown that in a survey of UK energy suppliers the largest, most profitable organisations were not among the ones scoring the highest in the survey. Customer service costs to an organisation can be complex and multi-faceted. Source: http://www.which.co.uk/switch/energy-suppliers/energy-companies-rated Direct learners to the energy survey: http://www.which.co.uk/switch/energy-suppliers/energy-companies-rated

Understand the customer environment The cost of poor customer service: loyalty If customers are not happy with service there is lot a of research to show that they will go elsewhere. Source: http://www.ctmaworld.com/EconomicTruths.htm

Understand the customer environment The cost of poor customer service ‒ word of mouth/reputation A recent study in the USA gives very clear indications of the cost of poor service when focusing on word of mouth: A dissatisfied customer will tell between 9 to 15 people about their experience. Around 13 per cent of dissatisfied customers tell more than 20 people. Negative interactions with a business are spread to twice as many people as positive ones. People are twice as likely to talk about bad customer service experiences than they are to talk about good experiences. Sixty-seven per cent of people spend money after getting recommendations from their friends on online communities like Facebook and Twitter. Happy customers who get their issue resolved tell about 4 to 6 people about their experience. Source: White House Office of Consumer Affairs, 2012 Global Customer Service Barometer, McKinsey Quarterly Source: White House Office of Consumer Affairs, 2012 Global Customer Service Barometer, McKinsey Quarterly, Internet Retailer.  Discuss this with the group. Encourage their own experiences of poor service.

Understand the customer environment The cost of good customer service Investing in customer service can cost money; for example: staff/recruitment costs training costs product development. Outgoings and financial investment should be directed to areas with the most benefit to customers and ultimately resulting in an increase in business. Organisations carry out audits, reviews and evaluations to identify which areas will benefit from additional investment. Source: White House Office of Consumer Affairs, 2012 Global Customer Service Barometer, McKinsey Quarterly, Internet Retailer. 

Understand the customer environment Organisational values An organisational value is ‘a belief that a specific mode of conduct is preferable to an opposite or contrary mode of conduct. They are the framework for how an organisation operates. Values are different within each organisation, they might relate to teamwork, honesty, commitment or excellence. Some organisations pride themselves on their core values and often make these a focus of their service offer. This creates an image of how the customer sees the organisation and what they can expect. Activity 5 will increase your knowledge further in this area. source: Rokeach (1973, The Nature Of Human Values) Give out Activity 5.

Understand the customer environment Organisational values If you have completed Activity 5 you will know that all organisations focus on different things to create their values. As customers this is now what we expect from the organisation. If they do not deliver their promised offer communicated through their core values then our expectation will not be met. This is an expectation that has been set by the organisation themselves through the creation of their core values. source: Rokeach (1973, The Nature Of Human Values) Give out Worksheet 3.

Questions?