1. Chapter 1 The Customer Service Profession

2. Learning Objectives Define customer service
Describe factors that have impacted the growth of the service sector in the United States
Identify societal factors that have influenced customer service
Recognize the changes in consumer behavior that are impacting service
This chapter defines customer service, describes factors that impacted the growth of the service sector in the United States, identifies societal factors that have influenced customer service, and recognizes the changes in consumer behavior.

3. Learning Objectives
List the six major components of a customer- focused environment
Explain how some companies are addressing the changes impacting the service sector
The chapter further lists the six major components of a customer-focused environment and explains how some companies address the changes that impact the service sector.

4. Customer Service
Employee’s ability to deliver products and services to internal and external customers
Satisfying their needs and resulting in positive word-of-mouth publicity and return business
Service industry: Businesses and organizations engaged primarily in service delivery
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Defining Customer Service
The ability of knowledgeable, capable and enthusiastic employees to deliver products and services to internal and external customers in a manner that satisfies identified and unidentified needs, resulting in positive word-of-mouth publicity and return business
Service industry: Engages in service delivery, rather than working with products
Product: Something produced or an output by an individual or organization

5. Figure 1.1 - Customer-Focused Organizations
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Defining Customer Service
Figure1.1 – Customer-Focused Organizations
Customer relationship management (CRM): Understanding and influencing customer behavior through ongoing communication strategies in an effort to acquire, retain, and satisfy the customer
Customer-focused organization: Company that spends energy and effort on satisfying internal and external customers by first identifying customer needs, then establishing policies, procedures, and management and reward systems to support excellence in service delivery

6. Growth of Customer Service
Post-World War II
Increase in the number of people in service occupations in the U.S.
Shift to service
Economy shifted focus from manufacturing to providing timely quality service
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Defining Customer Service
The concept of customer service started with cottage industries
Cottage industries: Small businesses started by people in their homes or cottages, to barter products or services with neighbors
Post-world war II service in the United States
Increasing number of workers were pulled into the service sector due to increasing demand
Shift to service due to the increasing importance of the service economy
Service economy: Trend in which businesses have shifted from primarily production and manufacturing to more service delivery
Many organizations have developed specifically to provide services to customers

7. Figure 1.2 - From Pre-World War II Occupations to Service Occupations
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Defining Customer Service
Figure From Pre-World War II Occupations to Service Occupations
Typical former occupations
Farmer
Ranch worker
Machinist
Engineer
Steelworker
Homemaker
Factory worker
Miner
Tradesperson
Railroad worker
Typical service occupations
Salesperson
Insurance agent
Food service
Administrative assistant
Flight attendant
Call center representative
Repair person
Travel professional
Child care provider
Security guard

8. Figure Numeric Change in Wage and Salary Employment in Service-Providing Industries, 2010–2020 (projected)
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Growth of the Service Sector
Figure Numeric Change in Wage and Salary Employment in Service-Providing Industries, 2010–2020 (projected)
As with goods-producing industries, growth among service-producing industries will vary
Technology-related service jobs such as those of database administrators, computer support specialists, computer scientists, computer engineers, and systems analysts are expected to continue to grow at a rapid pace
Source: Bureau of Labor Statistics National Employment Matrix

9. Figure 1.4 - Percent of Labor Force by Race and Ethnic Origin
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Growth of the Service Sector
Figure Percent of Labor Force by Race and Ethnic Origin
Data from the Bureau of Labor Statistics that apply the changes in the service industry include:
The U.S. labor force is growing slower than in the past, becoming more diverse and aging
By 2020, projections are that the U.S. workforce will become even more diverse than it is now
Overall employment in goods-producing industries is expected to increase, driven largely by rapid growth in construction
Productivity gains, automation, and international competition are projected to reduce the demand for labor in most manufacturing industries
Note: The four race groups add to the total labor force; the two ethnic origin groups also add to the total labor force; Hispanics may be of any race
Source: Bureau of Labor Statistics Division of Industry Employment Projections

10. Impact of the Economy on the Quantity of Jobs being Created
Prevailing interest rates and consumer demand cause companies to evaluate:
How many people they need
Which jobs should be maintained
Technology
Increased the need for new technical skills
Automation of tasks that were previously performed by employees
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Growth of the Service Sector
Impact of the economy
Quantity of jobs being created
Prevailing interest rates and consumer demand, typically cause companies to evaluate how many people they need and which jobs will be established
Technology
Has increased the need for many new technical skills in the areas of computer hardware and software operation and maintenance
Has created an opportunity for organizations to transfer to automation tasks previously performed by employees

11. Impact of the Economy on the Distribution of jobs
More jobs are likely to develop in major metropolitan areas
Need for telecommuting
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Growth of the Service Sector
Impact of the economy
Distribution of jobs
Need for employees to be able to have regular access to personal and professional networks and to engage in collaborative exchanges means that more jobs are likely to develop in major metropolitan areas
Need for telecommuting
Telecommuting: To reduce traffic and pollution and save resources many organizations allow employees to set up home offices and from there electronically communicate and forward information to their corporate offices

12. Impact of the Economy on the Quality of Service Jobs
Competition for prime service jobs will become much more intense in the future
Successful employees will be:
Better educated, trained, and prepared
Those who have tapped into the concept of professional networking
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Growth of the Service Sector
Impact of the economy
Quality of service jobs
The 2007–2009 recession affected job security .
It is likely that competition for desired prime service jobs will continue to become much more intense into the foreseeable future.
Employees who obtain and maintain the better customer service jobs that provide good working conditions, security, and benefits will be:
Those who are better educated, trained, and prepared.
Those who understand and have tapped into the concept of professional networking.
Networking: The active process of building relationships and sharing resources.

13. Global Economic Shifts
Sales in brick-and-mortar stores are down, owing to the growth of online retailing
Post-recession, organizations have:
Cut back on the size of their workforce
Sold off, merged, or closed operations
Taken dramatic steps to attract and retain customers
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Societal Factors Affecting Customer Service
Global economic shifts
New legislation impacting healthcare and taxes, job elimination in the government sector, and shifts in consumer spending have impacted many organizations, forcing downsizings and in many cases closures.
Sales in brick-and-mortar stores are down for many retailers and suppliers as consumers turn to the Internet for their needs.
Companies have made drastic shifts in the way they do business and attempt to attract and hold customers.

14. Shifts in the Population and Labor Force
The present labor force is:
Older, more diverse, and has more women
Expected to grow at a slower rate than in previous decades
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Societal Factors Affecting Customer Service
Shifts in the population and labor force
Today’s labor force:
Is older, more racially and ethnically diverse, and composed of more women than in the past
Is expected to grow at a slightly slower rate than in previous decades
The future population
There will be a significant increase in the older population.
Immigration will continue to play a major role in the growth and makeup of the racial and ethnic composition of the U.S. population.
Will have a higher need for more consumer goods and services.

15. Increased Efficiency in Technology
Has resulted in:
Increased production and quality
Equipment working continuously
Enhanced ease of service delivery and faster processing
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Societal Factors Affecting Customer Service
Increased efficiency in technology
Has increased production and quality and has resulted in:
Acquisition of equipment that enhances customer service.
Increased need for service organizations.
Decrease in manufacturing and blue-collar jobs.
Machines and equipment can work 24 hours, seven days a week with few lapses in quality, with no need for breaks, and without increases in salary and benefits.
They also potentially enhance the ease of service delivery and provide faster processing.

16. Globalization of the Economy
Information, knowledge, and resource sharing around the world
Focus is on business-to-business (B2B) customer service
Globalization
Relocation of business services by an organization from one country to another
Offshoring
Contracting with third-party companies to deliver products and services to customers or produce products
Outsourcing
Making internal employees assume functions and perform work instead of contracting to third parties or outsourcing
Insourcing
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Societal Factors Affecting Customer Service
Globalization of the economy
Globalization
Ongoing trend of information, knowledge, and resource sharing around the world.
As a result of a more mobile society and easier access to transportation and technology, more people are traveling and accessing products and services form international sources than ever before.
Offshoring
Relocation of business services by an organization from one country to another to cut costs with cheaper worker salaries and/or tax savings.
Outsourcing
Refers to the practice of contracting with third-party companies or vendors outside the organization to deliver products and services to customers or produce products.
Insourcing
The opposite of outsourcing, this occurs when organizations decide to have internal employees assume functions and perform work instead of contracting out to third parties or outsourcing it.

17. Deregulation
Governments remove legislative or regulatory guidelines that inhibit and control an industry
Deregulation of U.S. public services led to:
Breakdowns in service quality
Closure or restructuring of the company
Opportunities for new companies to step up and to better serve customers
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Societal Factors Affecting Customer Service
Deregulation of many industries
Deregulation: Occurs when governments remove legislative or regulatory guidelines that inhibit and control an industry.
Create opportunities for newly established companies to step in with improvements and innovations to close the gaps and better serve customers.
Disadvantages
Major industry shakeups.
Breakdowns in service quality.
Closure or restructuring of the company.
These events have created opportunities for newly established companies to step in with improvements and innovations to close the gaps and better serve customers.

18. Geopolitical Changes
Have reduced U.S. business access and competition within some areas of the world
North American Free Trade Agreement (NAFTA): Entered into by the United States, Canada, and Mexico
Greater need for better understanding of diversity-related issues
European Union
Economic market made up of 28 states
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Societal Factors Affecting Customer Service
Geopolitical changes
Economic embargoes, political unrest, and conflicts and wars involving various countries have reduced U.S. business access and competition within some areas of the world.
North American Free Trade Agreement (NAFTA)
Eliminates trade barriers.
Promotes fair trade across borders.
Increases investment opportunities.
Promotes and protects intellectual property rights.
There is a greater need for better understanding of diversity-related issues.
European Union
Ensures free movement of people, goods, services, and capital.
Majority of member states have adopted the euro.
Eliminates the need for a passport from people of member countries traveling throughout the Union.

19. Changing Values
Companies are attempting to attract and hold customers by:
Making changes in their products
Changing their manner of service
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Societal Factors Affecting Customer Service
Changing values
As the world changes, so do individual values.
As a result of societal values, companies change their approach in doing business as a competitive strategy and to attract and hold customers.
This includes shifting the way they do business, the products that they deliver, and their manner of service.

20. White-collar Workers and Women in the Workforce
Increase in the number of white-collar workers has led to the creation of new types of service occupations
Women’s traditional roles in society have shifted to service providers
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Societal Factors Affecting Customer Service
Increase in the number of white-collar workers has led to the creation of new types of service occupations; in effect, the service phenomenon has spawned its own service trend.
More women entering the workforce
Women’s traditional roles in society have shifted, out of necessity or convenience, to service providers.

21. Diverse Population and More Older Workers Entering the Workforce
Racially and ethnically diverse population
Bring new ideas, needs, and levels of knowledge, experience, and ability
Bring a better understanding of the needs of the group that they represent
More older workers entering the workforce
Median age of people in the United States is rising
Return to work due to economic necessity and/or social reasons
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Societal Factors Affecting Customer Service
A more racially and ethnically diverse population is entering the workforce
As workers - Bring with them new ideas, values, expectations, needs, and levels of knowledge, experience, and ability.
As consumers - Bring a better understanding of the needs of the various groups that they represent.
More older workers entering the workforce
Median age of people in the United States is rising because of the aging of the “baby-boom” generation.
More people return to work due to economic necessity or because they miss the work and/or the opportunity to interact with others and feel useful.

22. Growth of E-commerce
Consumers can surf the net for products and services without leaving their homes or offices
Manufacturers can provide products and services worldwide without ever physically coming into contact with a customer
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Societal Factors Affecting Customer Service
Growth of e-commerce
E-commerce: Marketing products and services on the Internet and through other technology, and the process of accessing them by consumers.
Shoppers use the virtual market place to satisfy needs or wants that they likely did not know they had before browsing the Internet.

23. Consumer Behavior Shifts
Different mindset
Expectation of quality service
Enhanced consumer preparation
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Consumer Behavior Shifts
Different mindset
Majority of consumers now are taking a very cautious approach to spending.
Younger consumers want to have lesser financial obligations.
Expectation of quality service
Customers switch to competitors if their needs are not met.
Creates a need for better-trained and better-educated customer service professionals.
Enhanced consumer preparation
Result of advertising and publicity by companies, and activities of consumer information and advocacy groups.
The Internet has given consumers a lot of power in dealing with manufacturers.
Customer satisfaction is crucial.
Customer satisfaction: The feeling of a person whose needs have been met by an organization.

24. Figure 1.8 - Components of a Customer-Focused Environment
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Figure Components of a Customer-Focused Environment
Customer
External customers: People outside the organization who purchase or lease products and services.
Internal customers: People within the organization who require support and service and provide information, products, and services to service providers.
Organizational culture
Includes an element of an organization that a customer encounters.
Experiences, attitudes, and norms upheld by employees set the tone for how service is delivered and for how service providers interact with internal and external customers.
Human resources
Refers to employees of an organization.
Attracting and retaining qualified employees is a challenge for many companies.
Younger workers are more likely than older workers to be short-tenured employees.
Deliverables
Products or services provided by an organization.
Quality and quantity determine customer satisfaction.
Delivery system
Method used by an organization to provide services and products to its customers.
Determined by industry standards, customer expectations, capabilities, costs, and current and projected requirements.
Service
Manner in which employees of an organization treat their customers and each other as they deliver their company’s deliverables.

25. Figure 1.10 - Competencies of Customer Service Professionals
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Figure Competencies of Customer Service Professionals
These are some of the competencies required for customer service professionals to be successful.

26. Addressing the Changes
To sustain in the present highly volatile business environment, companies must:
Become learning organizations
Focus on service recovery
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Addressing the Changes
In order to sustain and cope in a constantly changing business environment, companies must:
Become learning organizations
Learning organizations: Value knowledge, education, and employee training and learn from competition and industry trends.
Develop systems to support continued growth and development.
Focus on service recovery
Service recovery: Process of righting a wrong or correcting something that has gone wrong involving provision of a product or service to a customer.
Involves not only replacing defective products, but also going the extra step of providing compensation for the customer’s inconvenience.