CHAPTER 18 CUSTOMER SERVICE ANNOTATED OUTLINE INSTRUCTOR NOTES • Customer Service is the set of activities and programs undertaken by retailers to make the shopping experience more rewarding for their customers. These activities increase the value customers receive from the merchandise and services they purchase. All employees of a retail firm and all elements of the retailing mix provide services that increase the value of the merchandise. • Most of the services provided by retailers furnish information about the retailer's offering and make it easier for customers to locate and buy products and services. • Retailers can take advantage of the opportunities to develop strategic advantage by providing high-quality service. See PPT 18-3 Generate a discussion among students about their experience with customer service at various retailers. What were the possible reasons for good service at some retailers versus bad service at others? I. Strategic Advantage Through Customer Service • Successful retailers differentiate their retail offerings, build customer loyalty, and develop a sustainable competitive advantage by providing excellent customer service. Good service keeps customers returning to a retailer and generates positive word-of-mouth communication, which attracts new customers. • Providing high-quality service is difficult for retailers. Automated manufacturing makes quality of most merchandise consisted from item to item. But the quality of retail service can vary dramatically from store to store and from salesperson to salesperson within a store. See PPT 18-5 Ask students if they had chosen to buy a branded good at a specific retailer, even though it was available at other stores in the area. If so, was the decision to patronize a specific retailer due to the better service at that store? • In addition, most services provided by retailers are intangible – customers can't see or feel them. Intangibility makes it hard to provide and maintain high-quality service because retailers can't count, measure, or check service before it's delivered to customers. • The challenges of providing consistent high-quality service provides an opportunity for a retailer to develop a sustainable competitive advantage. A. Customer Service Strategies • Personalized and standardized are two approaches retailers use to develop a sustainable customer service advantage. • Successful implementation of the personalized approach relies on the performance of sales associates and service providers, while the standardized approach relies more on policy, procedures, and store design and layout See PPT 18-6 Ask students for examples of retailers that use customized and standardized service approaches. What are the advantages and disadvantages of each of these approaches? What are the factors that retailers should consider when deciding which approach to use? 1. Personalized Approach • The customization approach encourages service providers to tailor the service to meet each customer's personal needs. • Some retailers, such as Lands' End, are introducing a human element into their electronic channel. At Lands' End, customers can simply click on a button and chat – referred to as instant messaging – with a service provide. • At other retail stores, such as Target, several employees called guest ambassadors roam the store looking for customers who need assistance. • The customized approach typically results in customers receiving superior service. But the service might be See PPT 18-7 inconsistent because service delivery depends on the judgment and capabilities of the service providers. • In addition, providing the customized service is costly since it requires more well-trained service providers or complex computer software. 2. Standardized Approach • The standardized approach is based on establishing a set of rules and procedures and being sure that they are implemented consistently. By strict enforcement of these procedures, inconsistencies in the service are minimized. • Store or website design and layout also play an important role in the standardization approach. See PPT 18-8 3. Cost of Customer Service • Providing high quality service, particularly customized service, can be very costly. • However, from a long-term perspective, good customer service can actually reduce costs and increase profits. See PPT 18-09 B. Customer Evaluation of Service Quality • When customers evaluate retail 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 the service falls below their expectations. Ask students to describe a situation in which they received good and poor service from a retailer. What factors influenced their perceptions? 1. Role of Expectations • Customer expectations are based on knowledge and past experiences with a retailer and its competitors. • Technology is dramatically changing the ways in which customers and firms interact. Customers can now interact with companies through automated voice response systems and place orders and check on delivery through the Internet. But customers still expect dependable outcomes, easy access, responsive systems, flexibility, apologies, and compensation when things go wrong. • Expectations vary depending on the type of store. Since expectations aren't the same for all types of retailers, a customer may be satisfied with low levels of actual service in one store and dissatisfied with high service levels in another store. • Customer service expectations vary around the world. Although Germany's manufacturing capability is world renowned, its poor customer service is also well known. Because Germans aren't accustomed to good service, they don’t demand it. On the other hand, Japanese expect excellent customer service. See PPT 18-12 Describe the role of expectations. Relate the role of expectations to the student descriptions of service encounters. Ask students what factors influence their expectations? Get students to provide examples of unusual service situations, both good and bad. Then get them to provide examples of ordinary service. They won’t know what to do about the ordinary service situation question because they won’t remember any. They will remember, however, really good or really bad service. Ask students if they had received unexpected services from a retailer. II. The Gaps Model For Improving Retail Service Quality • When customers' expectations are greater than their perceptions of the delivered service, customers are dissatisfied and feel the quality of the retailer's service is poor. Thus, retailers need to reduce the service gap – the difference between customers' expectations and perceptions of customer service -- to improve See PPT 18-13 and 18-14 customers' satisfaction with their service. Four factors affect the service gap: • Knowledge gap: The difference between customer expectations and the retailer's perception of customer expectations. • Standards gap: The difference between the retailer's perceptions of customer’s expectations and the customer service standards it sets. • Delivery gap: The difference between the retailer's service standards and the actual service provided to customers. • Communication gap: The difference between the actual service provided to customers and the service promised in the retailer's promotion program. • These four gaps add up to the service gap. The retailer’s objective is to reduce the service gap by reducing each of the four gaps. A. Knowing What Customers Want: The Knowledge Gap • The most critical step in providing good service is to know what the customer wants. • 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, and improving the communication between managers and employees who provide customer service. • Market research can be used to better understand customers’ expectations and the quality of service provided by a retailer. See PPT 18-15 • Methods for obtaining this information range from comprehensive surveys to simply asking some customers about the store’s service. 1. Comprehensive Studies • Some retailers have established programs for assessing customers’ expectations and service perceptions. Work with students to develop a questionnaire that could be used to assess customer satisfaction with service provided by a local retailer. 2. Gauging Satisfaction with Individual Transactions • Another method for doing customer research is to survey customers immediately after a retail transaction has occurred. • Customer research on individual transactions provides up-to-date information about customers' expectations and perceptions. The research also indicates the retailer's interest in providing good service. • Since the responses can be linked to a specific encounter, the research provides a method for rewarding employees who provide good service and correcting those who exhibit poor performance. Have students go to a shopping center and ask customers about the service they received. 3. Customer Panels and Interviews • Rather than surveying many customers, retailers can use panels of 10 to 15 customers to gain insights into expectations and performance. Work with students to develop a procedure for conducting a customer panel. How many customers? What types of customers? When and where would it meet? What specific questions would be asked? 4. Interacting with Customers • Owner-managers of small retail firms typically have daily contact with their customers and thus have accurate first- hand information about them. • In large retail firms, managers often learn about customers through reports so they miss the rich information Ask students what retail managers can do to improve communications with contact people. provided by direct contact with customers. 5. Customer Complaints • Complaints allow retailers to interact with their customers and acquire detailed information about their service and merchandise. • Handling complaints is an inexpensive means to isolate and correct service problems. • Although customer complaints can provide useful information, retailers can't rely solely on this source of market information. • Typically dissatisfied customers don't complain. To provide better information on customer service, retailers need to encourage complaints and make it easy for customers to provide feedback about their problems. Ask students what retailers could do to stimulate comments and complaints about service. 6. Using Technology • New, affordable information technology packages are enabling even small retailers to improve their customer service by maintaining and providing customer information to sales associates. 7. Feedback from Store Employees • Salespeople and other employees in regular contact with customers often have a good understanding of customer service expectations and problems. This information will improve service quality only if they're encouraged to communicate their experiences to high- level managers who can act on it. 8. Using Customer Research • The service gap is reduced only when retailers use this information to improve service. Ask students if retail managers really need to interact with customers to determine customer expectations and perceptions? • Feedback on service performance needs to be provided in a timely manner. • Feedback must be prominently presented so service providers are aware of their performance. Can't they learn this through talking with employees and looking at market research? B. Setting Service Standards: The Standards Gap • Service standards should be based on customers’ perceptions rather than on internal operations. • To close the standards gap, retailers need to (1) commit their firms to providing high-quality service, (2) develop innovative solutions to service problems, (3) define the role of service providers, (4) set service goals, and (5) measure service performance. See PPT 18-6 Ask students what a retailer can do to remind employees about the need to provide good customer service. 1. Commitment to Service Quality • Service excellence occurs only when top management provides the leadership and demonstrates commitment. Top management must be willing to accept the temporary difficulties and even increased costs associated with improving service quality. • Store managers are the key to achieving service quality standards. See PPT 18-17 2. 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. 3. Setting Service Goals • Retailers often develop service goals based on their beliefs about the proper operation of the business rather than the customers' needs and expectations. • Employees are motivated to achieve service goals when the goals are specific, measurable, and participatory in the sense that they participated in setting them. • Employee participation in setting service standards leads to better understanding and greater acceptance of the goals. Ask student to give specific example of services goals that might be set for a sales associate in a Gap store. 4. Measuring Service Performance • Retailers need to continuously assess service quality to ensure that goals will be achieved. • Retailers also use mystery shoppers to assess their service quality. Mystery shoppers are professional shoppers who “shop” a store to assess the service provided by store employees and the presentation of merchandise in the store. Query students on the types of information that could be collected by mystery shoppers. 5. Giving Information and Training • Store employees need to know about the retailer’s service standards and the merchandise they offer, as well as their customers’ needs. With this information, employees can answer customers’ questions and suggest products. • In addition, store employees need training in interpersonal skills. III. 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 knowledge and skills, provide instrument and emotional See PPT 18-19 Ask students to indicate the kind of information a salesperson in the following departments of a department store should have: china, consumer electronics, men’s ties, women’s hosiery, and men’s suits. support, improve internal communications and reduce conflicts, and empower employees to act in the customers’ and firm’s best interests. 1. Providing Instrumental and Emotional Support • Service providers need to the have the instrumental support -- the appropriate systems and equipment – to deliver the service desired by customers. • In additional to instrumental support, service providers need emotional support from their coworkers and supervisors. Emotional support involves demonstrating a concern for the well-being of others. Dealing with customer problems and maintaining a smile in difficult situation is psychological demanding. • Service providers need to be in a supportive and understanding atmosphere to deal with these demands effectively. See PPT 18-20 Ask students to give examples of emotional and instrumental service support they might have received when working in a retail outlet. 2. Improving Internal Communications • When providing customer service, store employees must often manage the conflict between customers’ needs and the retail firms’ needs. • Retailers can reduce certain conflicts by having clear guidelines and policies concerning service and by explaining the rationale for these policies. • Conflicts can also arise when retailers set goals inconsistent with the other behaviors expected from store employees. • Finally, conflicts can also arise between different areas of the firm. 3. Empowering Store Employees • Empowerment means allowing employees at the lowest level of the firm to make important decisions on how service is provided to customers. When the employees responsible for providing service are authorized to make important decisions, the quality of service improves. • However, empowering service providers can be difficult and the benefits may not justify the costs. See PPT 18-21 Ask students what effects does empowering store employees have on the employees? On customers? Have students relate work experiences they have had in which their lack of empowerment reduced the quality of service they could provide. 4. Providing Incentives • Many retailers use incentives, like paying commissions based on sales to motivate employees. • But retailers have found that commissions on sales can decrease customer service and job satisfaction. Incentives can motivate high-pressure selling which leads to customer dissatisfaction. • However, incentives can also be used to effectively improve customer service when the rewards are tied to solving customer problems and the rewards are provided at about the same time the appropriate behavior occurred. Ask students about the benefits and problems with offering incentives. Review the material on incentives in Chapter 17. 5. Developing Solutions to Service Problems • Retailers also use systems and technology to close the delivery gap. a. Developing New Systems • Finding ways to overcome service problems can improve customer satisfaction, and in some cases, reduce costs. 6. Using Technology • Many retailers are installing kiosks with broadband Internet technology in their stores to allow customers to order See PPT 18-24 and 18-25 merchandise and to provide routine customer service, freeing employees to deal with more complicated customer service issues. • Other technology applications used to enhance customer service are hand- held scanners and “intelligent” shopping carts. Ask students to describe customer service technologies they have encountered in retail stores. A. Communicating the Service Promise: The Communications Gap • The fourth factor leading to a customer service gap is a difference between the service promised by the retailer and the service actually delivered. • Overstating the service offered raises customer expectations. Then, if the retailer doesn’t follow through, expectations exceed perceived service, and customers are dissatisfied. • The communication gap can be reduced by making realistic commitments and by managing customer expectations. See PPT 18-26 Discuss the paradox of wanting to tell customers about great customer service but not wanting to raise expectations too high. 1. Realistic Commitments • Advertising programs are typically developed by the marketing department, while the store operations division delivers the service. Poor communication between these areas can result in a mismatch between an ad campaign's promises and the service the store can actually offer. 2. Managing Customer Expectations • Information presented at the point of sale can be used to manage expectations. • Communication programs can inform customers about their role and responsibility in getting good service, and can give tips on how to get better Ask students to indicate some complaints they have made about service provided by a retailer. Use these situations in a role playing exercise assigning one student to play the part of the customer and the other to be the retail employee receiving the complaint. service, such as the best times of the day to shop and the retailer's policies and procedures for handling problems. VI. Service Recovery • Rather than dwelling on negative aspects of customer problems, retailers should focus on the positive opportunities they generate. • Service problems and complaints are an excellent source of information about the retailer's offering – its merchandise and service. • Armed with this information, retailers can make changes to increase customer satisfaction. • Service problems also enable a retailer to demonstrate its commitment to providing high-quality customer service. • Most retailers have standard policies for handling problems, however, in many cases, the cause of the problem may be hard to identify, uncorrectable, or as a result of the customer's unusual expectations. In such cases, service recovery might be more difficult. • The steps in effective service recovery are: (1) listen to the customer, (2) provide a fair solution, and (3) resolve the problem quickly. See PPT 18-27 Have students relate service failures they have experienced and describe situations in which the retailer made a good recovery and a poor recovery. A. Listening to the Customer • Customers can become very emotional over their real or imaginary problems with a retailer. Often this emotional reaction can be reduced by simply giving customers a chance to get their complaints off their chests. • Store employees should allow customers to air their complaints without interruption. Ask students why it is important for an employee to listen carefully to the complaint. Why is the best policy always to give the complaining customer what he or she wants? Do customers always know what they want? • Customers want a sympathetic response to their complaints. • Employees also need to listen carefully to determine what the customer perceives to be a fair solution. B. Providing a Fair Solution • Favorable impressions arise when customers feel they have been dealt with fairly. When evaluating the resolution of their problems, customers compare how they were treated in relation to others with similar problems or how they were treated in similar situations by other retail service providers. • Customers’ evaluations of complaints’ resolutions are based on distributive fairness and procedural fairness. 1. Distributive Fairness • Distributive fairness is the customer’s perceptions of the benefits received compared to their costs (inconvenience or loss). Customers want to get what they paid for. • Customers typically prefer tangible rather than intangible resolutions to their complaints. • Customers may want to “let off steam,” but they also want to feel the retailer was responsive to their complaint. If providing a tangible restitution is not possible, the next best alternative is to let customers see that their complaints will have an effect in the future. See PPT 18-29 Ask Students: What is distributive and procedural fairness? Which one is more important? Why? 2. Procedural Fairness • Procedural fairness is the perceived fairness of the process used to resolve complaints. • Customers consider three questions when evaluating procedural fairness: (1) Did the store employee collect information about the situation? (2) Was this information used to resolve the complaint? and, (3) Did the customer have some influence over the outcome? • Discontent with the procedures used to handle a complaint can overshadow the benefits of a positive outcome. • Customers typically feel they are dealt with fairly when store employees follow company guidelines. 3. Resolving Problems Quickly • Customer satisfaction is affected by the time it takes to get an issue resolved. • Retailers can minimize the time to resolve complaints by reducing the number of people the customer must contact, providing clear instructions, and speaking in the customer's language. Ask Students: What can retailers do to resolve complaints quickly? Is it always best to resolve complaints as quickly as possible? 1. Reducing the Number of Contacts • As a general rule, store employees who deal with customers should be made as self-sufficient as possible to handle problems. • Customers are more satisfied when the first person they contact can resolve a problem. 2. Giving Clear Instructions • Customers should be told clearly and precisely what they need to do to resolve a problem. 3. Speaking the Customer’s Language • Customers can become very annoyed when store employees use company jargon to describe a situation. To communicate clearly, store employees should use terms familiar to the customer. IX. Summary • Due to the inherent intangibility and inconsistency of services, providing high-quality customer service is challenging. However, customer service also provides an opportunity for retailers to develop a strategic advantage. • Retailers use two basic strategies for providing customer service: the personalized approach and the standardized approach. • The personalized approach relies primarily on sales associates. The standardized approach places more emphasis on developing appropriate rules, consistent procedures, and optimum store designs. ANSWERS TO “GET OUT AND DO ITS” 2. INTERNET EXERCISE Qthru (www.Qthru.com) is a company that has created a mobile application to increase the speed of the checkout process by enabling customers to scan the products they want to purchase and pay for them on their smartphones. Visit the company’s website and review both the application and the provided checkout process. How useful is this application for retailers? What sorts of retailers seem most likely to adopt it? There are retailers, like grocery stores and convenience stores, that need to expedite the checkout process in order to satisfy customers. Many customers at these stores are time starved and in a rush. Using a service like Qthru might facilitate a speedier transaction, thus making the customer happier. However, one negative outcome of this, is that the customer might not spend time looking at impulse products and that might reduce overall sales for these retailers. A product like Qthru is not great for many specialty stores as customers are expecting a higher level of interaction with the sales person and probably do not want to feel rushed through their purchases. 3. INTERNET EXERCISE Visit Amazon.com and shop for a bestselling book. How does the web site help you locate bestsellers? How does the customer service offered by this web site compare to the service you would get at another book retailer’s web site or in a bricks and mortar bookstore? The web page is organized by departments. Department First level menu Second level menu Third level menu Books Book Kindle books Textbook Audiobooks Magazines Advanced Search Browse Subjects New Releases Bestsellers The New York Times® Bestsellers Libros en español Bargain Books Textbooks Bestsellers in Books Any Category Books (Updated hourly) Top 100 books Services offered online: - Recommendations (based on past purchases) and a personalized welcome - Wish list - Choices for shipping methods and saved shipping addresses - Gift cards - Returns - Frequently asked questions and responses, etc. 4. GO SHOPPING Go to a discount store such as Walmart, a department store, and a specialty store to buy a pair of jeans. Compare and contrast the level of customer service you received in each of the stores. Which store made it easiest to find the pair of jeans you would be interested in buying? Evaluate the perceived service experience in terms of reliability, assurance, tangibility, empathy and responsiveness. Does the service quality match the store format? Explain your response. Student responses will vary. This could be a good class or team discussion topic. It is also a good way to review store format from The Types of Retailers chapter. Five customer service characteristics that affect the perceptions for service quality are reliability, assurance, tangibility, empathy and responsiveness. - Reliability is the ability to perform the service dependably and accurately, such as performing the service as promised/contracted or meeting promised delivery dates. - Assurance is the knowledge of and courtesy by employees and their ability to convey trust and confidence. - Tangibility is associated with the appearances of physical facilities, equipment, personnel, and communication materials. - Empathy refers to the caring, individualized attention provided to customers, such as personalized service, receipts of notes and e-mails, or recognition by name. - Responsiveness is the willingness to help customers and provide prompt service, such as returning calls and e-mails immediately. ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS 1. For each of these services, give an example of a retailer for which providing the service is critical to its success, then give an example of a retailer for which providing the service is not critical: (a) personal shoppers, (b) home delivery, (c) money-back guarantees, and (d) credit a) Personal shoppers are critical to the success of clothing department and specialty stores in that they can help customers find merchandise that might be otherwise hidden in the many isles and racks. On the other hand, personal shoppers are not needed in discount clothes stores, where people like to hunt through the racks themselves for their special deal. b) Home delivery is important in most online retailers. In this growing industry differentiation is needed. If a store can deliver quickly and carefully, this will definitely add to their success. However, delivery is not as important in strictly bricks and mortar stores selling smaller goods, like clothing, jewelry, books, etc. Customers can just walk in and pick up the goods themselves, with no need for delivery. c) Money-back guarantees are important are important in most retail industries to build customer loyalty. Gift retailers should focus on promoting money back guarantees, because it is possible the receivers of the goods will be returning them if disliked. A money-back guarantee is always a good idea with any retailer. d) Credit is critical in stores with high priced goods, like jewelry, or cars. Customers want to be able to buy on credit in order to pay for the goods over a period of time. However, store credit is not critical in retail stores that sell inexpensive goods, where the customer can most likely pay cash. 2. Both Nordstrom and McDonald's both are noted for their high-quality customer service, but their approaches to providing this quality service are different. Describe this difference. Why have the retailers elected to use these different approaches? In the chapter, we discuss to approaches for providing high quality customer service— standardization and customization. McDonald uses the standardization approach. Its service providers follow a set of rules and procedures when providing service. By strict enforcement of these procedures, inconsistencies in the service are minimized. Through standardization, customers receive the same food and service at McDonald’s restaurants across the globe. The food may not be exactly what customers want, but it is consistent. On the hand, Nordstrom uses a customization approach. It encourages service providers to tailor the service to meet each customer’s personal needs. This approach can result in customer’s receiving superior service. But the service might be more inconsistent because the service delivery depends on the judgment and capabilities of the service providers. The individual retailers use customer service to build customer loyalty and develop a sustainable competitive advantage. Good customer service keeps customers returning and generates positive word-of-mouth communications, which attracts new customers and a larger market share. 3. Have you ever worked in a job that required you to provide customer service? If yes, describe the skills you needed and tasks performed for this job. If no, what skills and abilities would you highlight to a potential employer that was interviewing you for a position that included customer service in the job description? While student answers will vary. This discussion is a good time to review the Standards gap and the ways retail employees take part in closing that gap. The retailer needs to ensure that its employees know about the firm’s service standards, merchandise/service offering and customer needs. Having complete knowledge allows these employees to feel confident and competent in working directly with customers, handling their questions and requests, and providing the service that they need. Students are likely to respond, and the discussion should definitely consider, the role of interpersonal skills in providing good customer service. Retailers need to support employees in enhancing and using these skills, as they will be critical in dealing effectively with difficult customer situations. Employees should also be encouraged to develop a skill set to deal with stress caused by facing these difficult interactions. 4. Consider customer service at IKEA. How does this retailer utilize a self-service model as a competitive advantage strategy versus traditional furniture stores? The typical furniture store uses a showroom to display some of the merchandise the retailer sells. Complementing the in-store inventory are books of fabric swatches, veneers, and alternative styles from which customers can order. Salespeople assist customers in going through the books. When the customer makes a selection, the order is placed with the factory, and the customized furniture is built and delivered to the customer’s home in six to eight weeks. This system tailors the furniture to the specific customers’ preferences, but increases costs and prices. Sales associates need to spend time with customers helping them “design” the furniture they want, retailers need to recover the cost of delivering the furniture to the customers’ home, and customers must wait weeks to get the furniture. In contrast, IKEA uses a self-service model based on extensive in-store displays and information. At information desks in the store, shoppers, as they enter the store, can pick up a map of the store, plus a pencil, order form, clipboard, and tape measure. Every product available is displayed in over 70 room-like settings throughout the 150,000 square foot warehouse stores. Thus, customers don’t need a decorator to help them picture how the furniture will go together. Adjacent to the display rooms is a warehouse with ready-to- assemble furniture in boxes that customers can pick up when they leave the store. After studying displays, customers proceed to a self-service storage area and locate their selections using codes copied from the sales tags. Although IKEA uses a “customers do it themselves” approach, it also offers some services that traditional furniture stores do not, such as in-store child-care centers, restaurants serving fast food, and extensive information and displays about the quality of the furniture. Toddlers can be left in a supervised ballroom filled with 50,000 brightly colored plastic balls. There are changing rooms in each store, complete with bottle warmers and disposable diaper dispensers. Displays cover the quality of products in terms of design features and materials, with demonstrations of testing procedures. 5. Review Retailing 18.2 about customer service at Zappos. How does Zappos create such a positive culture among its service personnel? Zappos corporate culture centers on customer satisfaction with a goal of “wow”ing every single customer. Zappos begins instilling this culture in potential employees in the interview process. If an employee is hired, he/she has to go through five weeks of training, including working in the call center. Employees are empowered to meet the needs of customer’s individually and are not given a script for handling service issues. Rather, employees are encouraged to respond in a way that meets the needs of the individual customer. Zappos also designed its shopping process to exceed customer expectations and provide a unique, pleasant, and seamless experience. 6. Assume you're the department manager for menswear in a local department store that emphasizes empowering its managers. A customer returns a dress shirt that's no longer in the package in which it was sold. The customer has no receipt, says that when he opened the package he found that the shirt was torn, and wants cash for the price at which the shirt is being sold now. The shirt was on sale last week when the customer claims to have bought it. What would you do? Students’ answers will vary. Potential answers might sound like the following: “I would first inspect the merchandise to determine if the shirt was torn. If indeed the shirt was torn when the customer opened the package, it is unlikely that he would have worn it. If the shirt appeared to be worn, I would assume that the customer was attempting to be deceitful; but I would still convey the goodwill of the store by offering the customer the opportunity to exchange the merchandise or accept a store credit at the sale price. If however, the customer was someone who I knew to be a loyal repeat customer, I would simply accept the return and give him what he was asking for. If the customer is unfamiliar to me or is known for making questionable returns, I would stick to the offer described above or not accept the return at all if he was unwilling to accept my offer.” 7. Consider a situation in which you received poor customer service in a retail store or from a customer service provider. Did you make the store’s management aware of your experience? Whom did you relay this experience to? Have you returned to this retailer? For each of these questions, explain why you did what you did. While discussing student responses about poor customer service experiences, review the concept of service recovery and emphasize the importance of the retailer focusing on the positive aspects of customer complaints, the learning opportunities to improve practices and enhance their offerings to provide better customer satisfaction. Service recovery, encouraging complaints and handling problems in a satisfactory way, provides the retailer with the opportunity strengthen their relationship with the customer. Effective efforts at service recovery can increase customer satisfaction, purchase intentions, and positive word of mouth about the retailer. Review the two critical aspects of effective service recovery: listening to customers and providing a fair solution. Most students are more likely to engage in negative word-of-mouth after a service failure, rather than dealing with the service provider directly and giving them an opportunity for service recovery. 8. Gaps analysis provides a systematic method for examining a customer service program's effectiveness. Top management has told an information systems manager that customers are complaining about the long wait to pay for merchandise at the checkout station. Take the role of the systems manager and use the gaps analysis table below to evaluate this problem and suggest possible approaches for reducing the wait time. Problem Encountered Strategies to Close this Gap Knowledge gap (1) Standards gap (2) Delivery gap (3) Communications gap (4) GAP One exists when there is a difference between customer expectations and management’s perceptions of customer expectations. In this case the manager needs to do marketing research to determine exactly what amount of time customers are willing to wait in line to pay for merchandise. Based on the complaints, apparently a GAP exists here. Several techniques to improve the manager’s understanding of consumer expectations are available such as customer panels and interviews, interacting with customers, getting feedback from store employees, and reviewing the content of the customers’ complaints. GAP Two exists when there is a difference between management’s perceptions of customer expectations and the specified service. If long waits in line are perceived by management not to be important to customers and the store does not implement measures to maintain short waiting times in line, then a GAP Two situation exists. Several techniques are available to bridge the standards gap including setting more clear service goals related to customer wait times, definite the role of service providers in reducing wait times, and measuring service performance through techniques such as mystery shoppers to determine whether employees can be playing a role to reduce customer wait times. GAP Three exists when there is a difference between the specified service and the delivered service. In this case, if management thinks that customers are willing to wait for ten minutes, but in reality they usually have to wait for fifteen minutes, then a GAP Three situation exists. Improving internal communications, providing support, providing incentives, using technology, and empowering store employees are three ways retailers can bridge this gap. GAP Four exists when there is a difference between the delivered service and the retailer’s communication about service. In this case, if Kmart advertises that there is no waiting in line at their stores, but in reality when customers come to the stores there is a long wait, and then there is a GAP Four situation. Strategies to bridge this gap include making realistic commitments and managing customer expectations. 9. How can retailers provide high quality personalized service? Use an ophthalmologist’s office that also sells eye glass frames and fills prescriptions for contact lenses as your example. How does this compare with the service provided with 1-800 CONTACTS online or in-store with their bricks and mortar partner, Walmart? Students’ answers should consider some of the cues used by customer to evaluate retail service: 1) Tangibles: appearance of store; display of merchandise; appearance of salespeople; 2) Understanding and knowing customer: providing individual attention; recognizing regular customers; 3) Security: feeling safe in parking lot; communications and transactions; treated confidently; 4) Credibility: reputation for honoring commitments; trustworthiness of salespeople; guarantees and warranties provided; return policy; 5) Information provided to customers: explanation of service and its cost; notes sent to customers informing them of sales; assurances that a problem will be resolved; 6) Courtesy: friendliness of employees; respect shown to customers; interest shown in customers; 7) Access: short waiting time to complete sales transaction; convenient operating hours; convenient location; manager available to discuss problems; 8) Competence: knowledge and skillful employees; customer questions answered; 9) Responsiveness: returning a customer’s call; giving prompt service; 10) Reliability: accuracy in billing; performing service at a designated time; accuracy in completing sales transaction. Other support for this discussion question… How do the services that retailers offer provide value and convenience for customers? - Furnishes information to customers about merchandise and brands - Makes it easier to locate and buy products and services - Provides sustainable competitive advantage for the retailer - Improves the interaction between the sales associate ant the customer - Retains existing customers and attracts new customers Nordstrom is known for their excellent customer service. Based on the book, “Lessons from the NORDSTROM Way”, by Robert Spector, highlights the main reasons other companies are emulating the #1 customer service company. 1. Provide You Customers with Choices 2. Create and Inviting Place 3. Hire Nice, Motivated People 4. Sell the Relationship: Service Your Customers through the Goods and Services You Sell 5. Empower Employees to Take Ownership 6. Disregard the Rules and Be Innovative 7. Promote Competition 8. Commit 100 Percent to Customer Service 9. Customers are at the very top because they are the most important people in the equation. 10. Consider a recent retail service experience, such as a haircut, doctor’s appointment, dinner in a restaurant, bank transaction or product repair (not an exhaustive list), and answer the questions below: a) Describe an excellent service delivery experience. b) What made this quality experience possible? c) Describe a service delivery experience in which you did not receive the performance that you expected. d) What were the problems encountered and how could they have been resolved? Students’ answers will likely vary quite a bit here to provide a rich basis for discussion of excellent and poor retail service experiences. Students’ answers should consider some of the cues used by customer to evaluate retail service: 1) Tangibles: appearance of store; display of merchandise; appearance of salespeople; 2) Understanding and knowing customer: providing individual attention; recognizing regular customers; 3) Security: feeling safe in parking lot; communications and transactions; treated confidently; 4) Credibility: reputation for honoring commitments; trustworthiness of salespeople; guarantees and warranties provided; return policy; 5) Information provided to customers: explanation of service and its cost; notes sent to customers informing them of sales; assurances that a problem will be resolved; 6) Courtesy: friendliness of employees; respect shown to customers; interest shown in customers; 7) Access: short waiting time to complete sales transaction; convenient operating hours; convenient location; manager available to discuss problems; 8) Competence: knowledge and skillful employees; customer questions answered; 9) Responsiveness: returning a customer’s call; giving prompt service; 10) Reliability: accuracy in billing; performing service at a designated time; accuracy in completing sales transaction. Solution Manual for Retailing Management Michael Levy, Barton A. Weitz, Dhruv Grewal 9780078028991
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