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4.1.5 Customer Service

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Customer service is an internal influence on the business but is covered separately in the specification.

Customer Service is any activity conducted by a business to better look after it’s customers and meet customer needs.

Benefits of good customer service to a business include:

  • Provides word of mouth promotion — happy customers might share positive messages about the good experience
  • Improves business reputation — the business will be seen more positively
  • Encourages repeat business — customers are more likely to make repeat purchases
  • Sets the business apart from competitors — for example Waitrose customer service vs Lidl
  • Brand awareness — more customers know about the business
  • Customer loyalty — customers are more likely to choose the business over its competitors
woman in white and brown floral dress
File:Asos.svg — Wikimedia Commons

Fashion retailer, ASOS, are known for using social media to provide excellent customer service.

File:Waitrose Logo.svg — Wikimedia Commons

Waitrose & John Lewis are known for providing customers with great customer service. Examples include providing shoppers with free newspapers and coffee.

Not only will business Aim for good customer service, they will also measure it so that they can improve. Businesses must measure customer service as it allows it to:

  • Inform future Product development
  • Increase customer retention
  • Improve competitiveness
  • Identify areas of strength and weakness

How Customer Service is Measured

Customer satisfaction scores

Customer satisfaction is the extent to which a business meets and exceeds customers needs, leading to them being happy.

Ikea have Feedback buttons at the exit where customers can provide their feedback on customer satisfaction, this is a very simple way to collect customer service data.

Have you visited Ikea? If so, give them a rating to the left.

Other companies may carry out other more sophisticated measurements about their customer service. They can even segment based on demographics (age, gender & education).

Can you think of any other ways to collect measurements about customer satisfaction?

person writing on notebook

Repeat business data

Satisfied customers are likely to return to the business. Tracking this data is vital to keep customers satisfied and returning.

Tesco Clubcard is a notable example of a business tracking repeat customer data through consumer purchases.

When shopping online, Tesco can even make recommendations based on customers in-store purchases using Clubcard data even if they have never shopped online before.

Online shops use user accounts and files saved to your computer called Cookies to track repeat business.

Levels of complaints/compliments

Customer complaints Cost businesses resources, from the staff wages paid to have someone to handle the complaint to any money paid for goodwill or refunds for faulty products.

Businesses should monitor complaints, keeping an eye out for any problems. One example is that a product may have a higher return rate than others, indicating an issue with the product.

Large businesses will use computer software, called CRM, to manage their customer interactions.

Compliments can also be logged and shared amongst staff to improve morale and provide positive feedback on what they are doing well and what the business can keep doing to meet customer needs.

Customer surveys

A customer survey is a bit like a questionnaire, sent to customers to complete so that the business can gather statistical data about customer service.

Customer Surveys Case Study

Zurich is an insurance company. Its strategy is to increase customer service. In order to do this, Zurich needed to understand what customers want. In 2010, Zurich carried out 7,000 customer surveys.

Zurich’s surveys found customers were most interested in the following factors:

Mystery shoppers

Mystery Shoppers are recruited to make purchases in-store or online, appearing as regular customers, allowing them to feedback on the customer service.

Task

Think about two customer service experiences you have had — one where you received good customer service and one where you received poor customer service.

List the factors that made the experiences good/bad and identify the differences between the two.

3.3.2 Non-financial methods of motivation

3.3.3 Motivation Theories