The art of customer service

A company should be driven by profitability, or shouldn’t it? There is so much more besides the finance part of a company. Although finance is important in order not to run out of business, it is also important to acquire customers to reach profitability. More importantly, it is important to retain those customers. Loyal customers are more profitable for a company compared to new customers in the long-run. An important factor of creating loyal customers is customer service.

Companies are shifting towards a new paradigm rather than the mass production view of the previous years (i.e. companies just pushing products into the market). According to this new view, companies should focus on long-term profitability, the needs and wants of their customers, build relationships with each party they are involved with and have interactions with consumers (i.e. converse rather than push your message into the market). In the table below, one can notice this shift of focus from companies:

Old “Mass Market” View New Paradigm
Short-term focus Long-term focus
Product orientation Customer orientation
Transactions Relationships
Mass media Interaction

Source: Marketing Information Management, lecture 7, by Dr. Ernst C. Osinga

This new paradigm matches the need for proper customer service, because customer service is a way to (I) have a customer orientation, (II) build relationships with your customers and (III) have interaction with your customers. The question that remains is how to build your customer service in the best possible way.

Service is about delivering beyond expectations. In other words, the customer service should be about delivering unexpected things to your customers. Some examples are faster delivery than promised, free upgrading, free extra services and/pr free delivery and return. The customer service should create a so-called “WOW-effect”. Companies can “WOW” their costumers if they surprise them. To explain this “WOW-concept”, let’s take an example of a customer looking for a new TV. The customer calls the customer service department asking about advice which TV to buy, doubting between a cheap and a more expensive TV. Short-term focus would say that you should try to sell the more expensive TV to the customer. On the contrary, a long-term focus means that you should help the customer and give honest advice. In this example, the customer service employee can “WOW” the customer by being honest: recommending the cheaper TV as this already satisfies the needs of the customer and maybe even include a free shipping option so that the customer can enjoy his/her brand new TV sooner. It would mean a small loss in the short-run, but an open, honest relationship is established with the customer. The next time the customer needs a product that is also within your assortment, it will be very likely that the customer returns.

The theory sounds nice, but it can be quite hard to implement this in reality as the whole company should recognize this New Paradigm, rather than customer service employees only.tonycover The whole company should be about servicing the needs and wants of their customers. These ideas are mainly based on Zappos, the biggest online shoe retailer in the USA. The CEO, Tony Hsieh, wrote a book about all their ideas regarding customer service. It is a must-read for all interested in this topic. He reveals that it is possible to succeed if an entire company breaths customer service. An example is that anyone interested can take a tour in the offices of Zappos, or read the non-adjusted employee book about the Zappos culture. They are open and honest to their customers, looking for the long-run relationships rather than short-term transactions. One of the most stunning examples illustrating this excellent customer service is one day when Tony and some friends decide to call the Zappos Customer Service. Under a false ID, they tell a story about being in a hotel and in need of a pizza. The Zappos Customer Service employee responds friendly by listing all the nearest pizza places which are still open. Zappos does not sell the pizza, but they do focus on establishing a long-term relationship with their customers through excellent customer service.

Besides the ‘founder’ of these ideas, other companies reveal believing in this New Paradigm as well. Cool Blue is an online electronic store which has won several customer service awards. The reason behind their success is that they have a customer-service focus as well. This is for example shown in the fact that they have a Director of Satisfied Customers besides the Financial Director. Moreover, they have a proper logistic network which makes quick delivery possible, “WOW-ing” their customers. A smaller example is the start-up company Looy&Wood. They recently started selling wooden sunglasses and watches. Their customer service is shown in, for example, the fact that customers can return the product without giving any reason. It does cost some money for a start-up company, but it is an example of a unique way of bonding with your customers.

These are all just examples to prove that customer service should be at the heart of a company, not just a department on itself. By bonding with their customers, companies can create a significant competitive advantage. Creating a product is what all companies can do, but a relationship with customers can be unique.

Background reading (for all the ideas on which this blog is based):
Tony Hsieh (2011). Delivering happiness: A path to profits, passion and purpose. Hachette Book Group: New York.

Also take a look at the following websites:
– http://about.zappos.com/
– http://deliveringhappiness.com/

 



Leave a Reply

Your email address will not be published. Required fields are marked *