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Chapter 3; Customer service: Strategy - Coggle Diagram
Chapter 3; Customer service: Strategy
How to establish CS strat;
managers judgement and historical norms, put preference on customer wants not desires.
firms need to est cs policies based on customer requirements and supportive of the overall marketing strat,
CS policies should be cost-efficient, contributing favourably to the firm's overall profitability.
a popular method of setting cs lvls is by bench marking with competitors cs performance. However, this has limited use as it doesnt account for customers specific desires, thus with the aid of surveys which measure various serv elements.
the 5 methods to measure and est cs strats, is by
customer reactions to stockouts
Cost/ rev trade-offs
Determining serv quality differences between customer's expectiations and a firms perf
ABC analysis of CS
CS audits
Customer reactions to stock outs;
Most manufactures don't sell to end users instead the sell to wholesalers or other intermediaries who sell to the final customer.
Due to this it is hard to assess the impact of stockouts on end users.
i.e. out of stock at the manufactures level doesn't mean out of stock at the retail level.
Customer is focal point & driving force in est logs performance requirements.
Best way to establish the desirable lvl of cs at retail level is to determine consumers' response to stockouts, i.e. subbing another size, switching brands or going to different stores.
consumers will only sub will only switch stores if they think the brand is superior or if the brand is cheaper than the alts.
Case study;
in the case of infant formulae, to see how stock out effects different channels of distribution, most Infant formulae manufactures dont advertise their pdts on national television, and limit the directed media advertising, they also limit the use of price promotions. they use samples instead, and give them to doctors and hospitals for new mothers.
Understanding the lvls in the channel is critical in formulating customer service strats.
penalty of manufactures having lows stock is relatively low, as new mothers will just go to another store.
however when the manufacture runs low on hospitals the consequences are much higher, as hospital demand 99% stock availability and 24-48 hrs lead time.
with a stock out in manufacturing there will be fdr
Simply put for the manufactures;
for some products customers are willing to switch brands
For some products customers are willing to switch stores
Frequent stockouts could use customers to permanently switch stores
If customers are willing to sub, service lvls can be increased without increasing invent
cost revenue trade off;
the total of logs costs such as carrying invent, transportation and info/order processing can be viewed as the companies expenditures on cs.
the aim is to achieve the lowest possible logs costs, for a given specific CS lvl.
this is mainly done by shifting the costs of products from different areas and departments, that then need in the long run of the total sys save costs.
Costs associated with service lvl improvement can be compared to increase in sales to cover additional costs
need to understand customer service lvl & sales rev relationship
best use of this case is when the company is running barely off of a break-even point, and there are several issues that occur with the CS decreasing their efficiency whilst bleeding the company
Service quality and customers expectations,
functional areas of logs such as transportation, warehousing and invent management, the characteristics of these functional areas reflect the nature of services as opposed to products or goods.
these functional areas reflect the intangible, inconsistent, perishable and inseparable relative to the products and goods the act upon in their role as logs activities.
Gaps Model
;
4 important issues affecting gap
need to understand the customers expectations
turn expectations into service specs
provide service according to specs
communicate intentions & actions to customers
customers develop prior expectations of a service based on several criteria, such as previous experience, WOM(word of mouth) recommendations, or advertising and comms by the service provider.
Once customers, experience the service the compare their perceptions of the experience to their expectations
ABC analysis/Pareto's Law;
its used to denote a goal for classifying items or activities according to their relative importance.
the logic behind ABC classification is that some customers and products are more beneficial to a firm than others;
use of
customer-product contribution matrix
to classify customers and products according to impact on profit
similar to ABC, Pareto's law notes that many situations are dominated by relatively few critical elements, a majority of delays and issues often come from a singular or small portions of the operation 80/20.
provide most profitable customers with service lvls that encourage repeat business
Disadvantage;
1 customer may order pdts in more than one category
less profitable accounts made more valuable by reducing service lvl
lower lvl of service does not imply less consistency
key to success of ABC analysis;
customer definitions of service
Id which service elements are important
Determine which lvl of service to provide
CS audits;
a means of evaluating the lvl of service a company is providing and as a benchmark for assessing the impact of change in CS policies.
objectives;
audits are used to, evaluate lvl of service a company is providing
serve as benchmark for assessing impact of changes in customer service policy
objectives;
id important CS elements
Id manner in which cs performance is controlled
assess internal info sys(quality & capabilities)
Focus is on the id of opportunities to gain competitive advantage
4 stages;
External CS audit
Internal CS audit
ID opportunities and methods for improvement
Est customer service lvls
1. Ext CS audit;
Ext A should be the starting point in an overall customer service audit, that examines both internal and external factors.
the key goals of the ext a is;
Id the element of CS that customers believe are important in their buying decision
Determine the customers perception of the service being offered by the firm and each major competitor
the best ratings dont effect the overall view of the org based on.
all of an industry's major suppliers may be performing at 'threshold' lvls, which makes it harder to distinguish among suppliers
Variables for which there are significant variances in vendor performance may be better predictors of market share than the variables described above.
determine which service elements the customer perceives as important, this can be done by
interview format
, which can provide insights into why cs issues, the firm wasn't aware of.
marketing often has the major decision-making authority in terms of making CS trade-offs within the marketing.
develop a
questionnaire
to gain feedback from a stats valid and representative group of the firm's customers.
questionnaire is used to show the relative importance of various CS elements, measure the received performance of the firm and its major competitors
the results obtained from a CS survey can reveal both opportunities and potential problems.
if a org scores lower than competitors on service variables or a big gap between where they are and where they want to be, it cause the market share to erode if the competitors take advantage of a firm's weakness
2. Internal CS;
reviews the firms current service practices, This provides a benchmark for assessing the impact of changes in CS lvl.
should address these issues;
how is customers service currently measured within the firm?
what are the units of service measurement?
what are the service performance standards or objectives?
what is the current level of attainment, results vs objectives
The major goal of int a is to measure gaps between the firm's service practice and customer requirements.
customers perceptions of current service lvls should also be determined because they perceive service as worse than it really is.
Int Cs may also assist the company in communication, and its efficiency, how communication flows within the org, to the consumer and how well can the consumer communicate to the org. This relates primarily to the order-ship-receive cycle.
reasons for CS strat;
CS is the output of logs sys(key interface between marketing & Logs - Place element)
3/4P elements of marketing mix create value for customers
when performance of competitors is similar to the org, Place gives the org and edge by developing, keeping customer loyalty & satisfaction
Lvl of CS based on industry norms, mngmt judgment, past practices, no on what the customer wants and corporate profitability
Crit strat issue is to determine the combo of service & desired format that will support profitable transactions
CS program needs to incorporate all activities and standards required to accomplish operating obj & measures.
needs to outperform competitors in cost-effective way