Effective Customer Service

Introduction to Customer Service Customer Satisfaction Customer Retention- Building Up Long Term Relationship Customer Relationship Management Social CRM (SCRM)- An emerging New Trend:

two do mean? We are Customer Care: wantsimple words but whatformtheyservice. Sometimesallwecustomers for something. Sometimes we a prompt no-nonsense of need lengthy advice. But often the service we receive is poor or non-existent. But there are occasions when we are delighted by what happens when we buy a particular product or service or how well we are taken care of by an individual in a company. Being a happy customer means that we may buy more likely to be loyal. Being loyal means that we are more likely to buy more from the same organization, even if we have to pay a bit extra. This all may seem quite straight forward, but just think about it, in reality how often are you really satisfied? Deliveries can turn up late, you can be put on hold on a telephone helpline service for 20 interminable minutes. As a customer under these circumstances you will often go elsewhere for the product or usually or would advice your friends to buy from the company which has served you so poorly. An average of 65 percent of all potential business is lost by suppliers due to their staffs apparent lack of interest, lack of attention, failure to meet customers expectations. The reality is as follows. If someone is unhappy with the service they receive from you they typically tell others. With internet, one click means that this information can now be spread to a whole community in no time at all. Think about this in the context of the substantial spend involved in acquiring new customers through advertising, telemarketing, TV campaigns, etc. All this adds costtotally unnecessarily. With the rise in technology & competition good customers service is not an option, its a must. Sometimes it can be difficult-and so can be the customers-but as the old saying has it, this is no worse than no customers.

Introduction: Customer Care

Customer Satisfaction:
Customer Satisfaction is the individuals perception of the performance of the product or service in relation to his or her expectations. As noted earlier, customers will have drastically different expectations of an expensive French restaurant & a McDonalds, although both are a part of the restaurant industry. The concept of customer satisfaction is a function of customer expectations. A customer whose experience falls below expectations will be dissatisfied. Diners whose experience match expectations will be satisfied. Diners whose expectations are exceeded will be very satisfied or delighted.

Six Satisfaction Elements

A companys product or service consists of a number of individual factors known as elements, which separately & collectively directly influence customer satisfaction. Between them, the six elements-known as satisfaction elements-represents every aspect in the purchasing decision of customers. The satisfaction elements are as followed: 1. 2. 3. 4. 5. 6. The product or service Sales After sales Location Time Culture

Product Element

Culture element

Sales Element

Customer Satisfaction Time Manage ment Location element After Sales element

Each element can be subdivided in to factors & considerations. These precisely describe the scope of each element & the considerations that customers bear in mind when they are choosing one product over another. Let us now have a breakup of the six elements

Elements
1. Product or Service

Factors To be Considered
Availability Product Quality Packaging Presentation Fulfillment of expectations Merchandising Verbal Communication POP Staff Maintained Interest Complaint handling Accessibility, Security & Comfort Web based purchase Business Hours Availability of products speed of transactions Ethics Conduct Relationships

2. Sales

3. After Sales 4. Location

5. Time

6. Culture

Customer Retention- Building Up Long Term Relationship

Customer retention is the strategic objective o striving to maintain long term relationships with the customers. Customer retention is the mirror image of customer defection. A high retention is equivalent to a low defection rate. Too many organizations make a sale & walk. They walk away without giving a second thought about how to continually engage with these one-time customers. Lets face it, the simple fact is it is easier & less expensive to retain existing customers than to attract new ones. According to American Marketing Organizations - It is five times more difficult to get a new customer rather than retaining one; all the more reasons to retains customers. Loyalty Schemes: An incentive Scheme Buy one get one free , Have tour car washed here three times and fourth time is free- can seem genuinely enticing. However the Fly to Berlin for $5 plus taxes can seem less enticing & rather annoying to a customer when they go on the airline website & find the additional taxes & surcharges wreck the low price promise. Many telecom companies love to talk about increasing retention rates buy then look to acquire new customers via sales promotion or other promotional techniques. The problem is that these acquisitions could merely load the pipeline with lots of customers who are disloyal. Companies know that they will lose customers once the promotional offers end. Let us take the case of recently opened Bigbazar at Belur- Howrah. It usually enjoys moderate or average foot-falls per day. However the average number of foot-falls per day increase during any sales promotional or special offers. But according to their store manager this is a real course of concern. Because it is huge obstacle in their way to build up long term relationship with customers.

Therefore marketers need to be careful while using the loyalty schemes. The main objective of any loyalty schemes is not only to acquire new customers but to retrain the existing ones. It is important to reward those who are actually or highly likely to be loyal customers even without magnet of the special offer. Committed customers want more than transient bait. They want to develop long term relation with the companies who understands & responds to their individual needs, discriminates between customers who have been genuinely loyal over a period & mew comers who have yet to demonstrate such an allegiance. Companies however around the world have implemented loyalty schemes successfully. Pharma style advantage cards, supermarket club cards, airline rewards cards are some of the loyalty schemes which have been effectively implemented by the companies. However it must be said that loyalty scheme is not a substitute for such core values as product quality, customers service etc.

The Tesco Club Card The Corner stone of Tescos CRM strategy has been its loyalty programmers. Tesco introduced its first its first loyalty programme in 1995. Called the Club Card, this loyalty card programme enabled customers to accumulate points with each purchase that could that could be used to obtain discounts off future purchases. The Club card proved to be very successful: first, in attracting more customers to Tesco stores; second in capturing valuable information from customers with every swipe of the card, which led to the creation a powerful database that was made possible through club membership information. For example, the card provided Tesco with vital information such as what products customers were and were not buying, where they were spending their time in the store, and where they were not, as measured by spending. As a result of this initial success,108 customer segments were identified and specific offers were made to each, such as high value customers receiving valet parking when they came to shop & other special privileges. In 1996 Tesco introduced two further loyalty cards, a student card & a card for mothers, with offers specifically targeted to each groups needs.

Customer Retention at Korea Telecom Korea Telecom places a high value of importance upon creating valuable relationships with customers, both business & consumers, in the telecommunications market of South Korea & South East Asia. The organization places significant emphasis on maintaining hi9gh retention rates in markets that are becoming increasingly competitive. To this end, Korea Telecom estimates that it costs around US$185 to gain a consumer for a broadband internet service. However, for an average customer it takes almost 2 years for the organization to break even with such service. Consequently, the organization undertakes number of activities as part of its CRM strategy to retain customers, including offering the bundling of a number of services such as internet mobile & home phone at a discount to the customers who enter into service contracts for at least 2 years.

Effective Activities to Build Up Long term Relationships: Going back to where we started in this chapter, you will see that there are various activities that an organization do to attract business to their organization. As time progresses, how useful are these activities in building a long term relationships with customers? In the following table three blocks of activities that are undertaken initially to attract business- such as advertising, non-selective ballroom-style seminars, cold calls by the sales team-ultimately fed into the wood work & are less effective as the business relationship develops with the customers. Activities to Build Up Long Term Relationships With Customers: Most Effective Research to understand consumer demand One to One relationship building Seminars Community or Civic Activities Networking with potential referral sources Newsletters Public Relations Brochures Direct Mail Cold Calls Advertising

Less Effective

Least Effective

To round of this topic; all we can say that no organization can rely solely on loyalty schemes & incentives to buy customer loyalty. There needs to be more, and this all comes down , as I have said repeatedly throughout this book, to people. You & your team are not only there to service customers but also to build their loyalty.

Customer Relationship Management:

Customer relationship management or CRM means different things to different people. Even the meaning of the three letter abbreviation CRM is contested. Most people use CRM to refer to Customer Relationship Management where as some refer to it as Customer relationship marketing. Whatever it is called, CR$M is clearly business practice focused on customers. Before the evolution of the marketing concept the marketers look to achieve profit by increasing the transaction volume. But after the birth of modern day marketing concept marketers look to achieve profit by customer satisfaction. This has lead to the birth of a new concept called customer relationship management(CRM). Customer relationship management can be defined as a concept or tool or a business strategy by which the companies look to achieve profit or growth not only by acquiring new customers but also retaining the existing ones because
It is five times more difficult to get a new customer rather than retaining one

Components of CRM: Customer

Relationship

Management

Customers: Customers are the only source of profit & growth(both future & present) CRM is all about understanding the customers (demand, taste & preference, buying behaviour) However a good customer with more profit with less resource is said to be scarce because of the fierce competition

Relationship: Relationship is the most critical factor in CRM Relationships are developed via interactions Relationships can be short-term or long-term or continuous or discrete Relationships can also be behavioral or attitudinal Even though a customer a has a good relationship with marketer his buying behaviour can be purely habitual. e.g. Purchase of air ticket CRM is all about managing the relationship so that it is profitable & mutually beneficial

Management: CRM is all about managing the relationship between the marketer & customers CRM is not just limited to the marketing department CRM involves the whole corporate culture & process CRM looks to get valuable information about the customer & transform the info to corporate knowledge to take advantage of the market opportunities

CRM Process:
Acquire & Retain

Deliver

Understand & differentiate

Develop & Customize

Interact

Acquire & Retain: Acquire Acquisition is a vital stage in CRM In order to acquire customers mainly focus upon the followings: Retain: After acquiring the customers the companies look to retain them Retaining plays a major role in the companys profitability According to AMA most of the companies earn 65% of their profit via existing customers While retention the companys focus on two aspects: value per transaction & frequency of purchase Customers who are low on these two dimensions is given least focus & vice versa Prospects Referrals by existing customers Past Customers Lapsed Customers Competitors Customer

Understand & Differentiate Understand In order to develop a relation the marketers must understand the customers This is a very critical phase because each customer is different & unique In order to understand the customers the marketers first look to get valuable info about the customers. Then they look develop a database to store the info so that customer knowledge can be gathered in an open & accessible form

Differentiate Based on the knowledge the companies look to differentiate the customer in to different segments Segmentation is usually done based on homogenous characteristics Gradually the marketers are shifting from the conventional demographic/psychographic segmentation to need based segmentation

Develop & Customize Develop Based on the info gathered about the customers the marketers look to develop the product If required they look to add new feature to the products deliver added value Sometimes the marketers even use the concept of test marketing- Where they informally launch the product to get a feel a about how the product is perceived by the customers. It also gives them chance to make subtle adjustments to the product based on the customer response

Customize: Due to the rise in competition a new concept has crept in- customization In the early days when the competition was low the marketers use to believe in mass marketing But with the rise in competition the bargaining power of the customers have increased Therefore in order to retain the customers the marketers are coming up with custom made products where the products are being produced not for a market segment but for a specific customer belonging to a market segment

Deliver: This is the final phase in the CRM process While delivering the product the marketers look to make sure that that the customers are not only satisfied but also delighted Simply because a delighted customer would not only conduct repeated purchase but also refer new customers increasing the overall profitability

Social CRM (SCRM)- An emerging New Trend:

The Social Customer: Now days you keep You keep hearing about this social customer relationship management (CRM) thing, right? Its definitely been a hot topic. But before unveiling the myth of SCRM we have to find out what exactly a social customer is. Since 2003, there has been a revolution in communications that impacts every institution. Social, political, economic, leisure and business organizations have been affected by a transformation that not only changes how people interact with the institutions they care to be involved with, but also changes what it takes to do business - everywhere. This is a transformation driven by the Internet. It gave unknown U.S. Senator from Illinois, Barrack Obama the presidency of the United States. Obama and his staff understood that the Web was not just a place to exhibit information, but instead was a vital integrated communications framework one that could and did drive volunteerism and donations to record levels -e.g. in one month, $55 million raised via the Web. They understood the power of interaction in an era where people were emboldened by their ability to communicate in real time with their peers in ways that could move organizations, entire industries or even the political process. The change is a social change that affects all institutions including business. This advancement in technology & growth of internet has given birth to the social customer. These social customers didnt have to rely on corporate literature and self-interested sales people any longer. They could rely on the web and each other for information on their potential purchases and for deeper knowledge about their common interests - work or play. Take a review site such as Yelp as an example. These sites are easily available to the users of products, services, or visitors to institutions and they provided a means for those who wanted to participate to rate, usually 1 to 5 stars and comment on the products that they used so that there was all in all an unvarnished idea of:

How good was the product? Did it meet the expectations the buyers had of it? What did it do right? Wrong? Did the manufacturer or retailer product provide appropriate service around the product? How did the company handle the order, shipping and, if need be customer service?

These arent formal reviews with rigid specifications or review criteria. They are informal and their language is conversational. Certainly there are agendas being met by some of the reviewers - some are shills for the companies that made or sold the products; others have a personal agenda - usually a vendetta. But when taken as a whole and read granularly, each of the product reviews and the picture painted of the product affects whether or not someone reading the review would purchase the product. A study done by Big Research in 2007 found that the most powerful form of influence is word of mouth (42% of respondents) - once again, conversation among those who are someone like me. A 2007 study done by Double-click found that the Internet was the most influential medium among influencers (#1 at 39%) and non-influencers (#1 at 28%) alike. The Concept of Social Customer Relationship Management: Social CRM is first a strategy that is often supported by various tools and technologies. The strategy is based around customer engagement and interactions, with transactions being a byproduct. It is a component of developing a social or collaborative business, both internally and externally. Social CRM VS Traditional CRM

CRM is comprised of sales, marketing and service/supportbased functions whose purpose was to move the customer through a pipeline with the goal of keeping the customer coming back to buy more and more stuff. Traditional CRM was very much based around data and information that brands could collect on their customers, all of which would go into a CRM system that then allowed the company to better target various customers.

PR now has a very active role in social CRM (in fact, PR typically owns budgetary control and authority of social initiatives ahead of every other department). In most organizations, PR departments manage the social presence of brands and handle the customer engagement. The next change we can see is that advocacy and experience are crucial components of social CRM, which all revolve around the customer. In the first CRM image above, youll see that the customer is not really a part of CRM theres no collaboration, no relationship. In social CRM, that has completely changed. The customer is actually the focal point of how an organization operates. Instead of marketing or pushing messages to customers, brands now talk to and collaborate with customers to solve business problems, empower customers to shape their own experiences and build customer relationships, which will hopefully turn into customer advocates. Its very important to keep in mind that social CRM is not a new thing that replaces CRM, its simply an evolution of what CRM has always been.

Wal-Marts Eleven Moms Walmart has had its share of issues trying to enter the Social Media space; but they are persistent and have come out with a new effort: Eleven Moms; Here is a quick snap for what they write in the Eleven Moms story page: We've spent lots of time interacting with and seeking to understand how people use these tools and in what ways the Walmart brand can be relevant and provide value. It quickly became obvious to us that many communities exist that focus on saving money which is core to our brand promise. We felt we could best participate in the conversation by helping to foster the growth of people and forums in this space . We began slowly, making contacts in Twitter, leveraging Facebook profiles, viewing related You Tube videos, and trying to understand how we could participate. And not just by adding more messaging. We made friends. We heard from our critics. And we began to interact as both Walmart associates and as people. In all we invited eleven Mom Bloggers to participate and began to refer to the group as "eleven-moms." Several Moms strongly suggested that we add another Mom Blogger that they regarded highly so we did. Hence, we have 12 "eleven-moms", a great value as well!

Assignments
1. Visit your nearest retail outlet/ food chain & develop a report on their customers acquisition & retention strategy 2. You have been appointed as the store manager of a newly opened pizza shop. What strategies will you adopt to acquire new customers? 3. Describe the impact of social media on the CRM strategies