CHAPTER 3 CUSTOMER

SERVICE

Learning Outcomes
Understand the link between Logistics and Marketing within the scope of

Customer Service
Understand the importance of Customer Service from the point of view of

Logistics
Understand the factors which contribute to Customer Service and how it can

be retained

Customer Service
Customer Service is anything that touches the customer Provide time and place utility in the transfer of goods and services between buyer and seller. Customer service is determined by the interaction of all those factors that affect the process of making products and services available to the buyer. Customer Service is the combination of outcomes and experiences

delivered to and received by the customer

- Johnston and Clark ,2005

Customer Service and Marketing

Customer service is often the key link between logistcis and

marketing within an organziation

There exist three levels of a product that an organziation provides to

its customers:
The core benefit / service which constitute what the buyer is really

buying
The Tangible product, or the physical product or service itself The augmented product, which includes the services attached to the

product bought

Customer Service : Three Perspectives

Customer Service as A philosophy: There exists an organization

wide commitment to providing customer satisfaction through superior customer service.

Customer Service as Performance Measure: Emphasize C.S. as

a specific performance measure, such as on time delivery and percentage of orders filled completely.
Customer Service as an Activity : View C.S as a particular task than

an organization must perform to satisfy a customers order requirements.

Elements of Customer Service

Time: From the sellers perspective it is the order to cash factor.

From the buyers perspective it refers to the order cycle time/lead time /replenishment time.
Dependability : This factor can be more important than the

absolute length of lead time.

o Cycle Time o Safe Delivery o Correct orders

Elements of Customer Service

Communication : Three types of communication exist between the

buyer and the seller: pre transaction / transaction and post transaction
Convenience: Logistics service levels must be flexible

All the four traditional dimensions of customer service from a logistics perspective are essential considerations in developing a sound and effective customer service program.

Performance Measure for Customer Service

The four dimensions have been used by organizations in developing

customer service policy and performance measurement standards.

Metrics stated from the sellers point of view: orders shipped on time

/ orders shipped completely/ product availability when the order was received / order preparation time.
Metrics stated from the buyers point of view: Orders received on

time / Orders received complete / Orders received damage free /Order filled accurately /orders billed accurately

Importance of Customer Service

Customer Loyalty Competitive edge Enables to Hire Competent Staff

Facilitates Modern technology

Encourages innovation Future Growth

Encourages Excellence

Objectives of Customer Service.

Cost reduction Service improvement Customer Satisfaction Delivering 100% perfect orders Creating competitive value by delivering seven Rs value to

customers

3 Rs of Customer Retention
Respect your customers Responsibility (take responsibility for your offering Refund ( if any damage / wrong product)

Customer Service Phases

LaLonde and Zinszer in a major study of customer service practices

suggested that Customer Service could be examined under three headings:

Pre Transaction Element : Corporate policy/ programmes Transaction Element : factors involved in forming the physical

distribution function
Post Transaction Element : Service support

 Pre-transaction phase
Company have to decide what the level of service they want
to keep. Educating the customer about the service and answering the FAQs.

Transaction phase
Process of order fulfillment. Taking care about the accuracy. If a particular service is not available then educate about their substitute.

Post-transaction phase
By giving information about their order status. Also by listening at the customer complaint and improving in that area.

Customer Service Standards

Setting Standards of performance in relation to competition Levels of Quality : Management philosophy focus on Total quality

or on creation of perfect order

Communication with customers: communicate customer service

policies and standards to the customers

Control of customer Service: Firm must measure , monitor and

control the customer service quality

Customer Service audit

Used for evaluation the level of service a company is providing and for

assessing the impact of change in the customer service policies

Main objectives are: Identify Critical customer Service Elements Identify how these elements can be controlled Assess the quality of information system Identify opportunities and ways for improvement Establishing Customer service levels.

Summary of Chapter 3
Meaning of Customer Service Importance of customer service Customer Service Three perspectives

Elements of Customer Service

Performance measures for customer service Importance and objectives of customer service

Phases of Customer Service

Customer Service Standards and Audit