Customer Service in Wholesale Distribution Analysis

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Recent years, customers and market annalists admit a complete breakdown of all customer service aspects through the wholesale sector. Many wholesale retailers have determined that the capability of their organizations has been defined by staff responsiveness, thus customers admit that many companies are not responsive, and not worthy of loyalty, based on performance during transactions. Quality customer service and customers loyalty are not valued by many wholesale retailers which causes a real crisis in customer relations and satisfaction.

A breakdown in customer service is identified at all level of management including business strategy and staff relations. The long-term value strategy is built on creating strong relationships with customers and anticipating their requirements. A significant new challenge is emerging with regard to value. The main problem is that wholesale retailers do not plan their strategies with respect to the physical product and the “virtual” product. Following Converse (2007) overlaps in physical and virtual product occur in many industries, particularly those where a tangible product, such as an automobile, and an intangible product, such as service advice or computer-based information support, coexist. On an overall company basis, poor corporate strategy impacts all resource allocation decisions: acquisition/divestiture, ventures, diversification/ compression (Bliss, 2006).

The wholesale companies approach customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Sales operations are emphasized. Management operates from a traditional bureaucratic model. Processes for performance measurement are rudimentary, and so is internal and external communication. Staff has minimal empowerment. The supplier company has greater awareness and sensitivity regarding customers. Though management still tends to operate from a traditional hierarchy, the company has formal processes in place for measuring performance and collecting/acting on complaints (Converse, 2007). Some wholesale companies engage in evaluating customer needs, training staff to be more proactive with customers, and/or creating teams or assigning individuals to upgrade customer services. In addition, wholesale retailers more frequently compensate sales and other staff at least partially on customer satisfaction scores (Converse, 2007).

In wholesale distribution, the breakdown in customer service is caused by passive relationships with customers established by companies. The emphasis is on bringing in new customers, and once on board, dealing with them in a largely reactive manner. These companies may believe they can have their pick of customers, and they are certain that customer needs are well understood. Peppers & Rogers (2005) admit that customer segmentation and responsiveness is minimal, with little interest shown in customers who have defected. Another problem of this breakdown is traditional bureaucratic management hierarchy. Managers rarely interface with customers. This is left to sales representatives, customer service staff, or not done at all. Management considers staff a commodity, offering them little incentive or direction to be more contributory or proactive. Internal department fiefdoms are very much in evidence, with mostly vertical information flow (Peppers & Rogers, 2005).

In terms of logistics management, many wholesale retailers have ineffective customer processes. There is little performance measurement, and what measurement exists is in the form of rudimentary comment cards or short mailers that ask only satisfaction-type questions. Little customer information passes between staff levels, and most information is tactical in nature (Langford, 2006). Complaints are handled somewhat grudgingly, and on an as-needed basis. These companies have cultures that are internally focused. Even though satisfaction-based companies are aware of customers, customers are regarded as more incidental than integral to their success. These companies place more emphasis on things that are considered tangible; such as factories, finances, products/services, and technical capability; and there is no evidence of organizing around customers. The more progressive of these companies may conduct periodic customer satisfaction studies and may also compensate sales staff based in part on the results of these studies (2007 Leadership in Customer Service 2007; Bulldog’s broadband, 2006).

In this case, responsiveness should be based on the level of cooperation, communication, and support employees exhibit for each other. Responsiveness may be tangible (time, completeness) or intangible (feelings) (Gupta & Lehmann, 2005). By extension, it may be proactive as well as reactive. Relationships are influenced by collective and individual skill levels. When customers have had long-term relationships with companies, they often come to depend on and expect certain skill levels and positive attitudes from their contacts. If that contact is lost–retirement, downsizing, firing, changing jobs, and so forth–it may be very difficult to sustain the image and loyalty. Managers must use the right tools, or levers, to influence inside and outside customers. According to Gupta & Lehmann (2005) the tools should be used to create competencies within organizations by hiring and training.

Low level of skills and lack of professional knowledge is another cause of the breakdown in customer service. Many wholesale retailers do not invest in training and development of employees. The chances are that staff will have less capability regarding customer knowledge and relationships, customized products and services, and information development and usage (Bliss, 2006). Staff should be selected and trained to be reactive to customer needs, problems, and complaints rather than being proactive, anticipating customer requirements, and giving exciting service-in other words, creating value and benefit. In theory (Bliss, 2006), companies interested in basic and advanced skills enhancement must provide formal training for everyone. The training needs to be continuous, since changes in technology, management theory, and work processes are ever-changing. State, federal, and municipal governments, plus colleges and universities, offer assistance programs and training. Training is available from professional organizations offering a broad spectrum of instruction. The main problem for wholesale retailers is that the customer does not derive specific benefit from a skill which increases dissatisfaction and disappointment. Following Langford (2006) rapid and customized production cycle time should be perceived by customers as value, so the collection of skills required to provide it are a competency. Competencies should be transferred to strengthen positions with customers (Gupta & Lehmann, 2005).

In spite technological innovations and opportunities proposed by the Internet, lack of professional skills and poor communication causes dissatisfaction and disappointment of customers. For instance,

Bulldog, which for the last few years advertised an attractively low cost, high-speed broadband service, quickly became one of the most complained about ISP’s in the UK, with customers highlighting a billing system that frequently went awry, randomly restricted bandwidth and an indifferent and sometimes uncontactable customer services call centre team” (Bulldog’s broadband, 2006).

Companies typically have five scarce resources: people, facilities, time, money, and technology. Technology is a crucial factor of customer service because it become a driving strategic force. If the salesperson from one company has a hand-held computer to check his customer’s inventory and can immediately fax or modern an order for replenishment-and a competitor cannot, the latter will fail. Technology impacts speed, customization, service, quality, design, and availability and use of information (Gupta & Lehmann, 2005). Another important factor to consider is service quality delivered to customers. In general, quality is defined by customers according to how well a product or service performs relative to their requirements. Because customer requirements change over time, so do perceptions of quality (Langford, 2006). Quality influences value determination. Many wholesale retailers cannot address and upgrade their level of quality. In this case, deployment requires more training, reducing product defect rates, increasing performance longevity, better designs, and the like. According to Langford (2006) as with several of the other value drivers, quality requires careful attention to customer needs; however, it also requires that customers be included or consulted early on when products or services are being created. Following BT wholesales: “today’s customers are refusing to settle for anything less than a sky-high quality of service. They also want it faster and they want it wherever and whenever they happen to be” (Customer experience and channel strategy, 2007).

The real drawbacks to staff-directed teams occur when they have been introduced too quickly, without appropriate member training, or when real-time measurements and metrics are not in place to help chart progress. Team structures work well with a clearly defined objective or task. Individuals contribute specific abilities, but the team is responsible as a whole for output and performance (Langford 2006). Teams adapt well to change and new ideas, but they must be self-disciplined and self-regulating. Discipline is expressed in the form of communication and decision-making, and teams must communicate actively and clearly and involve all members in decisions to be effective. Drucker saw teams not so much as a stand-alone structural design but as a valuable complement to functional structures. This is particularly true, he felt, in what he defined as the “knowledge organization.” (cited Peppers & Rogers 2005, p, 65). Such an organization develops, and effectively uses, specialists who have contributory skills. It forces the organization to continually determine and update what specialists are needed so that the available learning is optimally effective. It requires functional management to become better, more adaptive (Converse, 2007).

Following Gupta & Lehmann (2005), wholesale retailers wishing to create and sustain a customer culture and infrastructure must also create and sustain real value for the customer. Value can be expressed in terms of tangibles (time, money, efficiency, quality, etc.) or intangibles (pride and wellbeing). Customers have become increasingly selective and less strictly logical in their search for more attractive quality, service and price. High levels of service are often expected, so companies may he penalized if certain services are not offered rather than rewarded with customer loyalty when they are available. Customer service performance should be regularly evaluated and teams may be created to improve services and other operational processes. These companies are also competitively aware and stable, operating strategically and innovatively within the marketplace. Because they are more focused on serving customers, they actively seek to minimize registered complaints and problems as well as recover lost customers (Converse, 2007). The problems mentioned above cause poor delivery service and delays. Many wholesale retailers are challenged by increased competition: high costs and chronic late delivery (one-third of products are not delivered on time) lead to service breakdown. Poor inventory management causes poor service and constant delays. To improve the service, exact quantities should be calculated and specific require­ments should be placed on materials and goods. Control includes quality planning and control scheduling. This control helps the retailer to achieve more dependable deliv­eries and hence reduce the lead time and stock levels. Efficiency and effectiveness of processes are things of major importance to any wholesale organization. Logistic management should include substantial measurement and analysis of internal processes as well as changing environment (Langford, 2006).

Customer needs are better understood because there is regular interface with them by multiple levels of staff. Employees are trained to be proactive with customers, gathering information on their requirements and sharing that feedback internally. The wholesale company must revise its framework and policies to incorporate the customer satisfaction mind-set into the company’s foundation to ensure employee involvement. For example, employee profit or gain-sharing programs should include customer satisfaction goals, and employee performance systems should include team work and customer satisfaction measures. Following Converse (2007) the reality is that there is frequently little or no relationship between perceived satisfaction levels and the levels of sales, profits, or customer retention. When companies build appraisal and incentive compensation systems around customer satisfaction or perceived performance levels, they are likely to discover that they have created a very different culture, and different, perhaps, than intended. In wholesale companies, sales staff and management have even corrupted, or at least infected, the system by hand-selecting customers to be included in the satisfaction research, or contacting them and stepping up levels of attention and service (Bliss, 2006). The most significant changes are those created by ever changing customer needs and requirements. Skill level should be judged by how well leaders and their companies anticipate and facilitate change. The breakdown of customer service requires wholesale retailers to invest huge sums of money to create skillful workforce able to meet customers’ expectations and requirements. For services, they could be toll-free numbers, extended service hours, follow-up appreciation calls or visits, or free phone consultation (Bliss, 2006).

In sum, the breakdown of customer service within the wholesale sector is caused by poor management and lack of strategy approach to customer relations. While management still tends to follow traditional hierarchical and bureaucratic models, inhibiting internal, horizontal communication somewhat, many of competitors have gotten closer to their customers. Methods of doing this include complaint monitoring and handling through customer service centers, segmentation of customers according to their needs, and more representative, thorough, and current measurements that track levels of company performance on key attributes and transactions. Lack of professional skills and poor management control, late deliveries and technological problems are the main causes of the complete breakdown of customer service aspects. The progressive wholesale companies should differentiate themselves by their approaches to organization built on higher emphasis, or focus, on customers. Management structure tends to be flatter, and customers are served on a local or departmental basis. Organizational capability can be expressed in terms of strategy, economic or technical strength, structure, or leadership approaches; however, the most visible demonstration to customers is through staff interface and other areas of direct performance. Several skill sets should be required: responsiveness, relationship building, management and human resource practices, flexibility (including the ability to learn flexibly–individuals, in teams or projects, cross-training or on-the-job), and the capacity for change. Customer sensitive people should be self-responsive, capable of independent thought and achievement, able to overcome setbacks, and non-blaming.


  1. Bliss, J. 2006, Chief Customer Officer: Getting Past Lip Service to Passionate Action. Jossey-Bass.
  2. Bulldog’s broadband u-turn ‘may improve customer support’. 2006.
  3. Converse, P. D. 2007, Introduction To Marketing – Principles Of Wholesale And Retail Distribution. Meisel Press.
  4. Customer experience and channel strategy: event replay. 2007, BT Wholesale.
  5. Gupta, S., Lehmann, D. 2005, Managing Customers as Investments: The Strategic Value of Customers in the Long Run. Wharton School Publishing.
  6. Langford, J. W. 2006, Logistics: Principles and Applications, 2nd Ed. McGraw-Hill Professional; 2 edition.
  7. 2007 Leadership in Customer Service: Delivering on the Promise. 2007.
  8. Peppers, D., Rogers, M. 2005, Return on Customer: Creating Maximum Value From Your Scarcest Resource. Currency.

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