Customer Service: Term Analysis and Review

Introduction

Customer service has always been an important part of a company, but today it has become indispensable. According to Hayes and Dredge (1998), customers have a lot more freedom of choice today than they had ever before, and the market for any product or service is highly competitive. This holds true for both consumer and business markets where customers have a lot more say in where from and how they want to purchase goods and services (About.com: Marketing). Hence, customer service has become an integral factor that influences purchase decisions very strongly.

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Surveys of consumer and business purchasing have often shown that people prioritize service over price (Hayes & Dredge, 1998). Customer service and understanding customer needs have today replaced price and quality as the major factor affecting purchase decisions (“Author unknown”). Companies, therefore, should pay attention to this factor as it has great potential to impact their profitability.

Another argument in favour of customer service would be that in business markets, and increasingly in consumer markets as well, building long-term relationships with customers is very important. As Hayes and Dredge (1998, p. 4) say, “issues like reliability, warranties, punctuality, the flexibility of delivery, personal rapport, and ease of ordering can all make a significant impact on the buyer’s sense of ‘value for money”.

Thesis Statement: Hence, quality customer service can help the company attain a competitive edge, offset other factors successfully and create strong and lasting bonds with customers.

Counter Argument

Customers are not merely attracted or influenced to buy the product just because of customer service. Rather, the most important aspect for them is the quality of the product. Customers demand products and services that can stand the test of time and meet his or her needs and expectations at a cost that represent value for money. Hence, the quality of the product itself is what companies should focus on rather than spending resources on customer service.

Refutation

In Kotler and Keller (2005, p. 146), quality is defined as “the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs”. There is no doubt that product quality is highly important for customers and has the power to make or break a company. Customer service is not a substitute for product quality; the point is not to give a bad quality product and then try to hide it by providing stellar customer service as it is obvious that this will not work. Customers today are very intelligent and have a wide plethora of choices available to them; they will never settle for a shoddy product that does not serve its purpose and meet their expectations. Hence, the quality of the product is a given. It is not an added benefit provided by the company to the customer. Rather, if the company wants to ensure that the present customer remains a customer, they must ensure that they provide a quality product. Also, in the present day and age, product quality is not that effective a means of differentiation as all participants in any industry are striving to attain a reasonable standard of product quality. Hence, to stand out from its competitors and to achieve sustainable competitive advantage, the company must look for other aspects of product or service through which it can differentiate itself. Increasingly, companies are becoming more and more customer-centred. And providing quality customer service is one of the ways of doing that and is also a part of a differentiation strategy known as personnel differentiation (Vass, 2006). Berry and Parasuraman (1991, p.16) say that personnel should be “competent, courteous, credible, reliable, responsive and communicative”. They should make an effort to understand the customer, communicate effectively and respond quickly to customer requests and problems. Large chain bookstores such as Barnes & Nobles use their front-line employees as a means of differentiating and positioning their brand. Hence, “product quality is definitely positively related to return on investment” according to Buzzell & Gale (1987, p. 125-135), but the customer service facet of the product can serve to guarantee the company of a loyal customer base as well as a point of differentiation which is rapidly gaining popularity. Product quality, on the other hand, is ceasing to be a point of differentiation and becoming a necessity for the company if it wants to remain in the product category.

Counter Argument

For customers, the packaging of the product and its aesthetic appeal is more important than the customer service they encounter.

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Refutation

Packaging may be one of the factors which influence a customer’s decision-making process, but this usually happens only for a first-time purchase. After consumption of the product, for a repeat purchase, packaging ceases to be important. If we consider the example of two products: the first was brilliantly packaged and the second had a packaging of mediocre quality. The customer purchased both, and both had some defects in their quality. When the customer rang up the helpline for both products, the response from the customer service centre of the first product was very curt and unhelpful, while the customer service representatives from the manufacturer of the second product were courteous, they apologized for the defect and assured the customer of a full refund and a promise that this would not happen in the future. It is most likely that after this incident, the customer will try the second product (the one with mediocre packaging) again rather than the first product.

As an attribute, the packaging of a product can easily be imitated by competitors. No matter how huge the investment in packaging might be, with time, competitors can easily catch up and deliver better packaging to a customer. So if it is believed that the customer is influenced by the packaging, it will take very little time for him to switch over to a competitor’s brand. The better approach is to deliver high customer satisfaction, and providing high-quality customer service is one of the methods of doing that. “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation” (Wikipedia). Satisfied customers generally “stay loyal longer, buy more as the company introduces more products and upgrades existing ones, talk favourably about the company and its products, pay less attention to competing brands, are less sensitive to price, cost less to serve than new customers because transactions are routine and are more likely to not be swayed by competitors’ inducements to switch” (Sewell & Brown, 1990, p. 162). This decision to be loyal or to defect for a customer is the sum of his many small encounters with the company. Customer service hence has a huge role to play in this regard, for if his concerns are heard and responded to courteously and accurately and he is made to feel like a valued and important customer to the firm, there are more chances that he will be a loyal customer than if the situation were the opposite (CRM Media).

Counter Argument

The price of the product and whether or not the brand is a strong one is the factors that influence product purchase, not customer service.

Refutation

While pricing and branding are important nonetheless, customer service is one of those areas in which if a company excels; it can ward off competitive pressures successfully. As mentioned above, quality customer service becomes an intangible benefit for the customer, and customers might be willing to pay a slightly higher price or buy a less popular brand if they are made to feel like a valued customer or experience superb customer service in any other way. In this day and age, merely meeting customer expectations and needs is not enough; delighting the customer is the marketing mantra, and customer service has a very important role to play in that regard (Sherden, 1994, p. 77-100; “Author unknown”).

Conclusion

All the above arguments in favour of customer service illustrate the strong correlation between the quality of customer service and customer satisfaction. Product quality and the brand might be strong influences on the purchase decision, but customer service can also be a strong asset to the company as the focus today has shifted to using CRM to form long term bonds with customers. The sooner companies realize the role customer service can help them achieve this, the better their chances of satisfying customers and increasing profitability in the long term.

Often, a number of arguments are presented in an effort to disregard the importance of customer service in favour of other aspects such as the value of a brand, the quality of the product, the importance of packaging etc. These facets of a product are also important, and the quality of the product is the essence of the utmost importance. But if companies pay attention to customer service, they have the chance to build an intangible advantage over the competition. And this will prove to be a sustainable competitive advantage as it takes competitors a long time to imitate such advantages, as compared to advantages such as packaging, which are more easily imitable.

Customer service, if of good quality, plays a significant role in building customer loyalty. And it is a proven fact that it is usually far cheaper to retain existing customers than it is to find new ones, which can be an expensive and cumbersome process. If the customer is satisfied with the service he has received, it will be very difficult for other suppliers to tempt him away from the company. Even if he has experienced problems with the company, but if the company deals with these complaints quickly and efficiently, chances are this customer will be more loyal to the organization as compared to a customer who has not had any problems. Hence, customer service goes a long way in ensuring customer loyalty, which in the end, is what all companies are striving to attain. For this, it is important that the company understands its customers and their needs even better than the customers themselves and satisfies them in the best possible way.

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References

About.com: Marketing. Customer Relationships Are Key to Your Marketing StrategyWeb.

“Author unknown.” Customer Service more important than price, Findarticles.com.

Buzzell, R. & Gale, B. T. 1987, The PIMS principles: Linking strategy to performance, Free Press, New York.

Berry, L. & Parasuraman, A. Marketing Services: Competing through quality, The Free Press, New York.

CRM Media. (2002). What is CRM?

Hayes, J. & Dredge, F. 1998, Managing customer service, Gower, England.

Kotler, P. & Keller, K. L. 2005, Marketing Management, Prentice Hall, Englewood Cliffs, NJ.

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Sewell, C. & Brown, P. 1990, Customers for life, Pocket Books, New York.

Sherden, W. 1994, Market ownership: the art and science of becoming #1, Amacom, New York.

Vass, K.  2006, Customer Service as a point of differentiation, Textile World.

Wikipedia. (Date unknown). Customer Service. Web.

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