LESSON #01

IMPORTANCE OF GOOD CUSTOMER SERVICE IN CREATING LOYAL CUSTOMERS

Introduction

Most businesses value the relationship with their customers as the heart of their success.
Customers are the base for the company’s profit. Knowing how the relationship between the
company and its patrons works means the company knows how the business makes money.

Meaning of a customer

 Customers are individuals, households, or organizations that are the reasons for a
company’s business activities. They are the people or organizations whom the company
creates value by its activities and products. The people who needs the business
assistance to address their wants and needs through products and services offered.
 Customers are persons or institutions who come to a business with their needs and
wants. It is the business’s job to fill them.
 This means that without the customers the company would not exist. It also means that
the customer is the most important target for the company’s activities. They deserves
the most courteous attention the business can give them. They are the lifeblood of
every business.

Facts about customers

 The Customer is the business’ biggest asset.

 The Customer pays all our salaries wages and bonuses.
 The customer will go where he/she receives the best attention
 There is no profit, no growth, no jobs without the customer
 A typical dissatisfied customer will tell 8-10 people about their problem.
 7 out of 10 complaining customers will do business with the organization again if it
resolves the complaint in their favor.
 If the organization resolves a complaint on the spot, 95% will do business again.

Hence, the organization needs to be the customers’ best choice!

Reasons for customers leaving the organization

 Product dissatisfaction: -they are dissatisfied with poor quality and performance of the
product. E.g. fault product.
 Poor services: -they are dissatisfied with the level of service that does not meet their
expectations. E.g. slow delivery, poor communication, promises not accurately carried
out.
 Better prices elsewhere: -they are dissatisfied with the price level of the current
organization, and have found better prices to another organization.

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  Unprofessional and incompetent personnel to handle their inquiries and concerns. E.g.
rude staff, uninformed staff.

Types of customers

 There are many categories of customers. however, the two main categories of
customers are:-
o Internal customers
o External customers

Internal customers

 Internal customers are the employees of the company. They become customers when
they buy the company’s products or services. Example, managing director, subordinates
and others.

External customers

 External customers are individuals or organizations outside the company, who look for
the company’s services or products. Example people who are looking for services or
products from CRDB Bank Plc and are not employees of the Bank are its external
customers.
 Generally this type of customers includes people who visit businesses to buy goods or
services, stakeholders, the government and others.

Types of customers based on the demographics

 Customers may be categorized on the basis of demographic factors such as age,

disability and nationality. Such categories include:-
o Customer group by age: -categorization of customers based on age such as
children, adults and senior citizens.
o Customer group by disability: -categorization of customers based on their
incapacity, such as customers with mobility problems, customers with learning
difficulties, hearing impaired and visual impaired customers.
o Customer group by nationality: -categorization of customers based on their
languages and culture.

The relationship between business and the customers

 The existence of the business activities depends on its customers. For any business
there is always a customer for whom the work is done and the mission for the service
are in helping the customers.
 The customers use the products and services provided by the company to address their
needs and wants.

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  By using the products and services of the company, the customers in turn provide the
company with income, which is essential for the existence of the business.
 Thus the value and success of a business depends on its customers. Customers are the
base for the company’s profit from its activities.

The concept of customer services

 Customer services refer to the set of activities and programs undertaken by a business
to increase the value customer receives from the product and service they purchase.
 Such activities and programs may include: Product returns policy; Shopping carts, Free
shipping; Demonstration of merchandise; Display of merchandise; dressing rooms,
parking; quick delivery; credit; ATM terminals; personal assistance in selecting
merchandise; etc.
 It describes any or all interactions which the customer has with the organization while
conducting business.
 It is the ability to provide a service or product in the way it has been promised
 It is also about treating customers with respect, individuality, and personal attention
 Customers services is thus “the sum total of what an organization does to meet
customer needs and expectations and produce customer satisfaction ”.

The importance of customer services

 Customer service is important to a business organization because of the following

reasons:-
o Build a business reputation: - through a positive word-of-mouth communication
generated by satisfied customers. Satisfied customers tell each other about the
maximum level of care and treatment they receive from the firm. As the result, it
enhances the firm’s reputation.
o Attract new customers: -through the positive word-of-mouth communication
generated by satisfied customers.
o Creates referrals for a business: - as satisfied customers tell each other about
the care and treatment they receive from the firm.
o Drive customer loyalty: -good service keeps customers returning to a business.
Customer services make it easier for a firm to acquire customers, satisfy
customers and make them loyal customers. This improves customer retention.
o Develop sustainable competitive advantage and differentiation: -by providing
consistent high-quality service offers makes a business develop a sustainable
competitive advantage. No longer can a business compete on price but on the
service level provided.
o Increases customer satisfaction: -by meet or exceed customer expectations of
the service provided.

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 o Reduces customer churn: -people want to buy from places that make them feel
good. Creating an experience that is memorable and enjoyable for the customer
will help to keep them coming back for more and not churning away.
o Reduces the stress of a business: -satisfied customers cause less stress.
Customer service is designed to match the needs of customers in terms of
efficiency, reliability, fulfilling orders or commitment, professionalism, friendliness
and expertise of employees.
o Motivate firm’s business team: -Satisfied customers bring job satisfaction and
increase motivation to firm’s employees and therefore make them happier even
outside the firm.
o Lower employees’ turnover: -where people works happily, job turnover is
minimal. Good customer care or customer service can be a remedy of minimizing
jobs turnover.

Characteristics of a good customer service

 A good customer service is a combination of well-trained employees and an efficient

system. The following are the characteristics of a good customer service:-
o Reliability of products and services provided : -a good customer service is
accurate and dependable during interaction. It has every aspect of the service
such as instructions on assembly or performance, or information on warrantees
being factual and performed precisely. The products and services of the
organization are accurate and dependable. Example, if a customer pays a bill for
electricity, he/she expect the light to come n when the switch is flipped.
o Competence of customer service representatives in servicing their customers: - a
good customer service has knowledgeable and skilled customer service
representatives to handle the concerns of its customers. Customers want to
encounter knowledgeable and professional customer service representatives with
an efficient system at their disposal to resolve their issues.
o Responsiveness of the organization to customer inquiries, needs and wants on
time: -a good customer service has customer service representatives who
respond to customer inquiries and concerns on time. Customer service is at its
best when it is prompt. Allowing a customer to sit on hold or wait in the store for
an available representative is unacceptable. The timely response to a request,
question, concern or problem is the first step to a solution a customer needs. For
instance when customers enter a brick and mortar location, call on the phone,
email or initiate a web chat, he she expects immediate response.
o Courtesy of customer service provider to the customers : -a good customer
service have customer service representatives who kind and polite to assist their
customers. All customers deserve common courtesy. Body language and facial
expressions also contribute to the courtesy factor. They appropriate use their
body language and facial expressions when dealing with their customers.

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 o Credibility of the service offered: - a good customer service is trustworthy. It
does what it promises to do for its customers. Everyone in the organization
perform their duties in a manner that passes the credibility test.
o Consistency of the service level offered : -a good customer service has an
established pattern of behaviour to provide accurate and same services every
time they serve their customers. Steadiness in service provision creates long
term customers.
o Provide a win-win solution to its customers: -a good customer service provides a
win-win solution to its customers as the best solution. The customer wins
because he gets what he feels is a fair solution, and the company wins because
it gets to retain some profit and keep a repeat customer.
o Ensure customer satisfaction: - a good customer service is always making sure
that the customer is completely satisfied and that a situation has been
completely resolved. A good customer service associate is taught to ask a
customer if there is anything else that she needs done before the call is ended.

FOOD FOR THOUGHT

1. Explain the relationship between business and the customers

2. Distinguish between internal and external customers
3. Explain the benefits of good customer care to the business
4. Explain the meaning of customer service
5. Outline the characteristics of a good customer service
6. Identify the major types of customers of any given organization.
7. Categorize customers of an organization on the basis of demographic needs.

Individual assignment #01

1. Explain the consequences of providing bad customer service.

Individual assignment #02

1. Explain the benefits of good customer to the individual customer.

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