Chapter 19

Customer Service

McGraw-Hill/Irwin
Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
 19-2

Store Management

Layout, Design and Managing the Store

Visual Merchandising

Customer Service
 19-3

Services Offered by Retailers

 19-4

Customer Service Strategies

Customized
- Greater benefits to customers
- Greater inconsistency
- Higher cost

Standardized
Royalty-Free/CORBIS

- Lower cost
- High consistency
-Meets but does not exceed expectations
 19-5

Customization

Customization Approach encourages service provider

to tailor the service to meet each customer’s personal needs.

Store – sales associates offer individual customer service

Electronic Channel – instant messaging

Drawback: Service might be inconsistent

Customized service is costly
 19-6

Standardization

Standardization Approach is based on

establishing a set of rules and procedures and
being sure that they are implemented
consistently.

Retailers that use this approach:

McDonald’s
Wal-Mart
IKEA
Dollar General
Save-A-Lot
The McGraw-Hill Companies,
Inc./John Flournoy, photographer
 19-7

Cost of Customer Service

High levels of customer service can be costly, but good

customer service is worth an investment

PROFITS

COSTS

It costs more to acquire customers than to generate repeat business

 19-8

Customers Evaluate Service Quality

Role of Expectations: based on knowledge and
experience:
--Varies with types of retailers – discount vs.
department store

Perceived Services – evaluations are based on

perception

Due to its intangibility, services are hard to evaluate

accurately

Stockbyte/Punchstock Images
 19-9

Assessing Service Characteristics

• Reliability: accuracy of billing, meeting promised

delivery dates
• Assurance (trust): guarantees and warranties,
return policies
• Tangibility: appearance of store and
salespeople
• Empathy: personalized service, receipts of notes
and emails, recognition by name
• Responsiveness: returning calls and emails,
giving prompt service
 19-10

Perceived Service

Reliability Tangibility

Cues used to
assess service

Assurance Empathy

Responsiveness
 Gaps Model for 19-11

Improving Service Quality

 19-12

Gaps Model for Improving

Retail Customer Service

• Knowledge Gap -- knowing what the

customer wants
• Standards Gap -- setting service goals
• Delivery Gap -- meeting and exceeding
service goals
• Communications Gap -- communicating
the service promise
 19-13

Closing the Knowledge GAP

• Customer research
• More interactions between managers and
customers
• Better communications between managers
and service providers
 19-14

Market Research
Comprehensive Studies
Gauging Satisfaction with
Individual Transactions
Customer Panels and Interviews
Interacting with Customer
Customer Complaints
Steve Cole/Getty Images
Feedback from Store Employees

The service gap is reduced ONLY when retailers

use this information to improve service.
 19-15

Customer Complaints

Complaints are a source of information for retailers

Information about merchandise and its quality

Royalty-Free/CORBIS
Information about services

This feedback can be used for buyers, planners and customer

service representatives. Retailers need to encourage
complaints because most customers will not complain.
 19-16

Closing the Standards GAP

• High quality service commitment

• Define the role of service providers

• Measure service performance

• Innovative solutions

• Set service goals

 19-17

What Does Good Customer Service Mean?

• Retailers need to provide clear definition

of this to employees
• Description of service must be specific
so expectations are clear
• Service goals should be measurable
--customer surveys
--mystery shoppers

Royalty-Free/CORBIS
 19-18

Closing the Delivery GAP

• Information and training

• Instrument and emotional support
• Internal communications
• Reduce conflicts
• Empower employees
• Providing incentives
 19-19

Support for Service Providers

Instrumental Support – associates need to

have the appropriate systems and the right
equipment to deliver the services

Emotional Support – associates need

emotional support from their coworkers or
a concern for the well-being of others
 19-20

The Target of Empowerment:

Excellent Customer Service
Benefits to Employee:
Stimulates initiative
Promotes learning
Teaches responsibility
Manager’s Approach:
Provide guidance to employees
Steve Cole/Getty Images
Train employees to the challenge
 19-21

Empowerment is Not for Everyone

• Some employees will not take the

responsibility
• It is expensive or some standardized
retailers
• Empowerment idea is not embraced by all
cultures
 19-22

Using Technology
Retailers are using
technology to assist sales
associates in providing
customer service.

Kiosks: (c) image100/PunchStock

-Kiosks can offer opportunity to order merchandise not in

store
-Kiosks can free employees to deal with other customer
requests
-Customers can use kiosk to learn more about
merchandise
-Kiosks can provide customer solutions
 19-23

More Technology
• Hand Held Scanners – help to provide customer
service by allowing customers to scan large
merchandise instead of struggling with the
product to checkout

• Intelligent Shopping Assistants – a device

connected to a shopping cart with customer
database to provide personalized information to
shoppers

Nancy R. Cohen/Getty Images

 19-24

Closing the Communications GAP

The difference between the service provided by

the retailer and the service actually delivered

Realistic commitments

Corporate ideas – reality of store operations need to be communicated

Managing customer expectations

• Provide explanation

• Describe how retailer is improving situation

• Provide accurate info at point of sale

 19-25

Service Recovery

• Listen to the customer

• Provide a fair solution

- Distributive fairness
- Procedural fairness

• Resolve problem quickly

- Reduce number of contacts
- Give clear instructions
- Avoid jargon
 19-26

What’s Fair?

Distributive fairness – customers want to get

what they paid for

Procedural fairness – perceived fairness of

the process used to resolve complaints
• Did the employee collect information about the situation?
• Was this information used to resolve the complaint?
• Did the customer have some influence over the outcome?