Chapter One

Know Why Service

Matters
Recognize the role of customer service
in your career success

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-1

Learning objective 1: Explain why attracting and
keeping loyal customers is critical to business
and personal success

Customers = people with whom we exchange

value
Today’s “service economy” often fails
Focusing on service tasks builds your career
success and your organization’s success

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-2

What’s happened to today’s “service
economy?”

Too often it’s marked by:

◦Ignored customers
◦Unmet promises
◦Incomprehensible customer service people
◦Jargon instead of answers
Others from your experience?

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-3

Gain a focus on service importance
Every company touts its great service but many
fail to deliver it
Merely satisfactory customer service is not a
differentiator; it’s an expectation
Ultimately only two things can provide unique,
long-term, sustainable competitive advantage: a
company’s culture and the relationships it
fosters with its customers
 --Oracle Corp (p. 2)

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-4

Ockham’s razor
When trying to understand a situation, the
simplest explanation is usually the best
Example: more customers shop where
they enjoy shopping (i.e., better service?)

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-5

A simple view
Ockham’s razor applied to K-Mart versus Wal-
Mart
They sell the same stuff for about the same
prices from the same type stores in the same
locations . . .
Same, same, same . . . DIFFERENT: perception
of service (by many people)

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-6

The results

K-mart sales about $50 Billion/yr and

struggling
Wal-Mart sales over $400 Billion/yr and
growing. (more than a million employees!)

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-7

Learning objective 2: explain how
customers are called different things
A “customer” is someone with whom we
exchange value

EXTERNAL CUSTOMERS
◦ Exchange money for products or services

INTERNAL CUSTOMERS
◦ Exchange work for wages (employees) or
gratification (volunteer)

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-8

Learning objective 3: Explain how
customers can become partners
Ongoing relationships that meet each others
needs
“Service intimacy” from increasing
understanding
Generosity, trust
Share joint purpose
Speak truth with compassion and care

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-9

Learning objective 4: Recognize
impact of positive word of mouth
Positive word of mouth gets and keeps
customers
Cost of getting a new customer is higher than
cost of keeping existing customer
A friends’ advice or recommendation is powerful
Word of mouth (good or bad) is turbocharge with
email, blogs, or other electronic communication

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-10

Learning objective 5: Calculate the
impact of lost customers
On average companies lose 10-30% of
customers per year
Companies that use aggressive customer
retention programs see profits jump 25-100%

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-11

What are the numbers behind an
unhappy customer?
An upset customer tells 10-20 other people
These tell five more each
The total number affected by one poor
experience = 50 to 100!

THESE NUMBERS ARE VERY

CONSERVATIVE. SOCIAL
NETWORKING CAN MAKE THE
IMPACT MUCH GREATER

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-12

How much does it cost to replace the
unhappy customer?
Fiveto six times more than keeping existing one
About $118 to get a new customer
About $19 to keep one

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-13

Learning objectives 5, 6: Translate
slogans into strategies using six core
competencies
Act to convey your good intentions to the
customer
Get everyone in the organization on board
(especially “low level” employees—who may be
the face of the company to customers)
Gain satisfaction—feel better about yourself and
your life by giving great service

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-14

Core competencies
Ability to communicate effectively
Acceptance of ownership/ responsibility
Ability to use empowerment
Ability to manage knowledge/share ideas
Ability to manage change
Predisposition to continuous improvement

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-15

Learning objective 8: Get customers
beyond satisfaction—to loyalty
LOYALTY REFLECTS
◦ Overall satisfaction
◦ Commitment to invest in ongoing relationship
◦ Key customer behaviors:
 Repeat buying
 Willingness to recommend
 Resistance to defecting to a competitor

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-16

Your number one task, regardless of job
title, will always be to attract, satisfy,
and preserve loyal customers. Master
this task for career and personal
success!

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-17

Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall 1-18