1. Customer Care Dr. Hussin Hejase April 7-9, 2001

2. Service Definition

3. The Nature of Services Everyone is an expert on services. We all think we know what we want from a service organization and, by the very process of living, we have a good deal of experience with the service creation process. Services are idiosyncratic - What works well in providing one kind of service may prove disastrous in another. For example, consuming a restaurant meal in less than half an hour may be exactly what you want in a fast restaurant but be totally unacceptable at an expensive French restaurant.

4. The Nature of Services Quality of work is not quality of service. An auto dealership may do good work on your car, but it may take a week to get the job done. Most services contain a mix of tangible attributes that constitute a service package. The package requires different approaches to design and management than the production of goods. High-contact services are experienced, whereas goods are consumed.

5. The Nature of Services Effective management of services require an understanding of marketing and personnel as well as operations. Services often take the form of cycles of encounters involving face-to-face, phone, electromechanical, and/or mail interactions. Source: “Product Design & Process Selection-Services.” Production & Operations Management. Richard Chase, Nicholas Aquilano & Robert Jacobs, Irwin/McGraw-Hill, 1998. Chapter 5.

6. Contexts of Services 1. Service Business is the management of organizations whose primary business requires interaction with the customer to produce the service. Examples are: Banks, Airlines, Hospitals, Law firms, Retail stores, and Restaurants. Within this category, there are two distinctions: A. Facilities-based services, where the customer must go to the service facility, and B. Field-based services, where production and consumption of the service take place in the customer’s environment.

7. Contexts of Services 2. Internal services is the management of services required to support the activities of the larger organization. Functions include, data processing, accounting, engineering, and maintenance. Their consumers are the various departments within the organization that require such services.

8. The Customer ???

9. Who is My Customer? Simple question isn’t it? Well give it some thought…. On the path from the design of a product/service, through its various stages of manufacturing, testing, packing, dispatching, storing, selling, invoicing, installing, servicing, collecting payment, etc. there is a long chain of activities. Each activity is performed by an individual or a group of individuals, and the output of this activity is used by someone else in the chain. Each recipient of this output is a Customer and must be viewed just like an outside customer or end user.

10. Who is My Customer? Internal Customer: is the individual or department within your organization who uses your products or services. By enhancing your customer service skills, you develop better working relationships with the people within the organization.

11. Internal Customers: Example Ahmad is responsible for ordering forms and envelops for the mailing services department of his company. Although ultimately his company’s customers are those people who receive a mailing, Ahmad’s primary customers are internal - members of the marketing department, word processors, computer programmers, and employees in his own mailing department. All his internal customers rely on Ahmad to purchase the products they need in a timely fashion. If Ahmad does not order the correct products, none of the internal departments can serve their external customers.

12. Who is My Customer? External Customer: is the person or organization who purchases and uses your products and services. This is the customer we traditionally think of. In government and not- for-profit organizations, these are the people who use your services, along with the taxpayers and donors who support you. In business-to- business relationships, external customers may also be people with whom you are in a joint venture.

13. External Customers: Example One surprising example of external customers are the Former Customers - those persons who, for one reason or another, do not do business with your organization anymore. Former customers may provide excellent input your organization can use to provide exceptional service. They are also potential future customers.

14. The Terrible Cost of the Lost Customer: A Story. There goes Mrs. Naaman. She just checked out her groceries from Happy Face Supermarket and she is mad furiously. She has been shopping there for 7 years but the produce man would not even consider making her a smaller package of lemons, the dairy department was out of Feta cheese and then the cashier demanded two forms of Ids with her check. What do they think she is, a common thief? But worst of all was just an overall feeling that Happy Face’s employees do not care whether she shops there. She spends 105 hard-earned riyals there every week, but to the store employees she is just another “Cash Cow” to be milked without so much as a sincere “Thank-you.” Nobody seems to care whether she is a satisfied customer.

15. The Terrible Cost of the Lost Customer: A Story. Today it is different. Mrs. Naaman just decided to try shopping elsewhere. Maybe, there is a store where they will appreciate her business!

16. What do the employees think about that? They are not worried! Happy Face Supermarket is huge and does not really need Mrs. Naaman’s 105 Riyals spent per week.

17. More than a loss of one small customer She was a 105 SR a week buyer. That is 5460 SR a year or 38,220 SR in 7 years. However, ripple effects make it much worse!… Studies have shown that an upset customer tells, on average, 11 other people about an unhappy experience. Some people will tell many more, but let us assume this is the case here. The same studies say that these 11 may tell an average of 5 others each. So, it is getting serious!!!!

18. More than a loss of one small customer How many people are likely to hear the bad news from Mrs. Naaman? Mrs. Naaman 1 tells 11 others +11 who each tell 5 +55 Total who heard = 67 Let us assume that only 25% will decide not to shop at Happy Face Supermarket = ~ 17 persons.

19. More than a loss of one small customer Assuming that these 17 persons also spend 105 SR per week, then the supermarket stands to loose 92,820 SR a year, or 649,740 SR in 7 years because Mrs. Naaman was upset when she left the store. These numbers are conservative since a typical supermarket customer actually spends more, so loosing different customers could quickly double the numbers.

20. Cost to replace a Lost Customer? Customer service research says that it cost about six times as much to attract a new customer (mostly advertising & promotion costs) than it does to keep an existing one (where costs may include giving refunds, offering samples, replacing merchandise). One report puts these figures at about $19 to keep a customer happy versus $118 to get a new buyer into the store. Quick Math : Cost of keeping Mrs. Naaman happy $19 Cost of attracting 17 new customers $ 2,006

21. Lost Customers mean Lost Jobs A well-known personnel consulting firm, shows a simple way to calculate the amount of sales needed to pay employees’ salaries. Assuming that a company pays 50% in taxes and earns a profit of 5% after taxes, the following chart shows how much must be sold to pay each employee (3 different salary levels) and maintain current profit levels: Salary Benefits After tax cost Sales needed $25,000 $11,500 $18,250 $365,000 $15,000 $6,900 $10,950 $219,000 $10,000 $4,600 $7,300 $146,000

22. The Impact If a $10,000 a-year clerk irritates as few as three or four customers in a year, the ripple effects can exceed the amount of sales needed to maintain that job!!! Unfortunately, many organizations have employees who irritate three or four customers a Day…..!!!???

23. Knowing Your Customer The Customer is (or should be) the focal point of all decisions and actions of the service organization. The customer is the center of things -the service strategy, the systems, and the people who serve him/her.Then, the organization exists to serve the customer, and the systems and the people exist to facilitate the process of service.

24. Doing Business in the New Economy The Service Strategy The People The Systems The Customer Ref. Karl Albrecht & Ron Zemke, Service America: Doing Business in the New Economy (Burr Ridge, Il: Irwin, 1985), p.41.

25. Customer Centric Organization Let’s Discuss how this could happen?