6 QUESTIONS TO REEVALUATE YOUR CUSTOMER SERVICE
Below are key questions that every company, from a small-scale business to a global corporation, needs to ask about its customer service:
How do you measure customer service?
Companies measure customer service through surveys that measure satisfaction with the service provided to customers. Improving customer service has been shown to retain and increase customer base. It is a powerful tool if you are in a highly competitive market or when customers are fickle. A better way to measure customer service is by focusing on the loyalty of the customer base, that is, money spent by existing customers or renewal of membership.
Are you focusing on customer-facing employees or underlying operations to improve customer service?
Most companies assume that modifying scripts or providing more training or adding more staff to customer-facing organizations will enhance customer service. They are sadly mistaken. It requires improving underlying operations to meet or exceed customer requirements and doing this in a cost-effective fashion.
Are you able to improve service in a cost-effective manner?
When challenged to improve customer service, most companies do it with increasing costs, which impacts profitability. They soon find it hard to sustain the higher levels of service. They tend to offer one service standard to all customers, thereby underservicing critical segments and overservicing less critical segments. This approach results in increased cost and loss of satisfaction among customers who are essential for growth and profitability. Also, most companies fail to get customers to pay for the increased service despite the customers’ willingness to do so.
Is your service model unique and difficult for competitors to copy?
To win in customer service, companies have to develop a unique service model that competitors find difficult to copy. Otherwise, the advantage will be short lived and become industry standard, thereby increasing the cost for everyone. Developing a unique service model requires a deep understanding of customer requirements and the in-house operations that would be required.
What’s the best way to improve customer service?
To improve customer service, companies should segment customers, define and map service levels by segments, create a service model that is hard for the competition to match, and then convince customers to pay for the increased service. Supply chain organizations are involved in the delivery and can help in defining unique service models and estimating cost.
Do you include supply chain organization in customer service discussions?
Improving customer service is a team sport that requires participation and coordination among different functional groups. Unfortunately, supply chain organizations are typically kept out of service-level discussions. Most CEOs consider the supply chain as a support organization that is responsible for delivering services that the sales team promised to customers.
Not involving the supply chain has created a significant problem for some companies. For example, at a high tech company, the sales team promised to deliver hardware to a customer with remote locations in Europe within two days of being ordered. The customer included a severe penalty clause in the contract to ensure that the services were performed as promised. The high-tech company’s supply chain organization was not geared up to service all the locations across Europe. Its distributors were not able to deliver the hardware within the required two days to all of the remote locations. This created a lot of complaints from different locations as the sales representatives showed up without hardware. The high-tech company had to fly service representatives to remote locations. It was a mess. The company ended up paying a lot of money to the customer as a penalty.
It undoubtedly helps for supply chain organizations not just to be involved but to lead the service discussion. Though the sales and marketing team can help in classifying customers, the supply chain organization can point to different service models that can be offered to the client. They can also estimate the cost and effort associated with delivering the service. The sales team then can negotiate the price with the customer.
In addition to improving customer service, companies can boost revenue by bringing innovation quickly to market and being responsive to market demand. In the next chapter, we will review how supply chain can improve delivery of innovation by making customization, global sourcing, and market-driven planning a reality.
Excerpted with permission from The Supply Chain Revolution: Innovative Sourcing and Logistics for a Fiercely Competitive World by Suman Sarkar, copyright Suman Sarkar.