Customer service

Prepared by Simon Mensah

1. CUSTOMER SERVICE

The CustomerCustomers are the obvious requirement for doing business. The customer is the most important visitor on the organisation’s premises and the survival of any business organization depends on the customer. These customers have varying need from the business organization.

Customer ServiceCustomer service refers to anything that business organizations do for the customer that enhances the customer experience. Customer service must not be viewed from the organisation’s point of view, but from the customers’ point of view.

Importance of Customer Service"The customer is always right" is a famous business slogan. The underlying truth behind this statement is recognizing that customers are the life blood for any business. Understanding the importance of good customer service is essential for a healthy business in creating new customers, keeping loyal customers, and developing referrals for future customers. .

Excellent customer service begins at the initial greeting, whether that's in person, on the phone, or via email. In all of these situations, using good people skills will increase the chances for a positive first impression. For example, saying hello with a smile to a customer who just walked in the door will invite that person in and make them feel welcome. On the other hand, when an employee doesn't acknowledge the client, or makes him/her feel like an inconvenience, that customer immediately feels slighted. That negative feeling doesn't get the customer in a buying mood, and it will most likely turn them away from ever coming back to that particular store, company etc. .If the employee is utilizing good customer service on the phone, the initial greeting will be courteous. Again, this makes the client feel comfortable. In turn, the customer will appreciate the pleasant greeting and usually be more agreeable on the other end of the phone. This is a much better situation for the client instead of leaving messages on answering machines, never getting any returned phone calls, or trying to extract some product information from an uncaring employee.

Of course, good customer service goes beyond the initial contact. When helping customers choose the right product or service or answer their questions, assisting them with their needs is a great example of going the extra mile. This kind of service establishes good will, and it'll eventually lead to loyal customers. Even if that person doesn't purchase anything at that time, the good shopping experience will bring the customer back again. .

Think about how you've been treated whenever you're the customer. If you've ever had a bad experience with a company, you know that it's not easy to forget the encounter. Perhaps a clerk was too busy stocking shelves to help you pay for your items. Maybe there wasn't anyone around to answer your questions or help you with some additional information. You might have had to deal with an employee that won't help you because of some company rule. In any of these instances, the managers or the owner of the store usually aren't notified of the poor customer service. Instead, the people that do hear about the negative experience are many of the customer's family and friends.

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When dealing with clients, sometimes there are situations that need to be resolved. If the customer is upset about a product or service they've received from the company, the first thing an employee should do is to listen. By taking the time to hear through the entire complaint, the customer feels that you care. Occasionally, the issue is actually not related to your company at all, but the initial problem is merely a catalyst for that person's frustration about other things. Either way, attentive listening will break down that barrier and begin to build a bridge to fix the situation. Usually, discussing different options will then bring about a positive outcome for both sides.

Good customer service leads to many benefits. Not only will you gain trust with your current clients, they'll also become a wonderful referral system as they spread the word about your business to other prospects. Especially with any internet business transactions, product reviews are quite common. Whether it's positive or negative feedback about a product or service, people are writing freely about their shopping experiences. In the long run, treating people fairly and with respect will bring business to your company today and in the future.

Reasons for a good customer service 1. The provision of excellent customer service is the most effective and cost effective way to

maintain and grow a business organization.2. Customer service is the positive elements that help business keep their customers.3. The ability of the business organization to make profit depends to a large extend the services

provided to its customers.4. Customer service help foster a good relationship between the business organization and its

customers.

Customer SatisfactionIn business, customer satisfaction may develop quickly or may be cultivated over a period of time. Customer service providers should try to reduce customer’s stress, create a pleasant customer experience, provide current information and help solve customer problems.

Customer satisfaction is therefore the customer’s overall feeling of contentment with a customer interaction. Satisfaction is most often the customer’s afterthought. When the customer thinks back his interaction with the service provider and feel pleasant then the customer is satisfied. However, if the think back makes the customer feels unpleasant, then he is dissatisfied.

Customer service is a highly important part of every small business. Companies that are unable or unwilling to properly service their customers stand to lose the customers' business. However, several key variables or characteristics set excellent customer service apart from mediocre customer service. A company that best demonstrates these excellent customer service characteristics will have a distinct advantage over its competition.

Customer satisfaction is the overall essence of the impression about the supplier by the customers. This impression which a customer makes regarding the supplier is the sum total of all the process he goes through, right from communicating with the supplier before doing any purchase to post delivery options and services and managing queries or complaints post delivery. This helps the customer to form a strong opinion about the supplier which finally results in satisfaction or dissatisfaction. Customer’s perception on a supplier helps the customer choose among the supplier on basis of money, value and how well the delivered products suit all the requirements.

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Excellent Customer ServiceThis involves providing outstanding services to meet customer’s expectations. Excellent customer services include having a great attitude and being people centered.

Steps in Providing Excellent Customer Service1. Develop skills to be successful.2. Assess the current level of customer service and determine if it appropriately meets their

current needs. This will help in developing strategies that meet today’s customer’s needs.3. Empower employees to make decisions that benefit the customers.4. Use technology and current information systems that will help facilitate the provision of

excellent customer services.5. Individual employees must periodically examine their own performance to ensure that they

are still practicing the provision of good customer service as required.

Customer NeedsCustomers of all categories and classes have five basic needs. These are; service, price, quality, action, and appreciation.

1. Service: For any level of purchase, the customer expects an appropriate level of service.2. Price: Customers always want to use their financial resources efficiently. This means that

the price of the products that the customer is to pay is very important.3. Quality: Customers want the products that they purchase to be durable and functional until

the customer decides to replace them. This means that manufacturers and distributors should produce products that live up to the customers’ expectations of durability.

4. Action: Customers are human beings and like to think that they are important, and that when a need or question arises, someone will be ready and waiting to help them.

5. Appreciation: Customers need to know that their business with you is recognized and appreciated. Try to always say ‘thank you’ to customers. Let the customer know you are glad that he has chosen to do business with you.

Types of CustomersCustomers are grouped into two: External and Internal customers.

External CustomersExternal customers are the customers we do business with outside the organization. External customers are the customers we most commonly think of when we consider whom to serve. They are the people with whom the organization interact and share their knowledge and positive attitude. External customers have the power to enhance our reputation and to bring us new business, but they are not the only customers that we have.

Internal CustomersEveryday, the organization interacts with a special group of customers who frequently go unrecognized. These customers are the organisation’s internal customers. Internal customers are the people who work throughout the organization. They are important to the organisation’s success in providing the external customers with what they need. If internal customers do not see the importance of completing work promptly and of treating other with respect, it becomes very difficult for the organization to provide outstanding customer service to external customers.

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By developing a positive relationship with the internal customers we are showing them that we value their importance in the overall organization. We can apply a slightly modified version of the Golden Rule to our internal customers, “Do unto our internal customers as we would do unto ourselves.” This rule suggests that as customer service providers we will strive to determine what our internal customers’ needs and expectations are and place the same level of importance on their needs as we would do unto ourselves.

Management has an important role in creating an environment that recognizes the importance of internal customers. By providing opportunities for internal customers to experience the challenges of each other’s responsibilities, an increased respect can develop. It also helps everyone involved to see the big picture. By satisfying our internal customers we create an excellent foundation on which to begin meeting our external customers’ needs. Fewer apologies have to be made, work gets done more efficiently, and an overall positive atmosphere develops.

Customer AttributesThese are characteristics that allow customers to be grouped according to demographic, psychographic, and firmographic information.

Demographic information include characteristics like age, income, marital status, education, stage in the family cycle, home ownership, sex occupation, household size, mobility patterns, ethnic background, and religion. Demographic information is a straightforward and basic method of identifying customers.

Psychographic information focuses on lifestyles, modes of living, needs, motives, attitudes, reference groups, culture, social class, family influences, hobbies, political affiliation, etc. Psychographic information can provide a more thorough picture of the customer.

Firmographic information includes characteristics about a company such as how many employees they have, the kind of business they are in, whether they are retail, wholesale, or a service provider, their hours of operation, etc.

Cost of Losing a Customer1. Loss of the current cedis (dollars) that business relationship created. At the initial stage,

these losses seem insignificant, but with time, this loss becomes more damaging cumulatively.

2. Loss of the Jobs that our clients provide: If business goes elsewhere, we do not need to employ the people who were working on the customer or customers. This can result in the closing of the business organization.

3. Loss of business reputation: Words travels faster in this our information-based society. Our clients will possibly share their experiences with their clients and friends. This loss may result in the immediate departure of other business or simply in a lack of trust among our clients and any potential customers.

4. Loss of future business: This is an intangible variable because it is difficult to assess the long term effects of what might happened in the future. Whether it is one dollar, hundred dollars, million dollars or billion dollars, it is important to recognize the value of this loss.

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2. CHALLENGES OF CUSTOMER SERVICE

Customer service is rare because it require spending money and taking action which average organizations are unwilling to commit themselves to. Barriers to excellent customer service are grouped into two.

1. Barriers that are beyond the control of the customer service provider, and2. Barriers that are within the control of the customer service provider.

Barriers that are beyond the customer service provider include the following:1. Management philosophy; making it difficult for customers with problems to contact a

company or the person who can really help.2. Unreliable equipment3. Restrictive company policies.4. Difficult-to-understand warranties or owner’s manuals.5. Out-of-date procedures.6. Lack of understanding of the value of service beyond the control of the customer service

provider, but constitute the common part of doing the job.

Barriers that are within the control of the customer service provider:There are some barriers to excellent customer service that are within the control of the customer service provider. These barriers include laziness, poor communication skills, poor time management, moodiness, lack of adequate training, insufficient authority, inability to handle stress, and inadequate staffing. Overcome through diligent effort, allowing the customer service provider to do the best possible job.

Customer service providers must therefore perform periodic self-evaluations to assess their effectiveness and to identify areas that need improvement.

PerceptionsA perception is the way that we see something based on our experience. People perception of a situation will vary at least slightly. Our perceptions are developed over a period of time and they reflect the way that we have been treated, our values, priorities, and sensitivity to others.

Perceptions are not based on rational ideas. They are influenced by momentary frustration and anger, and full of mystery.

Customers perceptions are formed based on their prior interactions with the organization. Therefore, always work to provide the customer with excellent service so that their most current perception is a positive one.

Try to deal with your customers as individual human beings. Respect their time, circumstances, and perceptions that are based on their prior interactions.

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ExpectationsExpectations are a persons’ vision of the result that will come from our experience. A person’s expectations may be positive or negative. Expectations are based partially on a person’s perceptions.

If one last experience with a company was negative, you may approach a new situation with the expectation that you will again be dissatisfied. Sometimes companies and individuals wrongly assume that they cannot live up to their customers expectations. It is however important to note that what customers expect is frequently much easier and less costly to provide than we think.

Levels of ExpectationsThere are basically two levels of expectations. These are primary and secondary levels of expectations.

Primary expectations are the customers’ most basic requirements of an interaction. For example, dining in a restaurant satisfy hunger.

Secondary expectations are expectations based on our previous experiences that are enhancements to the customer primary expectations.

Scope of InfluenceScope of influence is our ability to influence others based on our perceptions or experience. It is important for businesses to recognize the influence their customers have on other customers. Some customers have a large scope of influence because they interact with a large number of people. It is therefore extremely important to do all we can to make our customers happy and keep their business. The recognition of the power of word-of-mouth supports the importance of scope of influence.

Reputation ManagementThis is the process of identifying how a company is perceived and establishing an action plan to correct, maintain, or enhance the company’s reputation.A good reputation is cultivated over a period of time through a company, or individual performance.

To manage reputation, the company must survey its customers and the community at large to assess what its reputation really is.

A company with good reputation has some of the following characteristics: Is very responsive to customers. Delivers its promises to customers. Provide excellent value to customer. Has excellent communication. Conducts business in a humane and caring way. Treats employees with respect. Is committed to the environment.

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Techniques for Exceeding Customers ExpectationsTo provide customer service beyond the customer expectations, the organization can undertake the following;

1. Become familiar with your customers. Try to find out who your customers are and why they do business with you. Get to know their likes and dislikes.

2. Ask the customers what their expectations are. Find out what they see as benefits of doing business with you. What is it that they want that you are not providing?

3. Tell the customers what they can expect. Convey to them what your commitments to them are.

4. Live up to their expectation. Try and accomplish what you said you would provide for them.

5. Maintain consistence. Do not promise what you cannot deliver. Always deliver a consistent service.

One important key to exceeding customers’ expectations is to remember that expectations are always changing and not constant.

CredibilityHow believable we are, and how reliable we are translates into how credible we are to others.Credibility is the combination of our current knowledge, reputation, and professionalism. Credibility encourages trust.

Key Tips for Cultivating Credibility1. Practice Consistency: Strive for fairness and approach similar situations in the same

manner. Be positive, professional and control your personal emotions all the time.2. Keep your word: Keep your promise. People will not have faith in you if you break your

promises. Follow through with the commitments that you make.3. Develop your Expertise: Maintain a high level of knowledge about your products, your

company, and the industry at large.4. Become a Teammate with your Co-workers: Working successfully with others shows that

you have common goals and can benefit from each individual specific skill.5. Show Dedication to Customers: Let customers know what you will do for them, and take

every customer’s request seriously.6. Treat all Customers and Co-workers with the same level of respect. Showing that you

respect others create an environment that allows others to respect you. Be sensitive to your effect on customers.

7. Apologies if you are wrong: Being honest will impress others and they will respect you for who you are.

8. Remember that credibility is hard to regain than it is to keep.

Importance of ValuesValues are a combination of our beliefs, perceptions, and ideas about the appropriate response to a situation. Companies must effectively communicate their own specific values. This is made possible through the use of employee manuals or policy statements. However, real corporate values can be conveyed through the actions of management in an organization. Employees must recognize their own values and beliefs and attempt to identify organizations that have similar priorities.

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To facilitate excellent customer service, there is the need to join corporate values and employee values. Individual values are personal. In the customer service industry, some organizations have a very distinct set of dos and don’ts. Other organizations may be more vague in expressing corporate priorities to employees. In either instance, the customer service provider must recognize that they are both representatives of their company and also individuals. Their behaviours and philosophies illustrate the persons they are.

Ethics in Customer ServiceEthics are a set of principles that governs the conduct of an individual or group of people. Ethical decisions are easy to recognize and are perceived as popular choices of behaviour by the people around us. At other times the spectrum of potential choices falls into gray areas in which the ‘right’ or ‘wrong’ course of action is difficult or nearly impossible to identify. The challenge of ethical decision making becomes even harder when it is not just an individual’s personal judgment that is involved, but also carrying out the instructions of a supervisor, request of a customer, policy of the organization, or some other situation in which a threat , real or perceived, is involved.

There are really not shortcuts when it comes to telling the truth and determining an appropriate course of action. Individuals in business must be seen by those around them as honest or they will not succeed for long. The bottom line in decision making is that individual must face the consequences of their decisions – good or bad.

When faced with an ethically challenging situation, ask yourself the following questions:1. It is legal?2. Is it fair?3. How do I feel about it?4. Would the court of public opinion find my behaviour incorrect?5. Am I fearful of what those I trust would say about my action?

The above questions can be quite revealing when attempting to choose an ethical course of action.One final consideration regarding ethical behaviour is that it is not always popular to “do the right thing”, but maintaining individual integrity and an organisation’s reputation will allow all involved to know that they examined all possibilities and chose the most appropriate course of action.

Current Status of Customer ServiceCustomer service providers mostly do little to improve upon the situation due the following reasons:

1. It is difficult to measure the financial benefits of customer service. It may be challenging to convince some financial managers of the long-term payoffs of providing customer service.

2. Customers have high expectations, but most often customer service providers do not know what those expectations are.

3. The cost of providing excellent customer service is prohibitive for many businesses.4. Technology provides the opportunity for faster responses to customer questions, but it also

creates the requirement that customer service providers have additional training to become proficient in using new systems.

Customer service is an opportunity that no professional can afford to ignore. It is frequently the distinguishing difference between two or more companies that offer the same product or service.

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New Trends in Customer ServiceNew trends are emerging in the customer service industry. Some of these trends include accessibility for the customer, immediacy of responses, feedback from customer service provider, outsourcing of all or part of customer service functions, and non-traditional examples of customer service.

1. Accessibility for the Customer: Customers today have more access to information about their account status, billing, delivery, and product availability than before. This reduced the questions that customer service providers must respond to.

2. Immediacy of Response: With technology, customers can have questions, or problems resolved immediately. Customer service providers are also more fully empowered to make decisions in response to customers’ inquiries.

3. Feedback from Customers: Feedback is important to all businesses and provides opportunities for growth in the customer service department. Customers’ suggestions are now frequently requested and encouraged. Most customers appreciate the chance to share their ideas and to see changes being made.

4. Outsourcing of all or part of Customer Service Functions: This involves the giving out of some customer service functions to outside firms to perform on behalf of the organization. Some functions outsourced include data processing, billing, maintenance, marketing, accounts receivable, etc.

5. Development of Non-Traditional Approaches: The importance of customer service has led to the development of non-traditional approaches to customer services. Some of these include offering informational newsletters to customers. Others are new product or service offerings, new systems, or service hours.

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3. THE ROLE PROBLEM SOLVING IN CUSTOMER SERVICE

Problems are challenges that we would prefer to avoid, but in most cases, this is not a possibility. Problem solving is an active resolution to a challenging situation. Problem solving is an individualized process. Every individual may have his/her own method of determining an appropriate course of action. What is important is the end result, not the process of determining the solution.

To actively confront the challenge of problem solving, organizations must prepare employee with training. Employees must be encouraged to develop solutions that are positive for both the customer and the company.

One main challenge to problem solving is the speed with which decisions must be made.

How to Effectively Solve ProblemsCustomer service providers can effectively equip themselves to make decisions and to sole problems by:

1. Learning problem-solving strategies. 2. Develop negotiation skills.3. Learn how to deal effectively with conflict.4. Recognise the importance of follow-up.

Creativity and Problem SolvingCreative problem solving suggests that through a open approach to finding solutions, an appropriate and innovative result may be discovered. Creative problem solving requires that employees work in a culture that allows new ideas to flow freely and to be considered realistically. Creativity requires effort and commitment to creating new idea or solutions.

Problems as OpportunityAs customer service providers, always consider criticism as an opportunity to obtain valuable information. A productive method of response to criticism as productive input to the creation of a problem-solving environment.

Note that customers have ideas about how a problem might be avoided in the future. Offer customers the opportunity to share their ideas, give customers the opportunity to participate in the process of improving a situation or system that has disappointed them.

Confronting ConflictConflict is a hostile encounter that occurs as a result of opposing needs, wishes, or ideas. Conflict is a reality in a problem solving situation. When faced with conflict in problem solving, it is important to proceed with caution.When encountering conflict, remember the following suggestions:

1. Listen to the other viewpoints that are being presented.2. Do not bring up old problems from the past or assign blame.3. Use tact as you respond to others.4. Do not repress your own anger, instead use it productively.5. Focus on finding the best solution to the conflict.

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Problem-Solving ProcessAfter determining that a problem exists, it is important to respond to the problem using the following guideline:

1. Identify the problem.2. Understand the problem unique characteristics and the possible outcomes.3. Define the requirements of a possible solution considering the company policies currently in

place.4. Identify possible solutions.5. Select the best solution. 6. Implement the solution, informing the customers of the details and how the customer will be

affected.7. Observe and evaluate the solution’s impact.

Problem-solving StrategiesThere are two common strategies of problem solving. These are brainstorming and diagramming.

1. BrainstormingBrainstorming strategy is used by groups of two or more. The premise behind brainstorming is that the more ideas that are shared in an open and accepting environment, the more creativity will result.

The Brainstorming Process1. A specific problem is identified.2. One person is designated as the recorder3. Someone share the first idea. Other ideas should follow.4. There is no criticism allowed at the free-wheeling of ideas stage.5. Generate a master list of ideas shared.6. Display it on a chalkboard or flipchart. It can also be compiled and distributed to group

members for later discussion.7. Members can review the ideas and make additions.8. Convene a next meeting to recommend the most appropriate solutions.9. Implement the chosen possible solutions.

DiagrammingThis strategy provides a visual representation of the problem and the facts related to it. Visual representations are easy to work with because they allow visual examination as well as discussion.

There are four main methods of diagramming problems in search of appropriate solutions. These are pro/con sheets, flowchart, organizational charts, and mind mapping.

Pro/Con sheetsPro/con sheets are best when used to choose a specific course of action as the resolution to a problem. To create a pro/con sheet, write the problem and the possible solution on the sheet of paper. Draw a line down the centre and write the pro on one side and con on the other side. Write all the possible reasons that the solution would work on the pro side of the line. List all the reasons that the solution would not be appropriate on the con side.

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When all these are listed, it can be determined whether the solution is appropriate or not.Example of Pro/Con Sheet:

Pro Con(Arguments for) (Arguments Against)

FlowchartsThis strategy in the problem-solving process is helpful to diagram what the process of flow of a problem is. Listing how a situation is processed and who must be involved is enough to identify why a problem is occurring. Flowcharts are helpful in identifying who would be affected by a change in the method of processing information.

To create a flowchart, include in a box on the top of a sheet of paper the points where a process begins.

Below is an example of student fee payment extension problem.

Request send HOD by student

Positive Yes Payment No History

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Extension to pay school fees requested by

Student payment history checked

Inform student that request is granted

Inform student that request is denied


Organizational ChartsThis is a diagram of who reports to whom within an organization or department. Even though organizational charts will not assist in solving specific problems, they can provide a visual illustration of areas of employee overload and can reveal possible snags (obstacles) in a system’s success.

Mind MappingThis is an extremely creative approach to diagramming a problem.

The Mind Mapping Process1. Place the problem or decision in an oval in the centre of a large piece of paper.2. Place lines going out of the centre in different directions.3. On each line, write important words or phrases that pertain to finding a solution to the

problem.4. Record as many ideas as possible.5. Review the ideas and make additions if any are suggested.6. Put your mind map aside for an hour or a day and then review what you have written.7. Begin to draw conclusions from your mind map.8. Implement the solutions arrive at.

In mind mapping, it is important to exercise an open mind and a willingness to think creatively.

Product Industry Knowledge Knowledge

Good Knowledge Communication Level

Reliable CREDIBILITY Honesty

Reputation Values

Hardwork Good Building Trust Performance

Consistency Quality Product Above is an example of a mind mapping on credibility problem facing an organization.

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Developing Negotiating SkillsNegotiation is the evaluation of the possible solutions to a challenge and the selection of the solution that is mutually beneficial. It involves discussion between parties. Negotiation must allow for give and take on both sides of the issue.

How to Improve Negotiation Skills1. Know your customer: Know the parties involved. Past relationships can shed valuable

light on how a person/customer may approach a current situation. The greater the awareness of customers and their needs, the more effective one can begin to solve their problems.

2. Ask questions and listen to the spoken and unspoken messages: Asking customers’ questions and actively listening to their responses provide an informed understanding of the situation.

3. Know the policies of your organization and in which areas flexibility is allowed. To negotiate with customer, it is important to be familiar with your company policies. The customer service provider should know when and where flexibility is allowed with regard to policies.

4. Demonstrate the willingness to be flexible: This is the ability to react to situations as they occur.

5. Learn to handle your anger and your customer’s anger appropriately. Anger is always a possibility during negotiation. When anger is revealed, it is best to defuse it as possible. Anger may express frustration, anxiety, or unmet expectations. You can defuse customer’s anger by trying to anticipate the course and to confront it carefully. As the customer service provider, consider the role you play as representative.

6. Consider what the customer may lose in the negotiation process. Negotiation is a give and take affair. Try to understand what the customer will see as compromise. When negotiating, stress that the goal is a positive resolution for all.

7. Determine mutually beneficial solutions to challenging problems and situation. When concluding negotiation, seek solution that will benefit both the company and customer. Explain to the customer how the agreed-upon solution will work.

Approaches to Apologising and conveying bad newsEffective problem solving acknowledges the fact that the customer may have legitimate concerns and that the customer was treated inappropriately. At this time, an apology is due to the customer.

Note that apology is not a sign of weakness, but a productive method of continuing the opportunity to communicate.When the need arise to apologise, consider the following suggestions:

1. Acknowledge customers’ feelings: Indicate to the customers that you recognize their feelings and emotions, and send the message that you care.

2. Express to the Customer that you Share the responsibility for the problem. Even if you and the company were loosely associated, note that you are part of the problem and its resolution.

3. Convey sincerity: When apologizing, it is important to convey care and concern. If showing regrets, the manner in which you say it should demonstrate your regret.

4. Ask for the opportunity to correct the problem. Give an offer to correct the error or to make changes in the future.

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5. Request the opportunity to continue doing business in the future. This request gives the customer the opportunity to share other concerns that might keep them from doing business with you.

Barriers to Problem Solving and Decision-making1. Resistance to Change: This can prevent people from taking chances and from considering

new possibilities.2. Habits: This limits our vision of what can be accomplished and may stand in the way of

solving a problem.3. Individual Insecurity: This may deter individuals from taking risks or from pursuing

behaviour that may require them to take a stand. This may come from overall lack of self-confidence.

4. Past History: Knowing what has happened before and what worked and did not work can inhibit an individual’s desire to try new methods of problem solving or decision making.

5. Fear of Success or Failure: The unknown can be a frightening thing. When a new way of doing something is attempted, the possibility exists that it may work well or not at all.

6. Jumping to Conclusions: This is making assumptions about what might or might not work. Assumptions may take on negative perspectives.

7. Perceptions: Perceptions are the way that we see things based on our experience. We may be unable to see something because we are so blinded by our own perception.

Follow-up is checking back to determine whether or not a situation is operating according to the initial plan.

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4. STRATEGY FOR FORMULATING A PLAN FOR SUCCESS

What is a Strategy?A strategy is a plan for positive action. A strategy can help a business to determine the proper level of customer service.

Variable of Customer Service Strategy1. Planning2. Infrastructure3. Culture4. High-touch and low touch customer5. Consumption behaviour6. Market segmentation

PlanningPlanning is finding a recognizable direction to focus on. It is the establishment of specific customer service goals. These goals may vary from reducing customer complaints to answering customers calls in 20 seconds or less. Establishing customer service goals will help customer service providers to define what they would like to accomplish.

InfrastructureAn infrastructure is made up of the network of people, physical facilities and information that support production of customer service. Customer service depends on the existence of an appropriate infrastructure. Infrastructure is the ‘highway’ that gets you where you need to go. Infrastructures require a lot of planning. If future needs are not anticipated, future costs may be greater. Very few infrastructure investments show a positive return in less than three to five years. The infrastructure should meet the needs of the customer. Infrastructure must be used to its fullest potential. If current technology is in place, but employees have not been trained, it is wasted.

CultureCulture is composed of the values, beliefs and norms shared by a group of people. Every business has its own unique culture. If the culture does not encourage excellent customer service, excellent customer service will not exist. Three ways of creating a customer friendly culture are:

1. Practice the Golden Rule: Do onto others as you would have them do unto you, both internally and externally.

2. View internal Customer as number one. If you take care of the internal customers, they will automatically take care of the external customer.

3. Work hard, play hard: Celebrate successes, offer incentives, and give people a reason to work hard.

High-touch and Low-Touch CustomersHigh-touch customers require a high level of customer interaction. These customers demand high level of service. These customers come into their customer service experience expecting a high level of service. They perceive that the cost of providing the service is included in the price. A high-touch customer may not be capable of completing the interaction without assistance.

Low-touch customers expect a low level of customer interaction. Low-touch frequently exists because of technology. It tends to have high usage and low cost per use.

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Consumption BehaviourThis refers to the customer’s usage and payment patterns. This involves collecting information about a customer. This requires the company to maintain a customer database. The more information an organization has about their customer’s consumption patterns, the better prepared they are to create a strategy to better serve that customer. Most companies service a variety of different customers with unique consumption patterns. It is not appropriate to serve all customers in exactly the same way. Most companies end up hurting their business opportunities because they do not consider their customers’ consumption bahaviour.

Segmentation of Your marketMarket segmentation is dividing customers into groups with similar characteristics. Segmentation helps to divide customers into serviceable groups, making it easier to assess the appropriate services to provide. Segmentation helps identify common and less common customers’ service needs.

Development of a Customer Service StrategyTo create a customer service strategy, the following guidelines can of helpful:

1. Segment your customers. Divide your customers into groups with similar characteristics.2. Identify the largest and most profitable customer groups. It is better to serve the largest

customer group, representing the majority of your business first.3. Determine your customers’ expectations. Find out what your customers want from their

experience with you.4. Develop a plan to achieve their expectations efficiently. Create an innovative strategy that

will allow you to serve customers effectively.5. Implement the plan. Put your new strategy into practice, implementing all aspects of the

strategy at the same time.6. Set an evaluation timetable. Before implementing your strategy, determine when an

evaluation of its success will be conducted.7. Evaluate and continue to improve the strategy. Evaluate the effectiveness of the new

customer service strategy and make appropriate improvements. Keep making changes to keep the new strategy as current as possible.

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5. EMPOWERMENTEmpowerment is to enable or permit customer service providers to make a range of decisions to assist their customers. Through empowerment, customer service providers are given the discretion to make decisions to further assist their customers. It allows customer service providers to decide on their own whether or not customers’ request should be granted. Where empowerment is practiced;

1. It avoids a situation where customers have to wait or retell the stories.2. It avoids a situation where service providers experience the feeling of helpless middlement.3. It avoids the situation where the supervisor hears or is given a hurried explanation of the

situation.

Purpose and Mission StatementPurpose statement expresses the reason for the organisation’s existence. The mission statement indicates the means by which the organization will fulfill its purpose.

Empowerment = OpportunityEmpowerment is a true opportunity. If customer service providers are given the power to deal directly with some of the more routine issues, more time is available for them to handle the more unique situations. Empowerment also frees the time of supervisors who may otherwise be less productive because they have to deal with issues that could be handled more quickly by the customer service providers.

Steps in Empowering Customer Service ProvidersEmpowerment is the result of a company’s focused efforts to establish guidelines, train employees, accept consequences and cerebrate positive results.There are four steps involved in empowering customer service providers:

1. Paint a picture of what you hope to accomplish. This picture can be an inspiring reminder of what your organization is trying to accomplish and how it can benefit each member of the organization.

2. Allow workers own their empowerment choices. Give them responsibility they can handle and give them feedback on their choices. Do not punish when mistakes occur, but instead retrain. Employees will avoid taking empowerment chances if they fear repercussions.

3. Reward and recognize positive examples and results of empowerment. You will show those in your organization that you are committed to the empowerment process.

4. Commit for the long haul. Positive results will not necessarily appear overnight, but they will be worth the wait.

Coproduction of Customer ServiceThis means that the customers participate in providing at least a part of their own service. This concept suggests that a customer service system should be designed so that customers are allowed and encouraged to provide their own customer service. Customers are often willing and interested in participating in the customer service process.

Why Coproduction of Customer Service Works1. When customers participate in the process, they have some degree of ownership of the

situation.2. Coproduction makes customers feel occupied and contributing something, instead of waiting

endlessly.

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6. COMMUNICATIONS IN CUSTOMER SERVICE

Communication is the process in which information, ideas, and understanding are share among two or more people. Customer service providers must develop their communication skills so that they are proficient in all methods of communication.

Building Customer IntelligenceCustomer intelligence is the process of gathering information, building a historical database, and developing an understanding of current, potential and lapsed customers. This allows organizations to better serve their customer groups. Customer intelligence helps improve relationship marketing.

Relationship marketingThis is cultivating a lasting mutually beneficial connection with customers. Customer intelligence and relationship marketing are necessary tools in creating a personal or business relationship. With business relationship, the more we get to know and understand others, the better we can communicate with them. Also, the more positively and appropriately we approach our communication efforts with customer, the more likely that we will succeed in effectively serving our customers.

Methods of CommunicationThere are five main methods of communication used in effective customer service interaction. These are listening, writing, talking, reading, and non-verbal expression.

1. Listening: This refers to the ability to hear and understand what the speaker is saying.2. Writing: This is communication by using the written words so that others can understand

the intended message.3. Talking: This refers to speaking, using words and terminology that others can understand.4. Reading: This is the ability to read and comprehend the written words.5. Non-verbal Expression: This refers to facial expression, posture, eye contact, tone and

inflection of voice. Non-verbal communication can contradict the message conveyed through another method of communication.

All these methods mentioned above are used by customer service providers in communicating, however, expects believe that listening is the most important methods in communication.

As customer service provider, to listen to your customers is to show them that you care and respect their questions and concerns. It takes practice and dedication to improve your listening techniques. There are several barriers to good listening. These barriers distract the listener from what is being said.

How to overcome barriers to listening1. Pay attention to the speaker. By focusing on the speakers and on what is being said, one is

less likely to miss the message being delivered.2. Avoid thinking of the ‘To do list’. These are called visual distraction and they are very

appealing and they require little effort to receive and may promote new ideas and thoughts.

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How to improve your listening skills1. Focus on the speaker and what he or she is saying.2. Look at the speaker and make eye contact when possible. If you are listening on the

telephone, make notes as you listen.3. Listen with an open mind.4. Rephrase what was said to clarify that you understood the intended message.5. Control your body language. Do not show impatience or disapproval.

A good listener knows the joy of sharing and communicating with others. Work to become the best listener you can be.

Voice Inflection as a Customer Service ToolVoice inflection is a variation in the pitch, timing, or loudness of the voice. Pitch is made up of the highs and lows of your voice. Many communicators have a hard time conveying their spoken message to others. If others frequently ask you to repeat what you said, cut you off before you are finished speaking, or do not take you seriously, the problem may be the way you use you voice. Note that your voice and message reveal some very important characteristics about the person you are. Many people believe that our voices reflect our personalities.

Telephones and Customer ServiceWhen you are on the telephone, you are selling yourself. A large percentage of customer service interaction takes place by phone. Due to this fact, customer service providers must have outstanding telephone skills. When communicating with customers by phone the advantages of face-to-face communication do not exist because there are no visual aids or body language. Instead, the communicator must depend on the listening skills, the ability to respond effectively to questions, and voice inflection. The following are seven steps to answering a call successfully.

1. Smile: Your voice will sound friendlier if you have a smile on your face.2. Answer the call with an enthusiastic and professional greeting. Your entire organization is

depending on you to make a positive first impression. Great the caller Identify your organization or department Introduce yourself Offer your assistance.

3. Ask questions about anything that is not clear to you. If additional information is needed, ask for it and explain why it is needed.

4. Give answers and assistance as quickly as possible. If you ca not solve the problem or answer the question, let the customer know what will happen next.

5. Thank the caller. Ask if you may be of further assistance.6. Conclude the call in a positive manner. Think of every call as the beginning of a new

relationship.7. Follow up on the call to make sure that the customer is pleased with the result and to make

sure that everything you promised was delivered.

The Power of eye contactEye contact is always important when we are communicating with others. Eye contact is allowing our eyes to make contact with someone else’s. In our culture, eye contact conveys sincerity and interest. Avoiding eye contact may suggest a lack of concern or lack of honesty. Our eyes can also convey compassion and caring. Customer may perceive that a customer service provider is not interested in what they are saying if they do not periodically make eye contact with the customer.

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Even when a customer service provider deals with customers by telephone, he or she must be concerned with eye contact because of interaction with internal customers. When dealing with people from other cultures, customer service providers should be aware of cultural differences. In many cultures, eye avoidance is a sign of respect. Be sensitive to others use of eye contact whenever possible.

Appeal to the Senses in CommunicationWhen attempting to communicate with customers, it is helpful to appeal to as many senses as is possible. A waiter in a restaurant can create a dramatic picture of a food item if he describe it vividly for you and then shows it to you. He is appealing to your senses of sound, sight, and possibly smell. The combination creates more impact than appealing to just one of the senses.

Communication and TechnologyThe customer service industry has been greatly impacted and enhanced by technological advances. Customer service providers must familiarize themselves with the technological opportunities that they have available to them. Three main areas of technology have emerged as being important to the customer service industry. Voice mail, fax machine, and electronic mail are actively in use on a daily basis. Customer service providers must become proficient in using these technologies so that they can enhance their productivity and ability to serve the customer efficiently.

Voice MailMost companies have some type of voice messaging system in place. Customer service providers must be comfortable using their customers’ voice mail systems and must understand their own system.

Voice mail system provides customers and customer service providers with wonderful opportunities for interaction. When customers are not immediately available, messages can be left to provide faster feedback. For customers, voice mail system can allow their calls to be answered faster and the customers know that the calls will either be answered soon or that they can leave a recorded message detailing their situation. When leaving a message on voice mail, practice the following steps to increase customer responsiveness.

1. Speaking clearly and slowly, identify yourself, your company, the day and date, and the time.

2. State the reason for your call.3. Suggest to the customer what the next step should be. Does he or she need to call you back

or wait for more information?4. Leave your name and the phone number where you can be reached. You have already given

the customer your name, but in case he or she did not write it down give it again with your phone number.

5. Close with a positive farewell.Remember that when leaving a recorded message, time may be short, so be as brief and to the point as possible.

Fax MachinesFax machines have become necessary fixtures in most offices, but surprisingly many people do not know the basic guidelines for using them. When using a fax machine, a fax cover sheet should always be used. A fax cover sheet does not need to be fancy, but include several pieces of key information. Include the following: your name, title, department, company, address, phone number,

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number of pages in your fax (including the cover sheet), and an introductory message. If the information you are faxing is confidential, place a warning statement or disclaimer on the cover sheet. The fax cover sheet is the first impression that the recipient has of your company. If your company does not have an official fax cover sheet, create one including all the information and possibly your company logo. When faxing information, strive for accuracy. Double check the number you are calling. A fax will not go through unless you reach another fax machine, and it is unlikely that you would reach another machine if you dialed incorrectly, but it could happen. Make sure that the faxed machine is readable.

Electronic MailMany companies have incorporated electronic mail programs into their computer system. Electronic mail, or e-mail, has in many cases eliminated the need for the paper memoranda that clutter employee’s mailboxes, desks, and trashcans. It has also shortened the time spent on communications between people and departments. Electronic mail is probably most beneficial when we are interacting with our internal customers. A response that previously would have taken a few days to flow through the company mail system can now be delivered almost immediately. As with other communication technologies in use in customer service, electronic mail requires that the user understand how the system works. When using electronic mail, users should become familiar with the usage policies of their organization. There are several practices that are considered appropriate among all electronic mail users. The following are some of the most common:

1. Never type in upper case. Using capital letters is considered poor etiquette and is harder to read.

2. Remember to periodically clean out your mailbox. By cleaning out your mailbox you will be sure to discard old mail and will be reminded of what is current and pending.

3. Avoid sending personal messages over the system. When you are communicating electronically you are usually using someone else’s resource. You may also accidentally send your message to the wrong mailbox. Even a secured message can be broken into.

4. Since electronic mail has no provision for voice inflection, it is incapable of showing emotion. Some users like to use emotions, or icons that add emotion to the screen, to add personality to their messages.

5. Most e-mail can ask for confirmation that mail has been received. Use this feature whenever possible.

Electronic mail has added a new dimension to the challenges of communicating with both internal and external customers. Familiarize yourself with the system in your organization.Developing excellent communication skills can give a customer service provider the best opportunity to communicate with customers in a manner that encourages understanding.

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7. COPING WITH CHALLENGING CUSTOMERS

Who is a Challenging Customer?As we interact with others in our daily lives, we become painfully aware that some individuals are easier and more enjoyable to be around and to spend time with than others. In private life, we most often try to avoid those people who in one way or the other bother us. Unfortunately, we cannot avoid these types of people (customers) in business. In business, we are frequently required to spend the greatest of our time with these types of customers. They are called challenging customers.

Challenging customers are those customers with problems, questions, fears, and personalities that require us to work to achieve true communication. Because all individuals have their own unique personalities and sets of past experiences, individuals will not find the same customers challenging. In spite of the fact that challenging customers are difficult to interact with, the reality is that they are still our customers and our overall goal is to provide them with excellent customer service and a feeling of satisfaction with their experience.

Customers may be seen as challenging for a number of reasons. They may have personalities or communication styles that we find difficult to interact with. Customers may be perceived as challenging because;

1. They do not speak our language.2. They do not have expertise or an understanding of the specific product or situation.3. They are openly hostile.4. They may be upset about something that has nothing to do with you or your company.

(Negative transfer of anger)5. They are very quiet and non-communicative.6. They show an attitude of superiority.7. They are impatient.8. They imply that they are doing you and your company a big favor for doing business with

you.9. They appear to be type of people you have a personal bias against.10. They have difficulty in making a decision.

Everyone is someone’s challenging customer. As we strive to provide excellent customer service, every customer should be the most important person at the moment. Note that challenging customers are never challenging by accident. They came into our interactions with past experiences, perceptions, expectations, frustrations, the stresses of daily life, and the desire for us to show that we care and value them as our customers. Customer service providers also bring their own sets of ideas to an interaction. The difference between the two is that the customer service provider is responsible for building the bridge of communication.

Note that some customers are just challenging no matter what we do or do not do for the. However, it is important to note that sometimes, the customer service provider creates many of the customer problems that we experience. The customer service provider mannerisms or comments may ‘rub customers the wrong way’ or really offend them and cause them to become irritable or uncooperative.

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How to Avoid Creating Challenging Customers1. Respect the customer’s time. Always work at peak efficiency. It is easy to fall into a laid-

back manner of dealing with those that we feel comfortable with. Stay focus on the customer.

2. Do not impose your bad or negative mood on anyone else. Though everyone has bad day once in a while but customer should never be able to tell that you are having a rough day. People will avoid dealing with you if you earn the reputation of being moody or having up and down days. Generally, if you immerse yourself in doing your job and being positive, you will forget what was bothering you and will have a better day than you expected.

3. Recognise regular customers with a smile and try to learn their names. Customer must value the experience they have by doing business with you and your organization. Giving someone a look of recognition is a great place to start. Everyone feels more welcome if they think that someone else recognizes them. Try for one week to call everyone possible by name, including your internal customers, and you will see positive results.

4. Avoid destructive remarks. Insults and certain comments may make some customers try avoiding you. The Golden Rule is a good one to follow in this situation. If you would not want someone to say it to you, do not say it to them.

5. Show initiative. Show the customer that you are willing to complete a task or go the extra mile for them.

Remember that challenging customers are challenging because of who we are, not who they are.

Characteristics of Challenging Customers1. Language and/or Cultural barriers. As our society continues to include people from

other cultures, we will increasingly come into contact with individuals who barely speak our language. Communication can even be challenging when we speak the same language. When attempting to communication with others who have difficulty in our language, speak slowly and clearly. Do not pretend that you understand what the customer said if that is not the case. Ask questions and repeat what you understood. Try not to become frustrated. Learn about the cultures of your customers.

2. Older Customers. What does it mean to be older? Different people will give different responses. For the purpose of this course, older customers are defined as those customers who are 65 years of age or more. Today, 65 years and above customers are dependent, active, self-sufficient, and living lives to the fullest. When dealing with older customers, customers service providers must remember to treat them with respect and attention because their purchasing power is extremely significant. Older customers may require special attention. They may have some problem reading fine print, may have slightly slower response time, or may be slightly hard to hearing. When interacting with them, always show a high level of respect. Recognize the individual’s need for self-respect.

3. Impatient Customers: People today operate at a fast pace. People are often tempted to accomplish many tasks within a short time. Note that our customers are attempting to do the same thing. The rush to fit everything in can cause customers to become impatient. When customers are impatient or irritable, it is important to remember that they may be bothered by something beyond our control – traffic, a headache, or a dread of completing the task at hand. There are times when their impatience is due to something that we have done or due to an antiquated system of doing business. To control this, tell impatient customers that you have their interests in mind. Emphasize to them that your goals is to

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work with them as efficiently as possible. Stay on the task at hand and complete their business quickly and accurately.

4. Angry Customers: Anger is a common emotion in customer service. Both internal and external customers experience anger from time to time. Anger among internal customers, if not properly managed can create an all-out war between departments. To respond to a customer’s anger, try to calm the customer. It is important for the customer service provider to stay calm. Angry customers have the ability to bring out anger in everyone with whom they come into contact. Ask the customer to explain his or her situation. Allow customers to vent their situation and feelings. They will feel better when they get it all out. Do not interrupt them. Angry people can become abusive or may resort to the use of profanity. This puts the customer service provider in a difficult situation. Always approach the customer with respect, even when they are behaving in an unprofessional manner. Acknowledge their emotions, but as quickly as possible, look for an opening to gain control of the conversation.

5. Analytical Customers: Customers who are analytical tend to need facts and like to know that they are speaking with someone who is knowledgeable about his or her product or company. Analytical customers like consistency and proof. When dealing with customers who want facts and definite answers, treat them with respect and give them what they want. Ask them if they have additional questions and answer them efficiently.

6. Noncommittal Customers: Some customers have difficulty in making decisions. They may be unwilling to commit because they are seeking information from several sources, or they may be hesitant in making a decision. Individual seem noncommittal for a variety of reasons. When interacting with noncommittal customers, keep in mind that customers are not slow to decide because they want to frustrate you. They have their own reasons for being hesitant to commit. Help them to speedier decision by detailing the possible options.

7. Superior Customers: Some customers may present to the customer service provider the

impression that they are in some way superior. It is important not to take this type of attitude seriously. Customers who show an attitude of superiority can be frustrating to interact with. They may be rude or may make condescending remarks. In reality, customers who present themselves in this manner are frequently very insecure and feel as thought they can somehow seem better if they put someone else down. They want you to know how important they consider themselves. When dealing with this type of customer, the customer service provider must recognize his or her self-worth. The temptation is strong to enter into a competition with the customer to see who really is better, but this is an unproductive waste of time, and no one really wins in the end. Use their attitude to your advantage. Praise their accomplishments and importance. Suggest that your resolution of their situations will enhance their positions.

8. Immature Customers: It is possible that a customer service provider will have the opportunity to interact with many immature customers. Late or unpaid bills, excuses, or blaming others for their problems are common occurrences among immature customers. When interacting with immature customers, listen to their explanation of the situation before responding. Allow them to fully describe their problem or question. Be frank about the consequences that may result when responding. Be firm with immature customers. They

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may not appreciate your enforcing your company’s policies now, but in the future they will learn from the experience.

9. Talkative Customers: Talkative customers can be exciting to be around. They may be outgoing and may have interesting stories to tell. They are often good storytellers and may secretly enjoy hearing themselves talk. In spite of the fact that we may periodically enjoy being around talkative people, we must still conduct business efficiently. When communicating with talkative customers, approach them in a positive and open manner. Allow them to share their questions or concerns. Help them to stay on the subject by asking specific questions that further explain the situation.

10. Customers with Special Needs: Customer service providers may from time to time have customers who require additional assistance because of a special need. Special needs customers include all customers who, because of individual circumstances, require our productive cooperation. It may be difficult to recognize a special needs customer, since many individuals who are viewed by society as having special needs do not perceive themselves in this way.

How to Cope with Challenging Customers1. Listen: Allow customers to express their concern or to share their side of the story.2. Ask Questions: Seek clarification of the problem. Determine the variables involved.3. Show Empathy: Attempt to understand what the customer is experiencing and take action to assist in resolving the situation.4. Solve the Problem: Determine the most appropriate solution to the situation. Use creativity and follow company policies as you seek to create a positive outcome for both the customer and your organization.5. Follow up: Restate what has been decided and how the situation is being resolved. Ask the customer if he or she has any more questions.6. End on a Positive Note: Thank customers for their understanding. Bid them farewell in an enthusiastic manner so that they remember the professional manner in which you resolved their problem. Customers are more likely to remember the end of an interaction than the beginning.

What to do when you are wrongAs a customer service provider interacts with his or her customers, the possibility exists that he or she will not treat all customers as well as they should be treated. Customer service providers are only human and may be tempted to take out their frustrations on their customers, or they may make mistakes. When you believe that you have treated a customer inappropriately, try the following:

1. Review the Situation: Examine your behaviour and the words that have been spoken. Try to look at the situation from the customer’s point of view.

2. Observe the Customer’s Reaction: Is the customer visibly upset? Does the customer seem surprised or hurt by your actions?

3. Admit the Mistake: Whether or not it was an error in your information or judgment, it is always best to acknowledge that you are aware of it.

4. Apologise for your Actions or Error: Express to the customer that you regret the problem, but do not make excuses for why it occurred.

5. Find a Solution and Implement it: The most effective way to undo the improper treatment of a customer is to create an effective solution and to put it into effect as quickly as possible.

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8. CUSTOMER RETENTION & MEASUREMENT OF SATISFACTIONIntroduction One of the key principles in sales is that, it is better to keep an existing customer happy and prevent him from going to your competitor brands rather than depending solely on making new customers.

What is Customer Retention? For example, in the stock brokerage industry, a customer may not buy a particular scrip in the given period of time but is tended to buy the same when the conditions to buy the scrip becomes favorable and when the customer evaluates that now this scrip could be profitable to buy. In this case, the definition of customer retention could be ‘customer retention is the process when customer is intended to buy the product and services at next favorable buy occasion’. Such products are known as long purchase cycle products.

“Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this is only possible when there is a quality relationship between customer and supplier. Usually a customer is tends to stick to a particular brand or product as far as his basic needs are continued to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business”.

Value of Existing CustomersIt costs six or seven times more to acquire a new customer than to maintain an existing one and a slight increase of 5% in customer retention can result in a profit increase of up to 95%.

Peter Drucker stated that the purpose of business is to create and keep customers. Business needs to understand customer acquisition is important. For without customers, no business will survive. Business also needs to understand customer retention is even more vital as if you are losing them, you are back to ground zero, Loyal customers are the life blood of any business and they create real values and drives revenue. Businesses need to work their due diligence to keep them and the cost of losing one customer translates to a spending of 6, 7 times more acquiring a new one.

Your loyal customers will spend more money with you, they cost you less to gain repeat business from, and they’re probably more loyal and less sensitive to price than new customers. Loyal customers always return and become a dependable lifetime sales stream and they brag about your service/product creating Word of Mouth advertising which is the most effective advertising, and it is free! Every business should put their existing customers at the heart of their marketing strategy. Customer Loyalty is the strategic competitive advantage of any business.

Customer Interactions and Churn Management There are various types of customer interactions that the customer may have with a supplier. Organizations need the capability to correlate churn to any of these interactions across any channel. And once the interactions that are root causes of churn have been analyzed, they must devise policies, processes, and tools that support the delivery of a better customer experience.For better customer retention, organizations must improve two types of customer interaction:

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Retention interactions can be either proactive or reactive. However in both the cases reducing churn depends upon the following:• Increasing the self-service interaction channels through which retention offers can be made

such as Web, social media etc.• Aligning employee incentives to company churn objectives• Improving the delivery of channel-specific training material• Keeping the channel processes and system capabilities consistent with each other• Identifying and resolving issues early and swiftly by providing on-site execution support• Providing offers that are effectively differentiated by channel by using campaign

optimization and real-time decision-making tools

One of the main root causes of churn or the customer defecting are the customer lifecycle interactions. The following are some of the phases of customer lifecycle interactions:• Early Life: This is one of the initial phases in the customer lifecycle interactions. It is one

of the earliest interactions that the customer has with the supplier. This occurs when the customer is “trying out” a recently purchased product or service. It is a critical moment in the customer’s decision making.

• Change of Life Events: This is the next phase of the customer lifecycle interactions. It involves interactions due to change of major life events such as marriage, divorce, a change of profession or geographic location etc.

• Mature Life: This is the phase that occurs towards the end of the customer lifecycle interactions. It involves interactions when a customer is nearing the end of a contract or the end of the useful life of the product they are using.

What is Customer Loyalty? Loyalty also means that customer sticks to the supplier on certain grounds though he may be having other options also. It may be possible that the supplier may not have the best product or the customer may have some problems with the supplier, in respect of his supply of the product but the customer likes to ignore other options and prefers to continue with the same supplier as the customer thinks the supplier provides him more value and benefit than others. Such loyal customers tend to spend more money, buy more, buy longer and tell more people about the product or supplier. This type of long-term customer loyalty can only be created by making the customers feel that they are the number one priority with the supplier.

In case the business is done directly the relationship is direct so also the loyalty. But if the selling is through two or more intermediaries then the loyalty has to be measured at different levels. In that case the end customer loyalty is influenced by the loyalty of the intermediate customers. Then the supplier has to focus his loyalty retention plan accordingly and has to judge and analyze the loyalties of the intermediaries. This process depends on what amount of importance he gives to each of the intermediaries and how much to the ultimate customer. But it is certain that well-managed customer retention programs are sure to give the ultimate customer loyalty. • Therefore, the customers who are targeted by a retention program demonstrate higher

loyalty to a business. • Therefore such customer retention programs should include regular communication with

customers and provide them opportunities to remain active and choosing to do business with the supplier.

• Measuring customer loyalty and developing a retention strategy are of great importance to an organization’s success.

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Customer Loyalty and Satisfaction Loyalty is demonstrated by the actions of the customer. But it doesn’t mean that the customer satisfaction level can measure his loyalty. Customer loyalty is not customer satisfaction. Customer satisfaction is the basic entry point for a good business to start with. A customer can be very satisfied with the deal and still not be loyal. On the other hand, a customer may not express satisfaction but wants to remain loyal to the supplier due to some reasons which keeps him benefited from that supplier. For the same degree of satisfaction, the loyalty level may also be different for different suppliers. • Most of the organizations believe that both ‘customer loyalty’ and ‘customer satisfaction’

are same and a satisfied customer is always loyal to them. • But this is not true as the customer can be delightfully satisfied but he may be or may not be

loyal• This is because satisfaction an emotional and slushy feeling over the job done. • But loyalty is related to the action taken by the customer future. • For an organization to be in business and make profit, it is a very important aspect for them

to gain customer loyalty. • Even if high satisfaction may not guarantee loyalty but satisfaction is a prerequisite for

loyalty.

Myths about Customer Retention Customer retention is a crucial factor for organizational success in business. Many companies have misconceptions about customer retention in regard to assessing customer satisfaction in order to enhance business. Following are the most prominent myths about customer retention in the business world:

An organization should endeavor a perfect 100% customer retention • The philosophy that an organization should endeavor 100% retention is unreasonable. • There are many factors within the scope of the organization and outside its scope that

substantially affect customer retention. • Hence, making the presumption of achieving 100% retention rate wrong.

Enhancing customer retention and enhancing organizational profit is equivalent • It is also incorrect to assume that enhancing customer retention will automatically enhance

organizational profit. • In normal situations, the philosophy that by increasing customer retention, business profits

also increase does not stand good. • However, it is crucial for an organization to create strategies to manage customer retention

and always aim at increasing business profit.

Challenges of Customer Retention • Trying to satisfy demanding customers who want it all like: competitive pricing, value for

money, and above all, high quality service. • Challenge of fulfilling customer’s expectations as the today’s customers won’t hesitate to

switch providers if they don’t find what they’re looking for. • Declining loyalty levels in customers even where satisfaction is relatively high • Individual switching decisions which are greatly influenced by social media and word-of-

mouth communication • Lack of understanding of exactly why customers leave them and what to do about it

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• Lack of tools to identify the drivers of churn • Ability to correlate churn to actionable customer segments • Ability to deploy highly targeted offers in-market across multiple channels at speed • To identify and learn which offers work most effectively and scale them • To take full advantage of customer initiated contacts in order to make highly-targeted

retention offers • Inconsistently executed loyalty programs • Lack of cohesion across their customer interaction channels

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