Customer Service

Methods to Improve Customer Service

Improving your customer serviceOpens in new window in a business is not necessarily a mystical problem that cannot be solved. We devote this post to explore some ways of improving customer service.

1.   Listen to the customer

Many companies do not actually listen to their customers. They do all the talking, and the customer must just listen as they ramble on and on (with excuse after excuse). Just remember that many customers actually want to help you by providing constructive criticism. They want to see you improving your product or service.

You may get certain customers who are never satisfied and will always be complaining and complaining. Sometimes you can even listen to these. The ones you must listen to are your loyal customers, when they point out things that they are unhappy with. Pay great attention to them. They can improve your logistical processes immensely, and thus increase your corporate profits.

2.   Break the elephant down into the bite-sized chunks

So you listened to feedback from your customers (either verbal or written — perhaps gathered by means of questionnaires) regarding areas for improvement.

You may be overwhelmed by the effort that is needed to improve your customer service. Where do you start? Remember, you can eat an elephant if you eat it in bite-sized chunks.

Perhaps start with the most pressing concern (or get your customers to rank their customer concerns from 1 to 10). Starts with concern number 1 and stick with it until it is solved. Only then should you move onto the next issue. It won’t be long before all the major issues are dealt with.

You might even find then that you are able to move on to other even more detailed customer issues and make even greater improvements. Statistical analysis of customer complaints will also help greatly. But don’t just analyze the statistics, do something about them!

3.   Determine your customers’ reaction to stock-outs

What do your customers do when you are out of stock of an item? Knowing how they react might sharpen up your systems (since you do not want to disappoint them again!)

You might also realize that a disappointed customer might switch to your competitor’s brand or store, and perhaps never come back to yours (this would be the worst-case scenario). Try to schedule and forecast your inventory strategy in such a way that you have appropriate levels of stock — especially of the most popular items.

One method of forecasting is to use previous historical or computerized inventory data. Another is to use an ABC analysis. Let us look at what happens when customers are told that an item is out of stock.

Often they will switch stores (from Walmart to a competitor in the USA, and from Checkers to Pick ‘n Pay in South Africa), switch brands (from Colgate to Macleans), try a substitute product (a mouthwash, perhaps) or simply not buy any product (the company then loses the sale.) It is therefore wise for retailers always to have adequate levels of stock, especially of popular brands.

4.   Do an ABC analysis

A good business will categorize its products into “A”, “B”, and “C” items. If you want to decrease stocks in your shop, make sure that you decrease the levels of “C” items before decreasing “A” and “B” items.

A good business also knows who its most important customers are. “A” customers generate the most profit for the business. Let us take the example of a cellphone shop. “A” customers might be businesspeople (both male and female).

The second most profitable group (“B” customers) might be housewives who use cellphones for safety and convenience. The least profitable group (“C” customers) may be students, who use cellphones to talk to parents and friends. Make sure that in the long term you pay most attention to business people who walk into your cellphone shop.

An even better business knows the unique combination of products and customers that are most profitable. Let us say that the most popular cellphone is a Nokia (“A”), with Erikson next (“B”), and then Siemens (“C”).

We also know that our most profitable customer is the businessperson (“A”), then the housewife (“B”), and finally the student (“C”). So when you see a businessperson come into the shop, keep in mind that he or she will probably want to buy a Nokia, so show him or her one of these first, then show an Erikson and then finally a Siemens.

Also make sure that you always have the item in stock. Stock-outs (“sorry, we are out of stock on this item”) mean lost sales — and lost sales means lost money. Sound inventoryOpens in new window and customer analysis means putting more money into the pockets of the business.

Let us not forget that the “A” items will generate the most sales (70% of sales). The next category of parts, those that are fairly popular, will generate another 20%, making the sales for categories “A” and “B” 90% of total sales.

The low sellers make up the final category, “C”, and account for the remaining 10% of sales. They are often stored in distant places in the parts warehouse, since customers seldom request them. Sometimes the rarely requested parts may have to be specially ordered, since they are not normally kept in stock.

5.   Assess the Cost-Profit Tradeoff (what will the service cost? what profits will be gained?)

Assessing the cost-profit tradeoff means working out whether the cost of keeping the product (or providing the service) are outweighed by the profits generated.

Good businesses make sure that what the customer sees as value-added extras are in fact the extras that they provide. All other company-determined value-added extras are often in fact cost drivers. They just add extra costs to your logistical processes

6.   The Customer Service Audit

One of the most effective ways to improve your customer service is to conduct a company-wide customer service audit. This implies firstly evaluating service levels, and secondly benchmarking for changes needed, identifying the most important elements of company actions that require attention, and then actually effecting the changes over time.

The goals of a customer service audit include:

The customer service audit has two aspects to it. The first is the external customer audit (how customers see customer service from outside the company); the second is the internal customer audit (how we see our customer service within our company).

The External Customer Audit

Here we look outside the company to the customers, to try to determine what they think of our service. We try to identify elements of customer service that customers believe are important to them, and also what is going wrong, and what is right. We list all these elements. The list is primarily based on interviews with customers, but also on interviews with external operations staff, management, marketing staff, market research companies, etc. The customer is the most important of these, of course.

Analyzing Logistical Activities in Terms of the Customer’s Feedback

Order cycle time is analyzed (how long does it take for orders to arrive, in your opinion?), order cycle time variability (do the order delivery times change from good to bad?), stock availability (is stock always available?), the accuracy of completed orders, billing and invoicing, how complaints are handled and how effective the order returns policy is.

Listening to customer complaints and analyzing them effectively may give us insight into the weaknesses in our logistics processes. Remember, not all customers complain.

Those who complain are normally only a small percentage of those who want to complain. One must listen to the complaints carefully and extract useful information so that processes can be improved.

The Internal Customer Service Audit

Here we look within the company at our current practices. What is currently practiced by our company? This internal analysis provides a benchmark for appraising the impact of changes in customer service strategy. Here we try to identify inconsistencies between the firm’s practices and customers’ expectations.

What should be looked at?

• Our internal communications system. Are messages communicated clearly and simply?

• The order processing system from start to finish. Do we have problems with statements?
• Each and every logistical activity. (Management interviews should take place, focused on problems encountered and possible solutions offered.)
• Physical supply management, materials management and production activities. These are analyzed for improvements that could be made and for processes that could be simplified.
• Customer feedback and reporting systems. Can improvements be made?

In short, the whole process from starts to finish is examined for improvements that can and must be made. Then these changes are implemented.

How Do We Improve Customer Service?

The levels of customer service a firm achieves can be improved by:

• thoroughly researching customer’s needs by means of customer service surveys;
• setting service levels that make realistic tradeoffs between revenues and expenses;
• making use of the lasts technology in order processing systems; and
• measuring and evaluating the performance of individual logistics activities.