Using customer service to position a business

by Business Case Studies on Tuesday 3rd November, 2009

We all hope to receive good customer service before, during and after purchasing a product or using a service. Customer service refers to the way a business looks after its customers. first direct is a division of HSBC Bank and it provides a range of banking services to its customers, such as current accounts, credit cards and loans. Customers can access its services through internet, telephone and mobile banking services. first direct has recognised the importance of good customer service and this can be identified from its mission statement which is 'pioneering amazing service'. Research has shown that this is paying off. first direct has a reputation for offering quality customer service and has been found to be the UK's number one bank in terms of customer satisfaction.

Despite the obvious benefits of satisfying customers' needs, last week the Institute of Customer Service reported that 30 percent of organisations have reduced their spending on customer service training this year. In addition to this, it has found that 21 percent of businesses have made customer-facing staff redundant. Earlier research by the institute has shown that companies that have a reputation for providing excellent service enjoy net profit margins of up to 24 percent more than their competitors. They also benefit from getting up to 71 percent more profit per worker. Although businesses may be forced to cut costs, these statistics suggest that managers question the wisdom of making cuts in this area. (The Times 26th October 2009)

first direct has found that its commitment to customer service has allowed it to provide a more personal service than many other banks. This has given it a competitive advantage and facilitated in it building a loyal customer base. With Christmas only weeks away, retail organisations will be competing with each other for our custom. Providing high levels of customer service may well be a factor in how well businesses cope this Christmas, especially as consumers are expected to spend less than last year.

Questions

  1.  In what ways can businesses provide good customer service? 
  2.  Explain the benefits to organisations like First Direct of providing excellent customer service.
  3. Analyse why it is important for businesses to maintain a focus on customer service and continue to invest in customer service training.

Answers to questions

1. In what ways can businesses provide good customer service? Examples may include:  Provide quality goods and services, Have informative, polite and friendly staff , Respond quickly to enquiries, Deliver orders on time, Provide an after-sales service e.g. ability to easily exchange faulty goods or supply a helpline number for dealing with technical queries

2. Explain the benefits to organisations, like first direct, of providing excellent customer service. Competitive advantage, May reduce marketing and operational costs, leading to higher profit margins, Loyal customers, Positive recommendations and word-of-mouth promotion, Fewer complaints

3. Analyse why it is important for businesses to maintain a focus on customer service and continue to invest in customer service training. New employees will need to be trained, Customers' needs may change, Product and service ranges may alter or be updated, Organisations may grow necessitating different customer service skills. For instance, if a business moves into a different country the requirements of these new customers may be different.

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