Consider this scenario:
You have been staying at a five star resort on holidays at a destination you had to fly eight hours to reach followed by an hour in a taxi. Your check-in experience was delightful. A welcoming band, a glass of sparkling wine, personal service you did not have to wait for and you were shown to your room by a smiling, informed and informative attendant who did not expect a tip for their services.
The room was delightful with a balcony overlooking the sea. The amenities at the resort were truly first class. They included a championship golf course, spa, gym, indoor and outdoor swimming pools, tennis courts, four restaurants, a child minding service and a wide range of activities and tour options. You were paying top dollar but the facilities were worth it.
There were a few glitches though; probably no-one’s fault. Your first night at your choice of restaurant, you were turned away as they were full. Apparently, you should have been told at check-in to book early as that restaurant was always popular. Your second night when you had booked early, you were put into a small alcove off the kitchen, almost as if you were an afterthought. You had trouble getting the waiter’s attention from your position and went without drinks for most of the night. The food was good though.
Golf was much more expensive than you thought, but you were really surprised how much they charged for the hire of the clubs and shoes. What is more, it rained very heavily from the fourth hole and by the ninth you were soaked. You asked if you could stop playing and get a refund as the course was almost unplayable and you did not come all this way to get a drenching. You were informed that under club rules the course was not unplayable, so you could not get a refund.
Aside from these irritations and the cancellation of a tour you had wanted to go on because there were insufficient numbers the stay was enjoyable with many highlights, such as the really friendly and helpful spa staff who made your time so relaxing you wanted to go again and again.
Did you get good customer service?
Would you come back to this resort?
Was it value for money when you considered the travel and cost?
Only you will know because customer service is judged by customers. It depends on what they value and perceive and their mood.
Why is customer service important?
Because of what customers do if they perceive they have received poor customer service:
- 80% of people who do not receive good service do not complain
- 73% complain when things go badly wrong
- A person who does complain tells nine people
- 12-16% leave without registering a complaint after receiving poor service
- 10-30% of customers leave after one complaint
- >80% leave if they have experienced three or more mistakes
- 5% increase in retention increases profits by 25-125%
- Acquiring new customers can cost five times more than satisfying and retaining current customers.
What are the elements of customer service?
- When customers become aware of a need to buy, they seek information and advice. A customer buying a bed needs information and advice on what different kinds of beds are available and the different benefits they bring. They need to know where they can buy beds, what prices are available, what terms are available, what delivery options are available, what warranties there are amongst a few.
- Giving good information and advice is our first opportunity to deliver customer service and encourage a customer to continue their buying journey with us.
- Having good information easily available where the customers we would like to have tended to look for information ensures that we get our fair share of prospects.
- Getting a price that seems fair is important to customers. Getting a price that fits their budget is also important. Pushing customers to buy more than they can afford destroys customer loyalty and is not good customer service.
- Achieving a perceived price reduction is important to some customers. Understanding against what bench mark the price reduction must be perceived, e.g. list price, competitor price, first offered price, allows us to build into our pricing strategy opportunities for customers to receive this perceived element of customer service. An example is a price guarantee.
Quality is measured in five ways.
- Did the product perform the way the advertising said it would?
- Did the product perform the way I expected it would?
- Conformance to standards
- Does the product or service conform to a known standard? e.g. AS/NZ Standards, ISO Standards, Government Standards
- Product/Service features
- Are the features of this service or product what I thought they would be?
- Does this product or service operate the way it is supposed to all the time?
- Durability (for a product)
- Does this product have a life time which matches my expectation?
A customer’s perception of service depends on their mood and, in order, these three categories of personal approach;
- When interacting with a customer we must show concern for the customer rather than our policy or meal break or other such internal issue.
- Matching the environment of surroundings and staff appearance and posture helps customers perceive that service is good. Having staff with gravity defying hairstyles and playing grunge music in the foyer of an hotel seeking to attract business customers is unlikely to engender a sense of good service.
- Using rude language and aggressive body language are obvious destroyers of the perception of service. However, so are over friendly terms, slang and over officious terms.
- Travelling a long way, having to fill out forms in triplicate, being passed through several hands or just being put on hold for five minutes are all perceived as elements of poor customer service. The converse is true.
- Experiencing buyer’s remorse can make the best service appear to be poor service. Following up buyers by means of a telephone call, an email, a web survey or using loyalty schemes ensures either the customer’s belief that they have made a good purchase or that you will able to rectify a fault immediately.
What is Fair Value?
Customers evaluate perceived price and perceived benefit to determine whether they have received fair value.
- Absolute price
- Relative price
- To budget
- To competition
- To like purchases
- Time taken
- Time of day
- Difficulty in completing purchase.
- Sense of belonging (fashionableness).
When the perceived benefit equals the perceived cost, customers perceive they receive fair value. For instance, a clean room with a working air conditioner, in a reasonably quiet location with friendly staff and a food outlet nearby is seen as fair value for, say, $90 per night at a country hotel and is seen as fair value as a five star resort with all the amenities for $350 per night.
Receiving elements of five star service at a country hotel for $90 per night is seen as exceptional value, whilst receiving “only” country hotel style service at a five star resort is seen as poor value.
Customer service must match the expectations of customers based on the value they expect.