2012 Cambridge Business & Economics Conference ISBN : 9780974211428 Customer Service In Eastern Europe: Does it matter who is asked? By: Aaron Martin, Indiana Wesleyan University Joshua R. Millage Shawn M. Carraher Sarah C. Carraher June 27-28, 2012 Cambridge, UK 1 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 For our research paper we decided to examine the importance of customer service for any entrepreneur or small business owner in any location or field. Because “businesses, large or small, industrial or retail, new or established, can't survive without customers.”1 And having good customer service is essential for small businesses in gaining those customers. Also discussed will be the need for small businesses to create life-time customers opposed to one-time customers. No matter how trendy, efficient, or useful your product or service is, you will go nowhere if your customers are not satisfied. And if your customers are not satisfied you can be sure that you will not have too many customers. Customer service seems to be a lost art in much of today’s business world. Many companies seem to be “out of stock” when it comes to good customer service. But “customers are smart enough to know it is not "out of stock" everywhere. Some company has what they are looking for, and they will find it.”2 From personal experience I have seen companies more concerned with cutting cost than the happiness of their customers. If owners would train their employees in customer service, it could take their small business a long way. Customer service is very valuable and becoming more of a rarity today. If more owners would apply the old rule, “the customer is always right,” to their business plan, it would take their business and possible the economy, a long way. This can be hard, because if small businesses are honest, there are some times that the problem is caused solely by the customer. But if businesses want to have good customer service they still must do all they can do to satisfy the customer. 3 In this research paper we hope to explain why customer service is so important to small businesses and why 1 Customer Service: Back to the Basics Customer Service – Out of Stock 3 Customer Service Can Reap Rich Rewards 2 June 27-28, 2012 Cambridge, UK 2 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 more owners of these businesses need to focus on this topic when determining how to treat customers. The first questions that must be answered when doing this research paper is “What is good customer service?” and “What are some examples of good customer service?” Customer service used to be defined simply as “the customer is always right,” but today some innovative businesses are “doing their best to figure out what the customer wants and to provide it before any questions or problems arise.”4 Some businesses today are even saying customer service isn’t most important anymore! They believe that “customer service brings them in the store the first time. Customer satisfaction brings them back."5 But for this paper we will assume that good customer service equals customer satisfaction. No discussed will be some general statistics from 2011 on the topic of customer service in the business world. These statistics show just how important customer service still is, such as the fact that even in this poor economy, 60% of customers will often or always pay more for a better experience. This statistic really shows how much customer service is a lost art, because people will actually pay more money for the same thing just to enjoy better customer service. This is bad overall, but can be good if a small business owner is one of those businesses that provides good customer service and can differentiate themselves in that way. This also explains why “80% of firms would like to use customer experience as a form of differentiation.”6 Since nobody is doing it anymore, it can be used to stand out in the crowd of small businesses. And “81% of companies with strong capabilities and competencies for delivering customer 4 Leadership (A Special Report) Beyond Satisfaction Customer Service Doesn’t Work Anymore 6 http://www.customer1.com/blog/customer-service-statistics 5 June 27-28, 2012 Cambridge, UK 3 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 experience excellence are outperforming their competition!”7 This means that customer service can actually help small businesses earn more money and a higher percentage of the customer base by being better than the competition Another eye-opening statistic about customer service is that “70% of customer experience management best in class adopters use customer feedback to make strategic decision. 50% of industry-average organizations and 29% of laggards do.”8 This means that the businesses that are focusing on customer service are growing and adapting to the world better than those businesses that do not focus on customer service. So if a small business wants to experience growth, a good step to achieve this would be to work on having superior customer service. Having good customer service is also a key way to gain and keep customers because “a dissatisfied consumer will tell between 9 and 15 people about their experience.” And “for every customer complaint, there are 26 other customers who have remained silent .”9 So if a small business has poor customer service, the customer may will most likely tell many other people about the experience, and not even let the business know! The next staggering statistic is that “86% of consumers quit doing business with a company because of a bad customer experience, up from 59% 4 years ago!” and “91% of unhappy customers will not willingly do business with your organization again.”10 On average “It takes 12 positive service experiences to make up for one negative experience.”11 This is why first impressions are so important with new customers, because if a small business 7 http://www.customer1.com/blog/customer-service-statistics http://www.customer1.com/blog/customer-service-statistics 9 http://www.customer1.com/blog/customer-service-statistics 10 http://www.customer1.com/blog/customer-service-statistics 8 June 27-28, 2012 Cambridge, UK 4 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 owner messes up once, it takes a lot of time to make things right. And the fact that “attracting a new customer costs 5 times as much as keeping an existing one” solidifies the importance of creating life-long instead of one time customers. If small businesses are successful at creating life-long customers due to customer service, they will enjoy the benefits, because “happy customers who get their issue resolved tell about 4 to 6 people about their experience.”12 There are many things that can justify good customer service, but next I will simply highlight eight rules that can be followed by small business owners to improve their customer service. The first rule that a business owner can do is simply answer the phone when it rings. When people call a business they want to “talk to a live person, not a fake recorded robot.”13 The second rule that can be done to help insure good customer service is, “don’t make promises unless you can keep them.”14 If a small business owner isn’t sure whether or not they can do something by a deadline, they shouldn’t say that can. Nothing annoys customers more than a broken promise. Customers would rather be told that a small business cannot do something than they would want to be disappointed by a false promise. The third rule is to actually “listen to your customers.”15 When customers talk, small business workers need to listen and respond appropriately. This is especially true when the customer has to interact with a worker. In these cases, “the interaction between customers and service workers offers a potential means by which a firm can achieve true customer loyalty.”16 They need to respond by trying to fix the problem, not by ignoring what the customer says completely. The previous idea ties into the fourth rule of good customer service which is to 11 http://www.customer1.com/blog/customer-service-statistics http://www.customer1.com/blog/customer-service-statistics 13 8 Rules for Good Customer Service 14 8 Rules for Good Customer Service 15 8 Rules for Good Customer Service 16 Journal of Service Management 12 June 27-28, 2012 Cambridge, UK 5 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 “deal with complaints.”17 Instead of saying that you can’t always please everybody, small businesses need to have the attitude that they may be able to help each and every single customer, or at least make a valiant effort to show that they tried their hardest. Even if a specific problem of a customer cannot be resolved, and earnest effort to solve the problem looks a whole lot better for a small business than not trying to do anything at all. The fifth rule in having good customer service is that small business owners need to “be helpful – even if there’s no immediate profit.”18 We found a true story that perfectly represents why small businesses should do this, and how it could create profit later. “The other day I popped into a local watch shop because I had lost the small piece that clips the pieces of our watch band together. When I explained the problem, the proprietor said that he thought he might have one lying around. He found it, attached it to our watch band – and charged me nothing! Where do you think I'll go when I need a new watch band or even a new watch? And how many people do you think I've told this story to?” - Susan Ward - 19 This type of thing can happen in any small business if they are helpful and provide good customer service. Businesses must look for consistent long-term profit, and not be after shortterm one-time profit. The sixth rule to insure good customer service is to “train your staff (if you have any) to be always helpful, courteous, and knowledgeable.”20 A small business owner can be very committed to having good customer service, but if they do not train their workers to be just as concerned the business will not have good service. Entrepreneurs and small business owners 17 8 Rules for Good Customer Service 8 Rules for Good Customer Service 19 8 Rules for Good Customer Service 20 8 Rules for Good Customer Service 18 June 27-28, 2012 Cambridge, UK 6 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 need to train and re-train employees so they know how to handle almost any situation when a customer needs assistance. One thing that small business owners never want is to have a worker say that they cannot help a customer, but somebody else will be back soon that can. This looks the employee and business as a whole look bad because of the lack of training provided. The seventh rule for small businesses to follow to have good customer service is “take the extra step.”21 Small businesses should never do the bare minimum to assist a customer, but they should always go above and beyond the call of duty. Customers may not say so, but they will notice and may share their experience with others. The eight and last rule to insure that a small business has good customer service is to “throw in something extra.”22 This “extra” thing does not have to be big; it just has to be genuine. Customers will always love to get more than they thought they were getting, so doing this will greatly increase your value of customer service. Following these eight steps to good customer service can greatly help small businesses and “over time it will bring in more new customers than promotions and price slashing ever did!”23 Customer Service itself can be broken into three additional factors which are “emotions, trust, and control.”24 These factors are the main things that determine how customers view and think about small businesses. Focusing on these three factors will provide small businesses with the “opportunities to shape new offerings that lead to more positive service results.”25 The first thing discussed will be emotions, which “influence what we remember, how we score 21 8 Rules for Good Customer Service 8 Rules for Good Customer Service 23 8 Rules for Good Customer Service 24 MIT Sloan Management Review 25 MIT Sloan Management Review 22 June 27-28, 2012 Cambridge, UK 7 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 encounters, and the decisions we make.”26 When small business are dealing with customers, they need to be aware of the emotions that they make the customers feel. The desired emotions are obviously positive ones such as a good surprise, happiness, or satisfaction. Workers should try at all cost to avoid emotions such as anger, annoyance, or irritation. Small businesses must realize that experience that are emotionally charged are remembered the most by the customers. The next factor that must be focused on when dealing with having good customer service is trust. It is very important for customers to be able to trust a small business because “trust is a … variable that is essential to any robust and enduring relationship.”27 If a customer has no trust in a business, they will never know what to expect or whether or not the workers of the business will follow through with their promises. Without trust there is only negative feelings, but with trust comes a sense of ease in the customer. The last factor that must be considered when dealing with good customer service is control. Both the business and the customer needs to feel as if they are in control of the circumstances of their interactions. Customers need to feel like they are in control of what they want, and will be served the way they should be. And the business itself needs to feel as if they have control over the knowledge needed to please the customer, and control in the actions of pleasing the customers. Realizing the importance of three factors of emotions, trust, and control can greatly increase a small business’s customer service. Discussed next will be some more specific area of good customer service that can be used to help an entrepreneur or small business owner improve their success as a business. The main topics covered will include; gaining and keeping employees through good customer service, differentiating through good customer service, and different forms and channels of good 26 27 MIT Sloan Management Review MIT Sloan Management Review June 27-28, 2012 Cambridge, UK 8 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 customer service. This will help show some of the benefits from customer service and why it can help business owners and customers alike. First focused on will be how to gain and keep customers through good customer service. Small businesses who can “provide high-quality customer service without compromise have two things the business world envies: dedicated, trustworthy employees and loyal, satisfied customers.”28 A small business with “good customer service keeps customers coming back, (but) bad customer service drives the customers away, taking their friends, family and workmates with them.”29 Good customer service can become a methodology that small business owners use to create life-long customers from the people that they interact with. This is “a process that begins with the customer’s favorable assessment of service quality; continues with positive feelings toward the establishment; and ends with loyalty behavior, including repeat purchases and favorable recommendations.”30 The first part of this process is having a good first impression like previously discussed. This can make or break a small businesses opportunity to have a good long-term relationship with a customer. If a business can start out on the right foot with customers it can have a long lasting effect on how the customer views that business. Next the customer must continue to feel as though they are being served well. It cannot just be a one-time thing; the small business must consistently practice good customer service. If this happens the customer will be satisfied and pleased with the good or service they received. This will cause them to tell others of the good experience and recommend the business that proved them with such good service. The small business or entrepreneur that has good customer service will gain a loyal customer, and some 28 Customer Service: Back to the Basics Customer Service Management - Turning Customer Loyalty into Profitability 30 Cornell Hospitality Quarterly 29 June 27-28, 2012 Cambridge, UK 9 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 free marketing from that customer as they share their positive experience when interacting with your business with others. “Treating customers well is a given for successful service brands, but some major companies believe it is enough to differentiate them from rivals.”31 So the next thing discussed will be how providing good customer service can help small businesses positively differentiate themselves in today’s economy. Good “customer service is a key differentiator between good, bad and indifferent companies.”32 It is important for small businesses to differentiate themselves through good customer service, because “providing quality service leads to competitive advantage, organizational growth, and enhanced profitability!”33 Especially “in an increasingly competitive global arena, the quality and value of customer service can give an organization its competitive edge.”34 Having good customer service will really stand out to the people who interact with a small business, and leave them wanting more business from that location. In this study we examine the customer service of small food entrepreneurs in Eastern Europe and various types of customer service oriented performance. METHOD Subjects The data for this study is drawn from 177 Eastern European food entrepreneurs. The sample consisted of 57.1% males and 42.9% females. Their average age was 32 (SD = 20.54). Instruments 31 Customer Service is not a Strategy Customer Service Management - Turning Customer Loyalty into Profitability 33 Allied Academies International Conference, Academy of Information and Management Sciences 34 Great Expectations: Improving Customer Service 32 June 27-28, 2012 Cambridge, UK 10 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 The primary instrument utilized was the customer service selection instrument developed by McBride (1988, 1997; McBride, Mendoza, & Carraher, 1997) as modified by Carraher and associates (1998), with the modifications having been recommended by McBride et al. (1997). Results of the principal components analyses supported the five dimensional solutions for this sample. Due to problems with the use of coefficient alpha reliability estimates (Sethi & Carraher, 1993), limited information factor analysis as suggested by Schoenfeldt and Mendoza (1994) was employed before calculating alphas. These ranged from .74 (openness to experience) to .86 (extraversion). Carraher and associates (2002) found the six-month, test-retest reliability estimates to range from .73 (openness to experience) to .84 (extroversion). In addition to demographic items, many of the questions contained in the inventory consisted of experiential, attitudinal, and behaviorally-based items (e.g. "When you were a member of a small group, how much do you participate? How comfortable are you in new places and situations?”). A five-point Likert scale was utilized. Performance was measured on the job. Three trained raters evaluated the performance of each respondent in order to allow a comparison in the ratings. Each of the raters had graduate training in psychology and assessments and received additional training in order to accurately and consistently identify differing levels of service-oriented performance. Additionally individuals were asked to rate their own levels of customer service, their customers were asked to rate them, and their competitors were asked to rate them. June 27-28, 2012 Cambridge, UK 11 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 Results Key: Extnew - Extroversion Connew - Conscientiousness Esnew - Emotional Stability Agnew - Agreeableness Oenew - Openness To Experience Table 1 Coefficientsa Model 1 Unstandardized Coefficients Standardized Coefficients B Beta Std. Error t Sig. 4.806 .000 (Constant) 1.065 .221 extnew .038 .063 .041 .612 .541 connew .143 .043 .185 3.312 .001 esnew .082 .046 .111 1.768 .079 agnew .329 .065 .424 5.044 .000 oenew .135 .050 .199 2.696 .008 2 a. Dependent Variable: Service Oriented Performance R = .769 R =.592 F = 48.14 Sig = .0000001 This table is showing what aspects are most important to good customer service according to professionals. Professionals in rating customer service conclude that Conscientiousness, Agreeableness, and Openness to Experience are statistically significant. This means that they believe that businesses that are good in these areas will be more likely to have good customer service. Table 2 Coefficientsa June 27-28, 2012 Cambridge, UK 12 2012 Cambridge Business & Economics Conference Model 1 ISBN : 9780974211428 Unstandardized Coefficients Standardized Coefficients B Beta Std. Error t Sig. 1.507 .134 (Constant) .691 .458 extnew .363 .129 .266 2.807 .006 connew .305 .089 .269 3.424 .001 esnew -.004 .095 -.004 -.044 .965 agnew .040 .135 .035 .300 .765 oenew -.008 .104 -.008 -.074 .941 a. Dependent Variable: Service Orientation Self Ratings R = .438 R2 = .192 F = 7.919 Sig. = .000 This table is showing the most important characteristics of good customer service according to the business itself. The business’s self-rating concludes that Extroversion and Conscientiousness are statistically significant. This means that when businesses look at themselves, they think these are the most important characteristics when focusing on having good customer service. Table 3 Coefficientsa Model 1 Unstandardized Coefficients Standardized Coefficients B Beta Std. Error t Sig. 1.905 .058 (Constant) .823 .432 extnew .001 .122 .001 .007 .994 connew -.021 .084 -.018 -.247 .805 esnew .087 .090 .077 .969 .334 agnew .311 .127 .260 2.437 .016 oenew .347 .098 .332 3.541 .001 2 a. Dependent Variable: Service Orientation Customer Ratings R = .583 R = .34 F = 17.23 Sig = .0000001 June 27-28, 2012 Cambridge, UK 13 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 This table is showing what the actually customers see as the most important areas for businesses to focus on when trying to achieve good customer service. The customer ratings show that Agreeableness and Openness to Experience are both statistically significant. This means that the customers think that businesses need to be agreeable and open to new experiences in order to have good customer service. Table 4 Coefficientsa Model 1 Unstandardized Coefficients Standardized Coefficients B Beta Std. Error t Sig. 8.224 .000 (Constant) 1.956 .238 extnew -.141 .067 -.155 -2.101 .037 connew .028 .046 .036 .596 .552 esnew .057 .050 .080 1.159 .248 agnew .493 .070 .646 7.022 .000 oenew .091 .054 .137 1.692 .093 2 a. Dependent Variable: Customer Service Competition R = .713 R = .509 F = 34.564 Sig. = .0000001 This table is showing what competing businesses think is most important for their competitors to have good customer service. They show that Agreeableness is positively statistically significant, but extroversion is negatively statistically significant due to a negative tscore. This means that the competitors believe that being agreeable will be beneficial and lead to good customer service, but being extroverted may be detrimental to business and cause bad customer service. Table 5 Correlations June 27-28, 2012 Cambridge, UK 14 2012 Cambridge Business & Economics Conference Prof Prof ISBN : 9780974211428 self Cust Comp Pearson Correlation 1 .577** .791** .897** Sig. (2-tailed) .000 .000 .000 N 172 172 172 ** Self Pearson Correlation .577 1 .337** Sig. (2-tailed) .000 .000 N 172 177 176 ** ** Cust Pearson Correlation .791 .337 1 Sig. (2-tailed) .000 .000 N 172 176 176 ** ** Comp Pearson Correlation .897 .432 .664** Sig. (2-tailed) .000 .000 .000 N 172 175 174 ** Correlation is significant at the 0.01 level (2-tailed) 172 .432** .000 175 .664** .000 174 1 175 As can be seen in Tables 1, 2, 3, 4, and 5 not only are there varying amounts of variance explained by the personality variables the various “measures” of customer service were not surrogates for one another. In order for them to serve as true surrogates, requires that the correlations be .9 or above. The closest to this level is the correlation between the ratings by the professionals and the ratings by the competition however the variables seen as being influential did not agree with one another. Future research and discussion Future research will help truly reveal the most important characteristics for businesses to focus on when trying to have good customer service. There are four main ways that small businesses can outshine their competition when it comes to good customer service. The first way that small businesses can differentiate June 27-28, 2012 Cambridge, UK 15 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 themselves is “determine what makes (the) offer special.”35 This will include research of the small business’s competition and what they are doing in regards to customer service. Then that small business owner needs to take a look at what he or she is doing, and determine how they can provide better customer service. This could involve improving what the business is already doing, coming up with new ideas, or just simply going above and beyond what is expected by the customer. Determining how to have better customer service than competition could also mean making a list ideas, which leads to the second way small businesses can create a competitive advantage which is to “study the customer service ideas on (their) list and examine their feasibility.”36 This could also tie in to only making promises when it is known that they can be kept. If there is an idea to improve customer service, but the small business owner or workers are not sure whether or not it can always be guaranteed, it should be dropped from consideration. If a small business truly wants to differentiate itself from the competition, their guarantees must follow through one-hundred percent of the time. Once a small business tests the feasibility of its different ideas, the owner must “choose one or two of your shiny customer service ideas and implement them.”37 Implementing them can mean more than just doing them. Small businesses owners need to make these “shiny ideas” known to their workers, and especially known to their customers. This can be done by putting the customer service guarantees on ads, catalogues, up in the store, or simply letting customers know when they enter the business. And it is also important to just choose one or two and do them very 35 4 Ways To Provide Customer Service That Outshines Your Competitors 4 Ways To Provide Customer Service That Outshines Your Competitors 37 4 Ways To Provide Customer Service That Outshines Your Competitors 36 June 27-28, 2012 Cambridge, UK 16 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 well. It is hard to have numerous ideas and implement them all effectively. Small businesses need to simply choose one or two and implement those customer service ideas perfectly. The fourth and last thing that small businesses can do to differentiate themselves from competition is “stay proactive and keep gathering customer service ideas.”38 Customers’ tastes and preferences can and will change with the times, so small business owners and their workers must stay on top of this. Customer service techniques cannot be stagnant, because life is not stagnant. In order for a business to successfully differentiate itself though customer service, it must be innovative in the ideas and techniques to create good customer service. Following these four things can help any small business differentiate itself from the competition through good customer service. The different channels and forms of communication and interaction that good customer service can be utilized through will now be focused on. Recently “there has been growth in customer contact services, that is, personal communication channels such as face-to-face, mail, phone and the web that impact on the way a customer may interact with a business.”39 This growth of different points of contact can help give small businesses more opportunities to be proactive in their interactions and responsiveness to customers. But they must also realize that “technological service provision cannot substitute for personnel who listen, empathize, reassure, solve problems and meet individual customer requests.”40 Next, some of the actually channels that good customer service can be utilized will be looked at. The most obvious channel of customer service is face-to-face, in the store contact. This is the most frequent place that the opportunity arises to have good customer service. This involves 38 4 Ways To Provide Customer Service That Outshines Your Competitors European Journal of Marketing 40 Mt Eliza Business Review 39 June 27-28, 2012 Cambridge, UK 17 2012 Cambridge Business & Economics Conference ISBN : 9780974211428 the owner or workers of a small business actually interacting with customers to help meet needs or solve issues. Another channel of customer service which is being used less and less frequently is mailing. This can be used to send out customer response surveys, or simply give out thanks for recent purchases or heads up on special deals. The next form of customer service discussed will be the communication channel of the phone. This is a part of customer service that can have some serious negative value to customers if not done right. Customers do not want to talk to a robot, they want a human. Small businesses need to actually have helpful workers that can answer the phone and answer questions or complaints as needed. The last form and channel that customer service can be used through is over the web. This can consist of a few things. One is email, where customers can email a company with a question or complaint, and they can respond quickly and informatively. And a huge area of focus for customer service in recent years would be social media. Facebook and Twitter can be huge opportunities for small businesses to differentiate themselves. They can connect with customers directly through the website, and answer questions or resolve issues as needed. These types of websites have become more and more popular in recent years, and need to be utilized by small businesses as a source to have good customer service. There are not many small businesses that use social media either, so it can also be a significant way for business to differentiate themselves in the market. 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