Everybody's got a customer service story, and it's rarely a happy one. The surly or inattentive clerk. Pressing "1" on the handset over and over again in search of a human voice—with a recorded voice telling you just how important your business is to rub salt in the wounds.
Those homely daily experiences illustrate that there aren't many players in business today who really get what customer service is about—or how it can translate into competitive advantage.
But why is customer service important in the context of supply chain management? It's simple. The supply chain doesn't really begin with sourcing and procurement, as some would have it. It begins with customers—their demands and those of their customers, their profiles, their locations, and their buying habits. Customer service dictates where we locate facilities, how we design distribution networks, and what processes and technologies we deploy and employ.
As for who these customers are, from the standpoint of supply chain operations, it can be just about anyone. We may be dealing with end-consumers. Or maybe our customers are other businesses—manufacturers, distributors, retailers, etc. At minimum, other departments inside our company—and the people in them—are our individual or functional customers. We'll focus here on some consumer examples, but the concepts and principles apply to customer relationships throughout the supply chain.
What is customer service, really? If you ask a group of people, you'll find there are a number of thoughts on the topic. But only once in our lives has anyone spontaneously come up with the answer that makes the most sense to us. A guy attending our Supply Chain Short Course at Georgia Tech stood up and simply said, "Everything." And he meant it. Everything. Everything that a customer might see, touch, or hear, before, during, and after a transaction is part of customer service.
At the retail level, for example, that would mean the look, feel, and smell—and location—of the store, the availability and display of goods, and the knowledge, helpfulness, and attitude of associates. On a Web site, it would include the site's appearance and ease of use by customers, whether they're placing orders or seeking answers to questions. And for call centers, it would encompass telephone service clarity and speed, complaint resolution, and staff knowledge.
What should customer service be about?
What do customers want? It might seem that they want the sun, the moon, and the stars, but research has shown that they really have only a few basic expectations:
- Quick response/recognition. Whether it's in the store or on the telephone, no one wants to wait to be acknowledged or recognized, and no one wants to wait (five minutes tests the upper limit) for a response following recognition.
- Human contact. The fact remains that people like the social experience— and flexibility—of dealing with other people, especially when there's a problem.
- One-call problem resolution. This may be the gold standard for both "fixes" and information, but it's certainly not unachievable. And remember, costs go up—and customer confidence drops—with each succeeding call.
- Expeditious solutions. That doesn't necessarily mean same- or next-day service, but it does mean a reasonably timely—and reliable—response. You're better off hitting a consistent three-day commitment than promising something in one day and delivering in two.
- Positive attitudes. A smile in the voice goes a long way toward disarming an irate customer.
Technical knowledge. That means knowledge not just about products and how they work, but also of customer service processes and how they work. A representative who can lead a customer through the company's internal resolution process can make a business friend for life. Much of the above refers to the service department's daily interactions with customers. But true service leaders build customer service into the fabric of the company in ways that make doing right by the customer nearly automatic. They anticipate what customers might seek, as when Ford Credit mailed customers in Florida payment-forgiveness notices after the 2004 hurricanes. They empower employees at all levels to fix problems and correct errors and omissions. They focus on overall results—and the value of "customers for life" rather than on the cost of a single event or solution. They treat customer service as an investment, not a cost, and understand that customer service is a differentiator and competitive advantage.
Does this pay off in today's dog-eat-dog world? Some research indicates that customer service leaders enjoy better-than-average stock price performance. Think about some recognized leaders, the image conjured up by the name, and the quality of experience you've had with them: Infiniti in automobiles, Ritz-Carlton in hospitality, Nordstrom in retail, L.L.Bean in consumer-direct. Then think about how most people feel about the legacy airlines. Customers at all levels can tell the difference between those who talk the talk and those who walk the walk.
Consider the customer, then invest
The customer service all-stars also consider how changes in business practices will affect their customers. Well-designed technology, for example, can leverage the human investment in customer service. But poorly designed Web sites and automated menus can sabotage everything you're trying to accomplish. Before investing in a particular piece of technological wizardry, figure out what you want it to accomplish. Is it to reduce labor costs? Handle the easy, routine stuff in order to free up skilled humans for the sensitive and difficult issues? Increase responsiveness and augment other information and service channels? Or—and it really seems this way sometimes—is it to provide the appearance of a customer service commitment without investing in substance and reality?
Off-center technology includes Web sites that are organized logically (to a technology professional, anyway) but are not aligned with customer behavior; sites that are difficult to navigate; sites with rigid search capability; menus that don't raise the most common options immediately, regardless of their "logical" positioning or sequence; and menus that don't offer an avenue for all possible options.
Offshoring is another decision to approach with care. Its relatively low cost is seductive, for sure. And there are real issues domestically in finding qualified and motivated staff at any cost. But anyone considering an offshore solution for elements of the customer service equation must determine customers' sensitivity to the dynamics of problem solving with someone with a different cultural background. There is also the question of when spoken English may not be perceived to be English—on either side of the exchange.
Finally, there is the tragedy of enterprises that are committed to customer service, are willing to spend money on it, but are tone-deaf regarding what customer service truly is. Misdirected customer service can be worse than bad customer service. Customer service is crucial, yes, but you can go too far. Ask yourself these questions. How much service should you lavish on "C" customers, for instance? Do you need to deliver the next day to customers who would be thrilled to get things in two or more days? What is the point of "delighting" customers who are buying commodities on price alone? Who has the courage, and the wisdom, to tell the customer he or she is wrong, and that there's money to be made doing things a different way? Have you met the basics of service before striving to "exceed the customer's expectations"?
Do take time to consider the importance of satisfying customers in all phases of the supply chain. It's what we are here for, and serving customers in all dimensions of a commercial relationship can help to fulfill all of our core reasons for being in business.
In their 2006 book, Satisfaction: How Every Great Company Listens to the Voice of the Customer, authors Chris Denove and James D. Power IV echo many of our contentions. Most significantly, they argue that there is a clear link between customer satisfaction and profitability. Simply put, the bottom line is that customer service is all about, well, the bottom line.
