Cost of Poor Customer Service
Cost of poor customer service: Your supervisor has asked you to provide training to your entire department on the topic of explaining the relationship between customer service levels and the costs associated…
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Cost of Poor Customer Service
Paper details
Your supervisor has asked you to provide training to your entire department on the topic of explaining the relationship between customer service levels and the costs associated with providing those service levels.
- Research customer service levels and the costs associated with the different service levels.
- Compose a 600-word business memorandum that outlines the different levels and associated costs.
Solution
Customer Service Levels and Associated Costs
Quality plays a significant role in determining a business’s success. Organizations that offer quality services are likely to benefit from the action seen in customer satisfaction, thus leading to repetitive purchases or referrals. Evaluating customer’s responses is considered critical in determining the effectiveness of services provided by the organization. The evaluation can be done by focusing on customer service levels and their associated costs to an organization.
The Criminal Service level
The level is depicted by customer service perceived as of low quality below the minimum expected standards. Angry customers might go-ahead to call an organization and showcase their frustration. Also, customers swear not to use the organization’s products again. Businesses that offer criminal service normally incur a little cost. For instance, they may not spend any money to research about customers’ preferences.
The poor service is also reflected in the low pricing of input, such as cheap and unskilled labor and low-quality raw materials (Daugherty, Bolumole, & Grawe, 2019). The ultimate cost is seen in a massive loss for the organization, as seen in clients running away and failing to get new customers. The business, therefore, incurs more operational costs as it tries to promote its services in a community that has a bad perception of them. Similarly, the organization might compensate customers for low services rendered, thus making it costly.
Basic service
The level involves low services that make the customers angry. However, anger does not last long, but the customer will tell others about bad services. Also, the customer might not call but promise not to approach the organization for services. Again, an organization uses little money when offering basic services.
The losses are, however, higher due to customers running away and bad publicity. The failure to retain customers become costly to the organization as it spends much money to remain operational. Likewise, the organization has to allocate much money to promotional activities such as advertisements to convince people to use their services (Lavee, & Pindek, 2020).
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Expected Service
It is a level depicted by service quality that is neither good nor bad. The customer’s return for repeated services depends on the options available. The cost of expected services can be signified by an average performance where the business loses some customers and retains some. Organizations incur other costs associated with convincing clients to return. For instance, the business spends much money on customer relationship management to keep customers close. Also, the firm incurs costs associated with service redesign to ensure that it meets customer’s expectations.
Desired service
It is characterized by the organization’s ability to attend to customers’ needs as per their expectations. Customers come back for service as the organization appeal to their needs. The organization spends much money to ensure it offers better quality. For instance, it implements the use of customer relationship management to understand customers. Likewise, the organization spends much money researching customer perception of quality. Returns of the high service cost incurred are seen in the business realizing more sales and better performance due to repeated sales.
Excellent service
The service is illustrated by the organization’s ability to provide services beyond the customer’s expectations in terms of better quality (Migueis, & Teixeira, 2020). An organization has to invest much money in ensuring that its services are way beyond customer expectations. Intensive research is conducted to determine customer’s desires and changing trends in the industry. Likewise, the organization has to incur the costs of adopting technological applications that seek to boost service experience, for instance, CRM systems.
Similarly, the organization has to incur costs associated with additional service features, for example, extra expenses for quick delivery. The high cost incurred in offering excellent services is returned by the organization’s massive benefits in return. Customers will come back every time and spread the good news to other people. No costs are used to attend to customer complaints and refunds. Little promotional costs are incurred as satisfied customers act as referees.
References
- Daugherty, P. J., Bolumole, Y., & Grawe, S. J. (2019). The new age of customer impatience. International Journal of Physical Distribution & Logistics Management.
- Lavee, E., & Pindek, S. (2020). The Costs of Customer Service Citizenship Behaviors: A Qualitative Study. Frontiers in Psychology, 11.
- Migueis, V. L., & Teixeira, R. (2020, February). Predicting Market Basket Additions as a Way to Enhance Customer Service Levels. In International Conference on Exploring Services Science (pp. 121-134). Springer, Cham.
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