Customer service is the provision of labour and other resources, for the purpose of increasing the value that buyers receive from their purchases and from the processes leading up to the purchase. With the rising dominance of the service sector in the global economy, customer service has grown in importance, as its impact on individuals, households, firms, and societies has become widespread.

History

The modern concept of customer service has its roots in the craftsman economy of the 1800s, when individuals and small groups of  manufacturers competed to produce arts and crafts to meet public demand. In the 1970s, international competition increased, and producers responded by improving the quality of their products and services.

The overall quality of customer service - in society and in specific industries - will continue to be determined by the relative balance of power between suppliers and consumers; it will improve as competition becomes more intense, and decline as competition decreases.

Strategic advantage

A company can outperform rivals only if it can establish a difference that it can preserve. Customer service can be such a difference. It is very difficult to control, and therefore difficult to imitate. It is difficult to control because of its variability. The level of service may vary greatly between two providers in the same organization. It may also vary from one moment to another, even as delivered by the same provider. The difficulty is compounded in multi-unit operations: in addition to variability within units, there is also variability among units.

That is both the challenge and the opportunity. The consistent delivery of superior service requires the careful design and execution of a whole system of activities that includes people, capital, technology, and processes. The few companies that can manage this system do stand out, and are sought out. This is the foundation of their sustainable competitive advantage.

Culture

For an organization’s members to deliver superior service consistently, they must be acculturated, i.e. instilled with the values, traits, patterns, and behaviors associated with a service culture. The mechanisms of this acculturation include recruitment, training, empowerment, and accountability, within the framework of an organization’s ideology of service.

Service Ideology

An organization’s ideology  comprises its purpose (Why are we here?) and values (What do we stand for?). Organizations renowned for providing excellent customer service have typically defined their purpose in terms of service – to serve their customers, and to serve their members. Their values typically include integrity, trustworthiness, reliability, personal responsibility, industriousness, continuous improvement, respect, and consistency.

Training and Empowerment

Training is focused on enabling personnel to deliver service in a manner that is beneficial to both the organization’s customers, and to itself.

Technology

Technology has made available a wide range of very powerful customer service tools. They range from support websites and the ability to have live chats with technical staff to databases tracking individual customers' preferences, pattern of buying, payment methods etc., and tailoring products and service responses based on this advanced data. Specialist software that is designed for the tracking of service levels and for helping recognize areas for improvement are often integrated into other enterprise operational software tools such as ERP software.

Accountability

Whereas outstanding service organizations allow their people to make mistakes and learn from their failures, there is little or no tolerance for violations of its core service values. People who do not fit into the culture are removed. Customers tend to be more forgiving of organizations who acknowledge and apologize for their mistakes, rather than those who deny them. Thus taking responsibility for mistakes and correcting them is an important aspect of good customer service.

What Customers Want

Delivering customer service begins with understanding what customers want. And this understanding begins with the understanding that they do not always know what they want, or why they want it. Traditional market research assumes that they do. Newer methods recognize that as much as 95% of our decision making is subconscious.

Common research methods (e.g., surveys and focus groups) reveal what customers think their motivations are, rather than what their motivations truly are. When respondents do not comprehend their true motivations, they tend to state how they think they ought to be motivated. Recent progress in neuroscience and in observational technologies have yielded more reliable, less biased results. Companies have Interaction Designers that use User Centered Designs methods, among others, to understand what customers need. They often use Personas to represent the research outcomes i.e., to describe the customer they are designing for.

Regardless of how they arrived at their findings, most researchers agree on the factors listed in this table to the right. Suppliers that meet these requirements are likely to give their customers a satisfactory experience.

In a competitive environment, however, satisfaction may not be enough. To stay in business, firms must provide at least as much satisfaction as their competitors. Moreover, firms that aim to gain profitable growth must increase the number of their customers while reducing the cost of customer acquisition. This is particularly true of companies that compete in mature industries. The objective then is not merely to satisfy customers, but to convert them into promoters (customers who recommend a company to others). Promoters serve to increase a firm’s clientele, without increasing its cost of acquisition – i.e. with no additional marketing or promotional expense.

But customers do not make recommendations lightly. When they make a recommendation, they put their own reputations on the line. Firms must earn that recommendation through the consistent delivery of outstanding customer service