draftenvironment - pearson education · 2019. 6. 21. · external factors such as legislation can...

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Is the customer king? Can a business be truly successful without ensuring that customer service is a priority? Working in customer service, you will be the first person customers talk to, and how you deal with them is key to the success of the business.

In this unit you will learn the principles required to deliver good customer service. You will look at different types of internal and external customer and their needs and expectations. You will learn about what businesses do to ensure a high level of customer service, and what can go wrong if systems fail. You will also look at how external factors such as legislation can affect the service offered.

On successful completion of your Level 2 qualification, you could progress to a Level 3 qualification or an Apprenticeship programme.

The Customer ServiceEnvironment1

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U N I T 1 T H E C U S T O M E R S E R V I C E E N V I R O N M E N T

How will I be assessed?

This unit is externally assessed and contributes 25 per cent of the total qualification.

You will be assessed using an onscreen test, which will be set and marked externally. The test contains different types of questions, including multiple choice, calculations, short answer and open response questions. You will have access to an onscreen notepad to make notes during the test but these notes will not be marked.

The assessment will test your knowledge and understanding of the role of a customer service assistant, the principles and practices related to the role, and the internal and external organisation context. The test will allow you to demonstrate a range of thinking skills outlined in the assessment outcomes and applied to several work-related contexts.

Assessment outcomes

AO1 Demonstrate knowledge and understanding of key customer service terms, definitions and principles.

AO2 Demonstrate understanding and application of customer service principles and concepts to business organisations, their success, and the environment in which they operate.

AO3 Be able to assess or analyse customer service information, demonstrating ability to make connections, identify and compare information, predict consequences and provide reasonable alternatives.

AO4 Be able to evaluate or assess customer service information to make informed judgements, including synthesising ideas and evidence from several sources to support arguments and form conclusions.

What you will learn in this unit:

A The business environment in which customer service operates

B Customer service

C How the delivery of customer service is affected by legislation, regulation, ethical and environmental considerations

D Customer service and the customer complaints process

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A The business environment in which customer service operates

A1 Features of businesses

CUSTOMER SERVICE could be defined as all the ways in which a business meets customer expectations to satisfy customers’ needs. For you to fully understand what customer service is, you must first gain knowledge and understanding of the features of businesses.

Ownership and liability

While not all businesses are concerned with making a profit, they are all concerned with being successful. A business wants to be able to supply its products or services to its CUSTOMERS (individuals or businesses that purchases goods or services produced by a business) in the most efficient way possible. Its ownership and LIABILITY (the amount of money which a business owes) will therefore be a significant factor in how it does this.

Private corporations

Sole trader

SOLE-TRADER businesses (businesses owned by one person, who is entitled to keep all profits but is liable for all losses – see Table 1.1) cover a wide range of activities, but they all have some features in common. For example, they can normally be run by one person and this person needs to be flexible and willing to work very long hours. This individual will be responsible for supplying or borrowing all the money required by the business and for actually running the business on a day-to-day basis. Perhaps the most common sorts of sole traders are craftsmen and women, such as plumbers, decorators, electricians, mobile hairdressers and window cleaners.

Advantages Disadvantages

There are no specific legal formalities to complete before commencing to trade.

Capital is limited to the owner’s savings or profits or any other money they can borrow.

There are no specific legal requirements governing the layout of the accounts.

The owner has sole responsibility for debts. If the owner does fall into financial difficulties, it may be necessary to sell their own personal possessions to meet the business’s debts.

The annual accounts do not have to be audited.

Responsibility for a range of activities falls on the shoulders of the one person who runs the business.

The owner has the freedom to run the business in their own way.

The success of the business is always dependent on how hard the sole trader wishes to work.

Any unforeseen accident or illness could seriously affect the business since all responsibilities rest on the shoulders of that one person.

Table 1.1 Advantages and disadvantages of setting up as a sole trader

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Partnership

A PARTNERSHIP (a business owned by two or more people who share responsibility for running the business) may be formed to overcome the problems that a sole trader might have in raising capital or so that partners can share skills and ideas, discuss problems and consider different views. A partnership consists of between two and 20 people who set up in business together and share the responsibility for that business. Each partner is required to contribute some capital, and the profits and the losses are shared between all the partners. Control of the business is the responsibility of all the partners and decisions made by one partner are always binding on the others.

In partnerships, all partners have UNLIMITED LIABILITY (the condition by which shareholders and owners share joint responsibility for the entire amount of debt and other liabilities amassed by the business – see Table 1.2). This means that any debts incurred by the partnership have to be met by all the partners.

Partnerships are commonly found in accounting and legal professions, where specialists in different areas of their profession will join together in a partnership to make the business more attractive to prospective clients.

Practise

Access Yell.com.

1 Identify at least ten local sole traders.

2 Make a list of their occupations.

3 Compare your findings with those of the other groups.


It is easier for partners than for sole traders to raise capital because all the partners can pool their resources.

Each partner is personally liable for all the firm’s debts.

Partners can share their expertise and workload.

Disagreements can arise between partners about the amount of effort that each of them puts in.

Partners can arrange to cover one another at times of illness or holidays.

Partnerships can only raise limited amounts of capital when compared to some other types of businesses.

A partnership, like a sole trader, does not have to publish its accounts or have them audited.

Decision-making can be slow since all partners have to be consulted.

Additional capital can be raised by introducing more partners into the partnership.

The death or retirement of a partner can bring a partnership to an end if such a rule is written into the deed of partnership.

All profits must be shared.

Private limited company (Ltd)

You can always tell when a company is a PRIVATE LIMITED COMPANY (a type of privately held business entity where the owners have limited liability for debts; if the business fails, they are only liable up to the amount they invested in the business) because the word Limited or Ltd is written after the company name. The shares in a private limited company are not freely available to the general public and only the directors agree the transfer of shares. Private limited companies are usually family concerns, or were

Table 1.2 Advantages and disadvantages of setting up a partnership

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B T E C L E V E L 2 T E C H N I C A L C E R T I F I C AT E C U S T O M E R S E R V I C E O P E R AT I O N S

originally so. This is the form of organisation often chosen when a sole trader wants to expand and wishes to retain control of the company.

Public limited company (PLC)

A PUBLIC LIMITED COMPANY (a company registered under the Companies Act (1980), with statutory minimum capital requirements and shares offered to the public subject to conditions of limited liability – see Table 1.3) tends to be a larger company. It will have PLC after the company name. These companies are allowed to raise capital by selling their shares on the Stock Exchange. This gives them greater flexibility in raising capital. A PLC can be set up by as few as two people, and there is no stated maximum number of shareholders.

The process of creating a public company is very similar to that of creating a private company (Figure 1.1).


Shareholders have LIMITED LIABILITY (the condition by which shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares). All debts incurred are the company’s liabilities and are not directly the legal liabilities of the shareholders or of the directors of the company. This means that all debts, above the value that the shareholder invested, belong to the company and not to the individuals. The ill-health or death of shareholders does not affect the running of the business.

The formation and running costs of a limited company can be expensive.

It is easier to raise capital through shares. It is often easier to raise finance through banks.

Decisions tend to be slow since there are a number of people involved.

It becomes possible to operate on a larger scale since additional shares are offered to the public.

Employees and shareholders are distanced from one another.

Suppliers tend to feel more comfortable trading with legally established organisations.

All the affairs of the company are made public through the audited accounts and annual returns that the company makes.

The company name is protected by law. Legal restrictions under the various Companies Acts are fairly tight.

There are tax advantages attached to giving shares to employees.

Large companies are often accused of being impersonal to work for and to deal with.

A company pension scheme can give better benefits than those that are available for the self-employed.

Rates of tax on profits are often higher.

Company prospectus is prepared, detailing how and how many shares will be sold.

Companies House issues a Certificate of

Incorporation.

Certificate of Operation is

obtained.

Business is up and running.

Figure 1.1 Creating a public company

Table 1.3 Advantages and disadvantages of setting up a limited company

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Co-operative

In the past, CO-OPERATIVES (businesses owned and run jointly by their members, who share the profits or benefits) were found mostly in agriculture or retail. More recently there has been growth in the number of cooperatives in services and in small-scale manufacturing. In a co-operative, all the people who form part of that organisation join together to make decisions, share the work and also share the profits. Examples include The Co-operative Bank and John Lewis Partnership.

Public corporations

PUBLIC CORPORATIONS are government-owned corporations – see Table 1.4. They are limited-liability companies that offer their SECURITIES (financing or investment instruments bought and sold in financial markets, such as bonds, debentures, notes, options, shares (stocks) and warrants) for sale to the general public. They include a number of non-ministerial departments (a department is composed of employed officials, known as civil servants, and is politically accountable through a minister – but not in this case), such as the Crown Prosecution Service, Her Majesty’s Land Registry and Ordnance Survey.

Practise

Work with a partner.

1 One of you takes PLCs and the other Ltds.

2 Take five minutes to list the main advantages of your type of company.

3 Together, try to agree which has the most advantages.

4 If you agree that PLCs are better than Ltds, think about why some companies remain Ltds. If you think that Ltds are better than PLCs, why do some companies take the trouble to become PLCs?


In creating public corporations, the government ensures that essential services are provided.

Public corporations tend to be large and can be inefficient.

The government can use public corporations as part of its overall plans.

They are large, impersonal organisations, which makes it difficult to motivate staff.

The government can ensure that services are not duplicated.

If the corporation makes mistakes which costs them money, additional funding has to be given to the organisation by the government via taxation.

If the corporation makes a profit, it can either be reinvested or given back to the Treasury to help reduce taxation.

Sometimes the corporations are influenced by political issues.

The bulk of funding for public corporations comes direct from government (the Treasury) and, as a result, the government exercises control over the organisation. A government minister will be responsible for the corporation and will have to answer questions in parliament if there are any problems with the organisation. Corporations have a separate legal identity and a board and chairperson are responsible for the day-to-day running of the organisation.

Table 1.4 Advantages and disadvantages of being a public corporation

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Not-for-profit organisations

Not-for-profit organisations include charities and voluntary organisations. They share many features.

• They are set up for charitable, social, philanthropic, religious, political or similar purposes.

• They are required to use any profit or surplus only for the organisation’s purposes.

• They are not a part of any governing department, local authority or other statutory body.

Voluntary organisations have a legal structure or status, being an unincorporated association or a trust or company limited by guarantee.

The number of registered charities is growing. At the end of 2015, there were 165,290 charities registered with the Charity Commission in England and Wales. By the end of 2016, there were 167,109. According to the Charity Commission, the total annual income for all registered charities was just over £73 billion in 2016.

Practise


1 Research the function and powers of your local authority/council.

2 Consider three ways in which the work of the local authority may impact on the business you work within or that of a large local supermarket.

Purposes of businesses

Different businesses have different purposes. Their purposes depend on what kind of activities the business is involved in and how it receives the bulk of its income.

Supply of products or services

At a profit

Businesses will either produce or buy products and services. They then sell them on to customers at a higher price in order to cover their own costs

Can you identify any charitable organisations near where you live?

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and to make a profit. Many of the products that you can buy in your local high street have passed through the hands of several businesses.

Not for profit

You might wonder how a business can offer products and services at no cost to the customer. The simple answer is that the business receives the funding it needs from another source, such as from central or local government, so the customer does not pay. Other organisations, known as charities, also provide a range of services at no cost to customers. Examples include Macmillan Cancer Support and the Money Advice Trust.

Scope of business activities

Whether you live in a city, a town or the countryside, there is a network of business organisations to cater for all your immediate wants and needs.

Local businesses

Many local businesses are small, or small-to-medium-sized organisations. Local businesses aim to cater for the immediate needs of the local community. They include convenience stores, takeaways, launderettes, public houses and restaurants.

Assessment practice AO1

Which of these is a not-for-profit organisation?

Select one option.

• Voluntary sector business

• Co-operative

• Local authority

• Sole trader

National businesses

There are a large number of private-sector organisations that have stores or offices in virtually all the major towns and cities in the country. This is particularly true of supermarket chains, such as Asda, Sainsbury’s and Tesco. Banks and building societies are also examples of national organisations that have set themselves up in all the main population centres in order to serve their customers.

International businesses

The term ‘international business’ refers to all those business activities that involve cross-border transactions of goods, services and resources between two or more nations. For example, a company that sells products in the US, Japan and throughout Europe is an international business. Transactions of economic resources include the exchange of capital and skills and the movement of people for the purpose of producing physical goods and services such as finance, banking, insurance and construction.

Practise

1 Identify the ten businesses nearest to your school or college.

2 Are they local businesses or do they belong to larger organisations?

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Multinational businesses

A multinational business is one operating in several countries but managed from one country. Generally, any business that generates a quarter of its revenue from operations outside its home country is considered to be a multinational business.

When we think about multinational businesses, we tend to think about huge organisations, such as Apple, Ford, Microsoft, Pepsi and Xerox. All these businesses have headquarters in the US and there is barely a town or city in the UK, if not the world, where you cannot purchase some of their products or services.

Multinational businesses account for a huge amount of sales, profit and employment around the world. Increasingly, these multinational businesses do not simply supply a country with their products or services, they set up their own factories, offices and even retail stores in markets around the world.

Size of businesses

The size of a business can be measured in a number of different ways, including the number of people it employs; the number of stores, offices or branches it has; the amount of sales it makes or the amount of profit it makes.

Micro-businesses

The European Commission defines a MICRO-BUSINESS as one which has fewer than ten employees and a turnover balance sheet of less than €2 million (approximately £1,7 million). There were 5.3 million micro-businesses in the UK in 2016, accounting for 96 per cent of all businesses. Although the vast majority of businesses in the UK employ fewer than ten people, this sort of business only accounts for 32 per cent of employment and 19 per cent of turnover.

Small and medium enterprises (SMEs)

SMEs are classified as:

• small businesses – with between ten and 49 employees and a turnover under £10 million.

• medium-sized businesses – organisations that employ fewer than 250 staff and have a turnover of less than £50 million. Many medium-sized organisations operate on a national basis and include travel agents, betting shops and newsagents’ chains. They are major employers in the UK and are involved in businesses as varied as agriculture, production, construction, retailing, catering, business services and wholesaling.

Large businesses

A large business is one that employs more than 250 staff and has no limit on turnover. In the UK, large businesses accounted for 0.1 per cent of businesses but 40 per cent of employment and 53 per cent of turnover in 2016.

There are a great number of different forms of large business operating in the UK. Some are UK businesses, while others are multinationals, and typical examples include Tesco, Boots, Virgin Trains and Merlin Entertainments.

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Reasons for business success

Some businesses are very successful, while others are not. For a business to be successful, it takes more than a good idea. A business also needs to provide strong customer service, have vision and be innovative.

• Strong customer service: getting people to buy a product or service is the key to a business’s success. The next challenge is getting them to become repeat customers. Strong customer service makes customers feel that businesses want to develop a long-term relationship that means more than just a sale. It shows that the business is concerned with creating a positive business reputation, being competitive on prices and continuing to meet the changing needs of the customer.

• Vision: the late Steve Jobs, the co-founder of Apple, had a vision. His vision was to develop, design and supply a computer for all of us at a time when access to PCs was restricted. Having the ability to think about or plan the future with imagination or wisdom, to learn from a problem and to never give up are key components of a successful business.

• Innovative products or processes: solving a problem by thinking of something new is always a good idea. Recent innovations include Sky Q (the set-top box home entertainment system, offering ultra-high definition viewing) and the improved batteries in electric cars. James Dyson built his business on innovative solutions such as the bagless vacuum cleaner and bladeless fan.

A2 Structure and organisation

Organisational structure

The structure of a business has an impact on the way the owners can communicate with their employees and will vary depending on a number of factors.

Hierarchical

Large businesses may have several levels of managers and supervisors (Figure 1.2). Staff have specific job roles and only carry out tasks related to their own role. There may be fixed rules and procedures and little scope for staff to use creativity and imagination. This tends to mean that customer service providers have little scope to deal with issues on their own, and so these will escalate upwards. Examples include the army, local government and large supermarket chains such as Tesco.

Flat

In a flat structure (Figure 1.3), there are fewer layers of management. It is like a flattened pyramid, designed so that the key decision-makers are, in most cases, only one or two layers above those who do the day-to-day work. This means that decisions around customer

Figure 1.2 Hierarchical organisation structure

Directors

Regional managers/Directors

Area managers

Store managers

Assistant managers

Team leaders

Operatives/Support sta�

MD

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Matrix

A matrix structure (Figure 1.4) is used when a business is involved with major projects such as opening a new branch. Each project is undertaken by a team controlled by a project leader. All teams are supported by the departments that provide specialised services such as customer service and finance. When a project is completed, the team is disbanded and assigned to a new one. This can mean that customer service provision varies depending on the structure of the team at any given time.

Technicalsta�

Salessta�

Support sta�

Manager

service provision can be made quickly and easily, and any problems can be escalated upwards to be dealt with swiftly.

Figure 1.3 Flat organisation structure

Head ofProject A

Head of Project B

Head of Project C

Finance Manager

Marketing Manager

HR Manager

Functional/operational areas

All businesses must carry out a number of functions to ensure the business runs smoothly. These functions link to the aims and objectives of the business. Some businesses are small enough that all the functions and decision-making can be done by one or two people. When a business is large, however, the work has to be shared.

In large businesses, employees are arranged into departments specialising in certain tasks. These tasks are called FUNCTIONAL/OPERATIONAL AREAS

(functional areas are teams of employees who have similar skills and expertise – for example, a company’s sales department is a common functional area, and the staff in this area would all be focused on selling the company’s products) (Table 1.5).

Figure 1.4 Matrix organisation structure


1 Identify one advantage to delivering customer service of a company operating with a flat organisational structure.

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Relationship and communication

No functional/operational area in a business can work in isolation. In a small firm, links and interactions between people responsible for different functions are usually informal and continuous. The situation can be different in a larger business, as people may work in separate areas or departments and may rarely meet each other. All areas, however, still need information and support from each other for the business to operate effectively. Constant communication and co-operation between operational areas, their managers and staff are essential if the business is to achieve its aims and objectives.

For example, if a customer makes a complaint about a faulty item, customer services will communicate with production and research and development. They will find the source of the problem and correct it. They will then communicate with marketing and sales, who will contact customers who

Have you ever had to return something because it was faulty? How did the business handle it?

Research and development

• Work closely with the marketing department.

• Keep a check on the products and services offered by competitors.

• Develop new products for the business to sell.

Human resources • Also known as the personnel department.

• Deal with recruitment, organisation and training of employees.

Sales • Sell goods and servces.

• Respond to customer enquiries, organize sales promotions and other events, and keep customer records up to date.

Administration • Control all paperwork and support other departments by servicing their needs for secretarial work, such as filing, posting and handling information.

Security • Prevent and protect against assault, damage, fire, fraud, invasion of privacy, theft, unlawful entry and other such occurrences.

IT • Responsible for business hardware and software and the maintenance of telecommunications.

• Ensure employees are trained in new technology.

Finance • Pay the wages and salaries of employees.

• Monitor the income and expenditure of the business.

Purchasing • Buy all the materials required for the business to function.

Logistics • Responsible for the complete process: planning, managing and controlling the flow of goods and services, information, real-time data and human resources from the point of origin to the point of destination.

Distribution • Responsible for ensuring the safe storage and transportation of products to the customer.

Customer service • Assist customers who have enquiries, concerns or complaints.

• Must be helpful, personable and aware of customers’ legal rights.

Production and quality

• Involved in all functions related to producing the products or services for the customer to buy.

Marketing • Ensure that the customer is aware of the products and services that the business offers.

Table 1.5 Functional business areas

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Lines of responsibility and levels of authority in the service chain

It is no longer enough just to make a quality product for the customer to enjoy. The customer SERVICE CHAIN (the process of managing and facilitating the interconnecting customer service-related activities through a supply chain) now focuses on STRATEGIC QUALITY MANAGEMENT (the process of establishing long-range customer-focused goals and defining the approach to meeting those goals). Strategic quality management ensures that existing work processes are continually improved and new processes are identified and set up. Where improvements are to be made, there are four main types of AUTHORITY LEVELS (strategic roles in the organisation power structure – the amount of authority increases with each higher level a person attains in the hierarchy) that can exist within a business (Table 1.6).

have bought the item to inform them of the fault. These customers will be offered an exchange for a non-faulty item.

Type of authority Description What this looks like for staff at this level

Level 1: act from instruction

The individual implements decisions made by others.

Staff have no choice and have to do as they are told. A member of staff who operates at Level 1 will have no scope for innovation, creativity or problem-solving. They simply do as they are told and are likely to lack motivation.

Level 2: act after approval

The person weighs factors and acts only after their manager has approved their chosen action.

Staff members have a number of choices and will proceed with the choice that their manager approves.

Level 3: decide, inform and act

Power to decide is added, but people remain accountable to someone else.

Staff members must inform their manager of their actions.

Level 4: decide and act

Provides complete authority and accountability.

No approval is required. An employee operating at Level 4 will have an almost unlimited scope to be innovative and creative. They will be enthused, inspired and motivated to solve problems and to come up with ideas.

The faster and more effectively a business can progress its employees up the levels of authority, the more innovative, creative and motivated their staff will become. This can lead to an increase in productivity and efficiency, which is beneficial for the service chain.

A3 Aims of businesses

The aims of a business are closely linked to its available resources. These aims can change over time, largely as a result of their experiences and relative success or failure.

Long-term goals of the business

When starting a business, various personal and business goals are set. These goals help the business to survive, be successful and grow.

Table 1.6 Levels of authority

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Mission statement

Businesses often call their goals MISSION STATEMENTS (a formal summary of the aims and values of a company, organisation, or individual). A mission statement describes, as clearly and briefly as possible, what the business intends to do, how it will attempt to go about it and states its long-term goals. It will often include the vision and values of the business relating to customer service. The mission statement for Instagram, for example, is: ‘We’re building Instagram to allow you to experience moments in your friends’ lives through pictures as they happen.’

Private sector

Goals for private-sector businesses might include the following areas:

• Making profits: ensuring that the difference between the amount earned and the amount spent in buying, operating or producing something is positive.

• Break-even: the point where the business is at the point of balance and is making neither a profit nor a loss.

• Survival: the ability of a business to continue its activity without interruptions.

• Growth: when a business generates positive cash flows, which increase significantly faster than the overall economy. A company in growth will reinvest profits to make even more profit.

• Market share: the percentage of a market controlled by a particular company or product.

Public sector

Goals for public-sector businesses might include the following.

• Social well-being: where a business is more concerned for the welfare or wellness of a group of people rather than about making a profit. For example, how the government invests money in projects to prevent isolation among ageing communities.

• Security: ensuring that a section of society that might be in danger or under threat has a more assured future that is free from the previous threat. For example, the government investing in intelligence to reduce the threat of terrorism.

• Value for money: making sure that no money is wasted and that something is well worth the money spent on it. For example, the government looking at ways to make education and health services more efficient, and to provide the tax-paying public with the best returns on their hard-earned tax payments.

Not for profit

Goals for businesses not concerned with making profits might include the following:

• Helping the vulnerable: looking out for those in need of special care, support or protection because of age, disability or risk of abuse or neglect.

Practise


1 Look at the mission statements of organisations such as Facebook, Ikea, Starbucks or Intel.

2 How important do they consider customer service to be for the success of their business?

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B T E C L E V E L 2 T E C H N I C A L C E R T I F I C AT E I N C U S T O M E R S E R V I C E O P E R AT I O N S

B Customer service

• Supporting communities both in this country and abroad: a way of strengthening communities by prioritising their actions and their perspectives in the development of social, economic and environmental policy. This plays a crucial role in supporting active democratic life by promoting the voice of disadvantaged and vulnerable communities.

Skills and knowledge check

What is the difference between for-profit and not-for-profit businesses?

Can you list three key features of a large business?

Can you define what a mission statement is?

Can you list at least eight functional areas?

Can you explain what ‘scope of business activities’ means?

What are the long-term goals of a private-sector business?

I can describe the key features of a private limited company (Ltd).

I understand the difference between limited and unlimited liability.

I can explain how each of the different organisation structures impact on customer service.

B1 Meaning, purpose and scope of customer service

As a customer, you undertake a journey – even if you are not aware of it. In this section, you will find out what this journey looks like at each stage and the variety of customer service roles that exist within it.

Customers

You will have a good idea of what a customer is – an individual or business that purchases goods or services produced by a business. These are EXTERNAL CUSTOMERS (customers who purchase a company’s products or services but are not employees or part of the organisation) (Figure 1.5). Have you, however, thought about INTERNAL customers within a business (customers who are directly connected to an organisation, and are usually, but not necessarily, internal to the organisation such as stakeholders or employees) (Figure 1.6)?

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External

• Shareholder (PLC): an owner of shares in an organisation • Supplier: a person or entity that is the source for goods or services • Lender: an individual, a public group, a private group or a financial

institution that makes funds available to another with the expectation that the funds will be repaid, along with any interest and/or fees, either in increments or as a lump sum

• Competitor: an organisation engaged in commercial or economic competition with others

• Debtor: a person or organisation that owes money • Creditor: a person or company to whom money is owing • Customer: someone who uses a company’s products or services but is

not part of the organisation • Community (local, national, international): a group of people living in

the same place or having a particular characteristic in common. A local community, for example, typically consists of business operators, public agency staff and residents. Their interactions can include the sharing of resources, information and assistance, as well as the establishment of commercial relationships between local businesses and consumers.

• Pressure group: a group of people who share an interest, concern or set of opinions and who try to influence politics or the policies of government, business and so on

• Interest group: a non-profit and usually voluntary organisation whose members have a common cause for which they seek to influence public policy without seeking political control. Interest groups try to defend a cause, whereas pressure groups try to promote it.

External customersIndividuals who purchase a company’s products or

services but are not employees or part of the organisation.

Shareholders (plc)

Pressure groups

Interest groups

Suppliers

Communities

Customers Competitors Lenders Debtors Creditors

Figure 1.5 External customers

Internal customersIndividuals who are directly connected to an

organisation and work with colleagues.

ManagersPeople responsible for

controlling or administering an organisation or group of

sta�.

Owners Parties that have the

exclusive right to hold, use and otherwise dispose of an

asset or property.

EmployeesPeople who work under a

contract of employment and have recognised rights and

duties.

Figure 1.6 Internal customersDRAFT

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Meaning of customer service

Customer service can be defined by what an organisation will do to meet and exceed internal and external customer needs and expectations. This is all about what happens before, during and after a purchase. Experiences during these interactions will influence how people feel about a business and their product or service.

Purpose

A business needs customers in order to be a success. It is harder to get a new customer than it is to keep a previous customer. In order to ensure customer loyalty, it is necessary to provide what they want and to do it well. The key to a successful and profitable service business is understanding customer needs and meeting them, if not surpassing them.

• Customer satisfaction: the degree of satisfaction provided by the goods or services of a company as measured by the number of repeat customers

• Reputation/image of the organisation: the estimation in which a business, product or service is held, especially by the community or public generally

• Customer loyalty: the likelihood of previous customers continuing to buy from the same business

• Meeting/exceeding sales and service targets: making sales equal to or more than a target set by management within a specified timeframe

Link it up

These points provide a brief guide to the purpose of customer service and will be expanded on later in this unit.

Practise

1 Are you a loyal customer? Do you always shop in the same place for your clothes, takeaway food or other regular purchases?

2 What is it about the business that makes you loyal to it?

Customers at a doctor’s surgery are using that business’s service. Can you think of any other examples of customers using services?

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Scope

What customer service involves

Customer service is about meeting the various needs and expectations of customers. Bad customer service can generate complaints and damage reputations. It can result in lost sales, because customers might take their business to a competitor. Good customer service involves developing bonds with customers, hopefully leading to long-term business relationships.

The customer journey and its value to the organisation

A customer will interact with a business many times throughout the purchasing process (Figure 1.7). Businesses will aim to make every experience a customer has as positive as they can be.

Use or supply of a product or service

There are a number of different stages involved in the supply of a product or service.

• Pre-service/enquiry stage: at this stage, the customer is considering whether or not to purchase the product or service. To help them make the decision, a number of questions may be asked or research may be conducted both face-to-face and remotely.

• Service/purchase stage: the point at which the customer pays for the product or service

• Post-service stage: this stage can be a follow up or a complaint and can be critical in retaining customers. This can greatly affect the decision process for similar purchases from the same business in the future. If the customer is satisfied, this could result in brand loyalty. Complaints and negative feedback may be directed to the business via reviews on their website, social-media networks or word of mouth. Businesses should be very careful to create positive post-service communication in order to engage customers and make the process as efficient as possible.

• Pricing and range of products and/or services unique to an organisation: the collection of products sold by the same business that are aimed at different segments of the market. All the products in the range are connected but some may be designed to attract very different segments of the market. The pricing of these items could dictate their success or failure.

• Value-added benefits, loyalty schemes: a loyalty scheme is a rewards programme offered by a business to customers who make frequent purchases. It may give a customer free merchandise, rewards, coupons or even opportunities to purchase products in advance of their general release.

• Service level agreement (SLA): a contract between a service provider (either internal or external) and the end user that defines the level of service expected from the service provider. SLAs are output-based in that their purpose is specifically to define what the customer will receive.

Before the purchase, this might

occur through the marketing materials.

During the purchase, this might occur with face-to-face or online interaction with the

business.

After the purchase, this might occur during correspondence

regarding delivery or o�ering a coupon code for the customer's

next purchase.

Figure 1.7 The customer journey

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Value to an organisation of good customer service

Providing good customer service not only benefits the customer but also the business offering it. In any industry where two or more businesses are selling the same goods or services, success is ultimately measured by how well the customer is treated. If you treat the customer well, then they will return. Good customer service benefits the business in many ways.

• Attracts more business: when a customer receives good customer service, they will talk about it to others. They tend to do so even more when they have been receiving good quality service over a period of time. These positive references equate to more business, which means more profit.

• Secures customer loyalty: when a customer is happy with a product or service, they will continue to purchase the same item from the same business and will not move to a competitor. This is a huge benefit for the business as customer retention is far cheaper than customer acquisition.

• Sets the standard of excellent customer service: when a business can successfully offer good customer service, it provides the foundations on which excellent customer service can blossom. If customers are happy, investors and business partners will also be happy, and this ultimately leads to higher profits. With a strong customer base, you can win the trust of investors and make the most of every opportunity.

Ways to meet or exceed customer expectations

Customers can have high expectations and these expectations can be difficult to meet. What does a business need to do to meet or exceed these expectations?

• Providing value for money, information and advice in a timely manner: ensure that the needs of the customer are met through offering a competitively priced product or service. Information, advice and guidance should be made available at every stage of the customer’s journey, and through their medium of choice – in person, over the phone or online. All interactions between the customer and the business need to be handled in a positive and timely manner.

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• Providing additional help and assistance to deal with the problems: being proactive rather than reactive is preferable if a problem arises. Customers do not want to spend their time chasing up complaints. They may also choose to share their bad experiences with friends, family, and the wider world via social media, resulting in a bad reputation and potential loss of income for the business. Standing out from the crowd by contacting customers before they have had the chance to make a complaint or, better still, before they are even aware of a problem is ideal.

• Offering discounts, additional products or services, providing information on returns policy: relationships are important to customers, and many want ongoing, personalised relationships with the same business. When businesses can exceed the expectations of the customer, they will gain a deserved reputation for being outstanding.

• Providing exceptional help and assistance for customers with special requirements: being able to meet the many varied needs of customers regardless of what that may be.

• Flexible service and innovative ideas to differentiate from competitors: customer expectations set the bar for customer satisfaction, which also affects repurchase decisions and customer loyalty. If a customer feels that you did not deliver a service that was expected, they won’t buy from you again. On the flip-side, if you deliver a service that exceeds customer expectations, and is better than what anyone else offers, not only will that customer return but they will also tell their friends and family about the experience.

• Having an effective follow-up service: finding new customers is crucial to the growth and success of a business. There is, however, a huge potential for revenue in their list of existing customers. It is believed to cost seven times more to get a new customer than it does to sell to an existing one. Retaining current customers is therefore vital.


Why is it important for a business to establish effective customer service?

Select one option.

• To reduce staffing levels

• To improve its reputation

• To lower customer expectations

• To increase complaints

Practise

Work in groups.

1 Select one organisation from: a gym, call centre, cinema or restaurant.

2 Identify how your chosen organisation can provide consistent customer service.

3 Discuss what the value to the business of good customer service is and how it can exceed customer expectations.

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B2 Customer service roles

There are different customer service roles in business. These can be direct, involving a SERVICE DELIVERER (the representative of the business that leads the interaction between the business and customers where the business offers a service, whether that be information or a task), and indirect, involving support roles. In this section, you will learn that good customer service relies on teamwork.

Direct customer service

The main role of a customer service adviser is dealing directly with customers. They interact with new, existing and potential customers, and seek to provide the best customer service. They typically handle enquiries, answer incoming calls, process customer correspondence and offer products and services. Roles that will fulfil this service include receptionists, shop assistants and delivery drivers.

• Face-to-face customer service: this is provided by the service deliverer, with whom the customer deals directly and who is seen as representing the business. Face-to-face customer service most often occurs in hotels, restaurants, leisure centres, hospitals and shops. A positive interaction will have positive repercussions for the business. Equally, a negative one could cause irreconcilable damage.

• Remote customer service: many businesses provide remote customer service so that customers can contact them without visiting the store, for example in call centres and online. Remote customer service is essential for businesses that only sell online.

Indirect customer service

Indirect customer service includes all the factors that can affect a customer’s impression of a business, such as ease of access (for example, car parking, escalators and lifts), employee approachability and the design and cleanliness of the business. Roles such as cleaners, maintenance staff and engineers help to provide a good impression of the business, whether it be a retail shop or a hotel. Although these staff are usually in the background, they contribute to the business by providing a good experience for its customers.

Customer service teamwork

Providing good customer service requires co-operation between individuals and business departments in the service chain. In other words, it requires teamwork. Teamwork is critical to ensure that people and processes are supported in order to deliver the type of experience that customers really care about. If a customer has a complaint or a complex query, it

Practise

1 Identify two roles in a supermarket that are directly involved with the customer and two that are not.

2 Do the same for a school and a hospital.

3 Share your findings with the group.

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may be necessary to liaise with another member of the team or another department to find the answer and provide excellent customer service.

B3 Customer service behaviours, attributes and skills

Customer service practitioners (service deliverers) must behave appropriately and have the necessary attributes and skills to meet customers’ expectations.

Behaviours

Success in business depends on identifying what your target customers need or want and creating a product or service that meets these needs in a superior fashion. Businesses must, however, go beyond offering a better product or service. Staff must also deliver superior customer service from the initial contact with the customer through the purchase experience and beyond.

Staff attitude

Good customer service staff must have the following skills to create a good impression.

• Being courteous to customers at all times is essential. • Being professional in appearance is essential as customers will get an

impression of the business through the appearance of staff. • Body language is important, as greeting a customer with a smile and

looking them in the eye will create a better impression than appearing bored and not making eye contact.

• Using appropriate language and tone of voice is essential. This may have to be varied to suit the customer. For example, it is not appropriate to use technical language to someone buying a set of golf clubs unless you know that they are familiar with such terms.

Practise

Think of a time when you received good customer service and a time when you received bad customer service.

1 What made the service good or bad?

2 How did this affect your thoughts about the business?

3 Compare your ideas with another member of the group.

What if...?

A grocery shop recently introduced a home-delivery service. It was going well but it has recently had some complaints about the quality of its products and the behaviour of its drivers. One of the drivers, in particular, has been rude and keeps throwing the deliveries around, which the shop thinks might be why quality is a problem. The shop is considering the complaints carefully.

1 What could the impact of the driver’s behaviour be on the reputation of the business?

2 Is the driver offering direct or indirect customer service?

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• Creating a good impression leads nowhere unless the service deliverer also has the necessary knowledge to provide the required customer service.

Resolve or refer complaints and problems as promised

Customers usually complain for a reason. As a service deliverer, the first rule is to listen carefully so that you understand the problem and what the customer wants you to do to put it right. This will include knowing when to offer an alternative item if a specific one is currently unavailable, offering an exchange or refund if appropriate and escalating the problem to a supervisor or manager if necessary.

Follow-up queries

It is vital to follow up on all customer queries so that the customer knows they are being looked after. Angry customers can lead to a bad reputation and any negative feedback on the web or through word of mouth may cause considerable damage. Gaining customers’ trust through finding suitable solutions to queries leads to a positive outcome for all parties.

Meet service-level agreements

SERVICE-LEVEL AGREEMENTS (a contract between a service provider (either internal or external) and the end user that defines the level of service expected from the service provider) are issued by an organisation. They are output-based in that their purpose is specifically to define details of the level of service the customer can expect when dealing with the organisation.

Follow organisational procedures

As a service deliverer, it is important to comply with the procedures and policies that are in place in a business. These may include a complaints procedure and a DISCLAIMER (a statement that says that someone is not responsible for or associated with something).

Attributes and skills

How a business treats its customers can make the difference between a returning customer and a dissatisfied customer who takes their custom elsewhere and may damage the business by harming its reputation

through word of mouth. You have been a customer in various situations, either in a restaurant or shop, and you will have experienced both good and bad service in person, on the phone or online. There are a number of attributes and skills that can help service providers to make the difference to the success of a business.

Putting customers at ease and gaining trust

Can you think of a time when you have received good customer service?

• Building rapport: how you deal with queries will affect how customers feel afterwards.

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• The service deliverer should always be friendly, no matter how difficult the customer may be. Through listening and asking appropriate questions, it is possible to show that you understand how the customer feels about the problem.

• Using appropriate body language, including making eye contact, gives the customer positive signals that you are interested in helping them.

• Negative body language can have a negative impact on customer service. A slumped posture can demonstrate a lack of confidence or boredom. Averted eye contact can be an indicator that a person is uncomfortable, self-conscious, or even lying. Crossed arms can signal defensiveness or disagreement. It is vital that negative body language is not displayed as it can reflect negatively on the business.

• Using diplomacy, patience, tact and initiative: even if you think the customer is wrong, do not disagree. Being tactful is important. Focus on the topic rather than an opinion. If the situation becomes very difficult, it may be necessary to ask for assistance. After all, the customer may be right!

• Listening and responding to customer problems or requests: it is always important to be patient, listen to what the customer is saying, remain positive and seek help if required from a more senior colleague.

• Remaining impartial: this is vital as the service deliverer is there to ‘fix’ the situation rather than to support either party.

• Being open to suggestions: customers will be happier if outcomes are not ‘set in stone’ and can be considered on a case-by-case basis. This shows that they are being viewed as an individual rather than as a category.

• ACTIVE LISTENING: this is a way of listening and responding to another person that improves mutual understanding. The service deliverer must fully concentrate, understand, respond and then remember what is being said. This is important because it establishes a connection with the customer and allows for ease of interaction so that messages are relayed clearly and completely. This will establish faith in the deliverer and the process.

• Avoiding misleading comments or making promises that cannot be met: if an arrangement is made to contact the customer again concerning a query, it is essential that this is done. Even if the service deliverer still does not have the answer, making contact reassures the customer that efforts are being made to help them. If members of staff make promises and do not keep them, the customer will lose faith in the business and this can damage a business’s reputation. DRAFT

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<=

Communication

Verbal

It is essential to speak clearly and to use an appropriate tone of voice. Avoid jargon and slang (see Table 1.6) and speak at an appropriate pace, being friendly and keen to meet the needs of the customer.

What if...?

Using your knowledge of customer service skills and attributes, how would you respond to the following scenarios?

1 A customer walks into a hotel and wants to check in. There is a large queue at the check-in desk. What can be done to meet the customer’s needs?

2 A school is going on a ski trip to the French Alps. On arriving at the airport, there are 40 students with five members of staff. As the students are under 16, they need to check in with an adult. There is a busy queue for the check-in desks. How could you offer assistance to the group?

3 A man goes shopping for some perfume as a gift for his partner. He has no idea what type of perfume she wears and has no idea about perfumes in general. How could you help him to decide which perfume to buy?

Jargon/slang Plain English

Alright mate Good morning

In a bit Goodbye

Nice one Thank you

Wicked Very good

Table 1.7 Verbal communication

Written

All written communications should be courteous and tactful with wording that is appropriate for the situation. The degree of formality depends on who the customer is and why you are writing to them. The format should always be appropriate. At the end of a formal complaints procedure, for example, sending a letter will be more appropriate than sending a text message. Make sure the layout is clear, check the spelling and grammar and always proofread your work.

Practise

Read the following email from a customer service adviser to a customer in response to their complaint that a watch that they bought has stopped working after just two weeks.

Hiya, gutted to hear that ur watch ain’t working. that’s not what you need after youve spent some big money on a special item like that. this happens all the time though, so Im not really surprised. think that they must be made on the cheap but we’re not supposed to say that cos they’re dead expensive. You’ve got 2 options now. bring it back and we’ll give you a new one. Or bring it back and we’ll give you the cash back. Either way, its no prob so you can do what you thinks best.

See you soon. Dave in Customer Complaints.

Rewrite the email to form an appropriate response to the customer’s complaint.

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B4 Provision of effective customer service

Certain actions or standards in customer service will enable a business to meet or exceed customer expectations.

Staff performance

Some situations will require the customer service deliverer to behave in a particular way. They may need to be formal and professional, helpful or show an understanding of a situation. Many employers look for employees who fit into their particular way of working. They will need to have good skills to interact with other people, a positive and helpful attitude towards work, and a professional manner while at work. To ensure consistency, businesses may set out the way in which they expect employees to behave in all types of situation. Training staff can help to improve performance. At McDonald’s fast food restaurants, for example, staff receive specific training on how to greet customers and to take and complete their orders.

Staff presentation

For all businesses whose employees have direct contact with their customers, it is important that the staff look presentable (Table 1.8). Facial expressions are the most common form of body language and customer service deliverers should always be aware of what their face is telling someone else.

Personal hygiene Staff must maintain a high level of personal hygiene, presenting a clean, neat, tidy and smart appearance at work.

Uniform/own clothes Staff should wear all the parts of their uniform and these should be clean and ironed. If a uniform is not required, staff should be smartly dressed.

Hair Hair must be clean, tidy and the style should be worn as appropriate to the role.

Make-up Make-up must be professional and conservative.

Jewellery Jewellery worn must be consistent with health and safety and professional standards, and must not obstruct or prevent an employee carrying out their duties.

Availability of help desk

Customer support is a major factor in the customer experience and the use of a help desk is one way of creating a positive experience. A help desk service provides information and support to customers, both internal and external. In the past, people would choose which businesses they interacted with based on price or brand. Today, the overall experience is a key factor. Reports suggest that 89 per cent of companies now expect to compete mostly on the basis of customer experience, versus 36 per cent in 2012.

Monitoring customer service

Effective monitoring of customer service – checking the range of methods used and how quickly complaints are dealt with – enables changes to be

Table 1.8 Staff presentation

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made to the service offered to meet customer expectations. The purpose of the monitoring system is to pick up problems as well as customer perceptions of the customer service provision.

• The first and perhaps least efficient way of doing this is to rely on informal customer feedback. This could be found via online sites such as TripAdvisor. Obtaining objective information about customer service is unlikely using this method as only the most vocal customers will comment.

• A more structured way of collecting information is to use customer questionnaires and comment cards. Customers are asked various questions concerning customer services, such as the politeness of staff, their helpfulness and whether a situation was resolved to their satisfaction. However, businesses usually find that only a small number of these questionnaires are returned.

• Staff can provide useful feedback for monitoring and evaluating customer service. They can identify problem areas and common complaints from customers. If used in conjunction with customer feedback, they can give a good indication of the situation.

• Some businesses might use ‘mystery shoppers’ who test the customer service provision by pretending to be a customer with a specific problem. They will provide a report on how they were treated and whether they were satisfied with the level of customer service that they received.

• Another method is to examine the number and nature of complaints or compliments received.

By continually monitoring and evaluating customer service, a business will hope to make steady improvements. A business will try to ensure that its products and services remain good value for money, and that its overall package provides a reliable service to its customers.

Legal and regulatory requirements and ethical standards

All businesses are subject to different forms of legislation and regulatory requirements. Customer service staff must know those that directly affect customers.

The Consumer Rights Act 2015 is the main law that regulates sales transactions. It states that traders must sell goods that are as described and of satisfactory quality. If customers discover that products do not meet these requirements, they can reject them and ask for their money back. They can also ask for a repair or replacement or claim compensation.

ETHICAL STANDARDS (responsibilities for professionals to do what is morally right for the customer) must also be met. Ethics in business are concerned with being able to differentiate between what is right and wrong, and conducting all dealings based on what is right, even though this may bring fewer benefits, at least in the short term. Ethics in customer dealings present your business in a good light and customers

Practise

Have you ever completed a customer questionnaire or comment card?

1 What kind of information did it ask for?

2 How much importance do you think a business places on the information it receives in this way?

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will trust the business irrespective of high prices or minor service lapses. Ethics in customer dealings improve the quality of service and promote positive relationships.

Following correct procedures

In any job role, there are decisions and actions that staff are allowed to take and those they must refer to someone more senior. This protects both the organisation and staff as it prevents junior employees from making serious errors that could have major consequences. For example, a shop assistant may have limited authority on refunds. If the refund is over a certain amount or the item is damaged, then a supervisor may need to authorise the transaction. Both the assistant and the supervisor must work within the organisational guidelines. A supervisor or line manager will be responsible for junior members of staff and must ensure that all policies and procedures are carried out by their staff. Management will have control of a branch. As such, they will be able to authorise exceptional changes to policies and procedures, and make decisions where unusual or difficult issues arise.

Minimising hazards and risks

The Health and Safety at Work Act 1974 stipulates that an employer must protect the health, safety and welfare of all its employees, customers and suppliers. This must be done ‘so far as is reasonably practicable’, which means that employers can claim that the costs are too high to cover a particular risk. It allows the government to issue regulations, guidance and codes of practice that set out detailed responsibilities of the employer on health and safety matters.

Link it up

You will learn more about the legislation that governs customer service provision later in the next Learning aim: How the delivery of customer service is affected by legislation, regulation, ethical and environmental considerations.

Knowledge of competitors’ activities

A detailed knowledge of the MARKETPLACE (the area in which business deals take place), and possible opportunities and threats to a business, is essential. This allows a business to plan for likely issues that could affect the running of the business, its sales and its profitability. Often, this knowledge can be found by observing the behaviour of key competitors, looking for new initiatives or good ideas that can be adapted or improved. This may include offering a broader range to customers whose needs are not currently met by the competition.

Businesses can keep up to date on their competitors in a number of ways.

• Using competitors’ services: such as visiting their premises, looking at their displays if a retail store, or taking part in a service they provide. If a website, businesses might do a ‘dummy run’ of purchasing a product or service to see how well it works.

• Independent research: such as studying their website, analysing their advertisements and promotional materials, and reading press reports on their activities.

• Customer surveys: this could involve talking to competitors’ customers or including questions about competitors in surveys the business sends out.

Have you ever noticed ‘wet floor’ or ‘danger’ signs and ignored them?

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B5 Importance of effective customer service

The outcomes of effective customer service are important to any business.

Reputation and image

As a business builds up its customer base, the hope is that it will begin to achieve a reputation for high-quality products, services, staff and customer service (Figure 1.8). If there are issues, however, and these are severe, then customers may report the business to the local Trading Standards team (run by the local government to investigate customer complaints). If the business fails to sort out a problem, then their reputation will suffer.

Aspects that influence reputation and image

Competitive

Reliable Dependable

Consistency

Trustworthy service Quality products

Value for money

Through o�ering e�ective customer service, a business will retain existing

customers.

As its customer service excellence

becomes known, the business will attract

new customers.

The business will sell more products

and services, increasing its

turnover.

Outcome: the business

becomes more profitable.

Figure 1.8 Aspects of a business that influence reputation and image

Impact on business

Effective customer service has a beneficial impact on a business (Figure 1.9).

Figure 1.9 The impact of effective customer service

Benefits to the business

There are many benefits to providing effective customer service.

• Word-of-mouth recommendations will attract new customers. • Social-media posts will reach a broader range of people and increase

the numbers who can find out about the positive reputation of the business. This will attract even more new customers.

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• It can give a business competitive advantage, which means that customers believe the business offers the best value for money or provides a better service than its competitors.

• When staff feel they are giving customers a positive experience, they are more likely to be happy in their jobs and have job satisfaction and motivation.

• This helps to retain staff and reduces the costs involved in recruitment and training.

Reduce complaints

Effective customer service will lead to an increase in the number of satisfied customers, which leads to a reduction in complaints. The more positive interactions a business has, the more its reputation will increase, which builds customers’ confidence in the business.

B6 Importance of effective follow-up or after-sales service

In this section, you will find out about the features and benefits of an effective follow-up or after-sales service.

Response to complaints

Some complaints and queries are easy to answer, while others may be complicated. Making the effort to find out additional information or to answer a difficult enquiry will impress a customer and may even improve the reputation of the business. The availability of a designated help desk (face to face) or help line (over the phone or online) can help to speed up response times to queries and complaints. This will enhance customer satisfaction and may lead to the business being recommended to others. When customers use a help desk/help line for support, the business is given the opportunity to look at the issues and use information to improve on the quality of goods and services. A help desk/help line can also enhance the skills of those who handle the complaints and queries. Staff members become experts in their areas, thereby promoting prompt responses and resolved issues.

Updating customers

Customers’ expectations can be exceeded when a business proactively provides additional information on products and/or services linked to their initial purchase. This may lead to a further purchase, thus bringing in more revenue. This also provides an opportunity for UPSELLING, which is persuading a customer to buy something additional or more expensive.

Practise

Have you ever had to complain to a business about something?

1 How did they handle your complaint?

2 Did you find the situation frustrating or did they handle it well?

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Follow-up contact

Customer-focused businesses may follow up a purchase with a short phone call or online/text questionnaire to check that customers are happy with their purchase and the service provided. This means that customers can rely on an effective follow-up service no matter how or when they contact the business.

Offering incentives to secure customer loyalty

Loyalty schemes are offered by many businesses. Nando’s uses a simple scheme that gives customers a card on which they can collect ‘Chillies’. Each time a customer visits and spends over £7, they will earn a ‘Chilli’. The more ‘Chillies’ they earn, the bigger the reward they will receive, such as a free meal. This can be tracked both in the restaurants and online.

Monitoring and measuring customer satisfaction

It is important to monitor and measure customer satisfaction as it can improve customer service levels. A business can find out customers’ needs and expectations and from this adjust its customer service accordingly. Monitoring and measuring helps a business to see longer-term trends and to find better solutions for improving processes. Examples of this can be seen in supermarkets where a survey comes up on the touch pad as you enter your pin number. This is also seen in doctors’ surgeries that have touchscreen surveys in the waiting room.

Link it up

Go to Unit 4 to find details of how businesses monitor the impact of their customer service.


Explain one benefit of an effective follow-up service.


What is customer service?

Can you describe the key features of external customers?

List five ways to make the follow-up or after-sales service effective.

How must staff look when providing effective customer service?

What are SLAs and how do they work?

I understand the difference between direct and indirect customer service.

I can explain the different ways in which good service affects a business.

I understand how to put a customer at ease and gain their trust.

I can identify the importance of customer service through each stage of the customer journey.

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C How the delivery of customer service is affected by legislation, regulation, ethical and environmental considerations

C1 Consumer rights

You need to know about the legal responsibilities of a person in the role of a customer service practitioner. You need to know how recent legislation affects customer services, as this gives the consumer some new rights. Businesses need to know their legal, regulatory, ethical and environmental responsibilities in order to ensure that they are adhering to the law and are offering their customers the highest levels of customer service.

Consumer Rights Act 2015

The Consumer Rights Act 2015 became law on 1 October 2015. It replaced three major pieces of consumer legislation: the Sale of Goods Act, the Unfair Terms in Consumer Contracts Regulations, and the Supply of Goods and Services Act. It was introduced to simplify, strengthen and modernise the law, giving the consumer clearer shopping rights.

Under the Consumer Rights Act, all products – whether physical items or digital content – must meet the following standards.

• Satisfactory quality: goods must be of a satisfactory quality when customers receive them, not faulty or damaged. Businesses must consider what a reasonable person would consider satisfactory for the goods in questions. For example, bargain bucket products will not be held to the same standards as luxury goods.

• Fit for purpose: the goods must be fit for a particular purpose, as well as any specific purpose the customer made known to the retailer before they agreed to buy the goods.

• As described: the goods supplied must match any description given, or any models or samples shown to the customer at the time of purchase.

Returns and refunds

Under the Consumer Rights Act, customers have a legal right to reject goods and receive a full refund for any that are of unsatisfactory quality, unfit for purpose or not as described. This right, however, is limited to 30 days from the date of purchase. After 30 days, the customer will not be legally entitled to return the item if it develops a fault, although some sellers may offer an extended refund period. The right to a refund does not apply to certain digital products, such as downloadable music, games or apps. A customer can, however, ask for a digital product to be repaired or replaced if it develops a fault. If this is not possible or is unsuccessful, the customer has the right to receive a price reduction.

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Up to six months after purchase

If a fault is discovered within the first six months after purchase, it is presumed to have been there since the time of purchase – unless the retailer can prove otherwise. If any repair or replacement fails, the customer has the right to reject the goods for a full refund or receive a price reduction if they want to keep the product.

After six months

After the first six months, the burden is on the customer to prove that the product was faulty at the time of purchase. This may require some form of expert report, opinion or evidence of similar problems across the product range. Customers have six years to take a claim to the small claims court for faulty goods in England, Wales and Northern Ireland, and five years in Scotland.

The Consumer Contracts Regulations 2013

The Regulations came into force on 13 June 2014 and apply to contracts entered into on or after that date. They give the customer rights when shopping online, so that they are covered if things go wrong. The specific information varies depending on whether the sale is made at a distance (for example, online or over the phone) or face to face but at a place that is not the trader’s business premises (also known as ‘OFF-PREMISES’) or in-store.

• The customer’s right to cancel an order for goods made at a distance starts when the customer receives the goods and lasts for 14 days.

• The right to cancel a service made at a distance starts the moment the customer enters into the contract and lasts for 14 days.

• If the customer wants to download digital content within the 14-day cancellation period, they must agree to waive their cancellation rights.

• Companies are not allowed to charge customers for items they put in their online shopping basket or that they have bought as a result of a pre-ticked box.

• Customers should get a refund within 14 days of the trader receiving the returned goods or the customer providing evidence of having returned the goods (for example, a proof of postage receipt from the Post Office), whichever is the sooner.

• A deduction can be made if the value of the goods has been reduced as a result of the customer handling the goods more than was necessary.

• There are some circumstances in which the Consumer Contracts Regulations do not give the customer a right to cancel. These include CDs, DVDs or software if the customer has broken the seal on the wrapping, perishable items and tailor-made or personalised items.

Why do you think the six-month timeframe for faulty products exists?

Practise

Use your knowledge of each regulation to write a detailed response that justifies what you think should happen in the following scenarios.

1 A customer buys a television and after 20 days decides that they no longer want it.

2 A customer buys a television and, after four months, it stops working.

3 A customer buys a watch as a present for someone else but the recipient does not want it. The customer bought the watch eight days ago.

4 A customer buys a watch and it stops working after seven months.

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Consumer Credit Act (1974 as amended 2006)

This Act regulates credit card purchases and gives protection when a customer enters into a loan or hire agreement. It also gives the right to a cooling-off period. The legislation covers the following areas.

• The information consumers should be provided with before they enter into a credit agreement.

• The content and form of credit agreements. • The method of calculating annual percentage rates of interest (APR). • Procedures relating to defaulting, termination and early settlement. • Credit advertising. • Additional protection on credit card purchases costing more than £100

and up to £30,000 under Section 75 of the Consumer Credit Act.

Certain information must be provided to the customer before a regulated agreement is made. This includes:

• the nature and duration of the agreement • the identity and address of the creditor or the credit intermediary (if

applicable) • the type and amount of credit or the credit limit • the amounts and timings of repayments. • the rate of interest charges, the APR and any conditions applicable to

the rate • the total amount payable.

At a distance

The Financial Services (Distance Marketing) Regulations apply when customers enter into a credit agreement at a distance – for instance, over the phone or online. These regulations require that certain information is provided in good time before the customer is bound by the contract. This must include:

• the name and address of the creditor • a description of the main characteristics of the credit agreement • the total price payable for the credit • the arrangements for payment • information regarding a right of withdrawal.

Off-premises

If a customer signs a credit agreement off trade premises, at a temporary marketing display stand for instance, they have the right to cancel the agreement within the cooling-off period. In such an event, a notice of the cancellation rights must be included in the copy of the credit agreement and must be sent by post or email within seven days. Customers then have five clear days (not counting the date of receipt) in which to cancel. Cancelling a credit agreement within the cooling-off period means that the agreement and any linked transactions are treated as if they have never been entered into. The loan company must therefore repay all sums which the customer has paid and they must return any goods they have received.

In addition to the five-day cooling-off period, the customer has a 14-day cooling-off period in which to change their mind and cancel a credit agreement. They would have to repay the amount borrowed along with any interest that has accrued up to the point at which they cancel. The 14-day cooling-off period starts from the day the agreement is concluded or from when the customer receives a copy of the agreement if later.

Credit check

When a customer applies for a loan or a credit card, the card company or credit provider may apply to a credit reference agency to check their credit

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history and details. The company or provider will use this information to decide whether to offer a card or a loan. If a customer believes that they have been unfairly denied credit, the customer can ask the credit provider which credit reference agency they used and can request a copy of the credit file.

Impact of non-compliance of legislation or regulations

The consequences of NON-COMPLIANCE (failure to act in accordance with regulations) are very serious and can have a catastrophic effect on a business. If a violation occurs that results in a conviction and a prison sentence for a member of the company, the company as a whole will be sentenced to a term of probation. The company will also be required to set up and maintain an effective compliance programme.

The costs of non-compliance that results in convictions are strategically and deliberately high. The government takes the position that the higher the penalties for non-compliance, the greater the likelihood that businesses will run an effective compliance programme and so comply with the law.

C2 Health and safety legislation

As a customer service practitioner, you need to know about legislation relating to health and safety, and how this affects the delivery of customer service, as well as the impact of non-compliance.

Health and Safety at Work Act (1974)

All workers have a right to work in places where risks to their health and safety are properly controlled. Health and safety is about stopping workers getting hurt at work or becoming ill through work. The employer is responsible for health and safety, but the employee must also do their part.

What employers must do • Through completing a risk assessment, decide what could harm an

employee in their job and make the necessary precautions to stop it.


Explain one way the Consumer Credit Act (1974) protects customers.

Explain two ways the Consumer Contracts Regulations (2013) protect customers.

Explain three ways the Consumer Rights Act (2015) protects customers.

What if...?

A large supermarket that buys in a wide range of products from local, national and international suppliers has a busy customer service desk. The supermarket wants to ensure that it is following ethical and legal requirements.

1 If the business is offering credit to a customer, what must they do first?

2 If the business knows that some items are faulty, can they still sell them in that state? Explain your answer.

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• In clear terms, explain how risks will be controlled and who is responsible for this.

• Work with employees and their health and safety representatives to protect everyone from harm in the workplace.

• Provide the health and safety training needed to do the job, free of charge.

• Give the employee any equipment and protective clothing needed, and ensure that it is properly looked after. Again, this must be free of charge.

• Provide toilets, washing facilities and drinking water. • Have adequate first-aid facilities. • Report major injuries and fatalities at work to the Incident Contact

Centre. Report other injuries, diseases and dangerous incidents online to the Health and Safety Executive.

• Have insurance that covers the employee in case they get hurt at work or ill through work. Display a hard copy or electronic copy of the current insurance certificate where it can easily be read.

• Work with any other employers or contractors sharing the workplace or providing employees (such as agency workers) so that everyone’s health and safety is protected.

What employees must do • Follow the training they have received when using any equipment their

employer has provided. • Take reasonable care of their own and other people’s health and safety. • Cooperate with their employer on health and safety. • Tell someone (their employer, supervisor, or health and safety

representative) if they think the work or inadequate precautions are putting anyone’s health and safety at serious risk.

Effect of legislation on delivery of customer service

Legislation can help protect customers, but excellent customer service requires sustained focus from businesses.

• Legislation establishes customers’ legal and statutory rights and protects them: customer service providers must ensure that they understand what a customer’s rights are and that they always provide customer service that supports these.

• Legislation establishes organisations’ legal and statutory responsibilities: customer service providers have a framework that they must work within when dealing with customers.

• Products and services must meet regulations and comply with legislation: if, for example, a customer is provided with a faulty product the organization must replace or fix it.

• Staff need to follow clear procedures in order to remain compliant: this is good for both customers and businesses. Customers can be assured that they will be treated correctly, according to legislation, and customer service providers have a clear framework to train staff and provide guidance.

• Organisations must have clear procedures in place and staff should be trained in these procedures: staff must be trained in how to deliver effective customer service. As part of this training, it is vital that they understand the role legislation plays in their role.

• Actions required to help ensure safety of self, colleagues and customers: businesses have to ensure that everyone is in an environment that is safe for them and there is no risk of any injury.

Link it up

Look back to the previous section to remind yourself about Consumer rights.

Why should a business care if someone slips and falls at their workplace?

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Impact of non-compliance of legislation or regulations

The effect that non-compliance can have on customer service and reputation can be huge. In addition, a business is only as good as its reputation. If that is lost, it can be very hard for a business to come back. In 2010, for example, BP did not comply with relevant legislation, leading to the Deepwater Horizon oil spill. This had a negative impact on its reputation in the global market.

C3 Ethical and environmental considerations that affect customer service

You need to know about ethical and environmental considerations and their effects on customer service.

Ethical considerations

One of the benefits of maintaining high ethical considerations is increased customer satisfaction, which can lead to repeat business and valuable word-of-mouth endorsements to other potential customers.

• Fairness: avoid selling the customer something that they do not really need, charging them too much or offering them a substandard level of service.

• Respecting equality and diversity: all customers, irrespective of their gender, age, race, ethnic origin, disability, religion or sexual orientation need to be treated with dignity and respect. Showing respect means representatives are paying attention to their customers. Respect also takes the form of listening rather than speaking, and allowing customers to express themselves fully before interjecting. If a customer wants to file a complaint or has another type of grievance, respect is critical for calming negative emotions.

Link it up

For more on the impact of non-compliance, see the previous section on Consumer rights.

Link it up

Look ahead to the section on Equality legislation affecting customer service to find out about the Equality Act 2010.

Practise

1 Find out more about the Health and Safety at Work Act 1974 by visiting the HSE website. Take notes about the Act and what this means to businesses and their workplaces.

2 Find out how visitors to your school/college are warned about hazards. What procedures exist to ensure the safety of any wheelchair users in an emergency evacuation?

• Following approved codes of practice: a CUSTOMER CHARTER sets out the purpose, scope and standards of your business’s commitment to customer service so that both employees and customers know what to expect, what to do if something goes wrong, and how to make contact. A CODE OF PRACTICE (helps workers in a particular profession to comply with ethical and health standards) is a statement of intent and is generally not part of the contract that a service deliverer makes with its customer. Adhering to these will assure a customer of the minimum that a business will offer with regards to customer service.

• Links to charitable organisations and fair trade partnerships: giving back to the community will help to build stronger relationships with existing customers and gain new ones. A 2010 study by Cone Communications revealed that 85 per cent of consumers have a better outlook on businesses that give to a charity that they care about. Giving a regular

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portion of profit to good causes is a great way to rally the support of the customer base and can even help to create new marketing opportunities to expand their reach.

• Using local produce and suppliers: local sourcing is not only cost effective, it can help build community ties. Local sourcing can help to meet customers’ environmental and ethical demands for products closer to home. For grocers, local sourcing has become an established sales strategy with locally produced goods making up an increasing balance of their business.

Environmental considerations

Environmental awareness and positive action form an important aspect of strategy for many businesses. Customer service may affect environmental performance by demanding additional resources. Environmental and sustainability awareness must be continually encouraged so that staff, suppliers, customers and other stakeholders are reminded of their contributions and responsibilities.

• Carbon emissions: carbon dioxide and carbon monoxide in the atmosphere, produced by vehicles and industrial processes. This impacts on customer service as the rise in awareness of the negative aspects of carbon emissions means that customers want products that have a low carbon footprint.

• Waste: materials discarded as they are no longer useful or required after completion of the process. Businesses that have a negative reputation regarding waste will lose customers so businesses have to be mindful of this.

• Recycling: converting waste into reusable material. Customers are recycling more and want packaging that is 100 per cent recyclable.

• Pollution: the contamination of air, water or soil by substances that have harmful or poisonous effects. Businesses have to minimise their pollution to maintain or improve their reputation.

• Size of environmental footprint: this measures the land and sea area needed to produce resources that we consume. This includes our food, clothes, the fuel we use for our cars and building materials for our homes. The larger the footprint, the more harm we are causing to the environment. Customers increasingly want to buy products that are locally sourced so they have a smaller environmental footprint.

Reducing their carbon footprint is one way for businesses to attract customers.

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Effects on customer service

• Procedures for providing customer service must demonstrate an understanding or appreciation of ethical considerations. Businesses must not only adhere to laws and legislations but also consider ethical issues such as where and who is producing their goods. Is it right to sell items that are made by child labourers in poor conditions?

• Policies and procedures may need to be changed if an organisation is not compliant. This will show that the business is willing to adapt their practices.

• Staff should be trained to improve their understanding of ethical and environmental considerations, and to apply good practice when providing customer service.

C4 Equality legislation affecting customer service

Treating all people fairly, whether they are a customer or an employee, is vital to the principles of ethical business. You need to know about employee’s legal rights and responsibilities, and the effect of these on customer service.

Equality Act 2010

The Equality Act protects individuals from unfair treatment and promotes a fair and more equal society. It protects against discrimination, harassment and victimisation. Employers and service providers are legally responsible for treating everyone, irrespective of age, disability, race, religion, gender, ethnic origin, sexual orientation, being pregnant or with a child, or being married or in a civil partnership, with equality, dignity and respect (Figure 1.10).

An employer must consider making ‘reasonable adjustments’ for a disabled employee or job applicant. Men and women in full-time or part-time employment have a right to equal pay, which in law means ‘no less favourable’ pay, benefits and terms and conditions in their employment contracts where they are doing equal work.

Figure 1.10 Equality in the workplace

The Working Time Regulations 1998

The Working Time Regulations provide employees with the following rights for employees.

• A limit of an average of 48 hours a week on the hours a worker can be required to work, though individuals may choose to work longer by ‘opting out’.

• Paid annual leave of 5.6 weeks a year. • In any 24-hour period, a worker should have 11 consecutive hours’ rest. • A 20-minute rest break if the working day is longer than six hours.

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• One day off each week. • A limit on the normal working hours of night workers to an average of

eight hours in any 24-hour period, and an entitlement for night workers to receive regular health assessments.

Employment Rights Act 1996

The Employment Rights Act sets out the rights of employees in situations such as dismissal, unfair dismissal, parental leave and redundancy. The main terms between the employee and employer must be recorded in writing and given to the employee within two months of starting employment. The Act gives both the employee and the employer rights in the following areas.

• Statements of employment particulars: this sets out the main responsibilities of the job, including the job description, pay, hours of work and any disciplinary or grievance procedures the employer has.

• The right to itemised pay statements: these must be in writing and must contain details of gross earnings, net pay, fixed and variable deductions of gross pay, where different parts of the net amount are paid in different ways and how holiday pay is calculated if this is included as part of the wages.

• Protection of wages: an employer cannot make a deduction from the wages of an employee unless the worker has previously signified, in writing, their consent to the deduction or the deduction is authorised within the employee’s contract.

• Right to time off for ante-natal care: pregnant employees are entitled to reasonable paid time off for ante-natal care. Fathers and partners of pregnant women are entitled to unpaid time off to attend two ante-natal appointments. Adopters are allowed time off for adoption appointments.

• Right to maternity and paternity leave: when employees have a baby, they are entitled to a year of maternity leave for a mother and two weeks of paternity leave for a father.

• The right not to be unfairly dismissed: in certain situations, employees may be able to take legal action if they are dismissed. Dismissal could be unfair if the employer does not have a good reason for the dismissal or if the company’s formal disciplinary or dismissal process has not been followed.

Effects on customer service

Most businesses deal with a variety of customers, and in doing so, there is a range of policies that have to be followed when it comes to customer service.

• Complaint and dispute procedures are very important as they are crucial for the development of the organisation.

• Confidentiality policies have to be followed at all times, as customer service staff deal with confidential data at all times.

• Equality, diversity and discrimination policies are very important as staff deal with clients from a diverse background.

• Every member of staff, including customer service staff, has to thoroughly abide by the data protection legislation.

• Special considerations and reasonable adjustments have to be made for someone with a disability. Areas such as improved access arrangements, audio induction loops, literature provided in larger type or Braille, interpreters, translators, being patient and offering additional support will need to be thought through.

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• The service provided to customers must be fair and equal. This means that through staff training and education, all employees must be made aware of the company’s equality documentation. Staff may also receive some specific customer service training around sensitivity. The business will regularly monitor all their policies to ensure that they are compliant.

C5 Legislation affecting the use and storage of customer information

Businesses need to hold a range of information on customers, staff and the business itself. It is essential to ensure that this information is protected and as secure as possible.

Principles of the Data Protection Act 1998

The Data Protection Act requires that information gathered by businesses meets the following standards.

• Obtained and processed fairly and lawfully: a business must gain permission to use any collected data and let the individual to whom it relates know exactly what it will be used for.

• Obtained only for specific purposes: the collected information must only be held and used for the reasons given. If a business wishes to use certain information for purposes beyond the original agreement, they must gain further permission from the individual.

• Adequate, relevant and not excessive: businesses must collect only the data that they need to know and not additional data that may be useful to them in the future. This also applies when a customer service provider is taking a customer’s details.

• Accurate and up to date: businesses must ensure that their data is true. If any suspicion exists that the information is inaccurate, they must check with the individual.

• Held no longer than is necessary for the registered purpose: businesses are only permitted to keep old files if really needed or if required by law.

• Processed in accordance with the rights of the individual: businesses must allow an individual access to the data that they are holding about them. It is the individual’s data and they have a say in how it is used.

• Surrounded by proper security: businesses must ensure that measures exist to keep the personal data they are responsible for out of the wrong hands.

• Cannot be transferred to countries outside the EU without consent: businesses must keep their customers informed. They must not store customers’ data without their specific consent. This will affect multinational businesses as they are not allowed to share customers’ details with all areas of the business.

Practise

Work in groups.

1 Research businesses that have been prosecuted for not adhering to the laws and regulations about storing customer data.

2 What happened to these businesses as a result of this?

3 What happened to their reputation?

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What are consumer rights?

Can you describe the key features of the Consumer Rights Act 2015?

Can you describe the key features of the Health and Safety at Work Act 1974?

What is the impact of non-compliance with legislation on customer service?

I can list the ethical considerations that affect customer service.

I understand the key principles of the Data Protection Act 1998.

I can explain how equality legislation affects customer service.

I can identify the environmental considerations that affect customer service.


Assess the importance to a supermarket of ensuring that they trade ethically.

D1 Barriers to providing effective customer service

There may be barriers in a business that might limit the provision of effective customer service. They may include policies and procedures, staff issues, lack of training or poor communication.

Unmanageable and restrictive organisational policies and procedures

Businesses must make it easy for customers to get their complaint resolved through the channel of their choice. Businesses that force their customers to use difficult web forms or expensive phone lines to contact customer services are discouraging customers from accessing the help they need to resolve any problems quickly, before they escalate.

Inadequate customer service systems or procedures

Even in today’s 24/7 web-enabled world, customers still value the human touch. Introducing some human interaction at the right time can divert the

D Customer service and the customer complaints process

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customer from being annoyed to feeling more positive in seconds. Being unable to get a complaint or enquiry resolved at the first point of contact is one of the biggest drivers of dissatisfaction and why many customers turn to social media. Trying to resolve a complaint in such a public forum only magnifies the exposure a single complaint brings. Businesses must be willing and able to give unhappy consumers their immediate attention.

Staff problems

Around 80 per cent of customer service issues concern the basics of the product or service. They do not require any special skill or knowledge or even investigation on the part of the service deliverer. Overworking the problem can be as damaging as underworking it. Good knowledge of the product or service, attention to the customer’s explanation of the issue and some degree of intuitiveness will help the service deliverer to see the real scope of the problem and give the fastest and the simplest solution. Using appropriate language throughout and recognising which problems they can handle themselves and which they have to pass on is essential. Knowing the appropriate way to rectify the problem, whether it is a refund, repair or replacement will contribute towards reaching a successful conclusion.

Lack of customer service training

How a customer service deliverer approaches a client and their attitude towards the client is extremely important. It is often the case that the quality of a personal interaction between the service deliverer and the customer has a greater effect on how a customer evaluates their experience than any technical aspect of how support is being offered. A global survey conducted by Genesys showed that 69 per cent of customers say that competent customer service representatives are most responsible for a happy customer experience.

Have you ever experienced anger while trying to make a complaint?

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Poor communication

Customers desire authenticity and dislike overly scripted service. Many businesses, unfortunately, move into scripted communication with their customers because it is easier for them. Companies also do not trust the discretion of their employees and how they will handle the customer’s problem.

Long hold times are one of the most frequent causes of complaint and dissatisfaction by customers. While this seems easy to fix, many businesses still overlook the importance of fast reaction to a customer service request. Conversely, there will be occasions when the customer’s poor communication of the nature of the problem delays the solution.

D2 Types of complaint

Handling customer complaints is an important part of providing outstanding customer service. To achieve this, you need to know about different types of issues, including with staff, products, services, or with the organisation as a whole.

Issues with staff

It is essential that all staff that can be called on to be service deliverers are appropriately trained to interact with customers. If there is a complaint about a member of staff, then the customer should be told of the customer complaint procedure. Issues that customers may have with staff include:

• lack of knowledge • poor service delivery • poor attitude • poor behaviour.

Issues with products/services

The product/service must be as advertised and in a saleable condition. If there are any issues, the staff must handle the complaint or problem as quickly and successfully as possible. Issues with products or services might include:

• the quality of the product or service – this might not be high enough • delivery problems, such as lateness • the product itself – it might be damaged or faulty • the price – the product or service might have been sold at the wrong

price or be thought too expensive.

Issues with the organisation

In all customer complaint situations, the customer service deliverer must know the company’s procedures for recording and reporting a complaint and follow these procedures correctly. If the complaint is one surrounding a pressure group, then it may have to be escalated to head office. Some issues might include:

• procedures • policies • effect on community and environment • use of fair trade/child labour.

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D3 Best practice for dealing with complaints

Careful complaint management can save a business unwanted costs. For example, negative word-of-mouth publicity from dissatisfied customers leads to lost revenue and a need to invest in more advertising to attract replacement customers. Complaints offer businesses an opportunity to correct problems. They also provide constructive ideas for improving products, upgrading services or modifying promotional material and product information.

You need to know about the best practice for dealing with different types of complaint.

Features

Consistent handling of complaints

A well-planned system for screening and recording complaint data can provide a business with answers to many important questions. Customers will need to know where and how to file complaints or make inquiries. A system for record-keeping needs to be developed and adhered to. All customer service operatives must know the company’s procedures for recording and reporting a complaint and follow these procedures correctly. They must know which problems they can handle themselves and which they have to pass on to a manager/supervisor. They must also know the appropriate way to rectify the problem, whether through a refund, a repair or a replacement.

Standardised organisational processes

When a complaint comes into a business, all staff must be able to find out the process that the complaint will go through (Figure 1.11). A complaint management system must be visible and accessible in order to serve customers and accomplish company goals. Management, sales, service and public relations personnel should all co-operate to make the complaint system accessible to customers. Periodically, complaints may be analysed and summarised.

Resolved in a manner

consistent with company policy

InvestigatedAcknowledgedProcessed

and recorded

Complaint received

Follow-upReport

prepared and filed

Figure 1.11 A standard complaints process

Set procedures

Set procedures are agreed with the customer and the organisation. These include timescales for resolution, who will be involved and external/third-party agencies for resolution (for example, Citizens Advice, OMBUDSMEN

(officials appointed to investigate individuals’ complaints against a company or organisation, especially a public authority), or the FINANCIAL

CONDUCT AUTHORITY (a financial regulatory body in the United Kingdom that focuses on the regulation of conduct by both retail and wholesale financial services firms)). If complaints cannot be resolved directly between the customer and retailer or manufacturer, they should be referred to a third party. Third-party mechanisms use the services of unbiased individuals or panels to resolve disputes through conciliation, mediation and arbitration. Third-party dispute resolution is advantageous to a

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business because it gives them an economical and fair complaint resolution without government regulation or legal action. By submitting disputes to a neutral decision-maker, a business can demonstrate goodwill through its willingness to seek unbiased solutions to consumer complaints.

Lines of responsibility and accountability

These should be clearly set out and understood by well-trained and informed staff. Customers are likely to turn first to the place of their purchase to complain. Resolving complaints at this level avoids unnecessary customer frustration and preserves the direct buyer/seller relationship. There should be clearly defined roles and all staff should be aware of who fulfils these roles.

Consumer legislation and customer statutory rights

Businesses need to ensure their standard terms of business and marketing and sales practices comply with consumer legislation. They need to ensure their contract terms are enforceable, to avoid legal and regulatory risk, and ensure that their liability to customers is effectively managed.

D4 Reasons to use a customer complaints and feedback process

Research into complaint behaviour reveals that only a fraction of dissatisfied customers complain to a business. The business, therefore, has little opportunity to correct the problem. There is evidence that some customers do not complain because they are sceptical about a business’s willingness or ability to resolve disputes fairly. Customers simply withdraw their custom and criticise the company or the product to others.

Customer complaints and feedback are important to a business because they provide businesses with insight that they can use to improve their business, products and/or overall customer experience.

Customers will feel reassured and confident

Customer feedback offers a direct line of communication with customers so businesses can determine whether they are happy with the product or service before they lose the customer’s business. A happy customer is a retained customer. By using customer complaints as a method of finding out what can be improved, businesses are kept up to date. If a customer becomes frustrated or thinks that a competitor is better, they will look at alternative options and may stop buying the products or services from the business. If a business can create a consistent, personalised experience that is better than that provided by their competitors, customers will remain loyal and will recommend the business to friends and family.

Organisation benefits

British Airways’ customer-relations department can claim to be a true champion of the customer. The number of customers who remain customers even after making a complaint has more than doubled, while its


Explain why a large supermarket requires a customer service desk.

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return on investment (the value of the business saved plus increased loyalty and new business from referrals relative to the department’s total costs) has risen by 200 per cent. While British Airways’ employees are never happy to be part of poor customer service, they are keen to hear about it so that they can do all that they can to ensure that it never happens again.


What is meant by ‘the complaints process’?

Can you describe five barriers to communication?

What are the differences between having well-trained staff handle customer complaints rather than poorly trained staff?

Can you explain why customers make complaints?

What are Ombudsmen and what do they do?

I understand the benefits to an organisation of using a customer feedback process.

I can explain the role of the Financial Conduct Authority and what it does.

I can explain the best practice for dealing with a complaint and understand what I would need to do in that situation.

Practise

Imagine that you work at a local supermarket. Discuss the strengths and weaknesses of using customer complaints to focus your customer service. Consider the reliability and percentages of complaints.

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WORK FOCUS

Imagine that you work in a call centre for a mobile phone network.

Here is a list of what the customer agent should and should not do during the call.

Do…

• have an in-depth knowledge about the company’s products and services

• make it a two-way conversation. Allow the customer to speak without interruption

• focus on the customer rather than selling

• get tips from an experienced or a successful colleague.

Don’t…

• lose your patience. You must remain professional

• rely on a script

• keep customers on hold for a long time

• say, ‘I have no idea’.

HANDS N

Write a role play that explains the needs of an internal customer (as a customer, not an employee). This should include a recognition of unstated needs, where a customer service assistant can approach a customer to offer assistance without the customer asking for the assistance.

Ready for work?

New photo file to come. Adjust depth of box when inserted.

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Getting ready for assessmentThis section has been written to help you to do your best when you take the external examination. Read through it carefully and ask your tutor if there is anything you are still not sure about.

About the testThis unit is assessed externally, using an onscreen test set and marked externally. The test must be taken under examination conditions. There are four types of questions: multiple-choice, short answer, calculations and longer answer questions. You must answer all of them.

• The number of marks for each question is shown in brackets.

• There will be an onscreen notepad that you can use to make notes during the test. These notes will not be marked.

• There will be an accessibility panel on every screen to allow you to zoom in or out and apply different colours.

• An onscreen calculator is provided for questions that require calculation.

Understanding the questionsIt is important that you understand what each question is asking you to do. Most questions contain ‘command words’ such as ‘describe’ or ‘explain’. These words give you a hint about how to answer the question. The table below shows some of the command words that could be used in this assessment. (This list is not exhaustive. It contains the key command words and not all of them will necessarily be used in each test. Ask your tutor for the full list as it appears in the unit specification.)

Command word Definition

Analyse Examine in detail the meaning or essential features of a topic or situation. Break it down into the different parts and say how they are related and explain how each one contributes to the topic or situation.

Assess Consider a variety of factors that apply to a specific situation or identify those that are most important or relevant to arrive at a conclusion.

Calculate Use maths to determine the answer.

Complete Provide the items necessary to make a list.

Discuss Consider different aspects of the topic, how they relate to each other and how important they are.

Evaluate Use different information to consider aspects such as strengths and weaknesses, advantages or disadvantages, alternative actions, and relevance or significance, and come to a conclusion.

Explain Show you understand the subject and its suitability for purpose. You need to give reasons to support an opinion, view or argument with clear details.

Give Provide examples, justifications and/or reasons in context.

Identify Indicate the main features or purpose of something.

Match Choose a thing that corresponds to another, to make a similar or complementary pair.

Name Give the term by which the object of the questions is identified.

Outline Provide a general description showing the essential features of something but not the detail.

State Give a definition or example.

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Sample questions and answersQuestion 1This question tests your knowledge of different types of customer.

This question is testing your ability to answer multiple-choice questions which use the command words give, match, outline, state or identify. The number of options you need to select will be stated. For example, select one option.

Identify which of these is an external customer for a business. (1 mark)

Select one option.

• A sales assistant

• A finance manager

• A customer in the shop

• A human resources assistant

Sample answer

A customer in the shop.

Verdict

Clients are external to the business and are therefore external customers. The other three options are internal customers. Make sure you know the difference between external and internal customers and can give examples of each.

Question 2In some questions, you will be given a scenario on which the questions are based. In this extended-answer question, you need to ensure that you read the scenario as well as the question carefully. Make sure that you answer the question given once you have understood the scenario.

In this four-mark ‘explain’ question, you need to identify two methods of finding out about competitor activities and expand each of them. If you are making two or more points, make sure that these are different.

Scenario

Bluebell department store is a large business that employs 250 well-trained staff. Though it has many competitors, it is a successful business with a strong reputation for customer service. Over the last few years, however, Bluebell’s competitors have introduced new benefits for their customers such as a reward scheme and personal shoppers. As a result, Bluebell has seen a reduction in profits. Management is now reviewing the store’s customer service and is considering introducing a loyalty card scheme and employing extra staff at weekends.

Explain two ways in which Bluebell could keep up to date with knowledge of its competitors’ activities. (4 marks)

Sample answer

Bluebell can monitor competitors’ activities by doing research on the internet and by looking at their websites. This will inform them of exactly what their competitors are offering and at what price. A second way is that Bluebell could conduct some primary research by making a ‘mystery shopper’ visit to see first-hand what the competition is selling.

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Verdict

This is an effective answer as there are several steps that have been given in a logical argument.

The following points would all have been suitable answers.

• Visit their website/order their brochure/catalogue to see current prices and promotions.

• Look at current advertising campaigns/promotions to see their effectiveness.

• Make a ‘mystery shopper’ visit to keep up to date on what your competition is selling.

• Ask customers about the competitors to see their satisfaction levels.

Question 3 This question assesses your knowledge of the consequences of not handling customer service complaints promptly and effectively.

Read the question carefully and highlight any key words. In your answer, you need to develop a line of argument using linking words, such as therefore, so that, because. Start your answer by making a relevant point and expand on this using two or three steps in a line of argument. Avoid moving on to new points until the point you have made has been fully developed.

You will need to present two arguments from different viewpoints. For example, one advantage and one disadvantage or one argument for and another against. You need to make judgements and write a conclusion only for an ‘evaluate’ question.

When writing longer answers, you might find it useful to sketch out a plan before you begin writing so that you don’t miss any points.

Scenario

A furniture factory has recently received a number of complaints about missing parcels in their deliveries. They have also been told that they are slow to pick up the phone and answer emails and that the missing parcels are not being replaced quickly enough. Management at the factory are concerned this could affect their reputation if it reaches social media and are looking at the complaints carefully.

Discuss the consequences to a business of not handling customer service complaints promptly and effectively. (6 marks)

Sample answer

At some point, everyone in business has to deal with an upset customer. The challenge is to handle the situation in a way that leaves the customer thinking positively of your business. Lots of businesses have gone out of business because of poor customer service. More than ever, customers want to be treated with respect. If customers are not happy about something then they will complain. These complaints could be done in person or, as is more likely these days, publicly over social media. This is where a fast resolution to any complaint is essential as, without it, the damage of the complaint will spread far and wide.

Poor customer service has a negative impact on any type of business. If the factory’s customer service issues are not resolved, promptly and effectively, then there could be a number of negative repercussions. These could include the loss of loyal customers, the loss of potential customers, loss of profit, loss of reputation and the loss of employees. The factory would want to avoid these, at all costs, so should have a process in place that ensures that all complaints are handled quickly

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and, wherever possible, effectively. They might want to look at putting processes in place that have complaints handled in a certain timeframe. A well-handled complaint can actually increase loyalty. Customers who have had their complaint handled well are more likely to buy from the factory again. A well-handled complaint will also be an opportunity to impress the customer with the factory’s sense of responsibility in business.

Verdict

This is an effective response as a range of suitable aspects is described. The majority of points made are relevant and there is a clear link to the topic of the question and use of the scenario. There is recognition of the relative importance of issues raised in the question.

Where such a strong response is not provided, credit can be gained for giving suitable examples of real businesses that have suffered the consequences of not handling customer service complaints promptly and effectively.

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draftenvironment - pearson education · 2019. 6. 21. · external factors such as legislation can...

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