Logistics and Customer Service.

Customer service policy is an on-going process of increasing both the quality and number of links between the manufacturing organization and the customer. The whole emphasis in today’s service intensified businesses are to increase a series of both human and information based technological relationships between customer and the organization so that better customer services and satisfaction to the customer can be realized.

From a more comprehensive viewpoint that regards customer service as the combination of the firm’s activities, performance standards, and philosophy, the elements of customer service can be grouped into three distinctive phases of the interface between the firm and its customers, as

• Pre-transaction elements – They are characterized by nonroutine, policy-related activities that require management input due to their significant impact on product sales.
• Transaction elements – They are those activities that are most commonly associated with customer service. Therefore, when emphasis has been placed on customer service,
• transaction elements receive the most attention from management.
• Post-transaction elements – Post-transaction elements of customer service focus on post-sales support.

Customer Relationship

To keep customers, the firm should make customers trust its service capabilities and make them believe it can deliver its services as promised. Customer trust cannot be built without providing the customers with a satisfying service experience in their first transaction. Because customers are more likely to be satisfied when their needs and preferences are met, the firm should learn more about its customers’ needs and preferences by communicating with them over the long term. Imagine walking into a local restaurant and the waitress says hello and calls you by your first name. The waitress remembers exactly what your favorite drink is, how your steak should be cooked, and which dessert you prefer. You would always appreciate such personalized service and are highly likely to return to the same restaurant in the future. Likewise, customer relationship management (CRM) is at the core of customer service.

Customer Service Elements

Different firms and industries attach varying degrees of significance to customer service and consequently include different lists of categories in conceptualizing customer service. For example, Simon has identified five elements essential to customer service: anticipation, accuracy in problem identification, completeness, responsiveness, and problem-solving efficiency. These elements merely represent part of the firm’s capability to predict and handle customer complaints, but not ways to enhance product sales, customer loyalty, and product value. To broaden the scope of customer service, Hopkins and Bailey have incorporated the physical distribution perspective into a wide range of marketing perspectives. Their categories of customer service include the following:

• Pre-sales and post-sales distribution services
• Technical service
• Product maintenance and repair services
• Service support for distributors and dealers
• Management aids to industrial/business customers

Customer Acquisition

Establishing customer relationships begins with customer acquisition. Customer acquisition aims to attract new customers, build their trust in the company’s product offerings and service capabilities, and bring back those customers for future business opportunities. Because it takes two to tango, the success of customer acquisition rests on the firm’s ability to provide loyal customers with economic incentives and social bonds strong enough to keep them satisfied and to recover the cost of winning new customers. Examples of economic incentives that can be offered to new customers include affinity programs (e.g., university alumni association with member benefits), payment of commissions to loyal customers for their referrals, and promotional offers (e.g., discounts, coupons, gifts) for customers who have switched from the competition.

Customer Retention

Whereas customer acquisition represents the firm’s effort to establish customer relationships, customer retention represents the effort to enhance customer relationships. In other words, customer retention aims to strengthen relationships with existing customers by increasing the value of customer loyalty to the firm. It is known to be true that relationships become more profitable to the firm over time because customers are less likely to switch to other firms once their bonds with the particular firm grow over time.

A key to successful customer retention is the firm’s ability to increase the level of social bonding or psychological attachment with the firm, thus leading to the customer’s long-term commitment to the firm.

Customer Segmentation

Customer segmentation refers to the categorization of a heterogeneous customer base into a number of smaller, more homogeneous subgroups with similar needs, behaviors, and values. There are several ways to segment the customer base, including geographic, demographic, lifestyle, and behavioral. Geographic segmentation is based on the national, regional, and political boundaries that separate certain groups of potential customers from the others. For example, customers living in densely populated areas with high fuel prices and narrow streets such as Japan, Korea, and Taiwan tend to prefer small compact cars, whereas their counterparts living in sparsely populated areas with low fuel prices and wide roads such as the United States tend to prefer large gas-guzzlers. As such, different marketing strategies intended for different foreign markets should be developed to meet different customer needs. In addition to the geographical characteristics, demographic profiles are often used to segment the customer base.

Manufacturing/logistics issues at the interface for better customer service are as follows

• Forecasting Demand: Product forecasting in the short to midterm contribute to the process of ensuring the availability of stock for customers. This includes the use of distribution requirements planning wherever appropriate. For the longer term, forecasting at the product group level is crucial for manufacturing capacity and flexibility decisions
• Customer and Supplier System: Organizational systems will need to be directly related to the issues of how to bind the customer more tightly to the organization and how effectively integrate suppliers into the overall supply chain with the objective of enhancing customer oriented service
• Plant Configurations: Both cost structure and service levels impact heavily on location, nature and operating performance of manufacturing facilities, central warehouses and branch warehouses. In the longer term, and in conjunction with other factors (systems, supplies), the plant/branch configuration is a major structural input to reducing overall supply chain costs

A need for reorganization of the logistics (supply chain) network from supplier through to customer will be required, once the associations between manufacturer and the customer and manufacturer and the supplier are complete, for two reasons

• Technology available, particularly information technology, will allow certain plant/branch configurations, previously ruled out, to be feasible
• The cost of the network will be required to reduce (in real terms) continuously

A key feature of this process will be the requirement of involving in an appropriate manner both customers and suppliers. This will be new ground for many organizations and will force a re-evaluation of values and mission in some circumstances.

Considering the growing role of customer service in the company’s profitability, customer service should be at the forefront of the company’s business strategy. Regardless of the specific type and packages of services to be rendered to customers, a winning customer service strategy should include the following:

• Customers’ perspective with respect to their needs, preferences, and judgment of the importance of certain service attributes or service bundles
• Systematic and objective measurement and monitoring of service performance relative to competitors
• Cost/benefit analysis (or return on investment) associated with service improvement initiatives
• Assurance of efficient and timely flow of information within the company, between the company and its customers, and across the supply chain (or among the partnering companies)

Generally speaking, a winning customer service strategy can be formulated by taking into account the following service dimensions:

• Customer selectivity—Some customers are more costly to service than others due to their inherent differences in character, nature, and special needs. For example, a healthcare insurance provider may shun smokers, obese people, senior citizens, and individuals genetically susceptible to diabetes and cancer, while targeting potential clients (e.g., nonsmokers) with low health risks. Likewise, some insurance companies may deny auto insurance to reckless drivers with a frequent accident history or may charge hefty insurance premiums to those drivers. Some third-party logistics providers may be reluctant to serve potential customers with less than a million-dollar account. Instead, they may want to focus on key customers with a lot of individual attention. Similarly, many airliners treat frequent flyers differently by prioritizing their boarding and upgrading their seat assignments.
• Service mix/portfolio—As discussed earlier, service quality is shaped not only by service products but also by other ingredients such as physical products, service environments, and service employees. Therefore, a service provider needs to determine which service mix best reflects the nature of the services it wants to provide in the particular business sector. For example, a coin-operated laundry would rather make an investment in upgrading washing machines and dryers than increasing the onsite assistance due to limited direct contact with its customers. On the other hand, tax consulting services and mortgage lending services, which require a high level of direct contact with their customers, may need to focus more on offering professional advice for each customer’s unique financial situation and giving personalized attention to the customer than on upgrading facility amenities.
• Mass customization—With the growing market base resultant from the globalization of business activities, customization on a mass scale is nothing new to many companies that offer a variety of service bundles. Ever since automobile manufacturers such as General Motors (GM) started offering a wide variety of car configurations (e.g., engine size, color, and other optional packages) to its customers, mass customization strategy has been applied to other sectors, including the service sector. For example, a regional cable operator often offers a wide choice of service bundles, such as access to basic television channels, premier movie channels, pay-per-view options, broadband Internet, caller identification, and long-distance telephone services, that cater to the different needs of customers at different prices.

Customer Relationship Management (CRM)

Customer relationship management (CRM) is a model for managing a company’s interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support.

Characteristics of CRM – The modern environment requires one business to interact with another via the web. According to a Sweeney Group definition, CRM is ―all the tools, technologies and procedures to manage, improve, or facilitate sales, support and related interactions with customers, prospects, and business partners throughout the enterprise‖. It assumes that CRM is involved in every B2B transaction. Despite the general notion that CRM systems were created for the customer-centric businesses, they can also be applied to B2B environments to streamline and improve customer management conditions. B2C and B2B CRM systems are not created equally and different CRM software applies to B2B and B2C conditions. B2B relationships usually have longer maturity times than B2C relationships. For the best level of CRM operation in a B2B environment, the software must be personalized and delivered at individual levels.

Well-designed CRM includes the following characteristics:

• Relationship management is a customer-oriented feature with service response based on customer input, one-to-one solutions to customers’ requirements, direct online communications with customer and customer service centers that help customers solve their questions.
• Salesforce automation: This function can implement sales promotion analysis, automate tracking of a client’s account history for repeated sales or future sales, and also coordinate sales, marketing, call centers, and retail outlets in order to realize the salesforce automation.
• Use of technology: This feature is about following the technology trend and skills of value delivering using technology to make ―up-to-the-second” customer data available. It applies data warehouse technology in order to aggregate transaction information, to merge the information with CRM solutions, and to provide KPI (key performance indicators).
• Opportunity management: This feature helps the company to manage unpredictable growth and demand and implement a good forecasting model to integrate sales history with sales projections.

Types of CRM

• Marketing: CRM systems for marketing track and measure campaigns over multiple communication channels, such as email, search, social media, telephone and direct mail. These systems track clicks, responses, leads and deals.
• Customer service and support: CRM systems can be used to create, assign and manage requests made by customers, such as call center software which helps direct customers to agents. CRM software can also be used to identify and reward loyal customers over a period of time.
• Appointments: CRM systems can automatically suggest suitable appointment times to customers via e-mail or the web. These can then be synchronized with the representative or agent’s calendar

Implementing CRM to the company: There are numerous steps company should follow while implementing CRM system. The project manager is responsible for the success of this process. Some conditions need to be checked by the company before the starting implementation directly:

• Make a strategic decision concerning CRM desired goal: to improve or to change the business processes of the organization?
• Choose an appropriate project manager: usually it is IT-department that is responsible for CRM system implementation. However, it is reasonable to hire the manager with a Customer Service/Sales and Marketing business focus as there are a bunch of decisions that are related rather to the business processes rather than to the hardware, software or network.
• Executive sponsorship: provide the top management support and systematic introduction to the project manager
• Project team commitment and training: make sure team members have enough time and authority to complete project tasks and are committed to its success
• Define KPI metrics
• Use phased approach: work towards long-term enterprise with a series of smaller, phased implementations

CRM software: Selecting a CRM program means finding the software that fits the company’s needs. All the CRM software comes many features and tools, and despite the fact that many of CRM product offer similar feature sets, there are some unique tools in each one. Programs can be divided into categories by the following criteria: Features mean how well it integrates with other applications (ex. Outlook, Gmail, iCall etc.) and how accessible information is. It covers everything from calendar alerts and to-do lists to mobile access and synchronization capabilities. Contact information ranking outlines the program’s ability to store specific information for each contact. Business world is a fast- paced so managers are needed to be able to access customer’s information quickly. Sales and marketing tools designed to help and maintain current clients and gain new ones. Important that this tools help find campaigns with positive ROI and those that are not performed. Ease of use is about app’s design. Programs are checked on clean, quick navigation and easy-to-locate of the most important items. Help and support is about what support CRM software manufacturer provides for their product.