Code of Ethics Planning Process Model

ANSWERS

KEY TERMS churn moment of truth code of ethics Planning Process Model contact points relationship management contingency plans relationship-rating points cost of dissatisfied customers relationship-rating point scale customer loyalty Technical Assistance Research Program (TARP) customer relationships total quality management (TQM) and continuous customer retention improvement (CQI) customer satisfaction trust ethical behavior touch point

1. A systematic approach to identifying and quantifying best practices in an organization and/or industry in order to make improvements in effectiveness and efficiency. Answer: total quality management (TQM) and continuous quality improvement (CQI)

2. The feeling of a person whose needs have been met by an organization. Answer: customer satisfaction

3. Instances in which a customer connects with a service provider or some other aspect of an organization. Answer: contact points

4. Values mentally assigned by customers to a service provider and his or her organization. Answer: relationship-rating points

1 5. The mental rating system that customers apply to service and service providers. Answer: relationship-rating scale

6. The process of a customer switching between products or companies, often simply to get a better price, rebate or warranty. Answer: churn

7. A phrase popularized by Scandinavian Airline System President Jan Carlzon in his popular 1987 book of the same name. Answer: moment of truth

8. Five-step process for creating contingency or backup plans to better serve customers when problems arise or things do not go as expected. Answer: Planning Process Model

9. Backup systems or procedures that are implemented when regular ones break down or fail to function as intended. Answer: contingency plans

10. A set of standards, often developed by employees, which guide the conduct of all employees. Answer: code of ethics

11. Expected performance that sends a message of being trustworthy and honest, and having the intent to provide quality service. Answer: ethical behavior

12. An Arlington, Virginia, based firm specializing in customer service research studies for call centers and many other industries. Answer: Technical Assistance Research Program (TARP)

13. Phrase that refers to any formula used to calculate the cost of acquiring a new customer or replacing a current one as a result of having a dissatisfied customer leave an organization. Answer: cost of dissatisfied customers

14. The ongoing effort by an organization to meet customer needs and desires in an effort to build long-term relationships and keep them for life. Answer: customer retention

15. The practice of building and maintaining ongoing friendships with customers in an effort to make them feel comfortable with an organization and its service providers and to enhance customer loyalty. Answer: customer relationships

2 16. The process of continually monitoring interaction with a customer in order to strengthen ties and retain the customer. Answer: relationship management

17. Term used to describe the tendency of customers to return to a product or organization regularly because of the service and satisfaction they receive. Answer: customer loyalty

18. Key element in cementing interpersonal relationships. Answer: trust

19. Any instance in which a service provider or organization (e.g., face to face, in writing, through technology) comes in contact with a customer; it is an opportunity to influence customer loyalty and enhance the customer relationship. Answer: touch point

3 ASSESSMENT CHECK Learning Objective 1 Establish and maintain trust with customers.

1. Explain the value of customer touch point. Answer: Every customer encounter is an opportunity for you and your organization to influence customer loyalty. Even when you win trust and achieve customer satisfaction, the customer relationship is very fragile. It is easy to destroy trust quickly with an inappropriate tone, missed appointment, failure to follow through, a lie, or a misleading statement.

2. What happens when trust is broken? Answer: Although it takes a long time to gain trust, it can be lost in seconds. Once trust is gone, if you do not react quickly to arrest the situation, you may never regain total customer confidence.

3. What must you communicate other than facts and figures? Answer: You must send a message of sincerity, knowledge and honesty.

4. What is the biggest mistake service providers make when dealing with customers? Answer: The biggest mistake is to deny accountability in dealing with a customer. The key is to recover from errors (you are human and mistakes are expected) by apologizing, accepting responsibility and quickly and appropriately solving the problem or getting the necessary information.

Learning Objective 2 Explain customer relationship management and explain its importance to quality service.

1. Why is B2B relationships often more difficult? Answer: These are companies as customers. This makes it difficult because of the number of contacts and the varying requirements or needs each might have. Also, much of business-to-business service is delivered through technology. Many use relationship management software to keep track and to record provided, but CRM remains CRM and is a crucial element of customer loyalty.

2. Explain why long-term customer relationships (customer retention) are the ones that sustain organizations. Answer: Seeking new customers through advertising or other means is expensive. In addition to finding the new customer, you and your organization have to educate them and win them over. You have to prove yourself to newly acquired customers. Since they will likely be more skeptical, you and every member of the organization have to work to develop loyalty on the part of those customers with whom you have an existing relationship.

3. Is there any evidence that customer rewards or loyalty programs work? Answer: It seems to be from a Maritz Loyalty Marketing study of 2,178 shoppers found that customer loyalty programs are an important tool to help retailers maximize their share of customers’ wallets. Rewards program members are more likely to have spent a greater amount of money in the past six months across the 11 retail categories examined in the study.

Learning Objective 3 Develop the service provider characteristics that will enhance customer loyalty.

1. According to a J.D. Power & Associates 2006 study, why do new vehicle dealerships lose sales? Answer: A leading cause of lost sales is poor treatment which was cited by nearly half of all shoppers as the reason they walked.

2. How can you demonstrate enthusiasm when dealing with a customer? Answer: Use your body language, vocal cues, and gestures that you read about in this book, coupled with using an enthusiastic greeting, a smile, a positive attitude, and listening actively to the customer.

3. Why is it important for you to be technology literate? Answer: You can respond faster and more efficiently to customer needs. This is especially true since many of your customers will be computer literate also.

4. Who are the most successful service providers? Answer: They are the ones who have learned to interact positively and build rapport with customers.

Learning Objective 4 Describe the provider’s responsibility for establishing and maintaining positive customer relationships.

1. What should you do to take responsibility for good relationship management? Answer: You should personalize your service, listen, keep an open mind, respect your customers and ask for input from your customers.

2. What does it mean to create a social bond with customers? Answer: You will need to take time to get to know your regular customers and serve them individually. For new customers, start using the positive interpersonal communication skills you have learned. Treat them as individuals. Helping your customers feel accepted can create a bond that will keep them coming back.

5 3. What should you do if you do not agree with a customer? Answer: You can still respect his or her point of view or need and provide the best possible service.

Learning Objective 5 Identify strategies that can be used to make customers feel like they are number one.

1. How can you make people feel like they are important and valued? Answer: By recognizing and acting on the fact that people like to feel important and valued. You can go a long way toward providing solid customer service. You can reduce churn and build a strong relationship. By being an “I care” person, you can generate much goodwill while meeting customer needs.

2. What do some businesses classify as a moment of truth? Answer: Some companies call a customer encounter a moment of truth or contact point. It is at this point that you can provide “knock your socks off” service.

3. Why is it an advantage to have customers who feel a connection to the store or business? Answer: When something goes wrong, people who feel a kinship with service providers typically give higher ratings on the relationship-rating point scale than people who do not feel this connection.

Learning Objective 6 Discuss strategies that can enhance customer satisfaction.

1. Explain why customer satisfaction is valuable. Answer: It can lead to repeat business—the key to keeping a business productive and profitable. Satisfaction is a big factor for many customers in remaining loyal.

2. Name several tips that can help you provide quality service to customers. Answer: Some tips for quality service are: Pay attention. Deal with one customer at a time. Know your customers. Give customers special treatment. Service each customer at least adequately. Do the unexpected. Handle all complaints effectively. Sell benefits, not features. Know your competition.

6 3. Why should you not criticize or belittle your competition? Answer: Such behavior is unprofessional, unethical, and will likely cause the customer to lose respect for you. Once respect goes, trust goes.

Learning Objective 7 Define quality service.

1. What does it mean when someone mentions that quality is a fad? Answer: There is so much written these days about quality—how to measure it and its significance—that there is a temptation to think of it as a fad. But this thinking can be disastrous. A person’s perception of quality service is often one of the prime reasons for his or her return.

2. Explain total quality management (TQM). Answer: TQM and continuous quality improvement (CQI) are often used to label the goal of improvement. Basically, quality service involves efforts and activities that are done well, and that meet or exceed customer needs and expectations. In an effort to achieve quality service, many organizations go to great lengths to test and measure the level of service provided to customers.

3. How can you strive for quality service on a personal level? Answer: You can work to achieve an exemplary rating on the relationship-rating point scale.

7 CRITICAL THINKING QUESTIONS

Learning Objective 1

1. Explain the difference in public trust that resulted from the incidents of Tylenol (Johnson and Johnson) versus the Exxon Valdez situation. Answer: The actions of Johnson & Johnson in taking responsibility for a situation not of its own making communicated strong values and concern for public safety. The public remained loyal as a result. On the other hand, Exxon was slow to react and did not, at first, take responsibility. As a result, it is still the object of litigation and jokes. From a trust standpoint, people harbor resentment over the incident and in protest, many will not patronize Exxon gas stations.

2. Examine and explain the view of looking at customers as here today, gone tomorrow versus long-term relationship building. Answer: The first view is a short-sighted one and does not consider the long-term implications. This is not the way to gain and sustain customer loyalty. A more customer-focused approach is to view customers from a relationship standpoint. You should strive to employ as many of the positive relationship building skills as possible. By treating internal and external customers in a manner that leads them to believe you care and have their best interest at heart, you can start to generate reciprocal feelings. Using the interpersonal skills you learned in this book is a great way to begin doing this.

3. How do you accomplish sound problem solving? Answer: You will need a process for gathering and analyzing information. Specific steps may need to be taken to solve a customer’s problem. The problem solving model you learned in Chapter 7 is useful for this process (p. 181). The steps are: identify the problem, compile and analyze the data, identify the alternatives, evaluate the alternatives, make a decision, monitor the results.

8 PRACTICE TEST ANSWERS

True- Learning Page Multiple- Learning Page False Objectives Choice Objectives 1. F LO1 246 1. B LO1 248 2. F LO1 248 2. C LO1 251 3. T LO2 252 3. A LO2 252 4. T LO2 253 4. D LO2 253 5. T LO2 254 5. B LO3 256 6. T LO3 255 6. D LO3 258 7. F LO3 257 7. B LO3 260 8. T LO3 259 8. D LO4 263 9. F LO3 259 9. B LO4 265 10. F LO4 264 10. C LO4 265 11. T LO4 264 11. D LO4 265 12. F LO5 266 12. A LO5 266 13. T LO5 267 13. B LO6 270 14. T LO6 270 14. C LO6 271 15. T LO7 272 15. C LO7 272