Customer service is the measure of how logistics is creating the time and place utility for a product. The meaning of customer service varies with the organization, the product it is marketing, and the transaction phase it is undergoing. The buyer looks for value for the money he is spending, while the seller, in delivering superior customer service, looks for trade-off between cost and customer satisfaction. Hence, customer service depends on the phase of the transaction it is passing through. There are three phases associated with the exchange process. The degree of importance of each phase varies with the organization and depends on the product and customer requirements (see Figure 2.1).
1. Pre-Transaction Phase
This phase is more related to policy enunciation for defining the service level and related activities in qualitative and quantitative terms. It is a non-routine activity. It gives the guidelines to the operating people regarding the dimensions and limitations on customer service activities of the firm. The pre-transaction phase is a creation of the service platform to serve the customer, so as to build credibility in the market and create a good image among the existing and prospective customers. This is an important phase of the exchange process, which will help to mould the organization toward customer orientation and in turn influence the perception of the firm in the mind of the customer. Typically, the following are important elements of the pre-transaction phase.
Customer Service Policy Statement in Written Form. This will indicate the service standards of the firm. For example, Caterpillar, one of the world’s leading construction equipment manufacturing companies, makes a policy commitment to deliver spare parts to their customer within 48 hours of the placement of order. Further, they commit to offer free supply, in case the parts reach their destination after the stipulated delivery period. In this phase, the firm will have to evolve a policy framework for performance measures, evaluation methods, reporting structure, and the reward structure.
Organization Building. For implementing the policy directives on customer service, the firm should formalize the supporting structure, delegate authority, and allocate responsibility. The contact person’s name and contact number needs to be communicated to the customers for information on order status, dispatch details, warranty claims, and so forth. The contact person is to be delegated with full authority to make decisions on customer services within his/her domain and is made accountable for the action he is taking. A proper reward system will motivate the employees involved in customer service to effectively and efficiently interface with the customer.
Structuring the Service. The basic structure of the service depends on customer expectations, industry standard, and the service standard the firm would like to keep. The firm marketing capital goods may evolve a service structure to extend lifetime product service commitments for the supply of spares, irrespective of continuous product and technology upgrades at its end. The supplier may extend a free periodic product check-up service to clients to gain a competitive edge. In such a case, he/she may absorb all service-related costs as a value-added free service to the client. In the maturity stage of the product life cycle, when competition is fierce, the firm needs to customize the service to strategic clients or to a section of clients in the niche segments. For sustainable competitive advantage, innovation in service is a must. Innovation adds value to the offerings to customers. These services may be offered as a complete system package along with the product, which is rather difficult for the competition to meet or emulate. The important feature of the service structure is its delivery. This may vary with the product and the client’s need. Delivery has two dimensions, viz. time and place. The firm may have to allocate and coordinate its resources to deliver services at the time and place desired by the customer. Exide Industry Ltd., a leading automotive battery manufacturer in India, introduced Bat-Mobile Service to gain a competitive advantage. They are offering a free van service for battery-related problems (irrespective of the battery brand) of vehicles stranded on highways within the major metro city limits. Monitoring, coordinating, and controlling the movements and work of the mobile service vans is a tedious logistical task. The company has its own fleet of vans with equipment installed in them, accompanied by their technicians carrying an inventory of new batteries dedicated to the service. Communication is conducted through a centralized wireless network. The investment in this value-added service has already brought in results by way of customer loyalty and the customer shift from the competition to Exide.
Customer Education. This is required for minimizing customer complaints on product deliveries, product operations and maintenance, spare parts inventory requirements and maintenance, freight charges, transit damages, and more. Customer education is done through manuals, training, seminars, and workshops.
System Design. System configuration should take care to answer all possible queries in the customer’s mind before placing an order. The system may be manual or fully automatic as in e-commerce. However, a prerequisite of the system in a competitive environment is responsiveness to customer requirements and the flexibility to take care of unplanned events.
2. Transaction Phase
Customer service during the transaction phase is associated with routine tasks performed in the logistics supply chain. These tasks need coordination for the entire system to be efficient and effective in delivering service to the customer as per the desired standard. The following are the various service elements associated with the transaction phase:
Order Fulfilment Reliability. In the transaction phase, the most important factor is the reliability to fulfil the order within the agreed time frame and also with respect to the quantity and quality of the material ordered. This depends on the close coordination and management of the various components of the order cycle such as order processing, material planning, allocation, picking, packing, and transportation. The customer’s production schedule is very much dependent on the reliability factor of order fulfilment by the supplier.
Delivery Consistency. The other important factor in the transaction phase is the consistency of delivery in repeat orders. Let’s say out of 100 deliveries only 60 are on time while 40 deviate from the agreed schedule. Now, this is likely to cause production interruptions at the customer’s end, and the customer will surely be dissatisfied with such inconsistencies. Inconsistency of delivery may be because of problems with the various elements of order fulfilment that need system improvement.
Order Convenience. Order convenience is the ease with which the customer can place an order. The barriers to convenience are the paperwork required by the supplier, compliance to various procedures, complex payment terms, poor communication network at the supplier’s end, and poor coordination in the marketing network of the supplier. In competitive markets these barriers may lead to opportunity loss and waning of the customer base.
Order Postponement. The customer, for some reason, may require an entire order or a part thereof to be postponed or executed in parts, in a phased manner. This may be due to rescheduling of requirements at the customer’s end. In another case, due to availability of a certain product category in the future, the seller may ask the buyer to place the order now and ship the product when it is available on future dates.
Product Substitute. A situation may arise that the product ordered can’t be shipped due to certain manufacturing or quality problems. The seller may extend the service by offering a substitute product of similar or better quality, in different sizes or from the available brands in the market (on the same terms and conditions), in order to keep the relationship and retain the customer. For obtaining the customer’s consent for a product substitute, the seller needs closer interaction and clear communication with the customer.
3. Post-Transaction Phase
This phase relates primarily to customer satisfaction and building a long-term relationship with the customer. It involves the commitment of resources to offer the desired level of service. For service- based products, this is an important phase dependent, on the service quality, which may make or mar the image of a company in the minds of their customers.
Order Status Information. In e-commerce or business-to-business transactions, the customer, after payment of part value (sometimes full value) of the product as an advance, requires continuous feedback on the status of the shipment. His production schedules or usage plans start only after the ordered product has reached the site. Many leading firms have a consignment tracking and tracing system installed on their websites for their clients to have online access to such information.
Customer Complaints, Claims, and Returns. The seller’s responsibility is not over after a product is dispatched to the client. The customer may have received products that were damaged during transit, or the product may not perform as per the functional requirement, or the client may have gotten the wrong consignment. For resolving these issues, the manufacturer normally evolves a product return policy and implements it through the reverse logistics system.
Product Installation, Commissioning, and Technical Snags. Technically complex products need installation, commissioning and stabilization services from suppliers, or else the product might develop technical snags during the warranty period. To handle these issues, firms normally have a separate set-up for after-sales service. The after-sales department takes care of all documentation, customer technical complaints, product installation, commissioning, stabilization, and handing over.
Customer Education and Training. Customer education and training is an important service element in the post-transaction phase. In the case of technically complex products, it is necessary for the seller to train or educate the user in their operation to get the desired functional output. This may be done through product manuals, training workshops, or demonstrations.
Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.
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