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Chapter 01 - The Customer Service Profession
1-1
Chapter 1
The Customer Service Profession
Table of Contents
Teaching Tools ................................................................................................................ 2
Instructor Teaching Tools ........................................................................................... 2
Student Learning Tools ............................................................................................... 2
Brief Chapter Outline ....................................................................................................... 3
Chapter Outline and Lecture Notes ................................................................................. 5
Class Activities and Sample Assignments ................................................................... 177
Discussion Opportunities ............................................................................................. 188
In the Real World Notes .............................................................................................. 199
Retail—Zappos.com ............................................................................................... 199
Work It Out Notes ........................................................................................................ 221
Work It Out 1.1—Improving Service Quality ............................................................ 221
Work It Out 1.2—Personal Exposure to the Global Trend ...................................... 221
Work It Out 1.3—Who Are My Internal Customers? ............................................... 221
Work It Out 1.4—Types of Service .......................................................................... 221
Work It Out 1.5—Attracting and Training Employees ................................................ 22
End-of-Chapter Material Notes ...................................................................................... 23
Key Terms ............................................................................................................. 2323
Review Questions ................................................................................................... 244
Collaborative Learning Activities ............................................................................. 255
Face to Face—Getting Ready for New Employee Orientation at PackAll ............... 255
Chapter 01 - The Customer Service Profession
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Teaching Tools
This book has several tools for both students and instructors to assist in the learning
and development on the topic of customer service. Those tools are listed below.
Instructor Teaching Tools
▪ Instructor’s Manual
▪ PowerPoint Presentations
▪ Asset Map
▪ Test Bank
▪ Customer Service Videos
▪ Sample Syllabi
Student Learning Tools
▪ Customer Service Interactions
▪ Customer Service Videos
▪ Chapter Objectives
▪ Flashcards
▪ Online Quizzes
▪ Practice Tests
▪ Glossary
▪ Spanish Glossary
▪ Worksheets
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Brief Chapter Outline
Learning Outcomes
➢ 1-1: Define customer service.
➢ 1-2: Describe factors that have impacted the growth of the service sector in the
United States.
➢ 1-3: Identify societal factors that have influenced customer service.
➢ 1-4: Recognize the changes in consumer behavior that are impacting service.
➢ 1-5: List the six major components of a customer-focused environment.
➢ 1-6: Explain how some companies are addressing the changes impacting the
service sector.
I. Defining Customer Service
A. The Concept of Customer Service
B. Post–World War II Service in the United States
C. The Shift to Service
II. Growth of the Service Sector
A. Impact of the economy
Quantity of Jobs Being Created
Distribution of Jobs
Quality of Service Jobs
III. Societal Factors Affecting Customer Service
A. Global Economic Shifts
B. Shifts in the Population and Labor Force
C. Increased Efficiency in Technology
Globalization of the Economy
D. Deregulation of Many Industries
E. Geopolitical Changes
F. Changing Values
G. Increase in the Number of White Collar Workers
H. More Women Entering the Workforce
I. A More Racially and Ethnically Diverse Population is Entering the Work Force
J. More Older Workers Entering the Workforce
K. Growth of E-Commerce
IV. Consumer Behavior Shifts
A. Different Mindset
B. Expectation of Quality Service
C. Enhanced Consumer Preparation
V. The Customer Service Environment
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A. Components of a Customer Service Environment
B. The Customer
External Customers
Internal Customers
C. Organizational Culture
D. Human Resources
E. Deliverables
F. Delivery Systems
G. Service
VI. Addressing the Changes
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Chapter Outline and Lecture Notes
I. Defining Customer Service
• Customer service is the ability of knowledgeable, capable and enthusiastic
employees to deliver products and services to their internal and external
customers in a manner that satisfies identified and unidentified needs and
ultimately results in positive word-of-mouth publicity and return business.
• Depending on an organization’s focus, such as retailing, medical, etc., the goals
of providing customer service may vary.
• Service industry is a term used to describe businesses and organizations that
are engaged primarily in service delivery.
• Product is something produced or an output by an individual or organization.
• Customer-focused organizations are companies that spend energy and effort
on satisfying internal and external customers by first identifying customer needs,
then establishing policies, procedures, and management and reward systems to
support excellence in service delivery.
• Some common characteristics of leading-edge customer-focused organizations
are:
o They have internal customers (for example, peers, co-workers, etc.) and/or
external customers (for example, vendors, suppliers, etc.).
o Their focus is on determining and meeting the needs of customers while
treating everyone with respect and as if they were special.
o Management and systems support and appropriately reward employee
efforts to serve customers.
o Reevaluation and quantitative measurement of the way business is
conducted is ongoing and results in necessary changes and upgrades to
deliver timely quality service to the customer.
o Continual benchmarking or comparison with competitors and related
organizations helps maintain an acute awareness and implementation of
best service practices by the organization.
o The latest technology is used to connect with and provide service to
customers, vendors, or suppliers and to support business operations.
o They build relationships through customer relationship management
(CRM) programs.
• The term service sector as used by the Census Bureau and the Bureau of Labor
Statistics in their reports and projections typically includes:
o Transportation, communication, and utilities
o Wholesale trade
o Retail trade
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o Finance, insurance and real estate
o Other services (including businesses such as legal firms, barbershops and
beauty salons, etc.)
o Federal government
o State and local governments
A. The Concept of Customer Service
• The concept or practice of customer service is not new throughout the world.
o Over the years, it has evolved from a meager beginning into a
multibillion-dollar, worldwide endeavor.
• In the past when many people worked on farms, small artisans and business
owners provided customer service to their neighbors.
o To supplement their income, many people made and sold or bartered
products from their homes in what came to be known as cottage
industries.
• When industry, manufacturing, and larger cities started to grow, the service
industry really started to gain ground.
B. Post–World War II Service in the United States
• After World War II, the desire, and in some cases need, to obtain products
and services started to grow throughout much of the world.
• In the United States there was a continuing rise in the number of people in
service occupations.
C. The Shift to Service
• The age of the service economy has been alive and strong for some time
now.
o Tied to this trend has been the development of international quality
standards by which effectiveness is measured in many multinational
organizations.
• Organizations such as the International Council of Customer Service
Organizations (ICCSO) work to help develop and promote service and
professional excellence standards throughout the world.
o This is being done by setting internationally acceptable standards and
certifications in an attempt to create a global atmosphere of service.
• To help attract and maintain a more loyal customer base, many customer-
centric organizations are stepping up their enthusiasm and support for such
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standards.
II. Growth of the Service Sector
• According to the U.S. Bureau of Labor Statistics, assuming a full employment
economy by the year 2020, the United States is projected to add 20.5 million new
jobs by that year.
o Service-providing industries are anticipated to generate nearly 18 million
new wage and salary jobs.
o The impact of these numbers can be seen as technology replaces many
production line workers, and increasing numbers of service jobs are
created.
o Technology-related service jobs such as those of database administrators,
computer support specialists, computer scientists, computer engineers, and
systems analysts are expected to continue to grow at a rapid pace.
A. Impact of the Economy
• According to leading economists, today’s economy is affecting jobs in three
ways:
o Overall quantity of jobs created
o The distribution of jobs among industries, occupations, geographic
areas, and organizations of different sizes
o The quality of jobs, measured by wages, job security, and opportunities
for development
Quantity of Jobs Being Created
• According to the U.S. Department of Labor:
o Of the 20 occupations with the largest growth, one-fifth are in the
office and administrative support services group.
o Together, these four occupations—bookkeeping, accounting and
auditing clerks, customer service representatives, general office
clerks, and receptionists and information clerks, are expected to
grow by 1.3 million jobs, accounting for about 18 percent of job
growth among the 20 occupations with the largest growth.
Distribution of Jobs
• Two parallel trends in job development are occurring:
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o The first comes about from the need for employees to be able to
have regular access to personal and professional networks and to
engage in collaborative exchanges.
o The second trend in job development arises from the ease of
transmission and exchange of information by means of technology.
▪ It is called telecommuting and various other terms describe it.
• With enhanced phone technology, broadband Internet access
facilitates more personal communication with customers, suppliers,
distributors, and colleagues.
• With visual imaging and collaboration software like, Skype and
GoToMeeting, instant messaging, social media, e-mail, and other
technology, employees can now work from their homes or satellite office
locations worldwide.
• Government agencies, technology-focused organizations, and many
companies with large staffs in major metropolitan areas that experience
traffic congestion have used telecommuting for a number of years to
eliminate the need for employees to travel to work each day and to
reduce corporate overhead, such as office space and technology, utility,
and equipment costs.
Quality of Service Jobs
• The last decade of the twentieth century saw increasing economic
growth, low interest rates, and new job opportunities.
• Employees who do obtain and maintain the better customer service jobs
that provide good working conditions, security, and benefits will be better
educated, trained, and prepared.
o They will also be the ones who understand and have tapped into
the concept of professional networking—the active process of
building relationships and sharing resources.
III. Societal Factors Affecting Customer Service
• The economies of America and many geographic areas are being dramatically
changed by the forces that are shaping the world.
• Some of the major shifts that continue to occur each year around the world are:
o Declining economic conditions
o Demographic shifts in population
o Constant technological change
o Globalization
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o Deregulation of industries
o Geopolitical changes
o Increases in the number of white-collar workers
o Socioeconomic program development
o More women entering the workplace
A. Global Economic Shift
• Not since the 1980s have economic indicators (e.g., stock trades, home
sales, etc.) been in such turmoil worldwide.
• In addition to governmental policy and economic changes, new legislation
impacting healthcare and taxes, job elimination in the government sector,
and shifts in consumer spending have significantly impacted many
organizations, forcing downsizings and in many cases closures.
• Large numbers of customers search and do their homework for products and
services online and often use retail outlets as a showroom to physically
examine things they are interested in potentially purchasing.
• Many companies have made dramatic shifts in the way they do business and
attempt to attract and hold customers.
• Because of the financial meltdown that occurred during the high point of the
recession, many organizations that have been household names for decades
and had international presence have cut back severely on the size of their
workforce and sold off, merged, or closed operations.
B. Shifts in the Population and Labor Force
• Today’s labor force is older, more racially and ethnically diverse, and
composed of more women than in the past.
• According to U.S. Census data, the U.S. resident population will grow from
308.7 million in 2010 to 341.4 million in 2020, an increase of 32.7 million
people in 10 years.
• Several significant factors will shape the future demographics of the U.S.
population:
o There will be a significant increase in the older population.
o Immigration will continue to play a major role in the growth and makeup
of the racial and ethnic composition of the U.S. population.
• There will be a need for more consumer goods and services to provide for
the needs and expectations of customers.
• Since the size of the labor force is the most important factor related to the
size and makeup of the available pool of workers, organizations that hire
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service representatives will have to make some adaptations related to the
way they recruit and hire in order to obtain quality candidates for open
positions.
C. Increased Efficiency in Technology
• The development and increased sophistication of machines, service
equipment, and computers have caused an increase in production and
quality.
• An advantage of this change is that machines and equipment can work 24
hours, seven days a week with few lapses in quality, with no need for breaks,
and without increases in salary and benefits.
o They also potentially enhance the ease of service delivery and provide
faster processing.
• Technology is extremely attractive to profit-minded business and corporate
shareholders and managers who are concerned with service delivery and
how it impacts sales.
• More people will have access to products and services via computers,
smartphones, iPad s, and similar devices.
Globalization of the Economy
• Beginning in the 1960s, when worldwide trade barriers started to come
down, a variety of factors have contributed to expanded international
cooperation and competition.
o This trend has been termed globalization, with many companies
focusing on business-to-business (B2B) initiatives, as well as
individual consumers.
• At some point, many companies make staffing and/or production
decisions based on bottom-line figures.
o When this happens, companies can, because of recent changes in
the law, take their production or call center functions “offshore”
(offshoring) to other countries.
▪ In doing so, companies often save money on costs such as
production, wages, and benefits.
• In addition to offshoring, many organizations are also outsourcing job
functions that have been traditionally handled internally (e.g., recruiting,
payroll, etc.) to third-party companies that specialize in these areas.
• Related to offshoring and outsourcing, insourcing occurs when
organizations decide to have internal employees assume functions and
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perform work instead of contracting out to third parties or outsourcing it.
D. Deregulation of Many Industries
• Deregulation is the removal of government restrictions on an industry.
• The continuing deregulation of major U.S. public services has caused
competition to flourish.
E. Geopolitical Changes
• Events such as economic embargoes, political unrest, and conflicts and wars
involving various countries have reduced U.S. business access and
competition within some areas of the world while companies from some
countries have free access in those areas.
o These circumstances not only limit access to product, manufacturing,
and distribution channels, but also reduce the markets to which U.S.
businesses can offer products and services.
• The passage of the North American Free Trade Agreement (NAFTA),
which was a trade agreement between the United States, Canada, and
Mexico that eliminated a number of trade and investment barriers between
the three countries made it easier for many U.S.-based companies to
relocate and send jobs across borders (offshoring) in order to find less-
expensive labor forces, increase profits, and avoid unions and federal taxes.
o Further events such as trade agreements with China and the thawing of
relations with Vietnam in recent years have opened new political and
economic doors.
F. Changing Values
• Values are internalized and a result of individual life experiences and societal
mores.
• Throughout the world, there has been a tremendous amount of dynamic
change in recent decades due to economic instability, quickly expanding and
enhanced technology, global mobility where people move quickly and
frequently.
• Because different societies view what is important from different
perspectives, clashes can sometimes result when service providers
encounter customers who have differing values.
• As a result of societal values, companies often change their approach to
doing business as a competitive strategy and to attract and hold customers.
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• Because many consumers are now cost-conscious, are ecologically aware,
and value sustainability, many automobile manufacturers are developing
vehicles that are more energy efficient, use ecologically sensitive fuels , and
cost less.
G. Increase in the Number of White-Collar Workers
• With the movement out of factories and mines and off the farm, more people
find themselves working at a traditional nine-to-five office job or providing
service on a variety of work shifts.
• This trend has led to the creation of new types of service occupations.
H. More Women Entering the Workforce
• The fact that more women are in the workplace means that many of their
traditional roles in society have shifted, out of necessity or convenience, to
service providers such as cleaners, cooks, and child care providers.
• As women have become a larger part of the work force, they have slowly
seen their income levels rise compared to those of their male counter parts
but have not yet reached equality in workplace compensation.
I. A More Racially and Ethnically Diverse Population is Entering the Work
Force
• The increase in numbers of people from different cultures entering the
workforce will have a profound impact on the business environment.
o Not only are the members of this expanded worker category bringing
with them new ideas, values, expectations, needs, and levels of
knowledge, experience, and ability, but as consumers themselves they
bring a better understanding of the needs of the various groups that
they represent.
J. More Older Workers Entering the Workforce
• The median age of people in the United States is rising because of the aging
of the “baby boom” generation (those born between 1946 and 1964).
o From a workplace perspective, this means that more of the people in
this age group will stay in the workplace or return once they leave.
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K. Growth of E-Commerce
• The past two decades have been witness to unimagined use of the personal
computer and the Internet by the average person.
• As an example of the impact of e-commerce, the retail trade sector had
sales of nearly $1,106.8 billion in the fourth quarter of 2012.
o E-commerce refers to an entire spectrum of companies that market
products and services on the Internet and through other technology,
and the process of accessing them by consumers.
IV. Consumer Behavior Shifts
A. Different Mindset
• A majority of consumers who formerly acted on impulse and bought whatever
they desired are now taking a very cautious approach.
• Economic reports are now starting to show that people have begun to shift
from a “cutting back” mentality to a slightly more optimistic “cautious
spending” approach.
• An interesting outcome of the recession and massive job losses is that many
consumers, especially younger ones, want to have less financial obligation in
the event something traumatic happens in their life related to employment
and financial security.
o Today’s consumers are also looking to save money in other ways.
B. Expectation of Quality Service
• Most customers expect that if they pay a fair dollar, in return they will receive
a quality product or service.
o If their expectations are not met, customers simply call or visit a
competing company where they can receive what they think they paid
for.
• Companies recognize that if they do not meet the service expectations of
customers, they lose business and revenue.
o Thus, the superior service providers invest large amounts of money in
training employees.
C. Enhanced Consumer Preparation
• Customers today are not only more highly educated than in the past, they are
