Chapter 13 Your External and Internal Customers
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CHAPTER 13
Your External and Internal Customers
Learning Objective
After studying this chapter, students will be able to:
1. Explain how to determine what customers really want.
3. Describe the internal customer.
5. Give examples of issues in customer service.
7. Explain the significance of going the extra mile.
9. Explain the moral of the Poor George story and how it relates to customer service.
Key Terms
Bad news skills: The skills necessary to deliver bad news to customers but still retain
their business and goodwill.
Going the extra mile: When a company gives customers small extra products or services
as a way of showing appreciation for their business.
Good feelings and solutions: The only two things that customers really buy.
Internal customer: The person who depends on the other people in the company to
provide the services and products for the external customer.
Self-esteem trap: The circumstance that comes from taking a customer’s attack
personally and letting it affect your own self-esteem.
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Two simplest principles: Finding out what the customer needs, and doing whatever is
necessary to satisfy that need.
Lecture Outline
I. What Do Customers Really Want?
An increasing number of people running businesses today are realizing that satisfied and
happy customers are the scarcest and most crucial resource. Without a good base of
customers, any business will fail. In How to Win Customers and Keep Them for Life,
High-quality customer service has never been more important than it is today.
• The most obvious reason for this increased importance is greater competition.
• A second reason for this emphasis is the growth of services in the United States
II. Customer Service: A Definition
Customer service guru John Tschohl says, “You have good service only when customers
think you do.” He also says that customer service is part of successful selling because
satisfied customers come back to be customers again.
Good service, which always includes good human relations, is the main reason for repeat
business. The cost of finding a new customer is considerably greater than the cost of
keeping one business already has. Unhappy customers have a high cost, too—the average
disgruntled customer tells at least 8 to 10 people about the unpleasant experience.
Treating customers as the most important part of the organization will pay off in the long
run, in terms of both growth and added profits.
Working on improving customer relations is excellent for one’s own self-development.
Learning what works in the process of satisfying customers can aid people in cultivating
their own skills in problem solving for other areas of life.
Chapter 13 Your External and Internal Customers
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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Customer relations skills can be transferred to almost any other occupation or profession.
If someone is an employee who has a vested interest in the success of the company he or
she is working for, the development of customer service skills is worthwhile for him or
her.
III. The Internal Customer
For the past several years, the term “internal customer” has been used more and more
often to describe an important relationship among managers, employees, and external
customers. One definition of the internal customer is the person who depends on the
other people in the company to provide the services and products for the external
customer.
Internal customers usually don’t walk away when the service is bad. Unlike their external
counterparts, they are tied to the company more directly than that. However, this is
exactly why treating them right is really important to the overall success of the business.
IV. The Two Simplest Principles of Customer Service
When dealing with any type of customer, the two simplest principles help greatly:
• Find out what the customer needs.
• Do whatever is necessary to satisfy those needs.
By listening carefully to the customer’s stated needs, one might discover unspoken needs.
In some cases, the customer doesn’t have a thorough understanding of what his or her
own needs are. A person’s task in that case becomes one of probing and asking a series of
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The wise choice is to treat the person with the same cordiality one would treat a paying
customer. After all, that person’s opinion of one’s establishment might bring him or her
back again.
V. Issues in Customer Service
A. Your Customers and Your Attitude
Checking one’s attitude around customers needs to be an ongoing practice. In Inc.
Magazine, entrepreneur Norm Brodsky points out that many businesspeople seem to
have the attitude that customers exist only for their (businesspeople’s) benefit. Many
B. Delivering Bad News
One of the touchiest human relations issues is the tough task of giving customers
unwelcome news—especially when they expect nothing but good news. Developing
sound bad news skills is essential, and it will make the job less unpleasant. Figure
13.2 shows the four rules that can help when giving customers messages that they
C. Encouraging Complaints
In some way, every customer has a problem. If nothing else, the problem is that the
customer is in need of the goods or services a company provides. Perhaps the
problem is dissatisfaction with some part of the operation—or the competitor’s.
Companies should learn to focus on the problem.
Chapter 13 Your External and Internal Customers
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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Bill Gates, founder of Microsoft, says that adopting a learning attitude toward the
customers rather than a defensive position can make customer complaints the most
important part of the road to improving the quality of whatever a company is doing.
The management should try to influence everyone in the company to think of
complaining customers in a positive way. Without them, the company would have
only a vague idea of what changes need to be made.
A complaint is an opportunity to improve. Customer complaints inspire
improvements to service that would otherwise have gone unnoticed to people in many
businesses.
An emphasis on careful listening to complaints sends the signal to customers that a
business is a customer-focused business. When customers perceive that the business
is willing to listen, and that it is encouraging their response, they will be much more
likely to respond honestly and openly.
VI. Handling the Difficult Customer
Although the customer may be very wrong, employees will still be called upon to treat
that customer as though everything seen through his or her eyes is correct. Carrying out
such an attitude requires more than a little self-discipline. It also requires some courage.
People should remember two things when dealing with an unreasonable, angry, or overly
demanding customer:
• People should stay focused. The success of the company depends on satisfying the
customers, no matter how unreasonable they might seem. If the employee can
remain focused on those long-term needs, rather than on a short-term need to
Chapter 13 Your External and Internal Customers
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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Sometimes, the only way to get a customer to communicate is to cool him or her off.
Instead of using one’s energy to show that one is right and that the customer is wrong,
one should put his or her energy into getting the customer calmed down. Some obvious
exceptions to this rule would be customers who are sexually harassing or physically
assaulting employees, as well as customers who are involved in other illegal activities.
VII. Going the Extra Mile
When a company gives customers small “extras” as a way of showing appreciation, it is
called going the extra mile—and it nearly always pays for itself.
VIII. Customer Service Ethics
Acting ethically is essential in all dealings with customers and would-be customers.
Customer service is a critical aspect of successful business development, and of
maintaining lucrative business relationships. The customer service ethics of a company or
organization define the quality of the services the customer will receive.
Unethical customer service can result in victimized customers, creates a frustrating gap
between the service that the customer expects and actually receives, and can negatively
IX. Who Is Running The Business?
One must set limits as to the extent to which one will allow a customer to run one’s
business. Regardless of how important the customer is, he or she must never be allowed
to undermine company decisions. Les Schwab, Inc. is a successful tire store chain in the
western United States. When the founder, Mr. Schwab, was still alive, he used the “Poor
George Story” at training sessions for tire store managers.
X. Poor George Story
The moral of the “Poor George Story” is—respect the customers and give them only the
highest-quality service, but never let the customers run the business.
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Review Questions
1. Explain what it means to say that customers really want feelings and solutions, rather
than products and services. When you are a customer, what does that mean to you?
2. Define the term “internal customer.” Why is the concept of internal customer service
important to an overall understanding of customer service?
3. Why is an understanding of the “nice” customer of great importance in improving
customer service? Have you ever known or been someone like this “nice” customer,
who is unhappy but only leaves and never returns rather than voicing concerns to the
business?
4. What are the “two simplest principles” of customer service? What importance does
listening play in the use of those principles? Have you ever seen them violated?
Chapter 13 Your External and Internal Customers
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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
By listening carefully to the customer’s stated needs, one might discover unspoken
needs. In some cases, the customer does not have a thorough understanding of what
his or her own needs are. The task in that case becomes one of probing and asking a
series of questions to find out what is behind the surface statements. Students’
answers to the last part of the question will vary.
5. Explain the importance of forming a bond with the customer. How does one go about
establishing such a bond?
Answer: Few factors will create more impact on overall and repeat sales than
bonding with the customer. If one forms meaningful relationships with customers,
they are much more likely to return and buy again. This practice is also known as
6. What are the four steps in giving the customer bad news? Explain each step.
Answer: The four rules for giving a customer bad news are:
• Use a polite tone of voice—make it a point to check on this. For many people,
7. What are some steps one can take to build the customer’s self-esteem? Which step,
in your opinion, is the most important? Explain.
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Answer: Students’ answers will vary. Some steps that can be taken to build the
customer’s self-esteem are:
• Put the customer at ease.
8. What is meant by “going the extra mile”? Provide an example from your life of
either serving customers or being a customer. How did your experience affect you?
Was there ever a time when someone didn’t go the extra mile?
Answer: Students’ answers will vary. When a company gives customers small
Critical Thinking Questions
9. Try to recall if you can identify a businessperson who was able to establish a bond
with you or one of your family members. How was this accomplished?
10. Have you ever been the victim of a company’s poor customer service policy, as
either an external or internal customer? What specifically occurred? How did this
treatment make you feel? What would you have changed in that situation if you had
the power to do so?
Chapter 13 Your External and Internal Customers
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Case Studies
Case Study 13.1: Disaster in Aisle Three
Mrs. Raye’s overloaded shopping cart hits and crashes a display of bottled fruit juices at
the health food store where Carmine DeLuccio worked. Upset, she blames the
overloading on the small carts and the badly positioned display. Carmine, in the absence
of his boss Ann Camilla and the assistant manager, proceeds to handle the situation with
the quote, “The customer is always right.”
Questions
1. What should Carmine say to Mrs. Raye? Why?
2. What should he do, and in what order?
3. What should Carmine say to the other customers who ask questions such as “What
happened over there, anyway?”
Chapter 13 Your External and Internal Customers
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Case Study 13.2: International Business Calling
Dana Smith, the manager at the U.S office of the tourism company, is frustrated at the
issue of several tourists cutting short their vacation in China due to illness. When Wei
Ting, her agent in Singapore, calls in with a client on line for reimbursement for a denied
visa, Dana does not wait to hear the issue but snaps at Wei Ting for not being able to
handle such “complaining customers”. This angers the listening customer and
embarrasses Wei Ting. Dana blames Wei Ting for not warning her about the customer
being on line.
Questions
1. Does this situation have more to do with external customer relations, with internal
customer relations, or both? Explain.
2. What should Dana do to resolve the situation on all fronts? What should Wei Ting do
to keep the client happy and develop a better working relationship with Dana?
Suggested Answer: Student answers will vary. Dana should, first of all, calm down
and apologize to and empathize with the client on the visa issue. She should then let
the customer vent his frustration while remaining calm and apologizing whenever
Chapter 13 Your External and Internal Customers
3. Explain how this company could encourage complaints in the future to avoid such
situations. What types of complaints and solutions would you anticipate management
receiving in this company?