CHAPTER 17
CUSTOMER SERVICE
ANNOTATED OUTLINE
INSTRUCTOR NOTES
• Customer Service is the set of activities and programs
undertaken by retailers to make the shopping experience
more rewarding. These activities increase the value
customers receive from the merchandise and services they
purchase. All employees of a retail firm and all elements of
the retailing mix provide services that increase the value of
the merchandise.
See PPT 17–3
Generate a discussion among
students about their experience
I. Balancing Customer Service: Personalization Versus
Standardization
• Personalized and standardized are two approaches
retailers use to develop a sustainable customer service
LO 17-1 Identify how retailers
balance customer service
through personalization versus
standardization.
See PPT 17–6
A. Personalized Approach
• Personalized customer service is less consistent than
standardized service. The delivery of personalized service
depends on the judgment and capabilities of each service
See PPT 17–7
provider.
• The personalized approach typically results in customers
receiving superior service. But the service might be
inconsistent because service delivery depends on the
judgment and capabilities of the service providers.
• Providing high quality service, particularly customized
service, can be very costly.
B. Standardized Approach
• Standardized, particularly automated services improve the
speed and reliability of the retail interaction for customers.
But this form of customization is also distinctly impersonal.
See PPT 17–8
II. Customer Evaluations of Service Quality
• When customers evaluate retail service, they compare
their perceptions of the service they receive with their
expectations.
LO 17-2 Explain how customers
evaluate a retailer’s customer
service.
A. Perceived Service
• Customers’ perceptions of a retailer’s customer service
depend on the actual service delivered. However, because
services are intangible, it is difficult for customers to
1. Reliability is the ability to perform the service dependably
and accurately, such as performing the service as promised
or contracted or meeting promised delivery dates.
2. Assurance is the knowledge and courtesy of employees and
their ability to convey trust and confidence.
5. Responsiveness means to provide customer service
personnel and sales associates that really want to help
customers and provide that service promptly.
B. Role of Expectations
• Customer expectations are based on knowledge and past
experiences with a retailer and its competitors.
See PPT 17–12
Describe the role of expectations.
retailer.
III. The Gaps Model for Improving Retail Customer Service Quality
• When customers’ expectations are greater than their
LO 17-3 Indicate the activities a
retailer can undertake to
provide high-quality customer
perceptions of the delivered service, customers are
dissatisfied and feel the quality of the retailer’s service is
poor. Thus, retailers need to reduce the service gap – the
difference between customers’ expectations and
perceptions of customer service — to improve customers’
satisfaction with their service.
Four factors affect the service gap:
• Delivery gap: The difference between the retailer’s service
standards and the actual service provided to customers.
• Communication gap: The difference between the actual
service provided to customers and the service promised in
the retailer’s promotion program.
service.
See PPT 17–13 and 17–14
A. Knowing What Customers Want: The Knowledge Gap
• The most critical step in providing good service is to know
what the customer wants.
• Methods for obtaining this information range from
comprehensive surveys to simply asking some customers
about the store’s service.
See PPT 17–15
1. Social Media
• Retailers can learn a lot about their customer expectations
and perceptions of their service quality by monitoring what
they say about the retailer’s offering and the offerings of
competitors on their social networks, blogs, review sites,
and what they are posting on sites like YouTube and Flickr.
Discuss with students how reviews
on products could be a factor in
understanding customer
sentiment. Ask if bad reviews are
always bad (or do they allow
retailers to get first-hand
information about product or
2. Surveys, Panels, and Contests
• Many retailers survey customers immediately after a retail
transaction has occurred.
• Rather than surveying many customers, retailers can use
panels of 10 to 15 customers to gain insights into
expectations and performance.
Work with students to develop a
procedure for conducting a
customer panel. How many
customers? What types of
customers? When and where
would it meet? What specific
questions would be asked?
3. Interact with Customers, Either Directly or through
Observation
through reports so they miss the rich information provided
Ask students what retail
4. Customer Complaints
• Complaints allow retailers to interact with their customers
and acquire detailed information about their service and
merchandise.
• Handling complaints is an inexpensive means to isolate and
correct service problems.
Ask students what retailers could
do to stimulate comments and
complaints about service.
customers to provide feedback about their problems.
5. Feedback from Store Employees
• Salespeople and other employees in regular contact with
customers often have a good understanding of customer
service expectations and problems. This information can
6. Using Customer Research in a Timely Manner
• The knowledge gap diminishes only when retailers use this
information to improve service.
Ask students if retail managers
really need to interact with
customers to determine customer
expectations and perceptions.
B. Setting Service Standards: The Standards Gap
• Service standards should be based on customers’
perceptions rather than on internal operations.
See PPT 17–6
Ask students what a retailer can
1. Commitment to Service Quality
• Service excellence occurs only when top management
provides the leadership and demonstrates commitment.
Top management must be willing to accept the temporary
difficulties and even increased costs associated with
improving service quality.
• Store managers are the key to achieving service quality
standards.
See PPT 17–17
2. Defining the Role of Service Providers
retailer’s expectations, service providers are directionless.
3. Setting Service Goals
• Retailers often develop service goals based on their beliefs
about the proper operation of the business rather than the
customers’ needs and expectations.
Ask students to give specific
examples of services goals that
might be set for a sales associate
in a Gap store.
4. Measuring Service Performance
• Retailers need to continuously assess service quality to
ensure that goals will be achieved.
Query students on the types of
C. Meeting and Exceeding Service Standards: The Delivery Gap
• To reduce the delivery gap and provide service that
exceeds standards, retailers must give service providers
the necessary information and training, empower
employees to act in the customers’ and firm’s best
interests, provide instrumental and emotional support,
provide appropriate incentives, improve internal
communications, and use technology.
See PPT 17–19
Ask students to indicate the kind
of information a salesperson in
the following departments of a
department store should have:
china, consumer electronics,
men’s ties, women’s hosiery, and
men’s suits.
1. Give Information and Training
• Service providers need to know about the retailer’s service
standards and the merchandise it offers, as well as the
customers’ needs.
See PPT 17–20
interpersonal skills. Dealing with customers is hard—
particularly when they are upset or angry.
2. Empower Store Employees
• Empowerment means allowing employees at the firm’s
lowest levels to make important decisions regarding how
service is provided to customers. When the employees
See PPT 17–21
3. Provide Instrumental and Emotional Support
• Service providers need to have instrumental support
(appropriate systems and equipment) to deliver the service
desired by customers.
Ask students to give examples of
emotional and instrumental
service support they might have
received when working in a retail
outlet.
4. Provide Incentives
• Many retailers use incentives, like paying commissions on
sales, to motivate employees.
Ask students about the benefits
and problems with offering
incentives. Review the material
on incentives in Chapter 17.
5. Improve Internal Communications
• When providing customer service, frontline service
providers often must manage a conflict between
customers’ and their employer’s needs.
• Retailers can reduce such conflicts by issuing clear
guidelines and policies concerning service and explaining
the rationale for these policies.
6. Use Technology
• Retailers have been actively engaged in implementing a
vast variety of technology tools in their stores and websites
to help their customers.
• Widespread technologies already in place include self-scan
checkout stations, web-linked kiosks, service personnel
equipped with iPads, various types of apps, digital displays,
online agents, and QR codes.
See PPT 17–24 and 17–25
Ask students to describe customer
service technologies they have
encountered in retail stores.
Discuss some of the advantages
and disadvantages of self-
D. Communicating the Service Promise: The Communications
Gap
• The fourth factor leading to a customer service gap is the
difference between the service promised by the retailer
and the service actually delivered.
See PPT 17–26
Discuss the paradox of wanting to
tell customers about great
customer service but not wanting
to raise expectations too high.
1. Realistic Commitments
• Advertising programs are typically developed by the
marketing department, while the store operations division
delivers the service. Poor communication between these
areas can result in a mismatch between an ad campaign’s
promises and the service the store can actually offer.
2. Managing Customer Expectations
• Information presented at the point of sale can be used to
manage expectations.
Ask students to indicate some
complaints they have made about
service provided by a retailer. Use
these situations in a role-playing
IV. Service Recovery
• Rather than dwelling on negative aspects of customer
problems, retailers should focus on the positive
opportunities the problems generate.
• Service problems also enable a retailer to demonstrate its
commitment to providing high-quality customer service.
• The steps in effective service recovery are: (1) listen to the
customer, (2) provide a fair solution, and (3) resolve the
problem quickly.
LO 17-4 Articulate retailers’
service failure strategies.
See PPT 17–27
Have students relate service
A. Listening to Customers
• Customers can become very emotional about their real or
imaginary problems with a retailer. Often, this emotional
reaction can be reduced by simply giving customers a
chance to get their complaints off their chests.
Ask students why it is important
for an employee to listen carefully
to the complaint. Why is the best
policy always to give the
complaining customer what he or
• Store employees should allow customers to air their
complaints without interruption.
• Employees also need to listen carefully to determine what
the customer perceives to be a fair solution.
she wants? Do customers always
know what they want?
B. Providing a Fair Solution
• Favorable impressions arise when customers feel they have
been dealt with fairly. When evaluating the resolution of
their problems, customers compare how they were treated
in relation to others with similar problems or how they
were treated in similar situations by other retail service
providers.
• Customers’ evaluations of complaints’ resolutions are
based on distributive fairness and procedural fairness.
See PPT 17–29
• Procedural fairness is the perceived fairness of the process
used to resolve complaints.
• Customers typically feel they are dealt with fairly when
store employees follow company guidelines.