Chapter 18 – Customer Service
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CHAPTER 18
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 for their customers. These
activities increase the value customers
receive from the merchandise and
See PPT 18-3
Generate a discussion among students about their
I. Strategic Advantage Through Customer
Service
• Successful retailers differentiate their
retail offerings, build customer loyalty,
and develop a sustainable competitive
advantage by providing excellent
customer service. Good service keeps
customers returning to a retailer and
generates positive word-of-mouth
communication, which attracts new
customers.
See PPT 18-5
Ask students if they had chosen to buy a
branded good at a specific retailer, even
though it was available at other stores in the
area. If so, was the decision to patronize a
specific retailer due to the better service at
that store?
Chapter 18 – Customer Service
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within a store.
• In addition, most services provided by
retailers are intangible – customers can’t
see or feel them. Intangibility makes it
A. Customer Service Strategies
• Personalized and standardized are two
approaches retailers use to develop a
sustainable customer service advantage.
See PPT 18-6
Ask students for examples of retailers that use
customized and standardized service
1. Personalized Approach
• The customization approach
encourages service providers to tailor the
service to meet each customer’s personal
needs.
See PPT 18-7
Chapter 18 – Customer Service
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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.
2. Standardized Approach
• The standardized approach is based on
establishing a set of rules and procedures
and being sure that they are
See PPT 18-8
3. Cost of Customer Service
• Providing high quality service,
particularly customized service, can be
very costly.
See PPT 18-09
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B. Customer Evaluation of Service Quality
• When customers evaluate retail service,
they compare their perceptions of the
service they receive with their
expectations.
Ask students to describe a situation in which
they received good and poor service from a
retailer. What factors influenced their
perceptions?
1. Role of Expectations
• Customer expectations are based on
knowledge and past experiences with a
retailer and its competitors.
• Expectations vary depending on the type
of store. Since expectations aren’t the
same for all types of retailers, a
customer may be satisfied with low
levels of actual service in one store and
dissatisfied with high service levels in
another store.
See PPT 18-12
Describe the role of expectations. Relate the
role of expectations to the student
remember, however, really good or really bad
service.
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service.
II. The Gaps Model For Improving Retail
Service Quality
• When customers’ expectations are
greater than their perceptions of the
delivered service, customers are
dissatisfied and feel the quality of the
Four factors affect the service gap:
• Knowledge gap: The difference
between customer expectations and the
retailer’s perception of customer
expectations.
• Communication gap: The difference
between the actual service provided to
customers and the service promised in
the retailer’s promotion program.
See PPT 18-13 and 18-14
A. Knowing What Customers Want: The
Knowledge Gap
• The most critical step in providing good
service is to know what the customer
See PPT 18-15
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wants.
• Retailers can reduce the knowledge gap
and develop a better understanding of
customer expectations by undertaking
• Methods for obtaining this information
range from comprehensive surveys to
simply asking some customers about the
store’s service.
1. Comprehensive Studies
• Some retailers have established
programs for assessing customers’
expectations and service perceptions.
Work with students to develop a questionnaire
that could be used to assess customer
satisfaction with service provided by a local
retailer.
2. Gauging Satisfaction with Individual
Transactions
• Another method for doing customer
research is to survey customers
immediately after a retail transaction has
occurred.
Have students go to a shopping center and
ask customers about the service they received.
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those who exhibit poor performance.
expectations and performance.
3. Customer Panels and Interviews
Work with students to develop a procedure
4. Interacting with Customers
• Owner-managers of small retail firms
typically have daily contact with their
customers and thus have accurate first-
hand information about them.
Ask students what retail managers can do to
improve communications with contact people.
5. Customer Complaints
• Complaints allow retailers to interact
with their customers and acquire detailed
information about their service and
merchandise.
• Typically dissatisfied customers don’t
complain. To provide better information
on customer service, retailers need to
encourage complaints and make it easy
for customers to provide feedback about
their problems.
Ask students what retailers could do to
stimulate comments and complaints about
service.
6. Using Technology
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7. Feedback from Store Employees
• Salespeople and other employees in
regular contact with customers often
8. Using Customer Research
• The service gap is reduced only when
retailers use this information to improve
service.
• Feedback on service performance needs
to be provided in a timely manner.
Ask students if retail managers really need to
interact with customers to determine
customer expectations and perceptions?
Can’t they learn this through talking with
employees and looking at market research?
B. Setting Service Standards: The Standards Gap
• Service standards should be based on
customers’ perceptions rather than on
internal operations.
See PPT 18-6
Ask students what a retailer can do to remind
employees about the need to provide good
customer service.
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
See PPT 18-17
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2. Defining the Role of Service Providers
• Managers can tell service providers that
they need to provide excellent service,
but not clearly indicate what excellent
service means. Without a clear
definition of the 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 student to give specific example 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 information
that could be collected by mystery shoppers.
5. Giving Information and Training
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• Store employees need to know about the
retailer’s service standards and the
merchandise they offer, as well as their
III. 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
See PPT 18-19
Ask students to indicate the kind of
information a salesperson in the following
departments of a department store should
1. Providing Instrumental and Emotional
Support
• Service providers need to the have the
instrumental support — the appropriate
systems and equipment – to deliver the
service desired by customers.
See PPT 18-20
Ask students to give examples of emotional
and instrumental service support they might
have received when working in a retail outlet.
2. Improving Internal Communications
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• When providing customer service, store
employees must often manage the
conflict between customers’ needs and
the retail firms’ needs.
3. Empowering Store Employees
• Empowerment means allowing
employees at the lowest level of the firm
to make important decisions on how
service is provided to customers. When
the employees responsible for providing
See PPT 18-21
Ask students what effects does empowering
store employees have on the employees? On
4. Providing Incentives
• Many retailers use incentives, like
paying commissions based on sales to
motivate employees.
Ask students about the benefits and problems
with offering incentives. Review the material
on incentives in Chapter 17.
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effectively improve customer service
when the rewards are tied to solving
customer problems and the rewards are
provided at about the same time the
appropriate behavior occurred.
5. Developing Solutions to Service Problems
a. Developing New Systems
• Finding ways to overcome service
6. Using Technology
• Many retailers are installing kiosks with
broadband Internet technology in their
stores to allow customers to order
See PPT 18-24 and 18-25
Ask students to describe customer service
technologies they have encountered in retail
A. Communicating the Service Promise: The
Communications Gap
• The fourth factor leading to a customer
service gap is a difference between the
service promised by the retailer and the
service actually delivered.
See PPT 18-26
Discuss the paradox of wanting to tell
customers about great customer service but
not wanting to raise expectations too high.
Chapter 18 – Customer Service
by making realistic commitments and by
managing customer expectations.
1. Realistic Commitments
• Advertising programs are typically
developed by the marketing department,
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
exercise assigning one student to play the
part of the customer and the other to be the
providing high-quality customer service.
VI. Service Recovery
• Rather than dwelling on negative aspects
of customer problems, retailers should
focus on the positive opportunities they
generate.
See PPT 18-27
Have students relate service failures they
have experienced and describe situations in
which the retailer made a good recovery and