Exploring a New Dimension of Customer Service and its Impact on Sales Growth and Loyalty

Abstract

The term ‘basic customer service’ encompasses those services that are provided to customers free of charge, along with the core product and/or service offering. The concept is similar to that of supplementary customer service, developed by Parashuraman (1998). The primary objectives of the present study are (1) to examine the characteristics of organisations providing superior basic customer service as opposed to organisations delivering inferior basic customer service, in terms of customer complaint handling systems and culture, and (2) to analyze the impact of such basic customer service on customer loyalty. The study is based on primary data collection using a structured questionnaire from a sample of business organisations in Bangalore, India. The sample companies were elicited from a panel of consumers who were asked to identify organisations providing superior basic customer service as opposed to organisations delivering inferior basic customer service, and what elements distinguished these two groups. Some of the indicative findings are: (1) Organisations providing superior basic customer service had a higher frequency of daily reviewing of customer complaints (56.7%) than organisations delivering inferior basic customer service (46.9%), but this narrows down when considering weekly review (81.7% and 79.7%, respectively). Thus, establishing a proper and timely customer complaint review system would enable organisations to provide superior basic customer service. (2) Organisations providing superior basic customer service had inbuilt corrective processes and/or actions for handling customer complaints (88.3%), as opposed to organisations delivering inferior basic customer service (76.6%). Thus, instituting an inbuilt corrective process for handling customer complaints would definitely provide greater satisfaction to the stakeholders and would thereby enable organisations to provide superior basic customer service. (3) Organisations providing superior basic customer service had a higher frequency of informing customers regarding customer complaint resolution within a day (35.0%) than organisations delivering inferior basic customer service (23.4%), and this gap widens when considering weekly information (58.3% and 42.2%, respectively). Streamlining the process of informing customers on complaint resolution would further enable organisations to provide superior basic customer service. (4) Organisations providing superior basic customer service fostered a customer-centric culture amongst employees, and in many such organisations it was top management’s involvement through periodic review of customer complaints that made the difference. In particular, organisations providing superior basic customer service strongly believe that customer service must be backed with top management commitment, with full employee involvement. (5) Organisations providing superior basic customer service had a higher rate of customer retention (51.83%) than organisations delivering inferior basic customer service (46.33%). Of course, customer retention/repeat purchase varied considerably with core product/service; superior basic customer service contributed to customer retention by providing a solid foundation for customer relationship. The study indicates that systems for frequent reviewing of customer complaints, with inbuilt corrective processes for handling customer complaints, and for providing adequate and timely information to customers on their complaints status, and a customer-centric organisational culture are crucial in delivering superior basic customer service, thereby enhancing customer retention and loyalty.