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When business is bad you need quality service.

"We just can't afford it any more." The President of a large personal services firm was speaking at the monthly senior management meeting. What the company could not afford, in his estimation, was:

1) Customer satisfaction training for ALL front-line employees.

2) Trips by company engineers to study client operations and to uncover new service needs.

3) Time for senior managers to make regular "How're we doing?" calls to major clients.

The President spoke in response to a presentation by the marketing vice president, a bright-eyed MBA, 32 years old, sitting on the right side of a long directors' table. He enumerated the benefits of the current customer service program, in a professional manner, ending by emphasizing the word "more" when he said: "We need good service MORE, not less, when the economy is in a downturn than we do when the economy is healthy.

"Quality service," he said, "is the least expensive and most effective way to keep customers and to win new customers through word-of-mouth recommendation. It's a lot less expensive than an expanded marketing program, a big promotion, expanding the product lines or cutting prices."

"You get a lot of mileage out of service," he said.

In the discussion that followed, the company's executives who favored the customer service program stressed the difference between short-term thinking and long-term thinking.

One of them said: "In the short term you'll save money. But, since we expect to stay in business, we must think long-term. We've got to keep our customers when business is bad."

The executive would find that savvy service pros throughout the country also believe that service is more important during economic downturns, not less important.

When there are more sellers than buyers, companies discover that "you have to find ways to give the customer more value than merely the product," says Harvey Shycon, consultant with Arthur D. Little Inc. in Cambridge, MA.

Joe Calloway, leading sales and management consultant and professional speaker, puts it this way: "Now's the time to out-service competitors."


There's little doubt that many people continue buying from companies and stores because they like the way they're treated. "Treating" customers in a helpful, friendly, knowledgeable way all the time may well be the most effective marketing tactic ever developed.

Service is selling because service KEEPS customers who continue to buy.


If your company has a good service reputation, service-minded people compete for your jobs. Qualified applicants want to work for you, expecting that being associated with your well-liked organization will raise their personal status.

They tend to stay with you for a different reason: It's a pleasure to work in a place where the customers smile -- where they are excited about the good service; and where they tell the employees how much they are appreciated.

Employees in a company with excellent service find fulfillment in the appreciation of customers. Pleased and pleasant customers, a hallmark of good service, motivate employees to superior performance and high productivity.

One result of a customer service program at Kroger's, largest supermarket chain in America, was reduced turnover and absenteeism.

It makes financial sense to retain employees too. Burger King found its cost of replacing a trained hourly employee to be $1,100. Excessive turnover among hourly workers usually leads to high turnover among managers saddled with the responsibility of coping with it. A major full-service restaurant chain figured its cost of replacing a unit manager as $40,000.

This, then, is the chain of events: A standard of customer pleasing service leads to self-fulfillment for employees who then continue working over a long period; and it also leads to loyalty among customers because they enjoy dealing with these employees.


The cost of keeping customers with good service is far less than the cost of winning new customers with a bigger outside sales force, expensive advertising, sales promotion, and other traditional marketing programs. That's why service, very effective at retaining customers, is a marketing bargain -- exactly what the doctor ordered for a slow business period.

With a customer service program you need only train present employees in the arts and skills of satisfying customers. You needn't pay them more or hire new employees.

Remember: Employees who are helpful, pleasant, and brisk in their movements cost no more than insulting, indolent, condescending and uninformed employees.

According to a study by the business consulting firm, Zenger--Miller Inc., the typical per employee investment in customer service programs, including education, is about $2.58 per year.

A study of more than 200 corporations by Zenger-Miller found that most customer service education teaches front line employees how to cross-sell and how to handle irate customers.

Inexpensive customer service that attracts and keeps employees and that develops customer loyalty is a great opportunity for any business that intends to stay in business. Especially during economic downturns.

Oh, yes, the personal services company we purposely did not name, did, indeed, delete virtually all spending for service.

The company probably has not doomed itself to failure.

They've just made their job more difficult and given themselves a wafer-thin margin of error.

John Tschohl is author of Achieving Excellence Through Customer Service published by Prentice Hall in 1991. The successful book is in its fifth printing. The company he founded, Service Quality Institute in Minneapolis, is an international service consulting and training organization. Phone number: 1-800-548-0538. As a professional speaker, Tschohl frequently addresses senior management groups throughout the country. He is a leading authority on quality service and was called a "customer service guru" in a Time magazine cover story.
COPYRIGHT 1992 Canadian Institute of Management
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Tschohl, John
Publication:Canadian Manager
Date:Dec 22, 1992
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