MOI UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS TOWN CAMPUS DEPARTMENT OF TOURISM AND TOUR OPERATIONS MANAGEMENT

COURSE CODE: BTT 115/BTM 103

COURSE TITLE: INTRODUCTION TO SERVICE MANAGEMENT

LECTURER: MS. SUSAN MATIKU

TASK: WORKSHOP

30TH MARCH 2011

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GROUP MEMBERS

NAME 1. 2. LOMMA BERNICE LUSIA LIVINGSTONE BARKING 3. 4. 5. 6. LUSWETI FAITH MACHARIA FLORENCE NJERI MORONG DORICE RONOH MURIUKI HARRISON MWANGI 7. MUTHONI JACKLINE KAGENDO 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. KORIR LYDIA JEBIWOTT CHESEREK VICKY JERUTO ROTICH NELLY KOYI BELDINE AKINYI METTO EDWARD KIBIWOTT MUDECHE BENICE RITTER MUGUMA NEBERE MILIANE MUHINDRA DESMOND MULI STELLA MUTIO MUSEMBI HAMPHREY KAMBA 18 19 OTIENO KELVIN AGUTU CHELEGAT CELESTINE

REG. NUMBER BTM/1080/10 BTM/0002/10

SIGN

BTM/1036/10 BTT/0009/10 BTT/0038/10 BTT/0014/10

BTT/0015/10

BTM/1002/10 BTT/1016/10 BTM/0072/10 BTM/1015/10 BTM/1031/10 BTM/0078/10 BTM/0018/10 BTM/1043/10 BTM/0056/10 BTM/1051/10

BTM/1038/10 BTM/1061/10

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TABLE OF CONTENTS  INTRODUCTION  WHAT TO MEASURE IN CUSTOMER SATISFACTION  METHODS OF MEASURING CUSTOMER SATISFACTION  WAYS OF ENHANCING CUSTOMER SATISFACTION  IMPORTANCE OF CUSTOMER SATISAFACTION  CHALLENGES IN MEETING CUSTOMER SATISFACTION  CONSEQUENCES OF CUSTOMER DISSATISFACTION  HANDLING CUSTOMER COMPLAINS  APPLICABILITY OF CUSTOMER SATISAFACTION  CONCLUSION  RECOMMENDATIONS  REFERENCES

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INTRODUCTION
A customer is a term used to refer to a current or potential buyer or user of the services or products of an individual or organization. Types of customers 1. Institutional customers This generally refers to banks, financial institutions, insurance companies, and other business organizations that possesses or control considerable assets for large scale investing or purchasing. 2. Individual customers. This is the person that buys goods and services personally from the retail outlet Customer satisfaction It is a business term and a measure of how products and services supplied by a company meets or surpass customer expectations. It is defined as the number of customers or percentage of total customers whose reported experience with a firm, its products or its services (ratings) exceeds specified satisfactions goals. Satisfaction represents a more short term transaction - specific judgments. The level of customers satisfaction is the result of a customers comparison of the service quality expected in a given service encounter with perceived service quality. This means that satisfaction assessments require customer experience while quality does not. Satisfaction and dissatisfaction are seen as two ends of a continuum, where the location is defined by a comparison between expectations and outcomes. A customer will be satisfied if the outcome of the service meets his/her expectations. When the the service quality exceeds the expectation the service provider is in the happy position of having a delighted customer. A customer will be dissatisfied when the perceived overall service quality is below his or her expectations.

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Customer satisfaction management and therefore measurement and compliment are important ingredients of any strategy to increase customer loyalty and therefore increase in profit.

WHAT TO MEASURE IN CUSTOMER SATISFACTION

 Overall satisfaction: Customers should be asked explicitly about their overall satisfaction with the organizations performance. A distinction should be made in measuring satisfaction between relationship satisfaction and transaction satisfaction measurement.  Customer loyalty: Establishing a customer loyalty measure loyalty measure allows us to assess the relationship between satisfaction and loyalty in the organization. This assessment will help to justify investments in customer satisfaction However measuring customer loyalty is not easy. In multiple-supplier situations it is even difficult to define customer loyalty.  Referrals: Delighted customers may refer other customers to your service organization. It is therefore intriguing to link satisfaction and loyalty measurements to these referrals. However, since it is very difficult, if not possible, to link these measures to actual referrals, it is common to measure the intent to refer instead.

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METHODS OF MEASURING CUSTOMER SATISFACTION

Managing customers satisfaction efficiently is one the biggest challenge an organization face. The tools or methods to measure customer satisfaction needs to be defined sophisticatedly to fulfill the desired norms. There are following methods to measure customer satisfaction: 1. Direct Methods: Directly contacting customers and getting their valuable feedback is very important. Following are some of the ways by which customers could be directly tabbed: a) Getting customer feedback through third party agencies. b) Direct marketing, in-house call centers, complaint handling department could be treated as first point of contact for getting customer feedback. These feedbacks are compiled to analyze customers perception. c) Getting customer feedback through face to face conversation or meeting. d) Feedback through complaint or appreciation letter. e) Direct customer feedback through surveys and questionnaires. Organizations mostly employ external agencies to listen to their customers and provide dedicated feedback to them. These feedbacks needs to be sophisticated and in structured format so that conclusive results could be fetched out. Face to face meetings and complaint or appreciation letter engages immediate issues. The feedback received in this is not uniformed as different types of customers are addressed with different domains of questions. This hiders the analysis process to be performed accurately and consistently. Hence the best way is to implement a proper survey which consists of uniformed questionnaire to get customer feedback from well segmented customers. The design of the prepared questionnaire is an important aspect and should enclose all the essential factors of business. The questions asked should be in a way that the customer is encouraged to respond in a obvious way/. These feedback could received by the organizations can be treated as one of the best way to measure customer satisfaction. Apart from the above methods there is another very popular direct method which is surprise market visit. By this, information regarding different segment of products and services provided to the customers could be obtained in an efficient manner. It becomes easy for the supplier to know the weak and strong aspects of products and services.

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2. Indirect Method: The major drawback of direct methods is that it turns out to be very costly and requires a lot of pre compiled preparations to implement. For getting the valuable feedbacks the supplier totally depends on the customer due to which they looses options and chances to take corrective measure at correct time. Hence there are other following indirect methods of getting feedback regarding customer satisfaction:  Customer Complaints: Customers complaints are the issues and problems reported by the customer to supplier with regards to any specific product or related service. These complaints can be classified under different segments according to the severity and department. If the complaints under a particular segment go high in a specific period of time then the performance of the organization is degrading in that specific area or segment. But if the complaints diminish in a specific period of time then that means the organization is performing well and customer satisfaction level is also higher.  Customer Loyalty: It is necessarily required for an organization to interact and communicate with customers on a regular basis to increase customer loyalty. In these interactions and communications it is required to learn and determine all individual customer needs and respond accordingly. A customer is said to be loyal if he revisits supplier on regular basis for purchases. These loyal customers are the satisfied ones and hence they are bounded with a relationship with the supplier. Hence by obtaining the customer loyalty index, suppliers can indirectly measure customer satisfaction. As consumers reduce their spending due to the prevailing harsh economic environment, it is imperative for a business to measure customer satisfaction. It is the heart of any modern business strategy. Understanding customer demographics, expectations, motivations, and desires creates an opportunity to serve customers better than your competitors. Serving customers better; y y y Creates satisfied customers, Builds repeat business, Drives profitability.

In order to survive during these difficult times, businesses need to regularly gather customer satisfaction information on which to base their long term strategies. This information assists

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businesses to serve their customers efficiently and create competitive clout. Market research has shown that organizations with a well defined service culture have concrete competitive clout. This is more so because service culture is not an event but a process which involves all management from the CEO to the messenger. On the other hand, Customer satisfaction studies reveal how customers feel about service they experience from their supplier. They do not reveal why? Customer service measurement reveals the why that stimulates continuous improvement. Essentially, satisfaction studies report perceptions and service studies report performance. If a satisfaction study revealed that customers thought food service was slow in a chain of restaurants, valuable information has been gleaned. Acting on this information alone would be impractical. Would the chain simply ask employees to work faster? Would it risk serving undercooked food for the sake of quick service? Would it redesign its units to receive food orders more quickly? Of course not. The chain would drill down deeper into the data to determine the root cause, the why. The chain would measure the speed of customer service it provides, likely using mystery shoppers to take those measurements. If a subsequent mystery shopper study revealed that table-service customers were waiting an average of 10 minutes to receive their bills, a specific reason for customers to perceive slow service has been isolated. Causes for the delay can now be investigated. Causes might include slow credit card authorizations, understaffing, a backlog waiting for a manager approval, or lack of staff training to use computers. Mystery shopping studies help management understand what happens when their front office staffs interact with their customers. This provides real time experiences which management can immediately address. However, customer satisfaction surveys can be used to gauge and establish a service level index (SLI) for the company, which will then be tracked using Mystery Shoppers. Both studies are very important tools for effectively measuring how customers perceive your business.

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IMPORTANCE OF CUSTOMER SATISAFACTION Customer satisfaction has a number of very important significance to any business organization: 1) Customer ratings within organizations have powerful effects because they focus on the importance of fulfilling customers expectations. 2) It also warns of problems that can affect sales and profitability of the organization and the possible solutions to them. 3) When a brand has loyal customers, it gains positive word of mouth marketing which is both free and effective 4) Provides a leading indicator of purchase intentions and loyalty. 5) It helps to establish standards of customer care. 6) Minimizes organization confession about what is required and the reasons for the same. 7) Offers a competitive edge to a business organizations competitors. 8) Helps to control quality. 9) Offers added value to the customer. 10) Promotes the better understanding of customers by the organization during the service experience. 11) Helps in building customer relationship and retention 12) Customers choose companies whose staff take time to listen to the customers and find out their needs, dont just talk to them all the time, show genuine concern about their problem and come up with innovative ways to solving and do not try to force into a mob- treat, customers as individuals.

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WAYS OF ENHANCING CUSTOMER SATISFACTION 1. Communicate. Communication with the customer is the key to enhancing customer satisfaction. Follow Up and Follow Through to assure and confirm expectations have been satisfied. 2. Be Confident. Customers like to deal with people who know what they are doing. We dont want to hear, This is my first time doing this so 3. Be Professional. The customer is always right even when they are wrong. 4. Build Customer Confidence. Your performance and ability to meet the customers needs will re-assure them that they have made the right decision. 5. Build Value (Reputation). Be effective and perform efficiently: Everyone wants the best lawyer or the best doctor. We have the best person on it. 6. Ask the customer. Is there anything else we can do for you today? This suggests that you are able to do more if necessary. The customer may just say, Not today, but may be next time. At least you know theyll may be back versus NEVER. 7. Dont send out surveys. There are many ways to measure customer satisfaction without sending surveys. Paying someone to provide an opinion may even change it. Will I still get a free lunch if I tell you what Im really thinking? Remember the Vending Machine example from above? The vending machine knows exactly how poor performance looks and feels. 8. Be the Solution. We coined a phrase some time ago Thinking so you dont have to. Take away the problem and be the solution. 9. Thank You. Show your customers that you appreciate their business. It may be as easy as saying Thank You for Your Business. 10. Smile Whether the customer can see you or not - SMILE. Studies have suggested that people know or can sense when other people are smiling. We cant quote a source for this statement, however, smiling is also good for you. How does this relate to LEAN? Poor customer service will kill any business. At that time it doesnt matter how efficient or lean your operation is. Most lean operations present very well. The cleanliness and organization of the operation suggests a degree of sophistication and a

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real sense of we know what were doing. Unfortunately, the customer experience may not include tours of your operation. CHALLENGES IN MEETING CUSTOMER SATISFACTION 1. Changing needs of the customers; the needs of the customers vary from time to time and also from one customer to the next it is therefore difficult for the service providers to predict and harmonize these needs 2. Financial constrains; to meet the diverse needs of the customers a lot of monetary value is needed as new purchase and activities have to be meet to meet the customers expectations 3. Differing conceptions and ideas by customers; one dissatisfied customer spreads the news his or her dissatisfaction wide which is hared to correct as it takes a lot of time and resources. 4. Heterogeneity of services; services are hard to deliver satisfactorily as their quality majorly depend on the individuals who offer them. 5. Varying customer emotions and occurrence; Emotions could influence how people make various purchase decisions even when various choices and decisions are set before them with reference to what may have happened.. 6. Price variations; With the need for satisafaction there arises the need for better services and thus a corresponding increase in the price of the commodity. This may make the customer hesitant to purchase the new product. 7. Piracy; Piracy affects the production of original products since customers will tend to go for the cheaper pirated goods.

CONSEQUENCES OF CUSTOMER DISSATISFACTION 1. Loss of customers; this is because customers tend to prefer the company or business that satisfies their needs to the best 2. It destroys the image of the company; customers perceive a company depending on its ability to satisfy their needs. 3. It gives the competitors an upper hand as the customers abandon the company to go to another where their needs will be fully met

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4. This is also causes loss of revenue and income to the service company as the customers may choose to live the organization and choose the competitors where service quality and the customer satisfaction is their priority. 5. Gives the service company a bad image to the general public and the market due to bad word of mouth by the dissatisfied customer. HANDLING CUSTOMER COMPLANS Most business people think they have few dissatisfied customers because most do not complain. Research has shown that out of few who complain, there are many who go without complaining due to the following reasons: I. II. III. IV. It is not worth their time or trouble. Complaining will do no good since no one will care. Some do not know how to complain. The business owner may not be a neighbor of in the same caliber. Ways of managing consumer complains 1) Set up an effective policy for handling consumer complains. Effective complaint management enhances a firms reputation, builds consumer confidence and loyalty Importance of effective complaints management  Results into increased sales  Gives room for creation of new and better products  Leads to improved personnel performance  Results to business efficiency  It can also save unwanted cost 2) Set up procedures for handling complains. Basic steps for effective complaint management include the following;  Listen to the customer and acknowledge his complaints.  Develop empathy or show concern for the customer. Personalize the response  Ask questions to identify and analyze the problem. Obtain the customers ideas concerning possible alternatives solutions

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 Resolve the complaint according to policy. Decide in a fair manner what you are responsible for and initiate positive action to remedy the solution.  Follow through with the proposed resolution. When it cannot be immediately resolved, keep the customer informed of progress and notify promptly when a settlement has been reached.  Keep a record of complaints and proposed action for resolution.

3) When handling customer complaints by telephone one should do the following  Answer promptly.  Answer politely and project a voice of friendliness as you identify yourself and the name of the business since friendly voice can reduce tension.  If you cannot handle the complaint yourself do not keep the customer waiting. Locate the person who will be able to make some form of adjustments even if its only temporary satisfaction until the complaint is brought directly to the store by the customer  Do not hang up or ignore the complaint.  If you told the consumer that you would consult a supervisor, its important that you follow 4) Publicize and explain complaint procedures to consumer, consumers and the public. There are many ways to publicize the system, including:  Aon posters and signs in the sales and service area.  On contract forms and sales slips.  In the charge account mailings.  In manuals concerning the use of the product and its care  In advertising - your firms complaint system could be the theme of advertising campaign.  On product packaging and labeling. 5) Use complaint management to reduce future complaints. 6) Retailers should resolve complaints direct, swift and informal complain resolution at the place of purchase is advantageous to all concerned.

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APPLICABILITY OF CUSTOMER SATISAFACTION Customer satisfaction plays a very important role in customer relationship management. It involves using technology to organize, automate and synchronize business processes. The overall goals of customer satisfaction in any business enterprise are to: Find, attract and win new clients.  Nurture and retain the customers that the company already has.  Entice former clients back into the fold.  Reduce the cost of marketing and client service. For any business to compete effectively in the market it has to manage the services it offers to its clients well. This is made possible by analyzing the reaction of customers after the services are offered to them. This can be illustrated by the diagram below:Satisfied

Existing Customer Recovered Complaining Not recovered Dissatisfied Not complaining

Satisfied customer

Dissatisfied customer

Fig: A service satisfaction framework. This framework shows that only a certain percentage of customers who are dissatisfied voice their complaints, while others do not.

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It is therefore of prime importance of every enterprise to serve all customers uniformly. This will enable the business to solve the customers business universally in case of any complaints. This practice ensures effective service management in the organization.

CONCLUSION Customer satisfaction is very important to the success of any business. As a group, we therefore concluded the following: 1) It is difficult to measure the satisfaction of customers due to the intangibility of services which is not the case in the manufacturing industry 2) Not all customers complain whenever they are dissatisfied making it hard for any organization to manage services. 3) Customer satisfaction dictates the sales of an enterprise. The higher the bold the customers are satisfied the the more sales the business enterprise makes and vice versa. 4) Companies or business that satisfies their customers have a competitive edge against other competitors. 5) Most business fails due to fully or partially not satisfying their customers. 6) The growth rate of the business enterprise is determined by the rate at which the business satisfies its customers. 7) Customer satisfaction is one of the promotional tool among others i.e. advertising sales promotion, personal selling, exhibitions and trade fairs that is free and very effective. 8) It acts as one of the customer retention stragies therefore reducing the cost.

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RECCOMENDATIONS We recommend that each and every business enterprise to give its customers first priority and their customer satisfaction should be sole obligation of the business. It is important to measure customer satisfaction as well to give considerable solutions to complaints raised. It is very important to consider the kind of customers we refer to during our measuring as well as in our action on complains raised.

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REFERENCES 1. Gitman, Lawrence J.; Carl D. McDaniel (2005). The Future of Business: The Essentials. Mason, Ohio: South-Western. ISBN 0324320280. 2. John, Joby (2003). Fundamentals of Customer-Focused Management: Competing Through Service. Westport, Conn.: Praeger. ISBN 9781567205640. 3. Berry, Leonard L.; A. Parasuraman (1991). Marketing Services: Competing Through Quality. New York: Free Press. ISBN 9780029030790. 4. Kessler, Sheila (2003). Customer satisfaction toolkit for ISO 9001:2000. Milwaukee, Wis.: ASQ Quality Press. ISBN 0873895592. 5. Vikas Mittal; Carly Frennea (2010). "Customer Satisfaction: A Strategic Review and Guidelines for Managers." Marketing Science Institute: MSI Fast Forward (10-701). 6. Turel, Ofir; Alexander Serenko (2006). "Satisfaction with mobile services in Canada: An empirical investigation". Telecommunications Policy 30 (5-6): 314331.

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