That’s our policy: Where do you fall on the customer service continuum?

Nov 01, 1999 10:30 PM  By

Every legitimate catalog company positions itself along a continuum of customer service, either by conscious effort or as a result of countless unplanned decisions. At one end of the scale are the most self-protective companies, those that set policies based solely on what the accounting department decides the business can afford. At the other end are the companies that bend over backward to make sure that every customer is happy.

But the vast majority of companies are somewhere between these two extremes. Whether you’re a catalog start-up or you’ve been around for 100 years, it’s important to determine where within the continuum your company’s service policies should fall. You may find that your policies are too conservative to satisfy most customers, or too lenient for you to be profitable.

What do we mean by “self-protective” companies? For starters, they use a toll telephone number for the order line as well as for customer service. Reps, who are trained not to “give away” the store, receive corrective feedback if they appear to err in favor of a customer. Call center trainers stress managing and controlling calls, with the underlying assumption that customers will try to get something for nothing. Efficiency is highly prized, and call length is carefully tracked.

Self-protective companies will put the onus on the dissatisfied customer to prove that a problem exists and that an adjustment is necessary. For instance, the customer must produce a packing slip, an invoice, or other documentation to achieve a service resolution. Everything is done by the book, and the rare case of an exception requires multiple approvals, so it takes a long time to get a problem resolved. Customers will tolerate these potential service barriers if they believe they’re getting good product value at reasonable cost, or if there is no other source available. But you can be sure these customers will complain about what they have to do to get service.

At the other extreme, the exceptionally eager-to-please companies assume that happy customers will buy more frequently and in larger amounts, and will also spread positive word of mouth. These catalogers position the profit-and-loss implications of their willingness to beat customer expectations as short-term expenses that will pay off in long-term revenue streams.

A company that goes above and beyond provides 800-numbers for orders, customer service, and faxes. Reps get substantial coaching about call quality and are trained to find a successful resolution to customers’ problems and concerns. Because the company assumes that customers are generally justified in their demands, managers encourage reps to ask customers how they would like an issue resolved. Management also provides reps with significant authority to spend the company’s money – sometimes hundreds of dollars – to rectify problems; budgets include funds for forgiveness discounts or certificates if something should go wrong, and for thank-you gifts for good customers.

For the most part, the companies that fall between these two positions try to take a fair and balanced approach to customer care. Catalogers that strive for balance evaluate customer service situations based on an array of factors, often starting with who’s at fault or who created the problem.

Whenever the balanced company or any of its agents is at fault, it takes responsibility and resolves the problem in favor of the customer, similar to the eager-to-please cataloger. Some catalogers consider their agents to be any third party involved in the transaction, including the parcel carrier. Others may draw the line at certain contracted relationships, such as particular drop shippers, and have customers deal with the third party directly to handle problems.

When a problem is clearly the customer’s fault, the balanced approach is to look at the customer’s history with the company. Is the problem a single occurrence or one of many? Is this a frequent buyer? A new customer? The balanced company also takes into account how unhappy the customer is and how much it would cost to make her happy.

Reps are typically given a small amount of financial authority, up to $25 or $50. Further expenditures require approval, but approval is easy to obtain from designated authorities who use established guidelines. Customer gifts are usually only for really good customers or really big problems.

A wide spectrum

Virtually any policy area can be positioned along this customer service continuum. Take returns. In the self-protective company, if the customer decides not to keep the merchandise, his recourse is somewhat limited. The period for accepting returns for full refund is explicit (usually 60 or 120 days, but occasionally as stringent as 10 days). If the product is guaranteed by the manufacturer’s warranty, the customer may have to return it directly to the manufacturer and pay any return shipping or postage. If a customer wants to return something after the return period has expired, some catalogers will impose a restocking or refurbishment fee.

The self-protective company will not ship a replacement for a damaged or defective product until the original item has been returned and inspected; then it will send the replacement out via the standard delivery method, unless the customer pays for expedited shipping. If the customer needs the replacement promptly, the rep will enter a new order but will not credit or refund the original order until after the original merchandise is received.

In the balanced company, if the customer receives damaged or defective merchandise, or if the reason for the return is otherwise the fault of the cataloger or its agents, the company pays return freight. Balanced catalogers will often automatically reship the new item if the value of the item falls below a preestablished cost threshold, and then ask the customer to return the original item within 30 or 60 days to avoid any charges for the replacement.

If the customer originally paid for expedited delivery, the balanced cataloger will express-ship the replacement; some will even express-ship at no additional cost if the customer needs the replacement item right away. But if the return is because the customer changed her mind about the item or didn’t care for the fit or the color, the balanced company typically expects the customer to pay the inbound shipping charge as a cost of the convenience of shopping direct.

Above-and-beyond catalog companies provide multiple returns options. Most often, these catalogers include prepaid return labels in the shipping carton, or if the customer wants the merchandise picked up, they issue call tags immediately. And if the value of the item is insignificant, the above-and-beyond cataloger asks the customer to discard the item if it’s damaged or defective instead of returning it. If the customer needs a replacement item immediately, the company pays express charges regardless of the original shipping method. The service rep also calls the customer to verify that the new merchandise arrived and is satisfactory.

Practices vary in other policy areas as well:

- Merchandise is not what the customer expected

The self-protective cataloger will provide a refund or credit for the item according to its standard return process.

The balanced cataloger will also treat this situation as a standard return, unless it’s clear that a significant number of customers have been similarly disappointed. In such cases, the company will take responsibility for the problem and refund shipping charges as well as the cost of item.

The above-and-beyond cataloger will work with the customer to try to find a satisfactory substitute. If a number of customers complain about the same item, the company may contact all customers who ordered the item, explain the situation, and offer to take it back for refund or credit even if it’s been used.

- Backorders

A minority of self-protective companies do not backorder merchandise, instead asking customers to call back and check if the merchandise is in stock at a later date. Those that do backorder goods rarely provide an expected receipt date but again tell the customer to call back to check status. In cases of warehouse backorders, when the system says the product is in stock but the picker has none of the items available on the shelves, the self-protective company may not mention this to the customer, in hopes that the product will eventually be located.

Some self-protective companies will take orders for out-of-stock merchandise they only expect to receive as returns trickle in. When merchandise arrives, it’s shipped out by whatever method is least expensive.

In the balanced company, the rep advises the customer if there’s an actual or likely backorder situation during the order call and gives a specific expected date for the receipt of backordered merchandise. If the company has to cancel the backorder to comply with the FTC rule (if goods are backordered for more than 30 days, you must cancel the order unless the customer expressly agrees to wait), it may call the customer to try to salvage the sale.

The above-and-beyond company always calls the customer to discuss backorders, possible cancellations, and potential substitutions. These catalogers also express-ship merchandise to the customer as soon as it’s received.

- Misshipments

The self-protective company will not reship without waiting for the results of a tracer or until the maximum allowable time for package delivery.

The balanced catalog company will automatically reship if the address was entered incorrectly but may not express-ship unless the customer specifically requests it. The cataloger will also contact the delivery company and reship after an “instant” tracer is performed (usually by going online with the parcel carrier’s system), identifying any problems the same day they’re raised.

The above-and-beyond company will reship express to make up for wasted time.

- Response time

It may take the self-protective company three or four days to respond to customer inquiries, and even longer to resolve a problem.

The balanced catalog company sets 24 hours or one business day as its standard response time.

The above-and-beyond company strives to resolve every issue during the original contact, and virtually every problem is completely resolved on the same day.

Remember that you can’t please all of the people all of the time, so you must determine how you will resolve cases of customer disappointment. Not every cataloger has the experience or resources to offer the super service of a Nordstrom. Then again, just because you’re a small or a new catalog doesn’t mean that you have to stick to restrictive service policies to try to save money.

The bottom line is that you want to keep your customers happy, because a happy customer is a loyal customer. But you have to figure out how far you are willing to go – or can afford to go – toward that end.

As you work on your service strategy, you can’t go wrong if you start by examining the kind of service your customers expect. Customer expectations are influenced by their experience with other companies – including your competitors – as well as by their perception of your organization and products as presented in your catalogs, on your Website, and on the phone.

For example, if your customer drives a Mercedes, wears Armani, and buys from you because she considers your products to be in the same category, then it’s likely that she expects sophisticated, high-touch service. On the other hand, the same customer may love a bargain when she’s in the market for nonfashion items. So she shops from discount catalogs and, as part of the deal, accepts more impersonal, “discounted” service. But keep in mind that your overall service posture is not inherently tied to your product line or market segment. For instance, some high-end catalogs take a conservative, self-protective stance, while some budget books will take extra steps to satisfy a customer.

As a catalog executive, you also need to consider your company’s intentions and priorities. Do you want to minimize customer annoyance? Reduce returns? Maximize customer confidence in buying direct? Boost revenue?

Above all, you want your service policies to reflect your corporate mission. That, along with the image you want to project and your business goals – not systems limitations and the procedures your employees are comfortable with – should determine your service policies.