Bsbcus501c SW PDF

1st Edition
Manage quality customer service

BSBCUS501C
Student Workbook

Student Workbook
BSBCUS501C Manage quality
customer service
1st Edition 2011
Part of a suite of support materials for the

BSB07 Business Services Training Package
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Published by: Innovation and Business Industry First published: December 2011
Skills Council Ltd
1st edition version: 1
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Stock code: BSBCUS501C1CL
Table of Contents
Getting Started ....................................................................................................................1
Features of the training program .................................................................................1
Structure of the training program ................................................................................1
Recommended reading ................................................................................................2
About Innovative Widgets .............................................................................................2
Section 1 Plan Customer Service....................................................................................4
What skills will you need? ............................................................................................4
What is customer service? ...........................................................................................5
What is quality customer service? ...............................................................................5
Internal and external customers ..................................................................................8
Customer behaviour .................................................................................................. 13
Investigate, identify and assess customer needs.................................................... 19
Customer questionnaire ............................................................................................ 21
Customer service plans ............................................................................................. 25
Relevant legislation, standards and codes of practice ........................................... 33
Section summary ....................................................................................................... 41
Further reading .......................................................................................................... 41
Section checklist ........................................................................................................ 41
Section 2 Deliver Customer Service ............................................................................ 42
What skills will you need? ......................................................................................... 42
Deliver customer service according to customer service plan ............................... 43
Customer service skills and attributes ..................................................................... 44
General communication skills................................................................................... 46
Handling customer complaints ................................................................................. 49
Monitor customer service.......................................................................................... 54
Manage team performance ...................................................................................... 59
Section summary ....................................................................................................... 62
Further reading .......................................................................................................... 62
Section 3 Review and Improve Customer Service ...................................................... 63
What skills will you need? ......................................................................................... 63
Continuous improvement strategies ........................................................................ 64
Systematic quality monitoring ................................................................................... 66
Variation analysis ....................................................................................................... 70
Value chain analysis .................................................................................................. 73
Gather and analyse customer feedback .................................................................. 74
Develop, procure and use resources........................................................................ 78
Seven quality monitoring, reporting and analysis tools .......................................... 81
Produce and evaluate customer service solutions .................................................. 86
Record-keeping .......................................................................................................... 90
Section summary ....................................................................................................... 95
Further reading .......................................................................................................... 95
Glossary ............................................................................................................................ 96
Appendices ....................................................................................................................... 97
Appendix 1: Answers to selected learning activities................................................ 97
Appendix 2: Complaints policy and procedure......................................................... 98
Student Workbook Getting Started
Getting Started
Features of the training program
The key features of this program are:
Student Workbook (SW) Self-paced learning activities to help you to understand
key concepts and terms. The Student Workbook is broken down into several
sections.
Facilitator-led sessions (FLS) Challenging and interesting learning activities that
can be completed in the classroom or by distance learning that will help you
consolidate and apply what you have learned in the Student Workbook.
Assessment Tasks Summative assessments where you can apply your new skills
and knowledge to solve authentic workplace tasks and problems.
Innovation & Business Skills Australia has licensed the use of over 200 video vignettes
from the Channel 9 television program, Your Business Success. The videos have been
carefully selected and embedded into relevant learning and assessment resources in
order to assist education providers and students in the learning process.
Each video is accompanied by a learning activity. Videos can be found on IBSAs YouTube
channel at <http://www.youtube.com/ibsachannel>.
Structure of the training program

The learning material focuses on the knowledge and skills that are necessary to manage
a quality customer service. This is provided in three sections planning, delivering and
improving:
Section 1: Plan customer service begins with a review of who customers are and
what customer service is. It continues by exploring the key elements of customer
service planning.
Section 2: Deliver customer service is about delivering quality customer service
and managing staff.
Section 3: Review and improve customer service looks at evaluating customer
service and introduces several problem-solving techniques.
Your facilitator may choose to combine or split sessions. For example, in some cases, this
training program may be delivered in two or three sessions, or in others, as many as eight
sessions.
BSBCUS501C Manage quality customer service 1st edition version: 1

2011 Innovation and Business Industry Skills Council Ltd Page 1 of 99
Getting Started Student Workbook
Recommended reading
Cole, K., 2010, Management: theory and practice, 4th edn, Pearson Education
Australia, NSW.
Commonwealth of Australia, 2010, Australian Consumer Law, viewed December
2011, <http://www.consumerlaw.gov.au/>.
Commonwealth of Australia, Customer service in your state or territory,
Business.gov.au, viewed December 2011,
<http://www.business.gov.au/BusinessTopics/Fairtrading/Pages/Customerservice
inyourstateorterritory.aspx>.
Glossary, American Society of Quality, viewed December 2011,
<http://www.asq.org/glossary/q.html>.
Goodman-Delahunty, J., 2001, ASICs Stakeholder Forum: Promoting Consumer
Complaints in the Financial Sector, ASIC, viewed December 2011, available online
through the speeches section of publications
<http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Speeches portal>.
About Innovative Widgets

In this Student Workbook, we use examples from a simulated business called Innovative
Widgets.
Innovative Widgets is the largest producer of widgets in Australia. Established in 1952, its
widgets are used as components in a broad range of machinery, from domestic
appliances to industrial equipment. The company is family-owned and run by the children
and one grandchild of the founder, who collectively form the board of directors. Until
recently, the grandchild had acted as managing director of Innovative Widgets.
Innovative Widgets operates from one location. There is a stores area in the warehouse
(for the raw materials used to make the widgets), a machine workshop (where the widgets
are produced) and dispatch and deliveries areas. The office block houses the following
operational departments:
purchasing
sales
accounts
human resources
a recently established customer services team.
1st edition version: 1 BSBCUS501C Manage quality customer service

Page 2 of 99 2011 Innovation and Business Industry Skills Council Ltd
Student Workbook Getting Started
Innovative Widgets Organisational Chart
In total, Innovative Widgets employs over 50 staff. Last year Innovative Widgets produced
a pre-tax profit $2,240,000 on a turnover of $16,000,000.
Innovative Widgets has a diverse customer base. Their largest customer is a major mining
equipment manufacturer. This customer accounts for approximately 40% of total widget
sales. The other 60% of sales are to medium and small businesses and to individuals and
sole traders.

Section 1 Plan Customer Service Student Workbook
Section 1 Plan Customer Service

This section introduces the concept of quality customer service, discusses internal and
external customers and their requirements, and discusses the identification and
assessment of customer needs. Finally, this section covers the key elements of a
customer service plan.
Scenario: Innovative Widgets
Innovative Widgets has been operating successfully for over 50 years and became the
largest manufacturer of widgets in Australia. The company is owned by the sons and
daughters of the companys founder, who all sit on the board of directors. Until recently
the managing director was the grandson of the founder.
The grandson was appointed managing director fifteen years ago. Little changed at
Innovative Widgets during his leadership. The company had an enviable position as
market leader and, with little competition, their market dominance was safe. About five
years ago it was noticed that sales were beginning to slump. The owners soon
discovered that the grandson was ill-equipped to face this challenge and they called in
a firm of management consultants to help out.
Initially, the consultants undertook a pre-audit by talking to staff, looking at work
processes and departmental records. They then produced an initial report identifying
some areas for concern. They suggested that Innovative Widgets:
were not aware of their external customers needs
were not aware of internal customer needs
did not have adequate policies and procedures for managing its customer
service.
The managing director needed help. He admitted that he had been complacent about
his customers, saying that he had always adopted the If its not broken, why fix it?
approach to customer relations. He also asked what an internal customer was was it
the staff members who bought widgets under the employee discount scheme at a
discounted price?
The consultants had a lot of work to do!
What skills will you need?

In order to work effectively as a customer service manager, you must be able to:
investigate, identify, assess, and include the needs of customers in planning

processes
ensure plans achieve the quality, time and cost specifications agreed with
customers.

Student Workbook Section 1 Plan Customer Service
What is customer service?

Customer service relates to the level of service an organisation offers to its customers
and the way an organisation interacts with a customer at all stages of the purchasing
process. Some organisations are predominantly service providers such as a legal firm or
accounting organisation while other organisations provide customer service in addition
to the physical product they are sell such as a car dealership or a shoe store. Customer
services cover a wide variety of activities, including extended guarantees; regular mailings
of information; after-sales servicing, such as a repair and replacement service; and a toll-
free helpline in case of complaints. The appeal of a companys products is greatly
influenced by the customer services it offers.
Being on par in terms of price and quality only gets you into the game.
Service wins the game.
Alessandra, 2009
What is quality customer service?

Before relating the notion of quality to customer service, lets look at some definitions of
quality.
The American Society for Quality (ASQ) defines quality as: the characteristics of a product
or service that bear on its ability to satisfy stated or implied needs and a product or
service free of deficiencies.
Noriaki Kano has described two important types of quality: must be quality and
attractive quality. 1 Kanos interpretation suggests that the must be quality is similar to
the ASQ definition of satisfying needs, whereas the attractive quality is what the
customer would love, but what hasnt yet even thought about. The key difference between
the ASQ and Kanos definitions of quality is that in Kanos definition there is the
suggestion that quality can exceed expectations.
Clearly, quality customer service is about meeting or exceeding the needs and
expectations of customers. Customers may have needs and expectations in regard to:
characteristics and specifications of products
manufacturing quality of the product itself
delivery times
time taken to process orders , enquiries and complaints.
Importantly, customers may not draw a clear distinction between the quality of a product
and the quality of service, particularly when making a complaint about the quality of a
product they have purchased.
1 Kano, N., 1984, Attractive quality and must-be quality, The Journal of the Japanese Society for Quality
Control, vol.14, no.2, pp. 3948.

Quality customer service may, therefore, involve acting on behalf of an organisation to

reassure customers and retain their business. In many such cases, quality customer
service involves identifying and satisfying customers emotional needs for validation and
reassurance.
Learning activity: Quality customer service
Consider two times in which you complained about a product or service: one instance in
which you came away from the experience of interacting with a customer service
representative satisfied, and one instance in which you came away dissatisfied.
Satisfactory experience:
Dissatisfactory experience:
List the reasons you felt satisfied or dissatisfied in the table provided below.
Satisfied: Dissatisfied:
Positive customer service experience Negative customer service experience

Answer the following questions.

1. With respect to the negative experience, what quality expectations were not met?
2. In the positive customer service experience, how did the customer service
representative (CSR) satisfy your:
a. external needs for quick service, correct ordering, product replacement,
etc.?
b. emotional needs, for example, for reassurance, closure, or appreciation?
3. Kanos notion of attractive quality refers to exceeding expectations. In what way

did the positive experience exceed expectations or satisfy expectations you didnt
know you had?

The goal of an organisation should be to ensure the quality of customer service meets or
exceeds the expectations of the customer to achieve a high level of customer satisfaction.
Customer satisfaction refers to how a product or service meets, fails to meet or exceeds
the customers expectations.
Quality service models

There are many models available to identify what a customer needs. One of the most
common models is the RATER model, which was developed in the mid 1980s by Zeithaml,
Parasuraman and Berry.
The RATER Model

Much research has gone into what customers need from their providers. One model, the
RATER model, is used extensively particularly in the service sector. RATER stands for
reliability, assurance, tangibles, empathy and responsiveness. It is believed that
customers, when assessing the service they want, consider the following five dimensions
of service:
Dimension Description
Reliability Dependability and accuracy of goods or service.
Assurance Employees courtesy, knowledge, confidence and trust.
Tangibles Appearance of employees, building, equipment, communication.
Empathy Care and attention paid to customer.
Responsiveness Provision of help, service and problem solving.
The focus of this section is on discovering all customer needs in order to plan and deliver
quality customer service.
First, however, lets take some time to analyse the concept of customer, discuss the
kinds of relationships that may exist between service providers and internal/external
customers, and explore customer needs in more detail.
Internal and external customers

A customer is the purchaser or user of a product or service. You may think of the
customer as the buyer of a product or service, but even within an organisation, employees
are also seen as customers of the various internal services provided. In addition, citizens
are viewed as customers of government services, and a logistics company can be the
customer of a supplier, even though the goods they transport are intended for another
end user.
It is easy to recognise the customer/provider relationship when you buy bread from a
baker. You are the customer; the bread is the product and the baker the provider. The
customer/provider relationship also applies when receiving a service, such as when
visiting your doctor. In this scenario you are again the customer and the doctor the
provider, but what are you buying? Here, you are buying a service. The service is the
advice the doctor gives you during the consultation.

Internal customers
The internal customer/provider relationship is often overlooked. An internal provider
refers to anyone who does something for another person or department within the same
organisation. The person within the organisation who receives what the provider gives is
an internal customer. For example, a secretary who types a letter for a manager to sign is
providing the manager with a product (the letter). In this example, the secretary is the
provider and the manager is the customer. Internal customers help and support you to
provide a quality product or service to your external customers.
Every workplace consists of people interacting with each other in similar ways. In a large
bakery, the flour may be stored in a storeroom. The storeman delivers the flour to the
baker. The storeman is providing a service (delivering flour) to the baker (receiving flour).
The storeman is the provider and the baker is the customer.
The baker bakes the bread and delivers it to the packer. Here the baker is the provider
and the packer is the customer.
The packer wraps the bread and delivers it to the dispatcher. The packer is the provider
and the dispatcher is the customer. The dispatcher loads the bread into a van and the
van driver delivers to the retail shops. The dispatcher is the provider to the driver. The
driver is the dispatchers customer.
Learning activity: Internal customers
Try to identify five internal customer/provider relationships in a workplace you are

familiar with.
Describe how the customer relationship is managed to maintain quality. What policies,
procedures, standards or agreed practices are in place to identify customer needs and
deliver customer satisfaction?

External customers
External customers are the people and organisations who have a need to purchase your
product or service. They have a budget that determines what they will provide in exchange
for a solution that meets their needs and expectations. External customers are able to
choose where and how they will spend their budget. The big question is who will receive
that money, you or your competitor? That will depend on who has earned the confidence
and trust of the customer. You and your competitor are competing for a slice of their
budget the business providing them with the best product/service wins. Its important
to remember that most customers tend to vote with their money and complain with
their feet.
The Australian Consumer Survey covers the general experiences of consumers and
businesses in dealing with consumer issues. The results of the 2011 survey showed that
consumers are generally aware of the laws that protect their purchases, that they are
aware of the consumer regulators and that they have the confidence to take action when
they need a dispute resolved. In this environment of savvy customers, it is better to
provide customers with what they expect than have to resolve dissatisfaction at a later
point. It is estimated that it costs Australian businesses a total of $6.6 billion a year to
deal with problems where they have a legal obligation to provide a remedy for the
consumer. 2
External customers and regulations

There are bodies that exist to protect consumers and promote fair trade. The main
regulatory body is the Australian Competition and Consumer Commission, but there are
also state run offices of fair trading or consumer affairs as well as other government and
private organisations that protect consumers. It is also important to note that on 1
January 2011 the Australian Consumer Law (ACL) commenced. The ACL is a cooperative
reform of the Australian Government and the states and territories, through the
Ministerial Council on Consumer Affairs (MCCA). Information on the ACL, its enforcement
and consumer policy in Australia is available on the Australian Consumer Law website at
<http://www.consumerlaw.gov.au>.
Supply and value chains

When you and your internal customers work as a cohesive team, your external customers
will benefit. Such teamwork means that the external customer, at the end of the supply
and value chains, receives the maximum value from their interaction with the business.
Supply chains show the process of procurement, production and delivery within an
organisation. In the bakery example on page 9, the supply chain includes:
warehouse (stores)
kitchen, packaging
dispatch/despatch
delivery.
2Australian Government, 2011, The Australian Consumer Survey Report, Australian Consumer Law, viewed
December 2011, <http://www.consumerlaw.gov.au/content/Content.aspx?doc=consumer_survey

/survey_overview.htm>.

Value chains show how each process in an organisation increases the value of the
product or service. In our bakery example, there are three processes that add value:
the kitchen adds value by turning the cheaper raw materials into bread
high quality packaging can result in receiving a higher price for bread
delivering to the customer produces delivery charges that produce a profit.
Note: The storeman and dispatcher have an important role to play in the supply chain, but
do not add value to the product.
The concepts of supply chains and value chains are related in that, as a product or
service passes through the supply chain, value is added to the product or service. At the
end of the both chains the customer service representative (CSR) adds the value of
quality customer service to the chain.
Poor internal relationships can lead to disastrous results for your external customers. It is
important that you are able to take ownership for customer concerns. In spite of
everything, CSRs are ambassadors for the company and should not hand over the blame
for late deliveries, poor service, and inadequate support. Customers aren't interested in
identifying specifically who is to blame. If there is a problem, then customers want that
problem to be fixed. It is up to the customer service team to use and direct all of the
company's resources to resolving their problem. Policies and procedures, service
standards and agreements for internal relationships should be in place to ensure the
supply-value chain functions as it should.
In some organisations a dedicated customer service department is established to ensure
consistent interactions with internal and external customers. However, as discussed
earlier, internal customer/client relationships exist everywhere within an organisation.
Everyone in an organisation is responsible for fostering quality customer service.
Learning activity: Supply chain at Innovative Widgets
Innovative Widgets have both internal and external customers. Their external
customers number over 1,000.
Internally, the reception yard receives the raw materials from the external suppliers.
The staff members in the yard are the suppliers customers.
The raw material is stored and kept in good condition until the production workshop
staff asks for a delivery.
At this point the storemen are suppliers and the workshop staff members are the
customers.
Consider Innovative Widgets organisational chart on the following page.

What other internal customer relationships exist?
Analyse each customer relationship:

What are the service needs?
How are the needs identified?
What policies, practices, standards, service guarantees, etc. are likely to govern
and control the relationship to maintain quality
What actions are or could be taken by service providers to improve service
quality?

Analyse the supply and value chain that ends with the external customer:
What policies, practices, standards, service guarantees, etc. might be put in
place to ensure the customer receives maximum value?
Customer behaviour
Customer behaviour can be thought of as both the decision-making process and the
physical activity undertaken to purchase and use a product or service.
Lets look at a common model of consumer decision-making:
Research into
Problem Evaluation of
product or
identification alternatives
service solutions
Post
Purchase/use
purchase/use
With respect to customer service, potential customers may base their decision-making on
the quality of customer service, whether the customer service experience meets the
original need which prompted the customers interaction with the business and how well
their need is met.
The general process described above varies from customer to customer depending on
needs and personal characteristics. To some extent, every customer is different. The
science of marketing of products and services, however, depends on the idea that,
although individual customers vary widely from one another with respect to some
personal attributes, with respect to their decision-making and purchasing behaviour,
consumers act in similar ways.

In the following pages, you will be introduced to some important concepts surrounding
customer behaviour and the relationship of customer behaviour to customer service. We
will look briefly at influences on customer behaviour, the notion of customer value, how
consumers behave when dissatisfied with a product or service, and finally at the
marketing process, how businesses attempt to influence behaviour.
Influences on customer behaviour

Why do customers behave the way they do when making purchasing or usage decisions?
According to Shail Patel and Antoine Schlijper in Models of Consumer Behaviour, there
are three factors which influence behaviour across 288 possible models of behaviour:
loyalty
sociology
psychology.
Loyalty describes the tendency for customers to purchase the same products or services.
Loyalty is an important force in shaping decision-making. Without loyalty, decisions would
be made solely on the basis of current availability. 3 In other words, customers would not
seek out the services of particular businesses or wait for service if alternatives were
present.
Sociology describes the tendency for customer decision-making to be influenced by the
decisions of others.
Psychology describes what and how aspects of products and services affect decision-
making. 4 For example, a product may appeal as a status symbol. Products may have
positive attributes or associations that consumers believe will to transfer to the
purchaser. Services, particularly those services delivered in connection to complaints
handling may appeal to a psychological need for empathy.
Undeniably, rational self-interest is also an influence on behaviour. In classical economic
theory individuals make purchasing decisions based on an unemotional, impartial view of
their own needs and they attempt to satisfy these needs at the lowest possible cost.
Marketers, however, presented with the task of differentiating products or services with
very similar features, emphasise the important role of social and psychological influences.
Underlying this emphasis is the appreciation of how much the decision-making process
while appearing conscious and rational is coloured by emotional reactions to products
or services.
Customer service channels and consumer behaviour

Customer service is the way an organisation interacts with a customer at all stages of the
purchasing process, i.e. before, during and after the purchase. A customer service
channel is the medium in which the transaction takes place.
3 Patel, S. and Schlijper, A., 2004, Models of Consumer Behaviour, Unilever Corporate Research, available
online, viewed December 2011, <http://www.maths-in-industry.org/miis/38/1/Consumers.pdf>.

4 Patel, S. and Schlijper, A., 2004, Models of Consumer Behaviour, Unilever Corporate Research, available
online, viewed December 2011, <http://www.maths-in-industry.org/miis/38/1/Consumers.pdf>.

Customer service channels include:

face-to-face email
telephone online.
Face-to-face interaction provides the opportunity to respond to customer needs

immediately and influence behaviour. Many customers will respond positively to the
personal touch this channel provides. For similar reasons, telephone interaction can also
be highly effective. Businesses use these interactive channels to build relationships with
customers in which customers actively participate and negotiate how a service is to be
delivered to them. Customer service representatives use active listening and other
techniques to seamlessly interpret customer behaviour, uncover customer needs and
tailor the service they deliver to the customer.
Increasingly, transactions are taking place without the need for service personnel and are
undertaken entirely over the internet. The design of the web pages and processes are
important factors in ensuring a quality service.
Interestingly enough, there is some evidence that customer service needs may be better
served through online service. Marketing researcher Yuping Liu argues that too much has
been made of the potential for face-to-face interaction to deliver effective service.
According to Liu, not enough attention has been paid by researchers to the way
customers actually behave in customer service scenarios. Many, but not all, customers
exhibit communication avoidance when faced with personal interactions. Far from
helping to shape the way products and services are delivered, as naively supposed, such
customers may avoid communicating altogether. Consequences for businesses include a
reduced ability to respond to customer needs and potential loss of customers.
Online alternatives, on the other hand, allow for customer interaction with customer
service personnel, but are non-threatening by virtue of being virtual interactions.
Customers may prefer to correspond, for example through email, live-messaging, or
potentially through far more interactive virtual environments. As online service technology
becomes increasingly sophisticated, more and more options for enriching, customising or
personalising the customer interaction are possible. 5
Learning activity: Customer value
Consider your own organisation or an organisation you are familiar with and answer the
following questions.
1. What channel do your customers prefer? Why?
5 Liu, Y., 2007, Online interaction readiness: conceptualisation and measurement, Journal of Customer
Behaviour, vol. 6, no. 3, pp. 283-299. Available online, viewed December 2011,
<http://www.yupingliu.com/files/papers/liu_interaction_readiness.pdf>.

2. What opportunities for online customer service exist?
Customer value
For customers of products or services, perhaps the most important influence on
behaviour is perceived value. When consumers make decisions, they will balance cost
against perceived value.
The notion of perceived value includes the satisfaction of all needs, including:
satisfaction of external needs, such as the real need for product features, speed of
service, etc.
satisfaction of sociological needs to be seen as part of a social group
satisfaction of psychological needs such as emotional validation.
For example, two products with the same price and features may be perceived as having
different values if one product includes friendly, dependable service.
Importantly, perceived value is relative to individuals or market segments. For example,
segments with low income may not attribute as much value to service as someone with a
higher income. Great service may not benefit the consumer as much as other factors. It is
important, therefore, to know your customer and how your customer perceives value.
Learning activity: Customer value 2
Consider your own organisation or an organisation you are familiar with. Answer the
1. What influences your customers behaviour?
2. How many kinds of customer/market segments do you deliver customer service

to?

3. How do your customers perceive value?
4. How could you increase customer service value for your different customer
segments?
The dissatisfied customer

So what happens if you dont deliver value? How do customers behave? Most research in
the field of customer psychology suggests that very few customers complain if they are
unhappy with a product or service, instead they never go back to that provider. They take
their business elsewhere. In addition, they tell lots of their friends about their bad
experience.
Consider the following facts.
The majority of unhappy customers dont complain because they dont want the
stress associated with complaining or they think their complaint will not do any
good.
As little as 5% of unhappy customers complain 6. (Goodman-Delahunty, 2001)
If the complaint is resolved, more than half will continue to do business.
Unhappy customers tell about ten others of their experience.
Customers who complain and have their complaint resolved tell about 5 others.
On average, it is much cheaper to keep a customer than to find a new one.
Customers often behave with the herd mentality. If customers start to leave you,
others will follow them just to be part of the herd.
So for every customer who complains, there are likely to be many others who are
unhappy, but do not complain. Customers simply leave, at great expense to the business.
This final point underscores the importance many people attribute to the quality of service
they receive. The perceived value of customer service shapes purchasing behaviour and
custom.
6 Goodman-Delahunty, J., 2001, ASICs Stakeholder Forum: Promoting Consumer Complaints in the Financial
Sector, ASIC, p. 5.

In Section 2 of this Student Workbook we will consider ways to handle customer

complaints in such a way as to satisfy needs, benefit customers and increase the value of
the customer experience.
Learning activity: Customer complaints
Consider your own organisation or an organisation you are familiar with. Answer the
1. How does your organisation handle customer complaints?
2. Considering the above information regarding customer behaviour, how could your
organisation add value to interactions with customers to:
a. defuse complaints?
b. retain customers?
The marketing process and customer service

The marketing process may be thought of as the attempt by businesses to influence
customer behaviour by appealing to those factors thought to influence purchasing.
Typically, businesses will first conduct marketing research to determine who is likely to
want a particular product or service. During the marketing process, businesses will
identify target markets or segments of the total market containing potential consumers
with common characteristics.
Once a target market segment has been identified, marketers analyse data and refine
their knowledge of shared characteristics or attributes of the segment in a process called
profiling the segment. Attributes may be psychological and influence decision-making,
they may be demographic attributes, or they may be physical behaviours. Crucially,
marketers will attempt to define the concept of value for customer segments.

Finally, once businesses know enough about their potential customers, they will design a
marketing mix for the product and service including price, product, promotion and
distribution elements.
With regard to customer service, a key element of the marketing mix is distribution.
Distribution refers to how a product or service is delivered to customers. For example,
customers may make a decision to purchase or not purchase a product or service on the
basis of friendly service. On the other hand, marketing research may uncover that
knowledgeable or fast service is a more important determinant of purchasing and usage
decisions. Businesses may also promote themselves as offering superior service as a way
of attracting customers.
Investigate, identify and assess customer needs

In order to market products and services effectively and satisfy customer service needs,
businesses need to actively identify the needs of their customers.
Depending upon the type of customer/provider relationship, there may be one or many
methods of identifying customer needs. The secretary typing a letter for the manager
need only ask a few questions to make sure the managers needs are identified. But a
multi-national oil company would find it impossible to enter into a conversation with all
their customers. What may be appropriate for an airline might not be appropriate for a
corner cafe.
The following list provides some examples of ways to investigate customer needs:
Informal face-to-face discussions are particularly useful if there are a small number
of customers.
Telephone interviews can be useful if there are large distances between the
customers and provider.
Paper surveys, usually sent through the post, can be useful for gathering
information but often the return rate is low.
Internet surveys, often displayed as pop-up boxes, rely on customer traffic to your
website.
Email surveys are better targeted towards your customer.
Telephone surveys, when unsolicited, are often seen as intrusive but may be
effective when connected to calls made by customers.
Suggestion boxes can be placed in store and can generate good ideas but require
follow-up and maintenance to make customers feel valued after making
suggestions.
Point-of-contact questioning, such as at the cash register, can often provide an
informal method of identifying customer needs.
Focus groups, where samples of customers are questioned about their needs, are
useful for organisations with large numbers of customers.

Less direct methods of identifying customer needs may also be used. Some methods
employed are:
analysing customer interaction recordings and observations
analysing of sales data, including cross-sales and up sales data
correlating sales data, etc with other market data such as demographic data, social
or economic trends, etc
analysing market research by external providers.
Tip: Getting customer feedback
Collecting customer feedback can be deceptively simple. The following example is from
the Innocent drinks website.
Innocent Fruit smoothies, viewed December 2010,
<http://www.innocentdrinks.co.uk/>.
In the summer of 1998 when we had developed our first smoothie recipes but were still
nervous about giving up our proper jobs, we bought 500 worth of fruit, turned it into
smoothies and sold them from a stall at a little music festival in London.
We put up a big sign saying: Do you think we should give up our jobs to make these
smoothies? and put out a bin saying YES and a bin saying NO and asked people to
put the empty bottle in the right bin.
At the end of the weekend the YES bin was full so we went in the next day and
resigned. 7
Assess customer needs

Once you have gathered data on customer needs, you will need to carefully assess
implications for customer service. If you have carefully designed the tools you will use to
collect data and have considered in advance how you will interpret and use this data this
task will be much easier to carry out.
Firstly, you will need to carry out a gap analysis between customer expectations and the
reality of customer service. Secondly, you will need to analyse cause and effect to identify
the reasons behind customers unmet expectations. Thirdly, you will need to devise
activities systems and processes to avoid poor performance and close the performance
gap. Section 3 will deal with performance data analysis tools and systematic customer
service improvement in more detail.
7 Sourced with permission from Innocent Drinks: Our story, Innocent Drinks, viewed December 2011,
<http://www.innocentdrinks.co.uk>.

Learning activity: Assess customer needs
Consider a business you are familiar with. Answer the following questions.
1. What methods are used to collect customer information?
2. How are these methods designed to collect the most useful information?
3. How is this information analysed to identify needs for the purpose of improving
customer service?
Customer questionnaire
Lets look at perhaps the most commonly used method of directly accessing customer
information questionnaires.
Questionnaire design
To design effective questionnaires, you need to determine what kind of data you require
to make management decisions about how to meet customer service needs. It is
important to consider if quantitative or qualitative data is required.
Quantitative data refers to data that can be converted into numerical form and organised
into tables and graphs. Qualitative data refers to comments such as suggestions for
improvement, where the customer is asked an open-ended question.
Quantitative data is easier to process and is useful when surveying large numbers of
people. Qualitative data can provide richer results, but can be difficult to analyse. Often a
mix is used; respondents might answer close-ended questions throughout the
questionnaire followed by a space provided for further comments (an open-ended request
for information).
Questions and scales should be designed to pass two tests: validity and reliability.
Question validity
A question is considered valid when the responder understands it in the same way as the
person writing the question. For example, cafe owners might ask customers when they
pay their bill: Did you enjoy the coffee? every time the owners get a yes response, they
assume that the customer was satisfied with the cafe. What if the customer found the
rest rooms dirty and has decided not to return? Is the owners question valid?

When writing questions for a survey they should be validated by conducting a smaller
survey and interviewing the responder to ensure that they understood the question as it
was intended to be understood.
Question reliability
A question is considered reliable if the response given would be the same as a second
response to the same question with the same conditions. For example, if I asked: On a
scale of 110 where 1 is ice cold and 10 is piping hot, please score your coffee
temperature. I may get different results for the same temperature of coffee. The question
is not reliable.
Reliability issues can be resolved by careful design of question and scale. In the example
above a more reliable question would be: Was your coffee too cold, about right or too
hot?
Question types to avoid

There are several types of questions that need to be avoided in surveys, some examples
are provided below.
Loaded A loaded question is partial and leads the responder to a preferred

response, e.g. you wouldnt want to buy from competitor X would you?
Complex Make the question as simple as possible so as not to confuse the
responder. Complex questions can also introduce too many variables
resulting in reliability issues: given the problems in the Asian markets
coupled to the strength of the dollar, but excluding the economic climate
in Europe, how would you describe your business confidence?
Two-in-one Ask one question at a time, otherwise the responder doesnt know which
to answer. For example what is the quickest, cheapest way for us to
deliver widgets to you? The quickest way to deliver may not be the
cheapest.
With All businesses use acronyms, but not all customers understand them.
acronyms Rather than ask: Did you find the SW useful when undertaking
BSBCUS501C? perhaps: Did you find the Student Workbook useful when
undertaking your Managing quality customer service course?
Personal Be aware of confidentiality issues and that some questions can be
intrusive. An overly personal question will discourage a customer from
completing the questionnaire.
Scales
There are many different types of scales used in questionnaires and careful consideration
needs to be given to their selection. The main types of scales are as follows.
Nominal These scales ask the responder to select from a list of words, such as
yes/no, or sometimes/often/never.
Ordinal Ordinal scales ask the responder to rank items, such as Rank the
following in order of importance: price, availability, quality, one year
guarantee.

Interval Interval scales ask the responder to rate something on a given scale,
where the differences on the scale are of equal strength. An example may
be: Please circle which best describes what you consider when buying:
Price is the most important factor when I buy widgets.
strongly agree/neither agree or disagree/strongly disagree
Ratio Ratio questions ask for actual data, such as how many, how old, how
much, etc.
Bi-polar Bi-polar scales ask the responder to place a mark between two opposites,
such as: Happy_ _ _ _ _ Sad or
Will shop here again _ _ _ _ _ Will not shop here again
Likert Likert scales are designed to gather opinions or attitudes and ask
responders to select from scales such as strongly
agree/agree/neither/disagree/strongly disagree
RATER
RATER (previously discussed on page 8) can be used as a guide to help you identify what
questions to ask your customers. The questions will be different for different businesses,
but the following is provided as a guide.
Dimension Questions
Reliability What precise item or service is required?

What are the specifications and tolerances?
When are the deadlines for delivering the product?
What guarantee is needed?
Assurance What level of product/service knowledge do we expect our

employees to have (define for any employees that come into
contact with the customer)?
What style of interrelation is preferred, e.g.
friendly/formal/courteous?
Should/do our employees appear confident and trustworthy?
Tangibles How are our employees expected to appear, e.g.

uniforms/formal/casual?
What should our buildings look like?
What should our equipment such as machines and vehicles look
like?
What should our letters, brochures and website look like?
Empathy Do our staff members show adequate and appropriate care and
attention?
Responsiveness How quickly do you want us to respond to your requests?

If things go wrong, what should our complaints procedures look
like?

Learning activity: Customer questionnaire
Consider a business you are familiar with and design a questionnaire to identify
customer needs for that business.

Learning activity: Conducting surveys
Watch the video BSBCUS501A: Conducting surveys on IBSAs YouTube channel at

<http://www.youtube.com/ibsachannel>, and answer the following questions.
1. Why is the incentive suggested to Heather Howard when creating her customer
questionnaire?
2. How else could the news agency use an incentive scheme to encourage
customers to complete the questionnaire?
Suggested answers to this activity are provided in Appendix 1 of this Student

Workbook.
Customer service plans

It is essential to have a plan to meet customer requirements. Each plan will be different
for different business sectors and businesses within sectors, but as a guide most plans
would contain:
a customer service vision and mission
product and/or service standards
a policy and procedures for identifying customer needs
a policy and procedures for customer feedback
a policy and procedures for managing complaints
A policy and procedures for managing record keeping
a section on continuous improvement
a customer service charter.

The following paragraphs explain what is normally included in each section of a customer
service plan.
Customer service vision and mission

If you dont know where youre going, youre likely to end up somewhere else. In order to
avoid this happening in business, a vision and mission is often developed. Some
companies use different terms for mission and vision, such as values statements or
guiding principles.
A customer service vision and mission are normally short statements that describe how
customer services will be in the future (the vision). The way the vision is to be achieved is
usually called the mission.
Example: Mission and vision statements:
Vision
In five years time, Company X will be considered a market leader in customer service.
Mission
Company X aims to deliver friendly, innovative and quality service to all internal and
external customers.
A customer service vision is a statement of how you see customer services being in the
future. The future can be any time, but is normally 510 years time. Vision statements
can take many forms, but most tend to be short and punchy, such as the Ford Motor
companys:
Our vision is to become the worlds leading consumer company for

automotive products and services.
A mission statement can also be equally short. It defines what the company will do to
achieve its vision. The Ford Motor Companys states:
We are a global family with a proud heritage passionately committed to

providing personal mobility for people around the world. We anticipate
consumer needs and deliver outstanding products and services that
improve peoples lives.
In addition, Ford has a Value statement which reads:
The customer is Job 1. We do the right thing for our customers, our
people, our environment and our society. By improving everything we do,
we provide superior returns to our shareholders.
A customer service plan should clearly identify how the business wants its customer
services to be in the future and how it intends to get there. A shared vision and mission
can be a powerful tool for guiding customer service delivery

Learning activity: Mission and vision statements
Write customer service mission and vision statements for a company you are familiar
with.
Note: Tailor your statements to reflect the actual goals of the business and needs of
customers. If you have access to company documentation, look at company strategic
plans or vision and mission statements contained in the companys business plan for
guidance or inspiration.
Mission statement
Vision statement
Product and/or service standards

A clear description of the product or service specifications is essential in order to respond
to customer queries and/or complaints. This description would normally include
tolerances, guarantees, delivery times/deadlines, etc.
Organisational policies and procedures

A policy is a written plan that describes what an organisation aims to achieve and
procedures are individual tasks that need to be done to achieve the organisations aims.
The customer service vision and mission will drive policy and procedures. For example, if
the mission is providing the lowest cost solution to managing customer relations, the
policy will differ significantly compared to a mission of providing excellence in all that we
do. The first might be appropriate for budget accommodation and the second for a five
star hotel.
A policy is a statement of intent related to an issue or function such as customer service.
A policy should include:
purpose statement the context of the policy, why it is required, the desired
standard or overall objective
scope the application of the policy (particular location, workgroup, etc.)
resources additional documents, related forms, etc.

roles and responsibilities who is responsible for what in the implementation of

the policy
reference to legislation that the policy specifically complies with where applicable.
Procedures are developed to support the implementation of the relevant policy. A

procedure states the complete instructions for completing an activity covered by the
policy. Procedures include the following as applicable:
step-by-step instructions for carrying out tasks and processes
training requirements
process for monitoring, reviewing and reporting
requirements for documentation and record-keeping.
Learning activity: Policy for customers
Visit the Monash University Policy Bank at <http://www.policy.monash.edu/policy-

bank/> and the Derwent Valley Council policy documents website at
<http://www.derwentvalley.tas.gov.au> (under Council Documents).
Identify three policies from each organisation that apply to external customers.
Most organisations will have a large number of policies and procedures that determine
how to deal with internal customers across a number of areas. For examples of policies
that cover internal customers, visit the Monash university website at
<http://www.adm.monash.edu.au/workplace-policy/>.
Effective policies and procedures should work to support the seamless integration of
business operations from different management areas. Policies and procedures should
also support and reinforce company culture, or how we do things at company X.
A good tactic to ensure policies and procedures from two management areas harmonise
such as customer relationship management and performance management is to
either reduce the number of individual policies, or base the individual policies on common
principles or values such as commitment to corporate ethics, or high performance. These
principles, in turn, should relate to or support company business or strategic goals. In this
way, individual policies and procedures will work to reinforce and support a company-
wide, integrated approach to doing business.

Policy and procedures for identifying customer needs

The customer service plan should contain a policy for identifying customer needs. The
policy may also state who is accountable for identifying the needs and what frequency
needs would need to be identified. Policies should contain reference to relevant
legislation discussed later in this part.
The procedures are the individual tasks that need to be taken to identify customer needs.
They should state who is responsible for undertaking each task. Complicated tasks are
usually presented as step-by-step procedures. A procedure for identifying customer needs
would state what action is to be taken to identify customer needs.
Policy and procedures for obtaining customer feedback

A policy for obtaining customer feedback would contain who is accountable for obtaining
customer feedback and who was responsible for undertaking the procedures tasks.
Procedures would include what strategies are to be used to obtain feedback. Policies
should contain reference to relevant legislation.
Policy and procedures for managing customer complaints

The policy should state the organisations commitment to managing customer complaints
and provide procedures for those employees who come into contact with customers. The
procedures should identify how to respond to customers and what limits of authority
employees have. Policies should contain reference to relevant legislation and may also
refer to voluntary standards.
A more detailed discussion of managing customer complaints is given later in Section 2
(see page 49).
Policy and procedures for managing records, reports and recommendations

The policy should state the organisations commitment to managing customer information
and employee information in accordance with relevant legislation such as the Privacy Act.
Procedures should specify steps to take to ensure the proper use of such information.
Policy and procedures should also be put in place for the systematic creation of and
storage of reports and recommendations for the purpose of continuous improvement of
customer service
Policy and procedures and customer needs

In Section 1 the RATER system was described as a model for identifying customer needs.
Having received feedback from customers it is essential to write and implement a policy
and procedures that will help ensure that the organisation meets the customer needs and
delivers quality service.
Consider the following customer responses to RATER questions from two airlines.
Question Budget Airline National Carrier
What is the maximum fare you will pay for a $25 $175
ticket from cities A and B?
How do you expect our cabin staff to dress? Not important Smart uniforms

Question Budget Airline National Carrier
Do you expect a meal? No Yes
Do you need a dedicated check-in? No Yes
Is a non-refundable ticket OK? Fine. Its cheap. No, Id want refund.
Do you expect a frequent flyer lounge? No Yes
Will you take your rubbish with you? Yes No
Because customer needs and expectations are different, the Budget Airlines policies and
procedures will be significantly different to the National Carriers. Using the feedback from
RATER guides, the development of policy and procedures in this case, results in differences
on several points:
product standards: prices, delivery times, quality tolerances, etc.
uniforms: suit and tie versus open collar
mode of contact: deference versus friendly
cleanliness: spotless versus tidy
after-sale contact: none needed (no refunds) versus telephone team to resolve
issues.
Learning activity: Policies and procedures
Consider the two airlines above. Using Monash Universitys policies and procedures as
a guide, create customer service policies for the airlines.
You may choose to use the blank policy template provided by Monash on their Writing
University Policy page available at <http://policy.monash.edu.au/processes/writing-
policy.html> as a guide for creating the policies and procedures.

Answer the following questions.

1. How do the policies differ? Why do they differ?
2. Consider customer service procedures that would be governed by the policies you
have written. How might these procedures differ? On which points would they
differ? Why? On which points wouldnt they differ, or differ minimally? Why?
a. On step-by-step instructions for carrying out tasks and processes?
b. On training requirements?
c. On process for monitoring, reviewing and reporting?
d. On requirements for documentation and record-keeping?
Continuous improvement
Most plans would contain evidence of continuous improvement. There should be a
continuous cycle of updating the plan, acting on, reviewing and updating the plan. A
customer service plan may include a section on what general process the business will
follow to ensure the continuous improvement of customer service to meet customer
needs.

Customer service charter

A customer service charter is often produced to inform customers of the customer-
relevant parts of the customer service plan. It would normally not include specific
procedures for employees on how to deal with customers face-to-face or on the
telephone. A customer service charter is an important tool for organisations to manage
public relations; set expectations in line with more internal, operations-focussed customer
service plans; and promote the organisation as responsive to customer need.
Learning activity: Customer service plans
Download a customer service plan. An example from the Latrobe City Council is
available from <http://www.latrobe.vic.gov.au/About/Publications/> (the link is at the
bottom of the page).
1. From the information provided in this customer service plan, note down:
a. who the council has identified as their internal and external customers
b. the customer service channels that they have developed standards for
c. the ways they have identified will be a measure of their level of customer
service success.
2. Find another example of a customer service plan online, and note some
similarities and differences between the plan you have located and the Latrobe
City Council customer service plan.

Relevant legislation, standards and codes of practice

Businesses providing customer service to consumers should take into account the
legislation that has been designed to protect consumers and business, particularly with
respect to the use of customer information and marketing activity.
The following pages list relevant legislation, mandatory and non-mandatory standards and
codes of practice that will affect the design and development of customer service plans
and charters.
Relevant legislation
Privacy Act 1988
The Privacy Act 1988 regulates how personal information is handled. It covers such
things as:
how personal information is collected
how it is then used and disclosed
its accuracy and how securely it is kept
general rights to access that information.
Consider the following ten rules to protect consumers personal information.

1. Only collect information that is necessary.
2. Do not collect personal information about an individual just because you think that
information may come in handy later.
3. Tell people what you are going to do with the personal information you collect about
them.
4. Consider whether you should be using personal information for a particular purpose.
5. Consider whether you need to disclose personal information.
6. If people ask for access to their own personal information on file (not the
information of another individual), grant them access .
7. Keep personal information secure.
8. Dont keep information you no longer need or are no longer required to retain.
9. Keep personal information accurate and up to date.
10. Consider making someone in your organisation or agency responsible for privacy. 8
With respect to managing customer service, privacy legislation may be relevant to policies
dealing with the treatment of customer details and records keeping.
8NPPs Plain English summary, Office of the Australian Information Commissioner, viewed December
2011, <http://www.privacy.gov.au>.

Australias Do Not Call Register for telemarketing

Australias Do Not Call legislation came into effect on 31 May 2007.
It is now illegal for telemarketers to call Australian phone numbers which are mainly for
personal or domestic use and whose owners have put their numbers on the Do Not Call
Register.
Exceptions include market research calls and calls from charities, and political parties.
Note that, for market research calls to be exempt there must be no intent to sell a
product or service (to that customer within that call). In other words, you should not
conduct marketing under the cover of customer service market research. 9
Anti-spam legislation
Spam is electronic mail that is sent indiscriminately to many, many people. Spam is
similar to junk mail that you receive in your letter box; however, spam can be much more
sinister. Spam is often used as a disguise to infect computers with viruses that can
damage them, or worse, to extract personal data such as credit card details.
As a result, spam is illegal in Australia. This means that it is an offence to send unsolicited
electronic material to members of the public. The ACMA and the Australian High Tech
Crime Centre work in partnership to identify and track organisations or individuals who
breach Australias Spam Act 2003.
Unsolicited commercial emails must contain accurate information about the origin of the
mail and provide a means for recipient to opt out. The regulation applies to email, SMS,
MMS, and instant messaging.
Material that is not of a commercial nature (i.e. is not selling a product or service) is
exempt. This includes pure market research and emails from charities, political parties,
and religious organisations that are seeking donations. 10
Anti-discrimination legislation
Laws about discrimination are made at both the Commonwealth and the state/territory
level. These laws provide a basis on which individuals may lodge a complaint including
discrimination because of race, sex, disability and age.
Commonwealth laws and the state/territory laws generally cover the same grounds and
areas of discrimination. However, there are some gaps in the protection that is offered
between different states and territories and at a Commonwealth level. Workplace
discrimination is unlawful. All businesses need to be familiar with relevant legislation to
prevent incidences of discrimination in the workplace. Some relevant anti-discrimination
Acts are listed below.
Age Discrimination Act 2004
Australian Human Rights Commission Act 1986
Disability Discrimination Act 1992
9FAQs, Do Not Call Register, viewed December 2011, <https://www.donotcall.gov.au/consumerfaq.cfm>.

10Spam Background information, Australian Communications and Media Authority, viewed December
2011, <http://www.acma.gov.au/WEB/STANDARD/pc=PC_2861>.

Racial Discrimination Act 1975
Sex Discrimination Act 1984.
Generally it is unlawful to discriminate on the basis of the following 16 characteristics:

sex political belief or activity
relationship status trade union activity
pregnancy lawful sexual activity
parental status gender identity
breastfeeding sexuality
age family responsibilities
race association with, or relation to, a

person identified on the basis of the
impairment
above.
religious belief or religious activity
Anti-discrimination legislation may be relevant to customer service policies dealing with

the treatment of both customers and employees. For example, all customers should be
given the same access to services regardless of the 16 characteristics listed above.
Similarly, the performance management, coaching or training of employees must be
carried out in a non-discriminatory manner. 11
Occupational health and safety legislation

OHS legislation aims to ensure the health and safety of workers and workplaces through
requiring employers to identify, assess and reduce or eliminate OHS risks. Employers are
required to consult with employees on OHS issues and respond to OHS issues raised by
employees.
Occupational health and safety legislation is enacted and enforced by each individual
state and territory. However, new federal legislation was endorsed in late 2009, known as
the Model Work Health and Safety Act 2009. The main aim of this legislation is to
harmonise OHS legislation and to create nationally consistent OHS legal standards and
obligations. Under the new legislation, the Commonwealth and each state and territory
must enact laws that reflect the model work health and safety laws by the end of
December 2011. 12
For more information about these changes and the new Act, visit Safe Work Australia:
Safe Work Australia, 2009, Frequently asked questions, Safe Work Australia,
viewed December 2011, <http://www.safeworkaustralia.gov.au/Legislation/FAQ/
Pages/FAQ.aspx>.
11 Fact sheets for use in the workplace, Australian Human Rights Commission Information for Employers,
viewed December 2011, <http://www.hreoc.gov.au/info_for_employers/fact/index.html>.

12Model work health and safety Act, Safe Work Australia, viewed December 2011,
<http://safeworkaustralia.gov.au/LEGISLATION/MODELWHSACT/Pages/ModelWHSAct.aspx>

Trade practices (competition and consumer) legislation

On 1 January 2011 the Trade Practices Act 1974 was renamed the Competition and
Consumer Act 2010.
The Competition and Consumer Act 2010 forbids marketing practices or activities that
could harm companies, their employees, their customers, or government agencies,
regardless of the justification for such activities.
Specifically prohibited activities include the following:
using deceptive or misleading statements
attempting to induce individuals to place their personal interests above those of the
companies or organisations they represent
attempting to restrict competition by:
inducing a competitor or customer to breach a contract with a third party

obtaining unauthorised access to classified or proprietary information or
documents
securing an unfair competitive advantage.
violating any law or regulation
engaging in any activity that could damage the companys reputation.
Employees may only use legal, ethical and proper methods to maintain markets for a
companys products and services and to secure additional business.
Schedule 2 of the Competition and Consumer Act sets out a new national consumer law:
the Australian Consumer Law (ACL). The ACL establishes consumer rights and business
obligations when selling goods and services across Australia and replaces various
national, state and territory laws.
The Competition and Consumer Act is enforced by the Australian Competition and
Consumer Commission (ACCC), the Australian Federal Governments national agency
dealing generally with competition and consumer protection matters.
Learning activity: Legislation
Consider Innovative Widgets, your own organisation, or an organisation you are familiar
with.
What specific legislation would you need to consider with respect to designing
and developing policies and procedures as part of a customer service plan?

How would provisions in legislation directly affect procedures, for example,

procedures for gathering or storing customer data or procedures for monitoring
customer service representatives to manage service quality?
What are the risks of not considering legislation in developing customer service
plans?

Standards and codes of practice

Customer service plans and charters may directly reference or be informed by standards,
best practice models, and codes of practice. These may be mandatory or voluntary. Lets
look at standards and codes of practice in more detail.
Mandatory standards
Organisations must comply with mandatory standards under the Competition and
Consumer Act 2010 13. Standards under the Act include various safety and information
standards for specific products and services.
Mandatory industry standards may be enforced under a number of other Acts and
Regulations. For example, under the Telecommunications Act 1997, The Australian
Communications and Media Authority (ACMA) enforce the Telemarketing and Research
Calls Industry Standard 2007. This standard provides guidance on the application of the
Do Not Call Register discussed previously and mandates times at which unsolicited
market research calls may be made.
Voluntary standards and best practice models

Many organisations adhere to voluntary standards in order to inspire consumer
confidence in the quality of goods and services provided
Two voluntary standards of relevance to customer service are:
The International Customer Service Standard (ICSS:2010-14)
AS ISO 10002-2006
Customer satisfaction - Guidelines for complaints handling in organizations (ISO
10002:2004, MOD)
Product and service standards define best practice models, which typically include the
following characteristics:
demonstrated customer focus:
striving to establish an objective, research-based, and clear understanding of

customer needs and customer expectations
having quality defined, not only in terms of product specifications, but also in
terms of customer expectations and perceptions
striving to meet and exceed customer expectations
establishment of customer service charters which communicate the service level
customers should expect to receive and if applicable, organisations should
establish individual service level agreements with key customers formalising their
expectations and procedures for renewing contracts
continuous improvement of operational processes and evaluation of performance
against customer expectations
13Standards and codes of practice, business.gov.au, viewed December 2011,

<http://www.business.gov.au/Howtoguides/Growingabusiness/Analysingyourbusiness/Pages/Standardscod
esofpractice.aspx>.

supplier relationships and supply chain well developed and maintained in order to
deliver consistent value to customers
commitment of the organisation (from senior management down) to quality
customer service, all management and employees should be trained in and
demonstrate attitudes and behaviours that reflect commitment to customer service
quality.
Australian e-commerce best practice model
One specific model is The Australian Guidelines for Electronic Commerce. This model
seeks to encourage consumer confidence in electronic commerce by providing guidance
to businesses on how to deal with consumers when engaged in business to consumer
electronic commerce. 14
Mandatory industry codes of practice

Mandatory Industry codes of practice provide practical guidance and advice on how to
achieve the standard required by legislation. Codes of practice are developed through
consultation with representatives from industry, workers and employers, special interest
groups and government agencies.
A code of practice is not law, but it should be followed unless there is an alternative
course of action that achieves the same or better standards.
The Australian eMarketing Code of Practice
One example of a mandatory industry code of practice is the Australian eMarketing Code
of practice. This code, included under section 117 of the Spam Act 2003, is mandatory
and enforceable by the Australian Communications and Media Authority (ACMA).
The code of practice can be downloaded from the ACMA website:
Australian eMarketing Code Development Committee, 2005, Australian eMarketing
Code of practice March 2005, Australian Communications and Media Authority,
viewed December 2011,
<http://www.acma.gov.au/WEB/STANDARD/pc=PC_7011>.
Voluntary industry codes of practice

Voluntary industry codes are not directly enforceable under any Act or Regulation. Like
voluntary standards, discussed above, voluntary codes exist mainly to encourage
consumer confidence in the service level to be expected within certain industries. They
also allow industries to self-regulate and promote ethical practice.
For example, the Australian Retailers Association sponsors the Scanning Code of Practice.
This code protects consumers when buying items that are scanned for pricing details.
Industry codes of practice may be developed and sponsored by industry groups or
developed in partnership with government agencies and regulatory bodies. Although
industry codes are generally voluntary, there may be cases where a statutory body
mandates adherence.
14The Australian Guidelines for Electronic Commerce, The Treasury, viewed December 2011,
<http://www.treasury.gov.au/contentitem.asp?NavId=014&ContentID=1083>.

Learning activity: Standards and codes of practice
Consider Innovative Widgets, your own organisation, or an organisation you are familiar
with.
What specific standards or codes of practice would you need to consider with
respect to designing and developing policies and procedures as part of a
customer service plan?
How would adherence to voluntary codes benefit an organisation that was

developing a customer service plan and customer service charter?

Section summary
You should now understand who customers are and how to identify their needs. You
should also know the key elements of a customer service plan.
Further reading
Commonwealth of Australia, 2010, Australian Consumer Law, viewed December
2011, <http://www.consumerlaw.gov.au/>.
Australian Competition and Consumer Commission, Dealing with customers,
ACCC, viewed December 2011,
<http://www.accc.gov.au/content/index.phtml/itemId/815329>.
Section checklist
Before you proceed to the next section, make sure that you are able to:
investigate, identify, assess, and include the needs of customers in planning

processes
ensure plans achieve the quality, time and cost specifications agreed with
customers.

Section 2 Deliver Customer Service Student Workbook
Section 2 Deliver Customer Service

This section develops the concept of customer service and addresses how to apply the
customer service plan to the delivery of quality products and services. The main focus of
this section is the use of procedures by managers and individual team members to
deliver aspects of customer service such as handling complaints to the desired quality
level. This section includes managerial skills to improve the performance of customer
service team members.
After the initial audit report the board of directors decided a new managing director was
needed to take the company forward. They promoted the grandson onto the board
and recruited a professional manager.
The new managing directors goal was to regain the market share that Innovative
Widgets had enjoyed prior to the recent slump in sales. The managing director started
by establishing a customer service department and agreeing to several new strategies
to implement:
an internal culture of excellent customer service through implementation of the
customer service plan
a vision and mission statement that all employees support
a policy and procedure for identifying customer needs
a policy and procedure for customer feedback
a policy and procedure for managing complaints.

In order to work effectively as a customer service manager, you must be able to:
deliver products and/or services to customer specifications within organisations

business plan
monitor team performance to consistently meet the organisations quality and

delivery standards
assist colleagues to overcome difficulty in meeting customer service standards.

Student Workbook Section 2 Deliver Customer Service
Deliver customer service according to customer

service plan
At the end of Section 1, we explored the components of the customer service plan. Most
plans would contain some or all of the following:
a customer service vision and mission
product and/or service standards
a policy and procedures for identifying customer needs
a policy and procedures for customer feedback
a policy and procedures for managing complaints
a section on continuous improvement
a customer service charter.
These documents should be created after careful consideration of customer needs and
should provide a program for staff to follow to meet the requirements and expectations of
your customers.
Section 2 focuses on following customer service plans to deliver quality customer service.
We will look briefly at integrating delivery with the rest of the business, general customer
service skills required to deliver effective customer service, monitoring customer service
and improving the customer service delivery of team members.
Integration with business requirements

Effective customer service cannot be delivered in isolation from the rest of the business.
As you deliver customer service, you will also need to give due consideration to business
requirements.
For instance, your organisations business plan itself will contain mission and vision
statements for the business as a whole. Your business will also have other policies and
procedures such as those relating to privacy, for example, with which you will need to
integrate your delivery of customer service. Your business and operational plan will also
contain over-arching strategic goals for the business. In addition, you will need to work to
deliver customer service within departmental budgetary constraints.
You will need to ensure that the customer service plan is aligned with business
documentation and anticipate the affect of customer service on the rest of the business
and work collaboratively with other managers to minimise conflict or disruption to normal
operations. You may need to consult with other managers or responsible parties to
ensure your delivery of customer service is integrated with pre-existing business goals
and systems.
In addition to consultation with managers, team responsibilities should also be set and
aligned with business requirements. Later in this section, we will look at setting
performance indicators so that these too align with business needs as a whole. You may
also need to reassess the skills of service team members so that they can carry out
customer service responsibilities and meet the other needs of the business as well.

Learning activity: Integrating customer service with the rest of the business
Consider your organisation or an organisation you are familiar with.

Gather business plans, strategic plans, policies and procedures. Compare these with
the customer service plan and answer the following questions.
1. How do the mission and vision statements in the business plan compare with the
mission and vision statements in the customer service plan?
2. Does the strategic direction of the business (as evidenced by strategic goals)
align with the mission, vision, policy and procedures in the customer service
plan?
3. How would you ensure customer service delivery is aligned with the needs of the
business as well as the needs of the customer?
Customer service skills and attributes

To provide excellent customer service, you need specialised skills, knowledge and
personal attributes. Kris Cole, in her 2005 book Management: theory and practice,
suggests that effective customer service personnel have:
strong inter-personal skills (helps identify and meet the customers psychological
needs)
empathy (to see the problem from the customers viewpoint)
communication skills (especially active listening)
ability to recap the facts and the customers feeling (active listening)
high self-esteem (stops people taking complaints personally).

The skills and attributes above may come more or less naturally to some people. In other
cases, skills can be improved and personal issues identified and worked on. In any case,
access to professional development options such as training, coaching and access to
information can help improve customer service skills.
You may need to incorporate customer service training into your customer service
planning to ensure your team has the capability to deliver quality customer service.
Learning activity: Customer service skills and attributes
Consider your customer service skills. Use the skills matrix below to identify the skills
you possess.
Staff Skills Matrix
Staff member You A B C D
1 Interpersonal skills Y N Y N
2 Ability to see problems from customers perspective Y N N N
3 General communication skills Y Y Y N
4 Ability to listen and paraphrase customer issues Y N Y N
5 Ability to remain professional under pressure Y Y Y Y
How would you use the matrix to identify areas for customer service team members to
improve?
What are some ways to improve team skills?
Before looking at how these skills and attributes can be applied to handling complaints,
lets look at general communication skills applicable to customer interaction.

General communication skills

Good communication is achieved through use of word choice, body language, and
demonstrating respect towards those who you are communicating with.
Word choice
The way we use words is important. Words can have a strong effect on customers; their
moods, feelings and their attitude to themselves and others. If you challenge your
assumptions about types of people and treat everyone with respect, dignity and equality,
you are less likely to unintentionally cause offense; however, there are a few things that
you should keep in mind about the words you choose to use in your customer
interactions.
1. Addressing a customer by their name.
This is a good way to help them understand that you are treating them as an
individual and that you want to know what their specific need or problem is.
2. Referring to a job title or group of people using nicknames, or your own terms can
sound demeaning.
For example, referring to the IT technician as the IT kid can make that job sound
trivial; it is unprofessional and does not communicate respect.
3. Technical terms or jargon can confuse customers if the terms are not properly
explained.
Think back to your first day in a new job and remember how difficult it was when
everybody seemed to speak a language you didnt understand. Where possible in
the workplace, avoid the use of technical terms unless it is necessary. Where
necessary, make sure that your listeners understand the terminology, and explain
any terms they are unfamiliar with.
Body language
Your body also speaks to customers through your stance, movements and mannerisms.
In order to encourage open communication with another your customers, it is important
that you show your willingness to listen and engage.
Make eye contact with your customer, when appropriate, and position yourself so that it is
clear that you are paying attention. Always maintain a posture of openness and
involvement and show you are interested. People are very sensitive to unspoken
messages and will often put more value on the way something is said, than on the words
they use to say it.
Active listening
Demonstrate your respect for your customer by using active listening. Few of us really
actively listen to what another person is saying and it is an important skill to develop. It is
too easy to hear only part of what another person has said, and then begin to form a
response, counter-argument or rebuttal before they have even finished speaking.

Active listening or improving listening behaviour requires:

the ability to concentrate
objectivity
skilful questioning
the ability to obtain feedback.
You must be able to listen to obtain the information you require otherwise you are only
doing half the job. Confirming that you understand what your customer is saying by asking
questions to confirm, or by paraphrasing parts of what they are saying shows your
customer that you understand them.
A quiet environment with minimal distractions fosters effective listening. Active listening is
an important concept. On page 49 we will revisit active listening as applied to handling
complaints.
Learning activity: Mystery shopper
One-way businesses monitor the customer service performance of employees is to take

a mystery shopper approach. A company representative may play the role of a
customer and visit a business or call a customer service helpdesk.
The next time you purchase a product or service, observe the communication skills of
the sales person or customer service representative.
Then fill out the following checklist.
Did the salesperson: Yes/No
(if applicable) address customers by name?
use appropriate titles?
use easy to understand language?
match word choice to customer appropriately?
(If applicable) make eye-contact?
use open, welcoming body language?
show interest?
ask questions to find out more about the customers needs?
demonstrate listening by paraphrasing, etc.?

Misunderstandings
Misunderstandings in customer service interactions will still occur from time to time. In
some instances, this may be a result of a misinterpretation of communication. Take some
time to complete the following learning activity with several other people to identify how
misunderstandings can occur.
Learning activity: Interpreting common interactions
The table below lists behaviour or actions that can occur during customer service
interactions. The right column lists possible interpretations of that behaviour.
Complete the table below.
Behaviour or What it means Correct/ Incorrect/

action Yes No
Remaining silent I am at fault.

when accused of
doing something
wrong I am upset at being falsely accused.
Nodding and I am agreeing with you.

saying mmm
I am only listening, but not agreeing.
Silence I understand all that is said. I am fine.
I do not understand anything. I am shy.
I am not interested or listening to you.
Smiling I agree and enjoy what you are saying.

I disagree with you and this is how I show it.
Eye contact I am polite and respectful. To look away would
signal dishonesty and avoidance.
I am challenging you.
Poor eye contact I am not listening and being disrespectful.
It is rude to engage in eye contact.

Verbal threat I intend to carry out my threat and this is a signal.
I am using a harmless way of expression
frustration and having fun. Threats do not have
any real meaning.
Asking questions I am interested in what youre saying.
I am attacking you by asking questions.
I am ignorant and have not prepared for the
meeting.

Ask a friend or classmate to also complete this activity and compare your answers. You
may be surprised how different their answers may be. What sorts of differences did you
find?
How can you check understanding and recognise misunderstanding when it occurs?
What can you do if misunderstanding occurs?
Handling customer complaints

Handing customer complaints builds on the general communication skills discussed
above and applies the skills methodically to achieve a positive outcome for both the
customer and the business.
In Section 1 we noted that customers are often likely to avoid making a complaint. Those
that do complain are still customers, fortunately. In other words, a complaint should be
looked at as an opportunity to retain valuable customers.
Customers dont expect you to be perfect.

They do expect you to fix things when they go wrong.
Donald Porter, Vice President, British Airways
The three steps to manage a customer complaint are: Listen Respond Resolve. The
first step is to listen to the customer using active listening techniques.
Active listening
Active listening comprises four processes. The four processes are: Asking Questions,
Paraphrasing, Using Verbal Prompts and Demonstrate Commitment. Active listening is a
skill that requires practise and will develop over time if you work at it.
Asking questions:
Try to engage with the person you are listening to by asking questions. Show
interest in what they are saying and try to build a positive relationship. Seek
clarification of the issue to find out what the core problem is. Be empathetic, not
assertive. Do not ask a question that implies judgement (such as: so you were
actually using the widget for something it wasnt designed for?)

Paraphrasing:
From time-to-time summarise or recap what the person has said to you. This serves
two purposes: to confirm to yourself that you understand what has been said, and
also to let the other person know that you have been listening.
Verbal prompts:
Use words such as yes, I see, and OK whilst the other person is talking to show
youre paying attention. Take care to use these words meaningfully. Do not say OK
or I see in order to make the customer feel better when you arent actually
understanding what they are saying.
Demonstrate commitment:
Demonstrating commitment serves two purposes to show the person you are
listening to that they have your full attention, and also to ensure you dont get
distracted during the conversation. Demonstrate commitment by making eye
contact, or, over the phone, by eliminating potential distractions such as
background noise. It is really important when listening to someone over the phone
that paperwork, the computer and background sounds dont distract you. Firstly you
will miss the nuances of what they are saying and also customers will hear paper
rustling or the keyboard being tapped.
Responding
Most people have complained to someone over the telephone or face-to-face about poor
service or products. Think about when you have complained and the responses you have
received. How satisfied were you?
Learning activity: Responses to complaints
Think about when you have complained to an organisation. What did you like about the
way they responded and what did you dislike?
Like Dislike

Now analyse your responses.

1. Why did you like or dislike how the customer service representative (CSR)
responded to your complaint?
2. What need was unanswered?

a. Was the need social in nature, i.e. to be a respected part of a group?
b. Was the need psychological?
c. Was the need emotional?
d. Was the need product related?
3. How then, would you modify the procedures of a team of CSRs to ensure
responses satisfied customer needs?

Most organisations have prescriptive procedures for their employees to follow when
responding to customer complaints. Most procedures will include principles similar to the
following:
assume the customer is telling you the truth
never argue with a customer
be honest if you dont know the answer to a question
acknowledge the customers feelings, but concentrate on the facts
apologise if appropriate
use active listening to find out as much as you can
ask the customer how they would like to see their complaint resolved
offer what the customer wants (if within your authority)
if above your authority, explain what you are authorised to offer
if unaccepted, explain you have to refer the complaint and explain when they will
hear back and from whom
make sure you refer promptly and someone gets back to the customer at the
promised time.
Resolving
Listening and responding by following organisational procedures is likely to resolve the
majority of customer complaints. However, there are some cases which are complex by
nature and may require more specialist skills, or solutions requiring a higher authority
than the customer services are able to offer. Some examples include:
the complaint involves injury or damage requiring the organisations insurers to be
involved
the complaint involves a threat of legal action requiring the organisations lawyers
to be involved
the complaint can be resolved, but at a cost above the authority of the Customer
Services Manager. This needs to be referred to the Customer Services Managers
manager
the complaint can be resolved by changing the product or service specifications.
This will require internal inter-departmental discussions.
In addition to procedures for managing customer complaints, responsibilities should also

be assigned so that all employees are aware who is responsible for executing each
procedure.

Learning activity: Complaints procedures
Customer service departments often create scripts for customer service team members
to follow.
Review the complaints handling procedure from
Appendix 2 of this Student Workbook.

Write a script in which a customer has a complaint and customer service
representative from Innovative Widgets handles the complaint following the
procedures.
Review your script to identify active listening, responding and resolving elements.
Note: In natural conversation, the elements may not always occur in order.

Monitor customer service

Most staff and departments will have goals and objectives that have been designed to
support the organisation in achieving its over-arching goals and objectives contained in
business and strategic plans. Often an individual or department might have many goals
and objectives. For example, a customer service manager may have some performance
targets such as the following:
ensure 90% of all calls are answered within three rings
reduce complaints by 30%
increase customer satisfaction rating by 20%
undertake weekly customer feedback
undertake quarterly customer research.
KRAs, KPIs and targets

Customer service departments develop and use key result areas (KRAs), key
performance indicators (KPIs) and targets to monitor the performance of customer
service team members.
Key result areas (KRAs) are areas of performance that are important to the business.
Common KRAs include:
financial (contributing to profit, etc.)
customers (contributing to customer focus, satisfaction, etc.)
people (performing work duties)
process (following correct processes).
A key performance indicator (KPI) is a number, percentage, or ratio that serves as a

measure of performance. KPIs are directly related to specific targets that have to be
achieved for each KRA. Targets detail what is to be achieved, in what timeframe, and are
then used to measure actual performance.
For example, an organisations objective could be to ensure customer satisfaction. The
associated target could be that all calls are answered within ten seconds. The
performance indicator could be the average time taken to answer a call (in seconds).
KPIs and targets are typically applied at role/individual level but can also be used to
measure the performance of an organisation or department. The principle for setting
targets and measuring performance remains the same, irrespective of the level of the
organisation at which they are applied. An individual who does not meet their targets may
be coached or placed on a performance improvement plan to assist them in achieving
their targets.
Each KRA should have only two to three KPIs, and should be focused on measuring the
most critical aspects of the KRA. KPIs and targets generally cover the following:
cost quality quantity time safety

Customer service KPIs

Customer service KPIs are objective measures of performance that facilitate monitoring
and allow for the assessment of performance against service targets.
Customer service KPIs may include some of the following:
time taken to answer customer calls
percentage of complaints resolved on the same day of complaint
achieving an agreed customer satisfaction score in feedback
undertaking an agreed number of customer feedback activities
undertaking an agreed number of customer need identification exercises.
Tip: Track KPIs in Excel
Microsoft Excel is a useful and easily used application for recording, monitoring and
presenting progress towards KPIs.
Simple pie charts or histograms can be quickly produced to present performance
against targets.
Tip: Visual management
When managing a team who are working towards common KPIs, make the KPIs visible
along with the actual performance. The team can instantly see how well they are doing
towards their goals.
For example, telephone call centres display KPIs and current performance such as:
KPI Average Maximum Call Duration: 3 minutes
Actual Average maximum Call Duration: 3 mins 15 secs.
Learning activity: KPIs
Write two or three KPIs for a customer service role you are familiar with.

Write targets associated to each KPI.
Describe how the KPIs relate to KRAs and over-arching business strategic goals.

Monitoring tools
Once you have developed KRAs, KPIs and targets to monitor the performance of
customer service team members, how do you use these measures to monitor
performance?
Customer service department use several tools. These include:
mystery shopper approaches
observations
customer feedback
balanced score cards.
In mystery shopper approaches, an observer may visit a shop or customer service

department and play the role of a customer. The CSR may be unaware of the identity of
the customer.
Direct observation is used extensively to monitor customer service performance. Call
centres will often warn you that your call may be recorded for coaching purposes. In a
similar way to the mystery shopper approach, the CSR is aware that they may be
observed, but is never completely sure whether they are being observed at any one time.
To avoid ethical issues, informed consent for these monitoring practices should be
sought.
Customer feedback, while often not applying to individuals may be taken into
consideration when determining performance on a team level.
Another useful tool is the balanced scorecard. Lets look at balanced scorecards in more
detail.
Balanced scorecards
Balanced scorecards are used to ensure that an individuals goals and objectives are
directly linked to the goals and objectives of the organisation.
Balanced scorecards are used to record individual KPIs and are provided to employees at
the commencement of the performance period to explain what they must achieve, by
when and how it will be measured.
Scorecards are a useful tool for both managers and employees, as they can be referred to
throughout the performance period to ensure that efforts are focused in the areas that
have been identified as delivering the most benefit to the organisation.
Balanced scorecards typically focus on the following key result areas (KRAs):
customers
financials
people
processes.

Example Innovative Widgets
Balanced Scorecard
Jennifer Henry Packing Team Supervisor
KRA Target Weighting Achievement
Financial To achieve $30,000 sales per month. 25%

Customer To handle 90% of customer complaints to 25%
customer satisfaction within five minutes.
People To perform all work duties to standard 25%
quality.
Process To follow all work processes as per 25%
Innovative Widgets policy and procedures.
Comments:
Learning activity: Balanced scorecards
In the previous learning activity, you developed KPIs and targets for a customer service
role you are familiar with.
Using this information, develop a balanced scorecard for the role or individual.
Describe how you would use the balanced scorecard, in conjunction with other
monitoring tools, to monitor the performance of customer service team members.

Manage team performance

Management skills are an integral part of being able to manage quality customer service.
A managers role can be extensive and complex. Depending upon the size of the
organisation there may or may not be people to do some or all of the following:
recruitment
arrange pay, compensation and benefits
provide ICT support
provide office services, repairs, etc.
provide purchasing services
provide training services.
In a small company, a manager may have all the above to contend with whilst still
undertaking the role of a manager. So what is the role of a manager? A manager needs to
produce department plans, prioritise and allocate work, assess individuals performance
and provide feedback. The manager also needs to manage non-human resources,
produce budgets and reports. Attending and chairing meetings is a routine activity.
Learning activity: What a manager does
Robert Sutton of the Stanford School of Business is an author and speaker on the
relationships between bosses and employees. Watch two or more of his talks on
YouTube and document some of the points that you could apply to managing a
customer service team. You might want to start with the following video clips:
Bob Sutton: Listening for the truth, 2010, YouTube, viewed December 2011,
<http://www.youtube.com/watch?v=4INfX3k073M>.
Bob Sutton: Hallmarks of Great Bosses, 2010, YouTube, viewed December
2011, <http://www.youtube.com/watch?v=oiknN8uomPc>.
What is the role of a manager of a customer service team?
How would you apply the information provided in the video clips to managing a
customer service team?
Lets briefly examine the four key skills and attributes of managing people: leadership,
supervision, mentoring and coaching.

Leadership
Leadership is strategic activity often thought of as the ability to set visions and inspire
others to achieve that vision. Many of the worlds greatest leaders shared their visions
and have inspired others to achieve them. Winston Churchill rallied allies from across the
globe to help during World War Two. Martin Luther Kings famous I have a dream speech
in Washington set the USA on a course away from black oppression and ultimately
towards the election of the first African-American President in Barack Obama.
In business, it is the role of the manager to set visions for the department to achieve. The
vision needs to be shared, with all staff buying into it and being prepared to work towards
it. A customer service vision may indicate a significant change to the current practices or
be a call to improve existing performance.
Supervision
Supervision involves overseeing of the performance of an individual or group regularly.
This involves allocating work, assessing individuals performances and providing
feedback. It also involves following up on feedback with staff to ensure improvements, or
to re-deploy or terminate staff. Intrinsic in this role is the need to use active listening in
order to fully understand the complex issues that can be present with personnel
problems.
Mentoring
Mentoring refers to the relationship between an experienced expert (the mentor) and the
mentors development of an employee. The manager may identify someone who appears
to have the skills to develop further within the organisation and assist with that persons
development through targeted strategies such as training, exposure or assignments. It is
the managers role to identify an appropriate mentor (not necessarily the manager) and
obtain agreement for the mentoring assignment.
Coaching
Coaching refers to the act of directing, guiding and training an individual or group.
Coaching often involves modelling what to do. In the sporting context a coach helps the
athlete to maximise their performance and this is what coaching in the workplace should
aim to achieve. Note that in the sporting context the athlete is the better performer, and
this can also be true in the workplace. The best manager may not be the best person to
respond to an irate customer!
A useful coaching model to follow is the GROW model. GROW stands for:
Goal Options
Reality Will.
Firstly, collaborate with the coachee to establish reasonable performance goals. Next,
establish the reality of current performance and the existence of a performance gap to
overcome. Obviously, if the coachee doesnt believe there is a performance gap to
overcome, the improvement process will stall. You may need to come prepared to
coaching sessions with evidence of underperformance.

Next you should discuss options for closing the gap. It is important to use active listening
to uncover root causes for underperformance and talk through the possible options to
generate effective solutions that will work for the coachee.
Finally, and perhaps, most importantly, you need to establish the willingness of the
coachee to improve. You should establish willingness by encouraging the coachee to
commit to taking practical, observable measures to achieve performance goals. In this
way, the coachee will be unable to hide a lack of commitment, through making vague
promises.
Note: The coaching conversation does not need to rigidly follow the order above. Any
genuinely two-way conversation will develop in unplanned ways. Nevertheless, each
element of the GROW model should be addressed at some point in any coaching session
that is likely to be effective.
Learning activity: Coaching
Imagine you are the manager of a customer service team. You have a team member
who is having trouble meeting a number of customer service performance targets.
They are rude to customers, when customers complain. According to policy,
customer service team members must always remain polite.
They make mistakes during 40% of orders; the target is <5%.
You plan to hold a five-minute coaching session with the team member to establish
how to help the team member reach their performance targets and determine what
steps the team member should undertake.
Complete the following coaching plan for the session. Some possible questions have
been provided. Try to think of at least three questions to ask at each stage.
Goal What are your KPIs?

What performance goals have you set for yourself?
Reality How do you think you are going?

Options
Will
Section summary
You should now understand how to implement a customer service plan to deliver quality
customer service.
Further reading
Australia, NSW.
Section checklist
deliver products and/or services to customer specifications within organisations

business plan
monitor team performance to consistently meet the organisations quality and

delivery standards
assist colleagues to overcome difficulty in meeting customer service standards.

Student Workbook Section 3 Review and Improve Customer Service
Section 3 Review and Improve

Customer Service
This section addresses the question of how to gather and analyse customer service data
for the purpose of making recommendations to systematically improve customer service.
Systematic improvement goes beyond improving the performance of individual team
members, which was the focus of Section 2, and includes making changes to aspects of
the customer service plan such as procedures that affect all team members.
Things were beginning to improve at Innovative Widgets. The RATER questionnaire

exercise identified several deficiencies that were easy to correct. Many customers
complained about tolerance problems, which were soon fixed by the production
manager. Letters of apology had been sent out to the larger customers who had not
bought from the company recently, apologising for the tolerance faults and offering a
significant discount on their next purchase.
Meanwhile, the newly appointed customer services manager was beginning to get the
customer services team working together as a team. A vision and mission had been
agreed collectively during a brainstorming sessions and the team had split into groups
to produce the policies and procedures for the manager to review with the managing
director.
Customer service performance monitoring and feedback gathering strategies had been
successfully implemented and systematic improvements, such as a uniform high level
of customer service quality across the customer service team were apparent.
The managing director had been so impressed that he called his senior managers
together and asked them to use the customer services model to implement internal
customer service plans within their departments.
Training sessions were organised to learn and practice the skills needed for handling
customer complaints, and also to become familiar with the new procedures.
The first feedback survey had been issued to customers and the results were beginning
to pour in.

In order to work effectively as a customer services manager, you must be able to:
develop and use strategies to monitor progress in achieving product and/or service
targets and standards
develop and use strategies to obtain customer feedback to improve the provision of
products and/or services

Section 3 Review and Improve Customer Service Student Workbook
develop, procure and use resources effectively to provide quality products and/or
services to customers
make decisions to overcome problems and to adapt customer services, products

and/or service delivery in consultation with appropriate individuals and groups
manage records, reports and recommendations within the organisations systems

and processes.
Continuous improvement strategies

After surveying customers, analysing their feedback, identifying problems and producing
solutions, its time for the continuous improvement cycle to begin the customer service
plan, organisations product or the organisations service is amended to resolve
weaknesses or problems.
You may recall from the beginning of this Student Workbook that the managing director of
Innovative Widgets used the saying: If its not broken, why fix it? Continuous
improvement adopts the opposite approach continually looking for small ways to make
processes and products better.
Continuous improvement will not happen unless systems are in place to make it happen.
A good customer service plan should contain a section on scheduling improvement
activities, documentation reviews, when procedures will be revised, etc. The advantage of
having a continuous improvement strategy in place is that improvement occurs regularly,
doesnt depend on the genius of one or two people, and becomes embedded in corporate
culture.
Kaizen
The Japanese philosophy for improvement is Kaizen. Kaizen was developed in Japan
after the Second World War and the concept was used to great effect at Toyota. It
involves all staff within on organisation asking the following questions about what
they do:
How can we do this better?
How can we do this easier?
How can we do this faster?
How can we do this cheaper?
How else can we do this? 15
Kaizen can be undertaken as an individual activity, but is more commonly undertaken

through a team approach. As part of a strategy to produce continuous improvement,
teams or workgroups meet regularly to ask the questions above and produce solutions.
These proposed solutions are then trialled, and, if successful, incorporated into standard
operating procedures.
15 Cole, K., 2010, Management: theory and practice, 4th edn, Pearson Education Australia, NSW.

PDCA cycle
A well known system structure for continuous improvement is the PDCA cycle. PDCA
stands for: Plan-Do-Check-Act.
Following the cycle, organisations first develop policies such as customer service
policies - and then plan to implement the policies. Organisations then implement the
policies along with monitoring strategies to check performance. On the basis of
performance data, the system is reviewed for effectiveness. Organisations take corrective
actions, or make further plans to improve the system. The cycle repeats indefinitely.
The PDCA cycle has several advantages. These advantages include:
lack of any close association with or ownership by any one organisation
simplicity
adaptability and ability to integrate with other quality systems.
The PDCA cycle can be easily applied to customer service. Organisations develop and
implement customer service policies and procedures, check performance and gather
data, and then take actions to improve performance.
Learning activity: Continuous improvement
Consider a business you are familiar with.

Describe how procedures and policies have been or could be adapted to effect
continuous improvement.

Research continuous improvement systems such as Kaizen or the PDCA cycle. For an
organisation you are familiar with, describe how you could systematically improve
customer service on an ongoing basis.
Systematic quality monitoring

Monitoring customer service performance ensures that you are aware of how your
organisation is tracking. It helps you to identify any corrective action you may need to take
to bring the performance back on track.
Some examples of corrective action:
change your plan
implement contingency plans
increase or decrease resource levels
bring in resources with different skills
change timelines
increase budget.
It is important to recognise the strategic advantage of following a monitoring system. A

good monitoring system regularly provides you with the information you need in order to
understand how well your organisation is performing against targets and what changes
are needed to keep performance on track. It allows you to manage your business
proactively rather than spending your time reacting to and resolving individual crises as
they arise. This can be a much more productive and enjoyable way to work!
While individual customer service performance issues may arise, following a system
ensures you notice the issue in the first place, act to resolve the problem, and ensure that
fixing the problem does not distract you from managing team performance as a whole.
Lets explore the steps of a typical monitoring system.

Monitoring performance
Step 1: Decide what you will monitor

The first step in monitoring performance is deciding what it is that should be monitored.
To determine this, you should think about what is most important to your organisation.
For example:
expenses
quality
sales
productivity
customer satisfaction
employee engagement.
You also need to consider high risk areas that could cause substantial damage to the
organisation if something went wrong these should be included in your monitoring
program.
Determine key result areas for customer service.
Step 2: Determine how you will measure performance

Once you have identified what is most important to your organisation, you need to
measure it. You should ensure each KRA has targets that you can measure against, and
that the data required to measure performance is easily accessible.
For example, in a call centre operation customer care might be important for
organisational success, which can be measured by the following KPIs.

How long does it take to answer a call?

Time
How long does it take to resolve the customers query?
How many customer issues are resolved in the first call?

Quality
How many customers have to make a repeat call to resolve their issue?
Customer
How satisfied are customers with the service they receive?
satisfaction
As we saw in Section 2, it is important to determine the way you will go about monitoring
performance and what tools, such as balanced scorecards, you will use.
To ensure your monitoring strategy is effective, your team understands the monitoring
process and how it applies to them. Your team should also understand the system itself
and how it will be applied fairly. In addition, ensure your team understands how the
system ensures that their performance relates to organisational goals.
Step 3: Analyse results

Now that you have identified what needs to be monitored and how it will be measured,
you have to analyse the data produced. You will be analysing data to understand what is
actually happening, compared to what should be happening.
Use your monitoring tools to produce performance reports. A good performance report will
specifically address each of the identified key result areas, allowing for easy monitoring of
performance.
Using performance reports to monitor KRAs involves three simple steps:
1. Identify any performance shortfalls against target:
a. For example, the target is 10 units and actual result is 12 units.
2. Analyse the shortfall to determine the cause:
a. Is the shortfall a one-off? For example, if delivery times were missed due to a
blackout and therefore computer systems could not load orders.
b. Has the underperformance been building over time and therefore needs
further investigation? For example, sales have been decreasing by 2% each
month for the last six months.
c. Is there an explanation for the performance? For example, if sales are down
for January because the shop was closed for two weeks for holidays.
d. Is there some systemic reason for the performance shortfall? Are processes
and procedures as efficient as they could be?
3. Take corrective action where required:
a. Take individual action to improve individual performance such as coaching.
b. Make changes to the monitoring system itself: improve KPIs, scorecards;
increase awareness or understanding of the system.

Learning activity: Apply monitoring strategies
Consider an organisation you are familiar with.

Plan a monitoring system that you could deploy to monitor and analyse performance
issues.
Lets consider some specific types of analysis you could perform as part of a systematic
approach to customer service performance management, variation management and
value chain management.

Variation analysis
The aim of performance management is to improve performance. Performance can be
improved on an individual or on a systemic basis (covering all team members rather than
one at a time). One important concept in systemically improving performance is variation.
Manufacturing quality or customer service performance may vary numerically over time.
For example, the number of unanswered calls on a customer complaints line may be 25
one day, 30 the next, 28 the day after, and so on. The number of widget returns is likely
to change week-by-week.
To more efficiently improve performance across all team members, managers should aim
to identify causes of variation and reduce performance variation.
Assignable variation and natural variation

Often, variation is natural or common cause variation. Natural variation may not have any
assignable cause. For example, a call centre receives on average three complaints a day.
One day they may receive two complaints; on another day, they may receive four
complaints. The variation is a result of the times customers decide to make a call.
Assignable (or also called special cause) variation describes cases in which a cause can
be found for the variation. For example, if the reports show that all the widgets that are
returned are always the 6mm size (never any other size), then it is likely that the variation
is assignable. The cause can be investigated and possibly identified and corrected. It may
be, for example, that the setting on the machine that makes 6mm widgets needs to be
adjusted, or that the operator who uses the 6mm machine needs additional training. In
the previous customer service example, if ten complaints were suddenly received on the
same day about the same issue, that issue would be the assignable cause for the
variation.
Once the cause of the variation has been identified, it is then possible to correct the fault
and reduce the variation.
Six Sigma
Six Sigma is a well-known performance improvement philosophy developed by Motorola in
the 1980s. Six Sigma is also a methodology for identifying and reducing assignable
variation.
The basic assumptions of Six Sigma rely on the statistics associated with a normal
distribution (the sort that produces a bell shaped curve when plotted on a graph).

Example: What is Six Sigma?
If 10mm widgets were to be produced to a size tolerance of +/- 3%, then in an ideal
world all the widgets produced would be within a range of 9.7mm and 10.3mm. A bell
curve showing the frequency of 10mm widgets produced would appear as below.
Mean = 10mm
Number of
widgets 9.7mm 10.3 mm
Size
Almost all the widgets fall within the tolerance range. Sizes are less frequent as they
fall further from the mean. According to Six Sigma philosophy, 99.9997% of all widgets
produced should be free of defect, i.e. produced within the tolerance range. Defects
should be extremely rare.
If a significant number are outside the tolerance range (>0.0003%), then measures
should be taken to manufacture the widgets more accurately and reduce the number of
defective widgets.
Reducing variation to improve customer service performance

It is important to minimise variation in the performance of customer service team
members. Some ways to reduce variation are introducing:
standards procedures
training performance targets.
Superficially, it may seem desirable for a customer service team to have a few members
who outperform others by a wide margin. Obviously, this is preferable to having no high
performers; however, a customer service manager is in a much better position to increase
overall performance if there is lower variation between high performers and low
performers. The ideal situation is for each team member to perform at a high level and
similarly to every other team member.
The reason why low variation is important is that it allows managers to take fewer actions
to improve the team performance as a whole. Low variation in performance makes it
easier for managers to identify and assign root causes for poor performance, i.e. some
condition that affects all team members performance in the same way such as a faulty
standard or procedure. Consequently, managers do not need to concentrate on individual
performance problems or customise performance solutions for each team member
separately. By acting on the team as a whole, one intervention, such as an improved
training program or an improvement to procedures can improve the performance of all
team members in one go.

Learning activity: variation
Consider a business you are familiar with and answer the following questions.
1. What aspects of customer service performance show a high degree of variation?
2. Can you assign a cause to the variation?
3. What systemic measures (as opposed to one-off, individual activities) could you
take to:
a. reduce variation
b. improve performance?
4. How do your proposed systemic measures contribute to continuous improvement

of customer service?

Value chain analysis

There are opportunities for your organisation to create a competitive advantage if you can
manage any of stages of the customer service process better. For example, a hotel may
perform better if it directs more attention towards the check-in component of their value
chain.
Conducting a value chain analysis involves three steps:
1. Identify activities Break down your organisations processes involved with
providing the customer a product or service into individual activities.
2. Identify value For each activity, determine the value to the customer.
3. Plan strategies Evaluate what changes could be made to increase your
organisations competitiveness by maximising value for customers.
identify identify plan

activities value strategies
Learning activity: Value chain analysis
Consider your current workplace, or the training organisation you are currently enrolled
with, and conduct a value chain analysis using the steps outlined above.
You may wish to read a more in depth description of each step in the article Value
chain analysis: Achieving excellence in the things that really matter available at
<http://www.mindtools.com/pages/article/newTMC_10.htm>.

Gather and analyse customer feedback

Customer feedback data mainly refers to the results of any surveys that have been
undertaken, data collected and recorded by customer service representatives, or data
collected through systematic collection under an automated customer relationship
management (CRM) System. The data is likely to be a mix of quantitative and qualitative
data.
Feedback analysis
Analysing quantitative data that is directly related to KPIs is straightforward. To present
results for analysis, you could use spreadsheet software (such as Microsoft Excel) and
use suitable charts. You can then relate data to customer service KPIs and compare
results with targets. In this way, you can determine areas of concern and take systemic
steps, such as amending procedures, or introducing training to improve performance.
In addition, quantitative data can help you to identify and analyse any gaps that exist
between service levels and customer expectations. For example, if the customer expects
a five minute wait for service and your average waiting time is ten minutes, a gap exists.
The relative importance of waiting times may also be gathered and analysed as a quantity
through the use of scales as discussed in Section 2 in connection with questionnaires.
Questions to ask when analysing quantitative data include:
what does the data represent
is there a significant gap between expectations and service
what is the cause for the gap
is the cause related to customer service or some other aspect of business

operations such as manufacturing
what actions would close the gap?
Feedback strategy
A good strategy for gathering data for analysis is to design your data gathering tools to
deliver quantitative data that:
is unambiguously related to KPIs
allows you to easily identify gaps between important expectations (those that will
drive purchasing behaviour) and service levels?
Learning activity: Design a feedback tool to gather (easily analysable) data
Review the customer service KPIs you developed in an earlier learning activity in
Section 2. In the space provided on the following page, design a customer feedback
tool such as a survey or questionnaire to gather service performance data that is
directly relatable to the KPIs.
Note: Refer to Section 1 for information on effective questionnaire design.


Refining your feedback strategy

Such a strategy as outlined above, however, runs the risk of gathering only a narrow
range of data. At worst, by limiting customer feedback to what can be quantified, you may
lose the opportunity to gain insight into less obvious and more complex customer needs.
For this reason, businesses may gather qualitative data that is more open to
interpretation, but may lead to unexpected breakthroughs in the understanding of
customer needs and expectations.
Qualitative data can be problematic. Complete the following learning activity before
reading on.
Learning activity: Customer survey
Your customer survey had a space for customer suggestions. The results are given
below.
Its too dark at the back of the Can you offer organic milk?
cafe.
No magazines to read!!!
I didnt feel myself. I felt out of
My coffee was cold.
place.
I didnt feel welcome.
I think your sign should be larger.
Can you offer pastrami as sandwich
Id prefer seats with cushions.
filler?
Id appreciate free newspapers.
Id prefer classical music to the ABC
Only one toilet in the ladies its Radio News.
not enough.
I felt old.
Colour scheme is dated.
I think youd all look better in red
There was a noisy group of aprons instead of the blue ones.
students in the corner and I
Tablecloths would be appreciated.
couldnt hear my conversation with
my friend. Can you ban mobile phones????
How would you attempt to analyse the data?
Are there gaps between customer expectations and actual service level? What is the
priority assigned to each gap?

Would you take any further steps to help you determine priorities for customer service
improvement and improve the customer experience?
It is difficult to evaluate qualitative data such as the data above. There is no information
regarding how many people would agree with each suggestion. Also, there is no weighting
to each suggestion. For example, if the person who complained about the lack of toilets
said it would stop her visiting the cafe in future, would that change your
recommendations for improvement? If the person who asked for classical music would
spend more time (and money) each day, would you implement that suggestion? Whats
needed is some way of prioritising qualitative data to guide your analysis and decision-
making.
Bullseye diagrams
A bullseye diagram is one of many tools that can assist in this process. It is used with a
follow-up survey of your customers where you share the comments you received from the
first survey.
Your customers add weight to the comments by placing them into a bullseye diagram
where the outer circle represents no importance, the middle might make me visit more
often and the inner circle critical a must do item.
It will soon become apparent which items should be given priority.

Develop, procure and use resources

Your quality monitoring and analysis may reveal gaps between the present capacity of the
organisation to deliver quality customer service and requirements. In order to put
customer service plans into effect, you may need to develop, procure or use resources.
Resource requirements may include human, physical and financial resources.
To fulfil resourcing needs, you will need to consider the organisations customer service
related strategic directions, operational needs, and policies and procedures. You should:
identify gaps between organisational needs for quality customer service delivery
and current organisational capacity
consider all relevant policies and procedures such as performance management
policy, recruitment policy, procurement policy and delegations policy.
if applicable, consider the business case for acquiring the resource: compare the
costs of the resource to the organisational benefit.
Lets take a brief look at developing and procuring resources for use in implementing
customer service planning.
Personnel
Your monitoring activities may reveal issues with individual or team performance. In such
cases, as discussed previously, you will need to develop the capacity of customer service
staff through such measures as training or coaching. Sometimes, however, the issue is
not quality but the ability of the team to handle the sheer volume of work. In this case,
you may need to consider recruitment of additional staff. You will need to conduct
recruitment in accordance with organisational policies with regard to, for instance,
planning and approval, advertising, selection, interviewing, assessment, and induction.
Procure physical resources

You may need to acquire physical resources such as product stock, raw materials, or
technology for employees to deliver quality customer service. A typical procurement
process is outlined below.
1. Research potential suppliers.
2. Request quotations, or implement tender process.
3. Select supplier.
4. Review proposed details of contracts such as service level, warrantees,
installation, training, maintenance.
5. Negotiate details, such as final pricing, delivery schedules, training schedules and
signing of contracts.
6. Use, maintain and dispose.
7. Review performance of suppliers
8. Determine renewal details if applicable.

Technology: customer relationship management (CRM) systems

To help customer service representatives deliver customised service to customers, you
may need to consider developing or acquiring technological solutions to information
management issues.
Customer relationship management (CRM) refers to those organisational activities
designed to establish and cement strong links with customers.
Large organisations utilise computerised customer relationship management systems
that comprise an integrated database of information about all customers, activity
schedulers and reports.
Typically, the database can provide instant access to all the information held about the
customer, from preferred name, family relationships, past purchases, past complaints
etc. This enables all staff members who come into contact with the customer to be able to
carry out the customer interaction with a full history and profile of the customer at their
fingertips.
CRM systems can also schedule calls, meetings, invitations or mail-outs as appropriate
for the particular customer.
CRM systems can also act as an intelligence gathering opportunity with information about
the customer being used by other internal departments such as the sales department,
who would be interested in any upgrading or replacement opportunities.
Learning activity: Investigate Customer Relationship Management systems
There are several computerised customer relationship management systems available

to purchase. Some of the more common systems are listed below:
Siebel SAP
Peoplesoft Microsoft Dynamics.
Use the internet as a source to gather information about a variety of systems. List the
common features below.

Consider a business you are familiar with. List some ways that a computerised
customer relationship management system could help improve the delivery of
customer service.
Note: Some of the computerised systems that you investigated require significant
investment both to purchase and operate and are intended for large organisations. The
benefits that they provide, however, can often be achieved manually through committed,
systematic application of the performance monitoring and feedback strategies discussed
so far.

Seven quality monitoring, reporting and analysis tools

The following seven quality tools are a group of tools originally developed by Kaoru
Ishikawa for solving quality problems in manufacturing. These tools have achieved
widespread use for solving quality problems in all fields including customer service.
These tools may be used to help identify and represent performance issues so that
appropriate solutions can be developed.
Lets take a short survey of the tools. Some of these tools will be referred to later in the
section in connection with developing customer service solutions.
Check sheets
A check sheet is a simple tool for gathering numerical evidence of problems. They are
usually used to make a tally prior to producing a Pareto Diagram, Histogram Chart or
Scatter Diagram. These types of diagrams are discussed later in this section.
Sales Team 1 Sales Team 2 Sales Team 3
Pressured 1111 1
Uninterested 111 1
Kept waiting 1111 11
The chart above captures data from customers after they have visited a store. The chart
shows that customers indicated four instances in which they felt pressure from Sales
Team 1. Possible interpretations of this data include:
Customer service representatives may not be following policy and procedures
Policy and procedures may need to change to reflect customer expectations
KPIs and targets for sales may be incompatible with customer expectations
Check sheets may be used within a continuous improvement system to identify and
correct issues with individual performance, systems or customer service planning.

Histograms
Histograms are used to present the relative frequency of performance issues. Frequency
information may be used to determine which problems in a system, if fixed could
generate the greatest overall performance improvement.
Lets compare histograms with Pareto charts.
Pareto charts
Vilfredo Pareto was an Italian economist in the late 19th and early 20th century. He
commented that 20% of the people had 80% of the wealth. This observed ratio has been
applied to quality issues, notably by Joseph Juran who stated that 20% of the quality
problems resulted in 80% of the financial loss. It is now usually referred to as the 80:20
Rule or the Pareto principle.
A Pareto chart is a bar chart or histogram, where the number of observations of a problem
is plotted on the y-axis while the faults are described on the x-axis. It is normal to sort the
results with the highest number closest to the y-axis. In addition, a line indicating
percentage is included.
As with histograms, the Pareto chart can quickly help identify areas of potential
improvement that would have the greatest overall effect.

Scatter diagrams
Scatter diagrams help to identify correlations between variables. For example, if the
number of complaints received on a particular day was higher than on other days, a
scatter diagram might help identify day-specific problems.
In this example, the number of calls unanswered by the customer complaints team clearly
shows problems on 5 January and 10 January.

Control charts
Control charts can be used to monitor quality over a period of time.
In this example, there appears to have been a peak of unanswered calls between 07:00
and 08:00.
Cause and effect diagrams

Sometimes called Fishbone Diagrams (after the way they look) or Ishikawa Diagrams
(after the inventor) these diagrams are a useful way of showing the relationships of the
problem and its possible causes.
The head of the fishbone represents the problem whilst the bones represent the factors
that contribute to the problem. The number of bones coming from the backbone varies,
depending on the nature of the problem. The inventor suggests four bones are useful for
service industries:
surroundings
suppliers
systems
skills.
We will look at fishbone diagrams in more detail on page 88.

Flow charts
Flow charts can present workflows in a graphical way. They are used to better understand
relationships between work processes. A simple complaints flow chart is presented
below:
Complaint received
Assigned unique
complaint number
Complete complaint form
Identify appropriate solution
Do I have the
No Refer to supervisor
authority to apply
the solution?
Yes
Implement solution
Learning activity: Analysis tools
Consider a business you are familiar with and answer the following questions.
1. Which of the seven tools are used to present and analyse data for the purpose of
developing ideas for performance improvement?

2. Choose a tool and describe how it was used (or could be used) to help identify
and resolve a customer service performance issue.
Produce and evaluate customer service solutions

There are many tools to assist in problem solving customer service performance issues.
This section will explore four:
brainstorming
root cause analysis
fishbone diagrams
force field analysis.
1. Brainstorming
Brainstorming, for the purpose of identifying performance solutions, usually takes place in
a meeting room. One person, a management team member, for instance performs in the
role of facilitator. The facilitators role is to state the performance problem and encourage
the participants to call out solutions. The solutions are written on a flip chart, whiteboard
or similar.
Brainstorming can be used to capture creative ideas to solve problems. It relies on a few
simple rules and conventions that are designed to maximise creativity:
participants are encouraged to call out unusual, novel or bizarre solutions
seeing bizarre solutions often triggers other ideas from the other participants
there must be no judging of the solutions.
At the end of the session the results are normally typed-up and time is given for reflection.
A follow-up meeting then reviews the suggestions and tries to identify any successful
solutions.

2. Root-cause analysis
Root-cause analysis is a technique used to try and pinpoint the precise reason for a
performance problem. The following table shows the steps that are taken and gives a
simplified customer service application to help illustrate the use of the tool.
1. Define the problem People have started to leave the cafe without
finishing their coffees.
2. Gather evidence about Most cups are left half full.

the problem
Some customers say they dont like the taste.
Others say it tastes gritty.
On examination, the coffee has a gritty residue at

the bottom of the cup.
3. Identify cause and Gritty coffee can be caused by the grind being too
effect relationships fine and passing through the basket into the cups.
The grinder wearing out and becoming faulty can
cause this.
Setting the grinder to the wrong setting can also
result in a grind thats too fine.
Gritty coffee can also be caused by the holes in the
basket being too large.
4. Identify the cause or The size of the basket holes looks OK.
causes that if removed
The grinder is new and works OK when tested.
or fixed would prevent
the problem All staff asked if they know how to use the grinder.
Recent hires have not been trained.
5. Identify solutions Train staff.
6. Implement solutions Staff members are trained in how to grind coffee

correctly.
7. Observe impact to All customers are drinking full cups.

ensure the initial
Apologise to past customers and offer a free refill.
problem is fixed and no
new problems have
been caused as a result
of the solution

3. Fishbone diagrams
Fishbone diagrams are another tool for helping identify the root causes of complex
performance problems. They are sometimes known as a cause and effect diagrams.
The possible causes of
problems are clustered
around the 5Ms, namely:
1. Man
2. Machine
3. Method
4. Materials, and
5. Measurement.
If you ran a coffee shop and

customers were complaining about your coffee, what could be the reasons?
poor quality coffee (material)
machine temperature is out of calibration (measurement)
machine is not clean (machine)
new operator is working the machine (man)
operator is not following procedure (method).
A fishbone diagram forces you to expand on all of these possible causes. Once the
possibilities are identified, you may then attempt to eliminate some causes or identify
root causes. You may then attempt to develop and trial solutions.

4. Force field analysis

Force field analysis is a tool that helps managers makes decisions about changes. An
example of a change might be a performance improvement measure such as
implementing a monitoring system.
Changes rarely have simple outcomes; they often result in complex shifts within an
organisation. Each shift can be seen as having pros and cons, and force field analysis
helps to quantify these qualitative pros and cons.
1. The process begins by describing the proposed change in the middle of a flip chart
or whiteboard.
2. All the forces for (pros) the proposed change are listed on one side of the outer
edge of the flip chart. All the forces against (cons) the proposed change are listed
on the left of the flip chart.
3. A score is given for each force. This seems arbitrary at first, but can be refined later.
When all the forces have been scored, revisit the scores to make sure a fair weight
has been assigned to all.
4. Finally, when all the scores have been agreed, add both sides up. The highest score
indicates whether a particular course of action is appropriate.
The following is a simplified example of a force field analysis for installing an extra toilet in
the ladies room in the cafe. The calculation was not in favour of the proposal:
Pros Cons
Customer retention = 2 Cost = 5

Install extra toilet in
New customers = 2 the ladies room Loss of space = 2
in the cafe
Extra income = 1
TOTAL = 5 TOTAL = 7
Learning activity: Develop solutions
Consider a business you are familiar with.

Describe how the following four methods have been or could be used to identify
systematic solutions to customer service performance issues:
brainstorming

root cause analysis
fishbone diagrams
force field analysis
Record-keeping
Effective record-keeping is essential to an organisations day-to-day operations and
continuous improvement. Record-keeping helps support communications within an
organisation and also provides data that can be analysed over time to identify trends in
regard to performance and evolving customer requirements.
To ensure effective customer service performance, records should be kept of:
the customer service plan (including out-dated versions)
procedures for updating the plan
minutes from meetings
customer complaints
identification of customer needs
customer feedback surveys
KPIs and performance towards targets.

Customer record-keeping (databases)

To stay competitive, organisations have an increasing need to gather and hold customer
information. For this purpose organisations may use:
computerised CRM systems
databases
other electronic-based documentation
paper-based documentation.
The systemic use of the above items allows organisations to track the contact they have
with customers. This practice can prevent errors from occurring with orders, and
subsequently lead to fewer complaints. Customer feedback may also be used to improve
systems and processes.
Legal and ethical considerations

Along with the many benefits of gathering and storing customer information come the
ethical and legal responsibilities related to storing information securely and using the
information appropriately. Legal and ethical considerations also apply to the storage and
use of employee data such as performance data, for example.
Some key legislation and ethical documentation that impacts the storage of both
customer and employee information includes:
Privacy Act 1988
anti-discrimination legislation
Do Not Call Register Act 2006
industry codes of practice.
It is essential to be familiar with your legal and ethical obligations and industry codes of
practice so that you store and use information appropriately.
The Privacy Act, for example, outlines the national privacy principles that must be
followed when storing individuals private information. When participating in customer
interactions for example, following the privacy principles means that you must be open
about your organisations policies regarding the use of personal information. You must
allow individuals access to information you hold about them. You must also, in most
cases, refuse to disclose information to third parties without the consent of the individual
concerned. You will need to have policies and procedures in place to ensure information
is only given to authorised people. Many organisations, for example require identification
to be presented before discussing customer accounts.
Ethical considerations
While some information is clearly protected by legislation, such as personal or financial
information, some information may not be. Whatever the case, records in your possession
or the information about those records in your possession should be governed at all times
by principles of ethical record-keeping such as the following:
Avoidance of conflict of interest A conflict of interest is a situation in which
financial or other personal considerations have the potential to compromise or bias

professional judgment and objectivity. It is important that conflicts of interest do not

impede your ability to handle records with impartiality.
Disclosure Disclosure deals with the obligation to make known information that
would potentially bias you in one way or another. Disclosure is to explain your
reasons for wanting the information and what you intend to do with the information
once you have collected it. This could be particularly important in dealing with
customers and explaining your organisations interest in customer data.
Protection of confidentiality Confidentiality is ensuring that information is
accessible only to those authorised to have access and is protected throughout its
lifecycle. Confidentiality is an important principle in business because it imposes a
boundary on the amount of personal information and data that can be disclosed
without consent. As you collect customer information, you will become responsible
for the protection of that information from unauthorised access and to keep it
confidential.
Record-keeping policy and procedures

Your organisation should have clear policies and procedures in place governing the use
and storage of customer information and customer service performance information.
Having such policies and procedures is important for several reasons:
achieving legal compliance and ethical standards
achieving customer and employee confidence and goodwill
achieving operational efficiency and high customer service performance
achieving effective integration with existing systems, processes and strategic goals.
Company policy often reflects legislation, business ethics and industry codes of conduct.
For customer service employees, following company policy and procedures is often a
more practical and less time consuming way of achieving legal compliance than reading
the relevant Acts. Procedures should outline specific steps to take, such as asking for
proof of identity and specifying what constitutes proof, for example, before releasing
personal information. In addition, having policies and procedures allows you to promote
your organisations respect for the rights of employees and customers to have their
personal information treated appropriately. To maximise consumer goodwill and
understanding, you may wish to publicise your records policy in customer service plans or
customer service charters targeted at customers.
Effective policy and procedures allows your organisation to ensure that record-keeping
practices are standard and are not entirely dependent on the foresight, thoroughness,
helpfulness and personal ethics of individual employees. Standard procedures allow for
easy retrieval and use of customer or employee information and, and, for that reason,
facilitate better performance. Having standard procedures also ensures that performance
management is applied on the same basis to all employees and reduces the potential for
quality variance.
As discussed in Section 1, effective policies and procedures should work to support the
seamless integration of business operations. Policies and procedures should also support
and reinforce company culture. To this end, ensure record-keeping policies should

harmonise with one another and with other policies and procedures from different areas
of the business.
Learning activity: Record-keeping
Consider a business you are familiar with. What legislation or ethical principles apply to
customer record-keeping?
Research the National Privacy Principles and the Do Not Call Register and, on the
following page, write a customer record-keeping policy.
Write procedures for:
safe storage of customer information
disclosure and use of customer information.

Suppose your company strategic goals include:

building company brand reputation
delivering best-of-breed customer service
growing market share.
How could your policy and procedures support other aspects of customer service and
integrate with company strategic goals?

Section summary
You should now understand how to develop and use monitoring and feedback strategies,
analyse the data received from customer information and performance data, identify
problems and produce solutions to customer service issues.
Further reading
Australia, NSW.
Section checklist
develop and use strategies to monitor progress in achieving product and/or service
targets and standards
develop and use strategies to obtain customer feedback to improve the provision of
products and/or services
develop, procure and use resources effectively to provide quality products and/or
services to customers
make decisions to overcome problems and to adapt customer services, products

and/or service delivery in consultation with appropriate individuals and groups
manage records, reports and recommendations within the organisations systems

and processes.

Glossary Student Workbook
Glossary
Term Definition
CRM system Customer Relationship Management system. Usually software-

based automated system to gather and organise customer
information for the purpose of assisting CSRs to manage
customer relationships.
CSR Customer Service Representative: customer service team

member, etc
Customer (internal) A person within an organisation who receives goods or services

from another within the same organisation.
Customer (external) A person outside an organisation who receives goods or services

from the organisation.
Goods Tangible products
Kaizen A continuous improvement philosophy and methodology. The

Japanese word for improvement is Kaizen.
Product An item that is being offered for sale
Provider The person or organisation who is selling or otherwise makes

available a product or service
Questionnaire A type of survey used to collect information or feedback from

customers. Questionnaires consist of lists of questions for
customers to answer.
RATER A methodology for identifying customer needs.
Supply chain Supply chains are the process of procurement, production and
delivery within an organisation.
Survey Any information gathering tool used to collect information or

feedback from customers
Tolerance A concept relating to manufacturing quality. The range within

which a product attribute, such as widget length, width, etc,
must fall in order to be considered to be at an acceptable quality
or fit-for-purpose.
Value chain Value chains show how each process in an organisation

increases the value of the product or service

Student Workbook Appendices
Appendices
Appendix 1: Answers to selected learning activities
Learning activity: Conducting surveys
Watch the video BSBCUS501A: Conducting surveys on IBSAs YouTube channel at

<http://www.youtube.com/ibsachannel>.
Why is the incentive suggested to Heather Howard when creating her customer
questionnaire?
It is done to help the customer be encouraged to complete the survey and help
establish in the customers mind that the newsagency want to be part of the local
community.
How else could the newsagency use an incentive scheme to encourage customers to
complete the questionnaire?
Other methods could be to have more winning entries such as 5 X $20 in-store
vouchers for the five best examples of feedback given, a free newspaper for a month
for the best feedback, a lucky dip box with small prizes to be given if you complete the
questionnaire, a numbering system on the questionnaire or a draw taken with the lucky
number winning a $30, $50, $100 in-store voucher.

Appendices Student Workbook
Appendix 2: Complaints policy and procedure
Innovative Widgets
Complaints Policy and Procedure
Purpose The purpose of this policy is to ensure the management of complaints

is carried out consistently, fairly and transparently and in accordance
with organisational requirements.
Scope The scope of this policy covers the management of customer

complaints by employees and contractors of Innovative Widgets.
Resources Specific procedures for the implementation of this policy are available
below and on the company intranet.
Responsibility Responsibility for the implementation of this policy rests with

employees and management of Innovative Widgets with responsibility
for managing customer complaints.
Relevant Privacy Act 1998 (Cwlth)

legislation etc.
Equal Opportunity Act 2010 (Vic)
Competition and Consumer Act 2010 (Cwlth)
Occupational Health and Safety Act 2004 (Vic).
Updated/ 10/2011 John Doe CFO

authorised
To manage complaints
1. Greet the customer courteously and give them your name.
2. Listen fully to what the customer is saying. Try to gather all the facts about the
complaint and jot them down. Ask questions and summarise what they are saying.
3. Never argue with the customer.
4. Apologise for any product fault or poor service. Be sympathetic. Ask if the customer
will allow us to send the faulty item to our quality department for testing.
5. When you have all the details about the complaint, ask the customer how they
would like it to be resolved.
6. No product replacements are within all staff members authority.
7. All staff members can use their professional judgement and refund an additional
10% of the value of the faulty product up to a maximum value of $25.

Student Workbook Appendices
8. Complaints involving damage to other property are covered by our insurance. Help
the customer to complete the Claims Form and ask if the customer can obtain
quotes for repairs.
9. All complaints involving injury must be referred to the Customer Service Manager.
Agree a suitable time for the Customer Service Manager to call the customer.
10. Any complaint that is not covered in the above procedures must be directed to the
Customer Service Manager. Agree a time for the Customer Service Manager to call
the customer.


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1st Edition

Manage quality customer service

Part of a suite of support materials for the

Structure of the training program

BSBCUS501C Manage quality customer service 1st edition version: 1

About Innovative Widgets

a recently established customer services team.

1st edition version: 1 BSBCUS501C Manage quality customer service

Innovative Widgets Organisational Chart

BSBCUS501C Manage quality customer service 1st edition version: 1

Section 1 Plan Customer Service

Scenario: Innovative Widgets

were not aware of internal customer needs

What skills will you need?

investigate, identify, assess, and include the needs of customers in planning

1st edition version: 1 BSBCUS501C Manage quality customer service

What is customer service?

What is quality customer service?

manufacturing quality of the product itself

time taken to process orders , enquiries and complaints.

Control, vol.14, no.2, pp. 3948.

BSBCUS501C Manage quality customer service 1st edition version: 1

Quality customer service may, therefore, involve acting on behalf of an organisation to

Learning activity: Quality customer service

1st edition version: 1 BSBCUS501C Manage quality customer service

Answer the following questions.

3. Kanos notion of attractive quality refers to exceeding expectations. In what way

BSBCUS501C Manage quality customer service 1st edition version: 1

Quality service models

The RATER Model

Reliability Dependability and accuracy of goods or service.

Assurance Employees courtesy, knowledge, confidence and trust.

Tangibles Appearance of employees, building, equipment, communication.

Empathy Care and attention paid to customer.

Responsiveness Provision of help, service and problem solving.

Internal and external customers

1st edition version: 1 BSBCUS501C Manage quality customer service

Learning activity: Internal customers

Try to identify five internal customer/provider relationships in a workplace you are

BSBCUS501C Manage quality customer service 1st edition version: 1

External customers and regulations

Supply and value chains

December 2011, <http://www.consumerlaw.gov.au/content/Content.aspx?doc=consumer_survey

1st edition version: 1 BSBCUS501C Manage quality customer service

Learning activity: Supply chain at Innovative Widgets

BSBCUS501C Manage quality customer service 1st edition version: 1

What other internal customer relationships exist?

Analyse each customer relationship:

How are the needs identified?

1st edition version: 1 BSBCUS501C Manage quality customer service

BSBCUS501C Manage quality customer service 1st edition version: 1

Influences on customer behaviour

Customer service channels and consumer behaviour

online, viewed December 2011, <http://www.maths-in-industry.org/miis/38/1/Consumers.pdf>.

online, viewed December 2011, <http://www.maths-in-industry.org/miis/38/1/Consumers.pdf>.

1st edition version: 1 BSBCUS501C Manage quality customer service

Customer service channels include:

Face-to-face interaction provides the opportunity to respond to customer needs

Learning activity: Customer value

BSBCUS501C Manage quality customer service 1st edition version: 1

2. What opportunities for online customer service exist?

satisfaction of psychological needs such as emotional validation.

Learning activity: Customer value 2