Posted: April 24th, 2025

Customer Service Management

What does it mean to say that a customer is satisfied? The simplest and most widely accepted definition of customer satisfaction is meeting or exceeding customer expectations. For example, a number of companies have adopted this definition, and while it is relatively straight forward, its implications for building service policies are not. Operations managers need to work with marketing and sales managers to answer questions

1. What do customers expect from the organization?

2. How does the organization form their customer expectations?

3. Why or how does this company fail to satisfy their customer?

4. Does the company mostly satisfies its customers, is that sufficient?

5. 750 – 1,000 words

6. Three outside sources needed

7. MLA format Header and Reference Page

written consent of McGraw-Hill Education.

Chapter 9

Customer Service Management

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Learning Objectives

9-1 Describe how operations management helps establish and

fulfill different levels of customer service.

9-2 Define the elements of basic service and explain how they
are measured.

9-3 Explain ways in which technology is enhancing basic
customer service.

9-4 Describe a model of customer satisfaction.

9-5 Explain the requirements for a commitment to customer
success.

9-6 Describe the technological and relational aspects of
customer relationship management.

9-7 Segment customers and tailor service strategies.

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Learning Objective 9-1

Customer Service at Amazon and the
“Amazon Effect”

• 24/7 customer service

• Easy-to-place orders

• Continuous info about the

order

• Informed buying process

• Fast and reliable delivery

• A trusted source

• Easy returns

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Learning Objective 9-1

Customer Management

Intense focus on understanding and providing customers
with products/service they desire.

Figure 9-1 Hierarchy
of Customer Service

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Learning Objective 9-2

Six Basic “Rights” to Customers

• Basic Customer Service

– Right product

– Right amount

– Right place

– Right time

– Right condition

– Right information

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Customer Service—Product Availability

Product Availability: inventory available when and where

desired by customer

Orders
Received

Total
Units
Ordered

Total
Order
Lines

Total Units
Delivered

Total
Complete
Order Lines
Delivered

Total
Complete
Orders
Delivered

1,000 20,000 5,000 19,500 4,800 910

Unit Fill Rate: Total units delivered/Total units ordered =
19,500/20,000 = 97.5%

Line Fill Rate: Number of order lines delivered complete/Total
order lines = 4,800/5,000 = 96%

Order Fill Rate: Total complete orders delivered/Total orders
= 910/1000 = 91%

Table 9-1 Summary Order Data

Example 9-1

Learning Objective 9-2

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Learning Objective 9-2

Order-to-Delivery Lead Time

1. Order lead time: time required to place and schedule
work for order

2. Product design lead time: time required to
conceptualize, design, and test

3. Procurement lead time: source and obtain inputs

4. Production lead time: start to end of production

5. Delivery lead time: warehousing and transportation
to customer

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Lead-Time Performance

Differing market orientations have different elements of
Order-to-Delivery (OTD) lead time.

• Engineer to Order (ETO): design and make to
customer specifications

• Make to Order (MTO): products that have similar
designs but are customized during production

• Assemble to Order (ATO): products that are
produced from standard components and modules

• Make to Stock (MTS): build and stock in anticipation
of customer demand

Learning Objective 9-2

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Service Reliability: The Perfect Order

Service Reliability: performance of all order-related

activities error-free

The Perfect Order: delivered without failure in any

order attribute

• Complete

• On time

• Damage free

• Documentation correct

Example 9-2

If a firm has 97 percent reliability on four attributes, the

probability of a perfect order is .97 × .97 × .97 × .97 =

0.885, or 88.5%

Learning Objective 9-2

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Student Activity (1 of 2)

Using any Web browser or your library’s electronic
databases, enter the term perfect order. Look for
articles that discuss the perfect order measure. Find
and summarize an article that discusses specific
companies and their ability to provide perfect orders
to their customers.

Learning Objective 9-2

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Technology Enablement of Basic Service
(1 of 2)

Omni-Channel: distribution channel in which customers

can place orders and receive and return purchases in

different ways

Service Platform: a product designed to deliver a wide

range of customizable services

Crowdsourcing: the process of obtaining ideas or

services by soliciting contributions from a large group of

people

Learning Objective 9-2

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Technology Enablement of Basic Service
(2 of 2)

Figure 9-2 Order and Delivery Points in an Omni-Channel Business

Learning Objective 9-3

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Limitations of Customer Service

Customer service involves specifying the firm’s
commitment to availability, operational performance,
and reliability.

• Order winners, qualifiers, and losers

• Meeting or beating competitor levels

• Link to competitive strategy

• Link performance to customer satisfaction

Learning Objective 9-3

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Customer Satisfaction: Core Expectations

• Customer Satisfaction

– Reliability

– Responsiveness

– Access

– Communication

– Credibility

– Security

– Courtesy

– Tangibles

– Knowing the customer

Learning Objective 9-3

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Customer Satisfaction (1 of 2)

Customer Satisfaction: meeting or exceeding
customer expectations, including:

• Reliability: performance as promised

• Responsiveness: prompt reply and resolution

• Access: easy to use communication channels

• Communication: proactive order notifications

• Credibility: believable and honest

Learning Objective 9-3

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Customer Satisfaction (2 of 2)

Customer Satisfaction: meeting or exceeding
customer expectations, including:

• Security: low-risk and confidential
• Courtesy: polite, friendly, and respectful
• Tangibles: physical appearance
• Knowing the customer: responsive to unique

customer needs

Learning Objective 9-3

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Customer Satisfaction Model Gaps (1 of 2)

Figure 9-3 A Model of Customer Satisfaction

Learning Objective 9-4

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Customer Service Expectation Influences

1. Defined requirements: some expectations come
from customer’s stated strategies and performance
goals

2. Previous supplier performance: past supplier
performance is often predictive of future
performance

3. Word-of-mouth: Customers frequently tell each
other about their experiences with specific
suppliers

4. Supplier communications: Promises and
commitments made by sales, customer service,
marketing

Learning Objective 9-4

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Gaps occur at differences between:

• Knowledge: understanding of customer needs

• Standards: gap between internal performance
standards and customer expectations

• Performance: gap between standard and actual
performance

• Communication: gap between actual
performance and communications about
performance

• Perception: gap between customer’s view of
performance and actual performance

• Satisfaction: customer’s perceptions and
expectations of performance

Customer Satisfaction Model Gaps (2 of 2)

Learning Objective 9-4

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Student Activity (2 of 2)

• Think of a time you were dissatisfied with a
supplier’s performance

• Which of your expectations were not met?

• How did you form these expectations?

• Which “gap” resulted in your dissatisfaction?

Learning Objective 9-4

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Customer Success

Customer success requires a supplier to:

• Have a long-term relationship focus

• Gain comprehensive knowledge of customer
needs

• Consider the customer’s customers

• Adapt manufacturing and distribution

Learning Objective 9-5

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Customer Relationship Management

Customer Relationship Management (CRM):
technology-enabled data gathering about customers
to develop strategic relationships

Learning Objective 9-6

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Customer Service Strategy

Figure 9-4 Selection of Appropriate Customer Service Strategies

Learning Objective 9-7

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Customer Management Summary

1. Basic customer service program includes availability, lead-
time performance, and service reliability.

2. Order-to-delivery lead time is important.

3. Digital technologies are enhancing service.

4. Customer satisfaction is achieved by meeting or exceeding
customer expectations.

5. Customer success focuses on strategic objectives and
individual customer requirements.

6. CRM involved data gathering and responding to the needs of
specific customers.

7. There are multiple types of relationships and levels of
commitment.

8. Customer expectations have been influenced by societal
changes (“Amazon effect”).

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