Case study: Managing Customer Quality Service

Topics: Customer service, Good, Customer Pages: 5 (1662 words) Published: April 12, 2007
Contents1.Lifetime Customer Value....................................................1What would you estimate is the lifetime customer value (LCV) of Laura's business at each of the stores?How would you account for any difference?2.Level of Service..................................................................3How would you rate the level of service provided by the two newsagents? Why?3.Customer Satisfaction and Customer Loyalty.........................4Although Laura shopped at the first newsagent regularly, was she loyal? Do you think the first newsagent confused "satisfaction" or even "nowhere else to go" with loyalty?Why is this dangerous for a business?How would you advise the first newsagent to proceed if she is to retain her customer base?4.Customer's Psychological Needs..........................................6What opportunities are there in a newsagency to provide sensational moments of truth?Bibliography…………………………………………………………………………7Q1) What would you estimate is the lifetime customer value (LCV) of Laura's business at each of the stores? How would you account for any different?LCV is a value to companies for how much a customer will buy from them over a period of time e.g. 5, 10, 15 years or more.

{LCV = (Maximum sale x 52 weeks / year) x Period of lifetime}We assume Laura is 35 year-old now and she can live until 75 year-old. Therefore, the LCV of Laura's business at the first newsagent would be (15 x 52) x 40 which is approximately $31,200; and the LCV of Laura's business at the second newsagent would be (22 x 52) x 40 which is approximately $45,760.

There are number of reasons show the difference of LCV between these two stores.

First of all, when people go in a shop, they look for what they want, and then the first important consideration comes up from their mind is the PRICE.

Price is the amount of money that charged for a product or service. In reality, people like comparing prices on the same brand of product from different shops to find out which one can meet their budget.

In the case study, Laura spends more amount of money in the second newsagent each week is probably because of its price is higher than the other one.

However, "Price alone rarely provides a long-term competitive advantage." (Jacques Horovitz 1990, p.30) This statement emphasises even if a business sells its products at a lower price, but in the long run, the business may still not compete against the other businesses because today's customers want more psychological needs rather than cheap price, and they are increasingly difficult to satisfy. This statement also leads to the next point.

Lastly, the element that goes after price would be QUALITY SERVICE. Nowadays, the quality of service is usually twice as important as price and it has become a major factor in many purchase decisions. For example, one day I went to a coffee shop to buy a cup of coffee, the assistant kept talking on her phone so I stood there for about three minutes and waited, but she still ignored me, therefore I rather went to Gloria Jeans to buy an expensive cup of coffee instead of standing there and wasting my time.

"Service comes from people, not companies." (Catherine Devrye 2000, p.8) This statement indicated that service only exists in human experience. If we cannot provide quality service to our existing customers, they may hide from their dissatisfaction with service; but if customers dissatisfied with their first experience are almost always lost customers.

So, Laura prefers to go to the second newsagent which may cost more but she paid for what she wanted and it is worth because she can have Chris's friendly smile and kindly greeting.

Thus, the difference in price and the level of service quality in business can lead to a difference in LCV of each store.

Q2) How would you rate the level of service provided by the two newsagents? Why?I would give two out of 5 of the service provided by the first newsagent because in the...

Bibliography: OOKSDevrye, C 2000, Good Service is Good Business, 2nd Edition, Peardon Education, Frenchs Forest, NSW.
Griffin, J 1995, Customer Loyalty, Lexington Books, New York, N.Y.
Hanan M / Karp P, 1991, Customer Satisfaction, AMACOM, New York, N.Y.
Horovitz, J 1990, How to win customers, Pitman, Long Acre, London.
INTERNETMiller, A 1999, Customer Service Tips and Techniques,Attard Communication, Inc., viewed March 12, 2006Customer loyal, 2003, BusinessTown.com LLC, viewed March 12, 2006, Smith, M 2004, Incisive Interactive Marketing LLC, sponsored by WebTrends, viewed March 12, 2006 <
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