The Role of Customer Service in Small Business Strategic Planning

Abstract

With the changing environment of retail sales, where giant discount chain stores are gobbling up market share, the chance of survival for the small business may hinge on its ability to provide outstanding customer service. However, the decision to provide outstanding service is a strategic management choice and should be interwoven into all facets of the business operation.

A model is introduced that depicts a customer’s expectations of the retailer’s customer service system. Expectations of the service encounter are depicted within a floating range. A small business must first attempt to provide the basic customer service needs prior to implementing a complex scheme. However, the service components designed to exceed customer expectations will be those more likely to result in loyal customers.

A Story of Bad Customer Service

A customer is in the process of remodeling his home and is in need of supplies to finish staining his hardwood floors. He is a novice home-repairman and goes to his local hardware store in hopes of getting the needed supplies and some instruction on how to use them. He enters the store and notices a young girl sitting at the cash register. She is wearing blue jeans and a sweatshirt. She is reading a book and never looks up to acknowledge the customer.

The customer wanders around the store for about five minutes looking down the unmarked aisles but cannot locate any floor stain products. He then notices several men seated around a desk. The men are dressed in blue jeans and assorted work shirts. They are telling stories about a recent deer hunt. The customer approaches this group of men and is unsure if they even work for the hardware store. The customer stands at the desk for several minutes while the stories continue. Finally, and with an air of annoyance at having their story interrupted, one of the men looks up and asks if he can help with something. The customer tells him what he is looking for and the store clerk says, "Yeah, they're over there" and points with his hand toward a back corner. The story of the deer hunt resumes.

The customer goes to the back corner of the business and looks around until he finally finds the floor stain products. There are three different brands, several varieties of colors, and each product seems to have various qualities that set it apart from the competing brands. After reading the labels to gain as much information as possible, the customer returns to the desk to obtain some assistance. Again the deer story must be interrupted and again the employees seem annoyed at being troubled by a customer. The customer states that he found the products, states the type of project he is working on, and asks which of the brands would best be suited for his particular task. The clerk replies, "Aw, they're pretty much all the same.”

The aftermath of this situation of poor customer service is rather astounding in terms of a lost customer, bad word of mouth, and, most important, lost sales revenue. The customer in this case purchased less than $10 worth of supplies for the floor staining project. However, other projects soon totaled well over $2,000. All of these subsequent supplies were purchased at another hardware store because the customer vowed to never go back to the original store. Additionally, he warned his friends about going to the business by sharing his story with them. He then recommended the second hardware store and lauded the friendly customer service he had received at this business.

Scenes such as this one occur daily in countless small retailers throughout the nation. Small retailers are continually searching for a way to compete against the retail giants. Outstanding customer service is one way in which they can compete. It is important to note, however, that not all small retailers should strive to deliver excellent customer service. The decision to provide such service should be a methodical one that is based on industry analysis and hard facts. The purpose of this paper is to examine the roles of strategic management and customer satisfaction in the small retail firm. The integration of these two very important business concepts can be the key to the survival of many small businesses.