2. Why customer service is important Flashcards
When was The Consumer Rights Act formed?
1st October 2015
What is the purpose of The Consumer Rights Act 2015?
To strengthen, simplify and update existing law.
What three key pieces of legislation did The Consumer Rights Act 2015 replace?
- The Sale of Goods Act
- The Unfair Terms in Consumer Contracts Regulations
- Supply of Goods and Services Act
What does the Consumer Rights act 2015 state in relation to supply of a service? (4)
- Service must be performed with reasonable care & skill
- Info provided to the customer by the organisation (written or verbal) is binding where customer relies on the info
- Where the timescale is not agreed prior, then this must be done w/in a reasonable time
4.Where a price is not agreed prior, then service must be provided at a reasonable price
TCF: What is one of the goals of the FCA?
Customers are protected and get a fair deal
Six outcomes of TCF?
- Consumers can be confident w firms where TCF is central to the corporate culture.
- Products & services marketed & sold, meet the needs of identified consumer groups & properly targeted.
- Consumers provided accurate information & kept informed before, during & after sale.
- Advice provided is suitable & takes into account their circumstances
- Consumers provided w products & services as firms have led them to expect
- Consumers don’t face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
What do FCA regulations apply to?
Retail customers only, however insurers wish to demonstrate they are TCF whether retail or business
What are the benefits of good customer service? (4)
- Customer loyalty
- Positive word of mouth
- Reputation
- Sustainable competitive advantage
What are the problems of poor customer service? (5)
- Customer switching
- Negative word of mouth
- Reputation & trust
- Impact on employees
- Financial performance
How does good customer service impact customer loyalty? (4)
- Repeat renewal
- Less likely to look elsewhere, less price sensitive
- Expensive to advertise, good to retain customers
- Loyal customers likely to buy more products & services, e.g. home & car insurance
How does good customer service impact positive word of mouth? (3)
- Speak w family & friends about positive experiences
- Studies show WOM has positive effect on sender as providing real personal experiences, helping others.
- More influential due to coming from someone independent from company, therefore more trustworthy
How does good customer service impact reputation? (2)
- Produces halo effect. Will be presumed that if good customer service, they will deliver on other things too.
- ‘Reservoir of good will’ - protection in times of crisis. EG media outburst of badly handled claim, will not be looked at as the norm and more of a one off.
How does good customer service impact sustainable competitive advantage? (3)
- Good customer service contributes to company’s profitability
- Outperforming competitors
- Difficult for competitors to copy quickly as requires a change in culture of organisation, takes time to build & establish rep.
How does poor customer service impact customer switching? (3)
- Likely to leave and go to competitor
- Customer can be insurer in contact with LA company and can decide not to renew
- Extreme poor service can result in the customer switching mid contract
How does poor customer service impact negative word of mouth? (3)
- On average consumers tell 16 people about bad service, compared with 9 for good service. TRAVELS FASTER.
- Social media, greater in scale, highly visible
- NWOM more influential - Can prevent potential customers from becoming customers.
