PERSONALIZED CUSTOMER SERVICE

Prepared forMrs. Marcia Allen

Edmond, Oklahoma

Prepared byQingling Wu

November 29, 2013

ii

November 30, 2013

Mrs. Marcia AllenUniversity of Central Oklahoma100 North University DriveEdmond, OK 73034

Dear Mrs. Marcia:

This reports details the analyze of the personalized customers service.

This study was designed to examine the personalized customer service through the following area:

The definition of the personalized customer service. All kinds of the businesses use personalized customers service nowadays. The benefits that personalized customers service brings to the enterprise, The hidden costs which are generated by the personalized customer service and

whether it is worth it.

Primary research consisted of statistic data from marketing and financial record which are from my administrative class. Secondary research sources include website articles and online scholarly journals.

I would be pleased to discuss this report and its conclusions with you at your request. If you still have further questions, please feel free to ask me after the presentation to the class on December 5th.

Sincerely,

Qingling WuReport Analyst

3

TABLE OF CONTENTS

EXECUTIVE SUMMARY..........................................................................................iv

INTRODUCTION: PERSONCIALIZED CUSTOMERS SERVICE..........................1

BACKGROUD: PERSONALIZED CUSTOMER SERVICE BECOMES POPULAR TODAY..........................................................................................................................1

DISCUSSION: APPICATION, BENEFITS AND HIDDEN COSTS...........................2

Application.............................................................................................................2 Kimpton Muse Hotel......................................................................................2

Amazon............................................................................................................2 Hertz...............................................................................................................3 Other businesses.............................................................................................3 Benefits...................................................................................................................4 Increases the company core competitiveness.................................................4 Cultivates loyal customers.............................................................................4 Prevents business from losing out on potential sales.....................................5

Hidden Costs..........................................................................................................5 Hidden costs generates from personalized customers service.......................5 Circle of success.............................................................................................6

CONCLUSION AND RECOMMENDATION..............................................................6

REFERENCES...............................................................................................................8

iii

iv

EXECUTIVE SUMMARY

Personalized customer service is used by many other businesses in different kinds of industries. Although it generates hidden costs at the beginning, it will create a group of loyal customers for the company and bring huge profit. According to this study, personalized customers service helps increasing business. Also, for the long-term profit, the enterprise is recommended to use the personalized customer service theory.

My conclusion that the personalized customer service benefits the company is based on the data supplied by online journals like “The power of personalization” and “Personalized customers service to create amazing customer experiences ” as well as professional literature.

Analysis of the data revealed conclusions in three areas:

Application. Nowadays more and more businesses such as hotels, restaurants, hair salons and online shops choose to use personalized customer service. By doing that, they own a good relationship with their customers.

Benefits. Personalized customer service has a positive impact on the enterprise. It helps increase the company core competency, cultivate loyal customers and prevents business from losing out on potential sales.

Hidden costs. At the beginning, personalized customers service may generate exact costs to hire more employees to maintain the independent customers and may make the company more complex to manage. However, according the circle of success, as the company gets used to use the personalized customers service system, the hidden costs will decrease and create more loyal customers to the company.

On the basis of these findings, it is recommended that the company should use the personalized customer service which will increase the business and bring long-term profit to the company.

1

INTRODUCTION: PERSONALIZED CUSTOMER SERVICE

This study was designed to analyze the feasibility of personalized customer service. Specifically, the study seeks answers to these questions:

What is personalized customer service? How do other businesses provide personalized customer service? How have other businesses profited from personalized customer service? Are there hidden costs and is it worth it?

BACKGROUND: PERSONALIZED CUSTOMER SERVICE BECOMES POPULAR TODAY

Nowadays, thanks for the development of the science, the producing efficiency is improving. Product supply is beyond requirement, so the customers have more choice. On the other hand, in order to attract more customers and earn more revenue, the company should adopt some efficient strategies. Personal customer service is one of them.

Personal customer service is a kind of pointed service. The company will set customer files related to each customer and collect personal databases from all kind of channels, then it will provide and recommence product information in which the customers will be interested. By doing that, the satisfaction of the customers and the percentage of selling the products successfully will be improved. What’s more, it is beneficial to cultivate loyal customers. In brief, the definition of the personalized customer service is by leveraging appropriate customer data and proactively managing relevant service events, enterprises can enhance their customer relationships.

More and more companies try to use personal customer service, because it has a positive impact on the customer satisfaction. Nowadays, customers not only search for good quality product but also good service. Personalized customer service shows that enterprises pay attention to personal customer while the customers enjoy this feeling and they will also come back again and even become loyal customers. That is good news to the companies because they spend less money to manage the loyal customers and gain the high profit.

This report details how the companies apply personalized customer service when they are running their own business and how have the companies profited from this. Although using personalized customer service will generate exact costs, it is worth it. In this report, we will analyze some specific enterprises in different industries and

2

draw the conclusion.

DISSCUSSION: APPICATION, BENEFITS AND HIDDEN COSTS

The results of this research indicate that the effective use of personalization in customer service results in several benefits while it is worth the hidden costs. The research findings presented here fall into three categories: (a) application, (b) benefits, and (c) hidden costs.

ApplicationPersonalized customer service is being used in all kinds of industries. In part, we will analyze Kimpton Muse hotel, Amazon, Hertz and other businesses to watch how they service their customers by using the personalized customer service.

Kimpton Muse Hotel

The Kimpton Muse Hotel arranges three people to serve the front desk to build some rapport with the customers. One person is in charge of helping the customers check in. One person will engage the customers with simple questions about any dinner reservations they might want to make, their favorite foods and more. The third person is responsible for asking why they came here and what they want help with.

Take a customer for example, after he checked in the hotel and answered all the questions from the front desk, he had a unforgettable experience at Kimption Muse Hotel. At a lunch and dinner time, the restaurant offered him his favorite food which was tasty and refreshing dish of his hometown. What’s more, by knowing that his wife will arrive at the hotel later and share spare time with him, the hotel has some surprises for him. After his wife arrives, the hotel sent up a bottle of wine, some fruit and chocolate. Furthermore, they give him a small picture frame, and the picture was of his wife and him. That’s because the staff of the hotel paid attention and picked up on a piece of knowledge that allowed them to personalize the man’s experience.

The Kimpton Muse Hotel is popular in New York City and has a large number of loyal customers. Because when the customers stay here, they feel just like at home. The hotel will provide them personal service which makes them feel comfortable and happy.

Amazon

Amazon is another example. Amazon knows enough about customers from previous contacts, purchase history, and other sources to structure special offers and purchase

3

recommendations well suited to their tastes. Amazon uses collaborative filtering to determine what music or books to recommend.

When you buy a product form Amazon, you should first set your own account. By setting up the account, you should fill up your personal information. When you buy some products or browse the products on line, your databases are recorded. Then Amazon will use its collaborative filtering to recommend the product you will be interested in. They will always send some products recommendation to their customers, which triggers their buying desire.

Amazon’s personalization of customer service keeps its customers happy and loyal. They know what their customer exact want and serve them what they want. They also make shopping online easier. After you set all the information, what you should just click your mouse three times and you can finish buying the products.

Hertz We always think renting a car as a frustrated experience because we have to always fill out a big pile of forms. In order to differentiate itself from the pack and provide more personalized service, Hertz, a rental car company, centrally stores all customer and payment data for the members of its #1 Gold Club program so that customers don’t have to fill out repetitive forms every time they rent cars. In this way, Hertz encourages frequent travelers to base their rental car decisions not only on price but also on the ability to save valuable time.

Nowadays, there is a fierce competition in the rental car market. However, most of people love to choose Hertz, because it understands the value of loyalty, strives to identify customer needs and presents a customer experience that leaves them delighted, not just satisfied.

Other businesses

Some restaurants pay close attention to their customers likes and dislikes by asking questions about the type of products or services they are looking for. So they can provide personalized service by preparing the meals that your customers most enjoy.

Some hair salons listen to their customers’ feedback. For example, they have a few customers who complain that their hairdressers are not able to do some of the latest hairstyles for them. By listening to the feedback, the manager of the salon will talk to the hairdressers about the customers' comments and suggest that they learn some new styles to retain their customers.

4

Benefits

Personalized customers service has several benefits for the company. Three main benefits of it are increasing the company core competitiveness, cultivates loyal customers and Prevents business from losing out on potential sales.

Increases the company core competitiveness

Nowadays, thousands of products are sold in the market. It is the customers’ decision to choose which brand they want to buy. When the companies are fighting with each other, core competitiveness is one of the most important elements to the company wining the competition. Core competencies are particular strengths relative to other organizations in the industry, which provide the fundamental basis for the provision of added value.By improving customers’ satisfaction, personalized customers service is helpful to distinguish the company from other companies. It treats the customers as core and tries its best to satisfy their requirements. When the quality and the price of the products are similar among the companies, customers always buy products from the company who cares about them, knows them well and offers personal service to them. In brief, personal customer service helps company built good relationships with customers to maximize operating profit. It increases the company core competitiveness and let company own more competitive capacity during the competition.

Cultivates loyal customers

Loyal customers is one of the most important core materials to the enterprise. It costs little advertisement expense and management cost to maintain loyal customers. Also, loyal customers create the biggest part of a company’s profits.

Personalized customers service is beneficial to cultivate loyal customers. The enterprises get to know their customers by collecting answers from the questions as well as listen to what they say and how do feel about the product. And then they select the suitable channel to suggest customers the certain alternatives for the products. During these processes, customers may feel happy and respected. They are willing to come back again to buying the products. Several times later, customers get used to buy your products and begin to pay close attention to your products by themselves. At that time, they become loyal customers and the companies just need to pay little cost to manage and maintain them.

5

Prevents business from losing out on potential sales

Personalized customers service lets companies built close relationship with customers. They know exactly what their customers are interested in and what their customers really need. They do not just distribute advertisements to their customers. In contrast, they are giving their customers information and try to satisfy their requirements. There are people who want to buy something but do not know where to buy it. This pointed advertisement lets their customers know the company produces this kind of product and you can buy that from here.

Take an example, you always buy electronic products from Amazon. Amazon will always send you the product messages you will be interested in. One day, when you want to buy a flash drive and you happen to watch the advertisement from Amazon, there is great opportunity for you to buy fom Amazon. In this case, Amazon prevents itself from losing out on potential sales.

Hidden Costs

There are hidden costs which are caused by personalized customer service. However, because of the circle of success, the hidden costs will decrease gradually.

Hidden costs generates from personalized customers service

At the beginning, in order to run personalized customer service successfully, enterprises should hire employees to collect databases from customers and contact with the customers. It increases service and management cost. According to the study, a 150 agent contact center operating 7 x 24 typically carries labor costs of $21 to $25 million annually. Also, according to the International Customer Management Institute (ICMI), a typical transaction completed via IVR self-service costs about $.50 versus $5.00 - $6.00 dollars for a typical call handled by a live agent. From these databases, we can see operating personalized customers service is expense.

What’s more. The personalized customer service may increase the complex of work. Because companies treat each customer as a independent market, a lot of customers culture adds burden to the employees. It results in some customers might be ignored. In this case, enterprises may have opportunity cost of losing some customers.

6

Circle of success

Although at the beginning, the enterprise may encounter hidden cost for hiring employees and for dealing with the management complex, once it systemizes, the automation rates will be improved and enterprise may lower cost to maintain it.

The graph below is circle of success. When the companies start the personalized customer service system, it costs a lot to set up the database, to collect and arrange the data and to provide the related messages to the customers. As the time past, enterprise will set up an operating process. At the time, it will have a higher disposing efficiency and their customers are more willing to accept the information sent from the company. At the end, the company just pays litter cost to maintain their loyal customers. If the company wants to attract new customers, the circle will run another round.

Although running personalized customers service exist hidden costs, it deserves. The huge hidden costs won’t last for a long time and it helps company bring more customers who are the future assets. In a nutshell, its benefits outweighs its weakness.

CONCLUSION AND RECOMMENDATIONBy looking at the several research from journal databases and online sources, I can

7

draw the following conclusions and recommendations about the personalized customer service:1. Many businesses in all kinds of industries apply personalized customers service to attract and maintain their customers. Like Hotels, Online shopping, car rental companies , hair salons, restaurants and so forth.

2. There are three main benefits of the personalized customer service. They are increasing the company core competitiveness, Cultivating Loyal customers and preventing business from losing out on potential sales.

3. Personalized customers service may generate hidden costs for hiring more employees and for figuring out the complex problem. However, as the companies get to know how to run this system well, the hidden costs will decrease while the companies will have a large number of loyal customers and will gain huge profit.

On the basis of these findings, we recommend companies to use personalized customers service. By maintaining good relationship with customers, companies may improve their core competency and gain more revenue to increase their business. For the long-term future profit, company should use the personalize customers service.

8

REFERENCES

Bai, D. (2010). Personalized customers service. Baidu Baike. Retrieve from http://baike.baidu.com/link?url=2Y8nEgULMVX3Cu3uzHfArl0jhe_vFcOijmzqhjoj72oOeBV0DDWz1pWGXykg8i35

Dick, B. (2013). The power of personalization. Voxeo. Retrieved from http://www.voxeo.com/pdf/Personalization_Whitepaper_June12.pdf

Esteban , K . (2001). What is the personalized customers service, anyway. Gartner. Retrieve from http://www.marcusball.com/work/TechReference/What%20Is

%20Personalized% 20Customer%20Service,%20Anyway.html

Shep , H . (2013). Personalize the customer experience. Shephyken. Retrieved from http://www.hyken.com/customer-experience-2/personalize-customer-service-to-create-amazing-customer-experiences/

Thea, T. (2013). How to Provide Personalized Customer Service. EHOW. Retrieved fromhttp://www.ehow.com/how_6655277_provide-personalized-customer-

service. htm l