2. ii
November 30, 2013
Mrs. Marcia Allen
University of Central Oklahoma
100 North University Drive
Edmond, 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 Wu
Report Analyst
3. 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
4. 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.
5. 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
6. 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.
Application
Personalized 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
7. 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.
8. 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.
9. 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.
10. 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 RECOMMENDATION
11. 7
By looking at the several research from journal databases and online sources, I can
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.
12. 8
REFERENCES
Bai, D. (2010). Personalized customers service. Baidu Baike. Retrieve from
http://baike.baidu.com/link?url=2Y8nEgULMVX3Cu3uzHfArl0jhe_vFcOijmzqh
joj72oOeBV0DDWz1pWGXykg8i35
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-cr
eate-amazing-customer-experiences/
Thea, T. (2013). How to Provide Personalized Customer Service. EHOW. Retrieved
fromhttp://www.ehow.com/how_6655277_provide-personalized-customer-
service. html
