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Improve customer service is the best way to differentiate from competitors



 
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Improve customer service is the best way to differentiate from competitors #1 (permalink) Fri Aug 21, 2015 3:43 am   Improve customer service is the best way to differentiate from competitors
 

The following appeared in a memo from the customer services division to the manager of Mammon Savings and Loan:
“We believe that improved customer service is the best way for us to differentiate ourselves from competitors and attract new customers. We can offer our customers better service by reducing waiting time in teller lines from an average of six minutes to an average of three. By operating for business at 8.30 instead of 9.00, and by remaining open for an additional hour beyond our current closing time, we will be better able to accommodate the busy schedules of our customers. These changes will enhance our bank’s image as the most customer-friendly bank in town and give us the edge over competition.”
Discuss how well reasoned …etc.

In the argument above, we can conclude from the memo that the bank should improve service level in order to differentiate themselves by reducing waiting time. The premise of this memo is that by extending employees’ working hour will reduce waiting lines. As a result, this short time spending activity will attract current and new customers. However, the argument is weak because of several supportive reasons.
First of all, the author wrongly assumes that more operating time, by extending 30 minutes and additional hour beyond their current closing time, cannot ensure that this will shorten waiting time. Yet we should evaluate this point by measure the efficient of employee per one time service. For example, in one time transaction, how many minutes does one employee take? Then we can set the average time for that transaction and set as Bank’s KPI.
Secondly, the author does not compare the cost of expanding operation time and the target marginal profit that the bank will get. It is definitely true that more working time will cost the bank more expenses to employee. Moreover, if the bank can approximate achieve marginal cost and expense, so that we can decide whether the bank operates more hours.
Third, the author erroneously presuppose that the extending time perfectly serves the customer’s requirement. To be specific, the bank should monitor at what time that the line will be jam. Instead of increase working time, the bank would better increase employees to that certain period. This will be more benefit to the bank than paying overtime incentive.
Forth, the author falsely supposes that more working hour is the strength that differentiate itself from other banks. Business strength should be something that is sufficient and hard for other people to imitate. If other banks follow this bank suit, in the end, this bank will be analogous to others.
To conclude, the argument in this memo to increase working time is weak since it lacks of several aforementioned reasons. Still, if the author of this memo can provide more information such as bank’s cluster time, the expense costed by new operating method and single transaction time, Hence, we can fully evaluated this memo.

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Roytor
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