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Customer Service Benchmark

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Classic Airlines - Scenario Two Problem Benchmarking

Classic Airlines must analyze the benefits of benchmarking its performance. While this document will provide the benchmarking success of Nordstrom, Harrah, and Remington, Classic Airlines must use this information that is relevant to the success of their organization. Classic Airlines must also establish a priority for customer service, and focus on that priority. The priority is the standard that the benchmarking companies use to have long-term success.

Nordstrom Inc. Benchmark

Assemble a focus group or workshop full of people from large retailers and one is sure to hear plenty of reasons why providing good customer service is difficult, expensive, far from cost-effective, and even downright impossible. Then casually mention that Nordstrom is coming to town, and watch the excuses fade into uncomfortable silence. The steady growth and almost legendary customer service stories that surround this Seattle-based fashion specialty retailer inspire both admiration and dread among competing merchants nationwide.

Admiration, because what Nordstrom is doing is working by that hallowed measure of business success. "The public's clamor for cosmetics and fashion helped Nordstrom Inc.'s second-quarter profit surge 39 percent to $148.9 million, beating Wall Street expectations by a large margin" (Bolt, 2005). It is obvious that Nordstrom understands the significance of service.

Classic Airlines must also understand the value and impact of providing exceptional service. There must be a number one priority for Classic Airlines, and it must relate to service, and "doing whatever it takes to provide the service that the customer needs". Therefore, the handwriting is on the wall, and it's written large enough and fashionable enough to convince even hardened, cost-conscious skeptics that customers' will indeed shop where they find not only the merchandise but the service they desire. That service, as illustrated by a growing number of "Nordy stories," is sometimes truly extraordinary. Like the one about a sales associate in Seattle who ironed a customer's new-bought shirt so he could wear it back to a meeting. Or the tale of a customer who brought back a pair of shoes a year after buying them to ask if they could be repaired and was given a new pair free instead. Nordstrom employees' in cold climates have been known to go out and warm up a customer's car while they finish their shopping. Others have cheerfully gift-wrapped items purchased from a rival store right along with a customer's Nordstrom purchases.

A few years ago, a field researcher for a rival retailer visited a Nordstrom store in California to check out what all the noise from the West Coast was about. Not surprisingly, the report focused on "service". To begin with, the researcher reported, Nordstrom's sales associates were outstanding friendly, outgoing, caring people who clearly impressed their customer's as knowing their merchandise inside and out, not just what was in stock in their department, but what was available throughout the store. Sales people were often heard to ask for customers' home phone numbers so they could call them as soon as something additional came in. Sometimes, long after a customer had left the department, a sales associate would still be looking for related items; and, on finding something, would page the recent customer, just in case he or she was still in the store and might want to come back.

This customer service is the epitome of "doing whatever it takes" to please and satisfy customers. It is very difficult to top the leadership and customer service of Nordstrom, but Classic Airlines must use this same customer service principle if they want to fix their problems and prosper. Classic Airlines must pay close attention to their customers, discover their needs, develop the services to satisfy their needs, and then do whatever it takes to make sure the customer is satisfied.

Classic Airlines must develop a resistance level that is below its competitors. At Nordstrom, the resistance level is zero. If a customer doesn't like their purchase, Nordstrom takes it back without any obligations to the customer. It's not an illusion. The substance is "service", and doing whatever it takes to satisfy the customer. Nordstrom stocks pretty much the same kinds of clothing and footwear found in most other fashion-conscious department stores, though often in more variety and depth. However, its stores are laid out and stocked and staffed to make shopping a "satisfying experience" for the customer as well as a commercially rewarding business for the company.

With this knowledge and understanding of service, Classic Airlines can overcome their problems and experience present and future success. However, it will depend on their determination to separate themselves from their competitors. They must analyze what they are doing wrong, and communicate honesty, with a vision for correcting past mistakes and moving towards a new culture of customer service.

Harrah's Benchmark

Harrah's has created innovation for customer segmentation, revenue optimization and maximizing lifetime customer value. When Phil Satre became CEO in 1984, he decided to pursue expansion by organizing the company's core competencies around customer loyalty. This put the company on a course of collecting and analyzing massive amounts of customer information they were to use to help fill hotel vacancies, maximizing the lifetime customer value, and create promotional marketing. Satre created a customer rewards program based on tracking player cards. Each property operated independently, therefore, the incentives provided lacked consistency.

During the mid-1990's, when Harrah's competitors built extravagant must-see properties, Harrah's experienced a loss of market share. Harrah's made the choice to focus on customer relationship improvement. For customer intimacy to be a success, Satre needed to change Harrah's leadership. He needed to get to the cause of Harrah's poor performance, so he hired Gary Loveman, a specialist in relationship marketing. Loveman was an outsider who could see Harrah's problems, without having the idea that, "I am the industry expert and I know what needs to be fixed" (Kale and Klugsberger, 2005 p. 15 ¶4). Loveman was objective in assessing the company's alternatives.

Loveman began to make a cultural change at Harrah's to help create a national brand that will motivate customer loyalty, and he found it difficult in the current environment where the behavior and mental



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