Existing user?
Which one of the following is a method a business could use to collect customer feedback?
Identify two consequences for a business of providing poor customer service.
Explain one benefit to a business of training its employees to have good product knowledge.
Which one of the following is a method of good customer service?
A Flow production
B Just in time stock control
C Post sales services
D Total quality management
Explain the meaning of the term 'customer engagement' using an example.
Identify two benefits to a business of providing good customer service.
State and explain two ways in which a business could use information and communication technology (ICT) to improve its customer service.
Item A: Wolds Cycles Ltd
Wolds Cycles Ltd is a private limited company owned by Dilan Mehta. It has four shops in Yorkshire and employs 32 people. The business sells electric bikes for an average price of £1 200 and repairs and services bikes of all makes.
Every new bike comes with a free six-week safety check. Sales assistants are given two weeks of training on how the bikes work so that they can answer customers' technical questions in the shop.
To book a repair or a service, customers must telephone a shop between 9 am and 5 pm, Monday to Friday. The website shows only opening times and service prices. Wolds Cycles has no social media accounts. Competition from online bike sellers is increasing.
Item B: Wolds Cycles Ltd
Dilan is considering replacing telephone bookings with an online booking system on the website. Customers would choose a shop, a date and a time, pay a deposit online, and then receive a confirmation email and a text reminder. The system would cost £9 000 to set up and £150 a month to run, and bookings could be taken 24 hours a day.
Around 40% of Wolds Cycles' service customers are over 60 and many of them say they prefer to speak to staff. The four shop managers point out that the telephone call is also when they sell extra items such as tyres and lights.
Table 1 Customer service data for Wolds Cycles Ltd
| 2023 | 2024 | |
|---|---|---|
| Telephone calls received | 16 000 | 24 000 |
| Telephone calls not answered | 2 400 | 3 600 |
| Written complaints received | 260 | 416 |
Explain one benefit to Wolds Cycles Ltd of offering a free six-week safety check on every new bike.
Using Table 1, calculate the percentage increase in the number of telephone calls not answered between 2023 and 2024.
Show your workings.
Wolds Cycles Ltd currently uses its website only to show opening times and service prices, and it has no social media accounts.
Analyse two ways in which greater use of ICT could improve customer service at Wolds Cycles Ltd.
Dilan is considering replacing telephone bookings with the online booking system described in Item B.
Recommend whether Dilan should introduce the online booking system to improve customer service at Wolds Cycles Ltd.
Give reasons for your answer.
Item A: Dashwell
Dashwell is a parcel delivery business with depots in the UK, France and Spain. It employs 4 000 drivers and operates 1 200 vans. Dashwell does not sell products of its own; it provides a delivery service for online retailers, who pay it £1.90 for every parcel delivered.
Customers track their parcel on the Dashwell app, which gives them a one-hour delivery slot and asks them to rate each delivery out of five stars. Over the last year the average rating has fallen from 4.6 stars to 4.1 stars. Most of the negative comments come from customers whose parcel arrived outside the promised slot, or was left somewhere unsafe. Dashwell employs 60 staff at a customer contact centre in Manchester to answer calls and messages, and it publishes a monthly summary of customer feedback for every depot manager.
Demand for home delivery has grown quickly, although the number of parcels delivered each week varies. The operations director, Mia Khan, is worried that the quality of the service is falling as volumes rise.
Table 1: Parcels delivered by Dashwell
| Week | Parcels delivered |
|---|---|
| 1 | 465 000 |
| 2 | 420 000 |
| 3 | 510 000 |
| 4 | 525 000 |
Item B: Dashwell
Mia Khan is considering changing the one-hour delivery slot to a two-hour slot. Drivers say they could reach almost every customer within a two-hour slot, even in the busiest weeks. Two of Dashwell's main rivals offer customers a one-hour slot.
Explain one danger to a business of providing poor customer service.
Using Table 1, calculate the average number of parcels Dashwell delivered per week.
Show your workings.
Analyse two benefits to Dashwell of responding to customer feedback.
Recommend whether Dashwell should change its one-hour delivery slot to a two-hour slot.
Give reasons for your answer.
Item A: Lumenford
Lumenford is a global online retailer of smart home technology such as heating controls, security cameras and lighting. Founded in 2012, it now sells to more than 3 million customers in 12 countries from three distribution centres. Lumenford owns no shops; everything is ordered through its website and app.
Its best-selling smart thermostat is priced at £89, around £15 more than similar products sold by larger competitors. Lumenford offers a 24-hour online chat service staffed by trained advisers, a three-year warranty and free returns within 60 days. Customers who buy a security camera are offered a free video call with an adviser to help them install it. The customer support centre costs Lumenford £5 million a year to run.
In a recent customer survey, 84% of Lumenford customers said they would recommend the company to a friend and 61% said they had already bought a second Lumenford product.
Item B: Lumenford
Several competitors have cut their prices, and some online reviewers now say that Lumenford's devices have fewer features than cheaper rivals. Lumenford wants to increase its sales. It is considering two options.
Option 1 – Extend its customer service
Lumenford would offer the free installation video call to every customer, not just those buying a security camera, and add a telephone helpline to its 24-hour online chat. The marketing director, Erin Walsh, believes Lumenford's success depends on its customer service.
Option 2 – Develop new product features
Lumenford would cut its customer support centre to online chat only, from 8am to 8pm, and spend the money saved on developing new features for its devices. Other directors argue that the money would be better spent on developing new products.
Explain the meaning of the term 'post-sales service', using an example.
Lumenford's smart thermostat is priced at £89, around £15 more than similar products sold by larger competitors.
Explain how Lumenford's customer service may allow it to charge a higher price than its competitors. You should use information in Item A in your answer.
Lumenford owns no shops; everything is ordered through its website and app.
Analyse two ways that ICT allows Lumenford to provide good customer service.
Lumenford wants to increase its sales. It is considering two options to achieve this:
Analyse the effect of each of these two options on the business.
Evaluate which of these two options will have the biggest impact on Lumenford's sales.
Item A: FreshFare plc
FreshFare plc delivers recipe boxes containing fresh ingredients to customers across Great Britain. Customers pay a subscription of £34.95 a week for four meals. The company has 320 000 subscribers and packs the boxes at two sites.
In its early years FreshFare grew quickly by offering a £15 discount on a customer's first box. Many of these customers cancelled after only a few weeks. FreshFare's own research found that the most common reason given for cancelling was a missing or damaged ingredient in a box.
FreshFare now employs 60 customer service staff who answer live chat messages within two minutes and refund the full cost of a box if any ingredient is missing. Every recipe card carries a telephone number for cooking advice, and each month FreshFare publishes online the changes it has made in response to customer feedback.
Rival recipe box companies charge between £29 and £39 a week for a similar number of meals. Table 4 shows the percentage of FreshFare subscribers cancelling each month.
Table 4: FreshFare subscribers cancelling each month
| Year | Subscribers cancelling each month (%) |
|---|---|
| Year 1 | 9.0 |
| Year 2 | 7.2 |
| Year 3 | 5.4 |
Item B: FreshFare plc
To cut costs, the finance director has suggested replacing the 60 live chat staff with an automated chat system on FreshFare's website. It would answer simple questions instantly, but customers with a missing or damaged ingredient would have to fill in an online form and wait up to two days for a refund.
Explain one benefit to FreshFare of publishing the changes it has made in response to customer feedback.
Using Table 4, calculate the number of FreshFare's 320 000 subscribers that would cancel in one month at the Year 3 rate.
Show your workings.
Analyse two benefits to FreshFare of providing good customer service.
Recommend whether FreshFare should replace its live chat staff with an automated chat system.
Give reasons for your answer.