Customer Relations and Services i

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Manual on Module IV – Customer Relations and Services

(Fine-tuned version)

Contributors Mr Paul Penfold

School of Hotel and Tourism Management, The Hong Kong Polytechnic University and

PSHE Section, Curriculum Development Institute



© The Government of the Hong Kong Special Administrative Region

All rights reserved.

The copyright of this manual belongs to the Government of the Hong Kong Special

Administrative Region. Commercial use is strictly prohibited. Offenders will be liable to legal responsibility.

Schools need not apply for permission to copy this manual in whole or in part for non-profit making educational or research purposes. All other uses should gain prior permission in writing from the Government of the Hong Kong Special Administrative Region. Requests should be directed to the:

Education Bureau

13/F, Room 1319, Wu Chung House 213 Queen’s Road East,

Wan Chai Hong Kong


We would like to express our gratitude to the following persons and organizations for giving us the permission to reprint some of the pictures and /or providing us with information for completing the curriculum support package:

"Smiles Icon Set" appears on the front cover

- Image courtesy of Digitalart,



A set of curriculum support package of tourism and hospitality learning and teaching materials is being developed by the Personal, Social and Humanities Education Section of Curriculum Development Institute, Education Bureau for the implementation of the senior secondary Tourism and Hospitality Studies fine-tuned curriculum in schools. The curriculum support package is comprised of five manuals, and they are developed to broaden students’

knowledge of the five different units of the Tourism and Hospitality Studies curriculum.

The content of this manual – Customer Relations and Services, should enhance students’

understanding of the dynamic nature of the tourism and hospitality industry. In addition, the manual includes activities to deepen students’ understanding and help them to apply theories and concepts. Furthermore, students should be able to develop enquiry, problem-solving and decision-making skills through these activities.

All comments and suggestions related to this curriculum support package may be sent to:

Chief Curriculum Development Officer (PSHE) Personal, Social and Humanities Education Curriculum Development Institute

Education Bureau

13/F, Room 1319, Wu Chung House 213 Queen’s Road East,

Wan Chai Hong Kong

January, 2014



1. Introduction to Customer Relations and Services 1

1.1. The Nature of Customer Services 1.2. Why Is Customer Service Important?

1.3. Parasuraman’s Five Service Dimensions – RATER

1.4. Personal Attributes of Tourism and Hospitality Service Personnel

1 7 10 15

2. Customer Service Concepts 17

2.1. Customer Needs, Expectations, Perceptions and Satisfaction 2.2. Customer Life-time Value and Loyalty

2.3. Cultural Issues in the Provision of Customer Services 2.4. Challenges in Providing Quality Customer Services

– Moment of Truth

– Parasuraman’s Gap Model of Service Quality

17 32 40 52 52 57

3. Company Policies on Customer Services 67

3.1. Company’s Mission on Quality Services 3.2. Service Standards and Commitment

3.3. Developing a Culture to Achieve Customer Satisfaction 3.4. Service Failure and Service Recovery

67 71 77 80

4. Dealing with Difficult Customers 90

4.1. Understand Different Types of Difficult Customers 4.2. Ways of Dealing with Customer Problems

4.3. Ways of Handling Different Types of Difficult Customers 4.4. Dealing with Complaints and Problem

4.5. Standards/Codes of Practice 4.6. Handling Customer Complaints 4.7. Resolving Customer Problems

91 94 96 103 106 110 112


5. Communicating with Customers 114

5.1. Delighting the Customer

5.2. Ways to Communicate with Customers 5.3. Say It Right

5.4. Is the Message Getting Through?

5.5. Put Pen to Paper

5.6. What Communication Method?

5.7. Face-to-Face

5.8. Using Body Language

5.9. Personal Grooming and Appearance

114 115 117 118 123 125 126 128 131

Appendices 133

Appendix I 134

Appendix II 136

Appendix III 139

Appendix IV 141


1. Introduction to Customer Relations and Services

1.1. The Nature of Customer Services

“Do what you do so well that they will want to see it again and bring their friends.”


Customer service can be defined as ‘a series of activities designed to enhance the level of customer satisfaction – the feeling that a product or service has met customer expectations.’ One example is a famous hotel group who see their mission as, “Ladies and Gentlemen serving Ladies and Gentlemen, in order to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience,” (Portman Ritz-Carlton Hotels).

Detail descriptions of the nature of customer services can be summarized in the following five dimensions:

1) Integrated

Tourists travel because they want to enjoy new experiences and the associated feelings which they won’t come across in their daily life. Through customer service, tourism and hospitality related industry provides tourists with integrated services, e.g. pre-trip services such as inquiry and booking, and services during the trip such as transport, food and beverage, accommodation, entertainment and sightseeing, etc.

Therefore, customer service in the tourism and hospitality industry is integrated.

2) Direct

All customer services are provided to customers in a direct, timely and immediate manner. For example, travel agencies or tourist information centers provide inquiry and booking services; hospitality staff provide food and beverage and accommodation services; and tour guides provide tour services. Therefore, serving customers directly is one of the characteristics of customer service.

3) Emotional

In addition to practical needs such as shopping or food and beverage, customers


their trips. Therefore, the service attitude and quality of staff are important to customers. Customer service staff should pay extra attention to take care of, and satisfy the emotional needs of customers.

4) Timely

“Moment of Truth” is about the effects of customer and employee interaction when there is opportunity for the business to impress or upset the customer.

5) Improvising

Customers have many different needs, and want services that will satisfy them.

However, the perception of satisfactory service varies significantly among different customers. It is important that at any time, customer service staff should be prepared to satisfy different customers with their different needs.


Wu Xiaohuai, “Introduction to Tourism”, Publishing House of Electronics Industry, 2008, Page 60-61.


1.1.1. Main Differences Between Physical Goods and Services

Besides the above descriptions in related to the nature of customer services, the main differences between physical goods and services should also be emphasized which generally affect the service quality as perceived by customers. The following table provides a summary of differences between goods and services in four major dimensions.

Table 1.1 – Main Differences Between Goods and Services

Goods Services Implications on the Provision of Customer Service

Tangible Intangible Services cannot be conceptualized or perceived by the five senses before purchase.

Production separate from consumption

Simultaneous production and consumption

Providers are part of the service experience because providers and customers must be present simultaneously for the transaction to occur.

Customers themselves may be part of the service experience because of their greater involvement in the production process.

The presence of other customers may become part of the service experience.

Standardized Heterogeneous Quality of services is likely to vary (i.e. lack of consistency) because of the provider, location, timing, etc.

Non-perishable Perishable Services are not durable and only last for a short while; they cannot be stocked as inventory for future sales or use.


1.1.2. Tangible and Intangible Services

Service is difficult to define in tangible terms because it involves people. Yes, hotels and restaurants are buildings and they do have many tangible features. However, the actual service that we receive at a tourism or hospitality establishment is given by people and thus can’t be easily described or measured. We can’t touch and feel a service. We refer to this as the intangible aspect of service.

When we go to a restaurant, stay at a hotel, or spend the day at a local tourist attraction, we are purchasing the intangible service given. We don’t purchase the bed in the guest room and take it home. What we are buying is the service given by the hotel.

Of course, there are characteristics of the tourism and hospitality establishment that are tangible and can be seen, touched, felt, heard, and tasted. For example, a meal at McDonald’s might include a Big Mac and that certainly can be seen, touched and tasted. However, that is only part of the entire service we are purchasing. We also go there because the service is fast, the food is prepared consistently, it is a place where we can gather with friends, and so on. So, we do say that there are both tangible and intangible aspects to tourism and hospitality establishments.

Some products we purchase are very tangible. We buy and consume the product and don’t really derive any service from it. An example would be soft drink. All of the bottles and cans of a specific soft drink will look the same, the ingredients will be identical, and we can buy it and consume it later if we like. Other products we purchase are very intangible and don’t have any aspects we can really see on a store shelf. An example might be taking a class in school. We can go to the class and the content of the course is very dependent on who the teacher is teaching the course.

Below is a spectrum showing various products you might purchase and showing where they might fall on a line between tangible and intangible.


Tangible Dominate

Intangible Dominate


Soft Drink


Teaching Banking

Five-star Hotel 50/50?


Figure 1.1: Spectrum of Tangibility

Further information about the characteristics of services and how they differ from physical goods in the four dimensions of intangibility, inseparability, variability and perishability can be referred to p.5-9 in the passport of “Hospitality Marketing”.



Think of a last time you were at a McDonald’s, KFC, Maxim’s Express, or similar quick service restaurant. List tangible aspects of the dining experience and then the intangible aspects of the dining experience in the table below:

Tangible Aspects Intangible Aspects

Thinking Point

Consider where on the tangibility spectrum would you place a quick service restaurant?

Why did you select that spot?


1.2. Why Is Customer Service Important?

Surveys suggest that service-driven companies are able to charge up to 9% more for the goods and services they offer and grow twice as fast as the average.

Figure 1.2: It takes months to find a customer (Photo: John Manoogian III)

Equally, poor service costs money, as it can take five times as much to go out and get a new customer as to retain existing customers. Research suggests that the average person who has a bad service experience tells at least nine others about it and l3% of those who complain tell more than 20 other people. In comparison, people who receive an excellent service only tell three or four others about it (Research Institute of America).

“If we don’t take care of our customers, someone else will.”


Customers have lots of choice these days about when and where they buy their goods and services. For example:


• there are hotels, pubs and restaurants offering accommodation, food and beverages to suit most pockets and tastes

• there are small retail shops, supermarkets, fresh markets and shopping malls selling food, vegetables and groceries

• computers and supplies can be purchased from retailers, the Internet or direct from the manufacturers

In other words, lots of organizations are competing for the same business. In order to get that business, and keep it, those organizations need to gain a ‘competitive edge’.

The best way to get their competitive edge is to ensure that the standard of service they give their customers is the best! Customer service matters because everyone in an organization either:

• helps customers directly or

• assists other people who help customers directly.



Look at the list of brands or companies below. Think about the type of product or service you think they give their customers and check the boxes.

Excellent Good Average Poor

HMV o o o o

MTR o o o o

McDonald’s o o o o

Cathay Pacific

o o o o

Maxim’s o o o o

Gucci o o o o

Omega watches o o o o

Mercedes Benz o o o o

Giordano o o o o

KFC o o o o

Shangri-La Hotel o o o o

MTV o o o o

It is important to remember that a company can produce an excellent product but if it doesn’t treat its customers well, it could lose them. If they lose them, they cannot sell their products or services. If they cannot sell their products or services, who pays the wages?

Figure 1.3: Customer Service is the New Marketing (Photo: Brian Solis)


1.3. Parasuraman’s Five Service Dimensions (RATER)

Research by experts in the field of service management tells us there are five essential dimensions that customers look for, and evaluate when they buy products or services. These are: tangibility, reliability, responsiveness, assurance, and empathy. These five aspects help us understand customer expectations, and companies need to consider them carefully in their service planning and delivery. Of the five factors, Reliability is the most important, Assurance is the second most important. However tourism and hospitality organizations need to make sure that all gaps are identified and eliminated and that all five quality dimensions are met in order to provide customer satisfaction. The way to remember these is by the acronym RATER (Table 1.2).

Table 1.2: The RATER five dimensions

Reliability The ability to perform the promised service dependably and accurately. Examples: Timely service and delivery of product.

Assurance The knowledge and courtesy of employees and their ability to inspire trust and confidence. Examples: Staff experience and

professionalism, staff politeness, and effort done by staff for customers’ security.

Tangibles The physical facilities should be visually appealing and in keeping with the type of services provided, equipment used to provide the service, appearance of service personnel, and behaviours of the customers match with the theme of the service facility. Examples:

Interior decorations should match with the type of services provided.

A group of noisy customers patronizes a quiet café.

Empathy The care and individual attention the company provides to its

customers. Examples: Staff to customer ratio, attention paid by staff, staff flexibility, company provision for customers’ necessities.

Example: Artificial sweetener is one of the customer necessities which must be provided by a restaurant.

Responsiveness The willingness to help customers quickly by providing prompt and efficient services. Examples: Welcoming of customers, response for requests, speed of service and having knowledge and skill to perform the service.


1) Reliability

Reliability is about always keeping the promises we make to the customer. These promises can be made in many ways. For example, they can be spoken or written agreements or contracts made with a customer, part of our sales literature or even an aspect of our service that is provided and comes to be expected by most customers.

Products and services are usually sold with certain implicit or explicit commitments about their sale. The table below shows the difference between implicit and explicit commitments of products and services.

Table 1.3: Explicit or Implicit Product/Service Commitments

Product / service

(Tangible / intangible)

Implicit commitment

(understood, implied or expected by the consumer)

Explicit commitment

(guaranteed, or defined by the provider)

A bottle of wine Will be drinkable Will be served correctly

Matches description printed on the wine list. That is, correct region, vintage, size, shipper, price etc.

Pizza delivery Correct order will get to your address

Within 30 minutes or $10 discount.

A hotel room At the very least a bed Matches description printed on the sales brochure or shown on the Internet. That is all rooms include 21 channel TV, mini bar, tea &

coffee making facilities, bathroom, amenities etc.

2) Assurance

Assurance relates to how confident the customer feels about doing business with an organization. Many consumers have some concerns when using a business, especially when it is for the first time. They need to be sure that the business knows what it is doing and is competent and capable in providing the required product or service just when it is needed and at the desired level of quality. For example, when using a restaurant for the first time customers may worry about the quality of the food, the atmosphere, value for money or how they will be treated. Knowledgeable, helpful, friendly and attentive staff, and user-friendly systems can do a great deal to put them


at ease. This also implies that the employee delivering the service knows his/her product well.

Figure 1.4: Table service, London (Photo from Cedric)

3) Tangibles

These are the items that the customer can touch, see and feel, and they will create an impression one way or the other. It is important to make sure that physical facilities such as decorations, furnishings, fittings should be in keeping with the type of services provided. For example, modern steel furniture would look out of place in the lobby of a very traditional hotel, whilst antiques would be out of place in a modern theme restaurant. In addition, the equipment used to provide the service should be up-to-date, for example, pool ozone generator is being used by some hotels to sanitize swimming pools by injecting ozone into the water in maintaining good hygiene. Tangible often provide a very vital first impression to the customer and research show that first and last impressions have the most impact on customer perceptions of a business. Therefore, appearance of service personnel is important.

They should be well dressed and appear neat. Customers in the facility can also create a bad or good image of a business. For example, customers speak too loud at a quiet coffee shop are not keeping with the type of service provided.


4) Empathy

Empathy is about the concern, understanding and compassion a company shows to its customers when they have a problem or a worry about some aspect of the product or service. It is about how staff deals with the customers, and the level of personal attention they are willing to provide. It could be as basic as recognizing who is the regular customer or knowing the customer’s specific requirements. To a further extent, sympathetic, caring and considerate staff who are willing to help solve a problem can go a long way to satisfying that customer. For example, a guest whose luggage has been lost en-route would probably be most satisfied by an empathetic approach which helps quickly solve the problems of having no change of clothing, toiletries etc., and locating the missing luggage.

5) Responsiveness

Responsiveness relates to the timeliness, speed, efficiency, courtesy, and capability of employees in providing help and assistance to customers when providing products, services or information. Example of timeliness, speed and efficiency when a hotel guest who complains that the TV is not working would not expect to wait several days to have it fixed, nor would they expect a room service order to take several hours to be delivered. Example of courtesy: When employees show their politeness, respect, consideration and friendliness to the customers.



Complete the following matching exercise to see if you understand the previous section. What is:

Reliability … Assurance…




A…the knowledge and courtesy of employees and their ability to inspire trust and confidence.

B…the willingness to help customers quickly by providing prompt and efficient services.

C…the ability to perform the promised service dependably and accurately every time.

D…the care and individual attention the company provides its customers.

E…the physical facilities, equipment, and appearance of service personnel.


1.4. Personal Attributes of Tourism & Hospitality Service Personnel

1.4.1. Personality of Customer Service Staff

According to Hong Kong Tourism Board, tourism industry staff should have the following personal attributes:


You do not have to be good looking to find work in the tourism industry. It will be sufficient as long as you have a pleasant character. Amicable smiles will also be beneficial to the job. The staff should keep his/her hair and clothes tidy. Fancy clothes should be avoided. Most organizations provide their staff with uniforms.


A tourism industry staff should enjoy meeting people and be able to communicate and get on well with all kinds of people. He/she should be able to communicate effectively with customers either face-to-face or over the telephone. He/she should be mature, outgoing, humorous, helpful and patient. In addition, honesty and politeness are also critical.

Qualification and skills

Professional training will be preferred. Some higher positions would require tertiary qualifications. Generally, a tourism industry staff should be fluent in English, and have a good understanding about the current affairs of Hong Kong and Chinese culture. For the position of tour coordinator or tour escort, it would be helpful if the worker can speak other languages such as Putonghua, Japanese, French or German.


You can be an outstanding tourism industry staff if you are physically healthy, quick in thinking, decisive, quick to adapt to different kinds of working environment, willing to work long and irregular hours, honest and reliable.


1.4.2. The Importance of Personal Attributes of Tourism and Hospitality Staff to the Provision of Quality Service

The tourism and hospitality industry is a service industry which involves numerous interpersonal contacts, and the service staff is the ones who provide customers with services directly. In addition, the provision and consumption of tourism services are simultaneously, which means the personal attribute, behavior and attitude of the frontline staff will affect the customers’ experience in the consumption of products or services. If a staff is rude and careless, the customers’ impression and experiences of the products or services will be affected. Eventually, the customers would likely not to buy the product or service again.

Personal grooming is also important in the tourism and hospitality industry because customers often comment on the appearance of the staff. Good personal grooming of staff reflects the service’s quality of a company. An outgoing, humorous, patient and honest personality also helps to maintain a good customer relationship, which is an important factor in achieving good quality customer service. To a large extent, the delivery of a quality customer service depends on the personal attributes of the tourism and hospitality staff.


What do you think are the most important features of customer service staff? Note down below two or three things customer service staff should try to be. We have done the first one for you:

1. helpful 2.




2. Customer Service Concepts

2.1. Customer Needs, Expectations, Perceptions and Satisfaction

2.1.1. Definitions of Terms

1) Customer Needs

A need can be explained as a basic essential which keeps one alive. Typical examples of basic needs include oxygen, water and food which are those key elements for human’s survival. Deeper understanding can be referred to Maslow’s Hierarchy of Needs which further divides human needs into different levels (See Table 2.1 below).

People will try and satisfy their basic needs and then go on to meet their more individual needs or desires. The table below shows how the people’s needs can be met with examples from the hospitality industry.

Table 2.1 : Human needs applied to hospitality

Category Human Needs Hospitality example

Group 1

Physiological needs (Lowest category)

The basic needs of food, water, sleep, oxygen and activity.

Choice of place to satisfy immediate need, e.g. eating just to satisfy hunger.

Group 2 Safety needs

The need for a stable environment free from threats to safety.

Choice of place to provide safe shelter, e.g. staying in a hotel when away from home.

Group 3

Belonging and love needs

The needs for affection and acceptance by peers.

Choice of place that offers acceptance/belonging, e.g. bar, club, disco, sports club etc.

Group 4 Esteem needs

The needs for self-respect, self-esteem and the esteem of others.

Choice of type of place to match self-image, e.g. trendy, up market, fashionable etc.

Group 5

Self-actualisation (Highest category)

The need for self-fulfilment and achieving full potential.

Choice of place to satisfy

achievement needs, e.g. holiday, event, dinner etc.


In service marketing, needs and wants are similar and sometimes interchangeable.

The main differences of needs, wants and demands are explained as below:

- Customer Wants

A want is something that a person desires, either immediately or in the future.

Unlike needs, wants are those that differ from one person to another. Each person has his or her own list of wants, each with a varying level of importance.

Furthermore, wants can change over a period of time. This is in contrast to needs, which remain constant throughout the lifetime of the person. Basically, a want is for the product or service that will satisfy a need, as shaped by the culture, personality and experience of the customer. These are described in terms of the objects (products and services) that will satisfy that need.

- Customer Demands

People have many wants but not enough money to meet all their wants. Therefore, they buy products that provide the most satisfaction (value) for their money. When backed with buying power, wants become "demands".

2) Customer Expectations

Expectations are all the benefits that the customer would like to get when satisfying needs and wants. Customer expectations are formed by many influences. And customer expectations have to be within a companies’ ability to meet them. That is they should be “reasonable”.

3) Customer Perception

Customer perception refers to how customers feel and think about a certain product / service. Generally, perceptions are formed mainly based on the customers’ past experience. Other common factors which may also influence one’s perception include, word of mouth and advertisement.

4) Customer Satisfaction

Customer satisfaction can only be gained by meeting or exceeding customer expectations after experiencing the services / products.


2.1.2. The Relationship Among Customer Needs, Expectations, Perceptions and Satisfactions

The relationship among customer needs, expectations and perceptions can be simply illustrated by Figure 2.1 below. Meeting the customer needs is not enough. It is being conscious that even though the needs are met, we know customers expect more from the service providers.

Figure 2.1: Relationship Among Customer Need, Expectation and Perception

For example, according to “Maslow’s Hierarchy of Needs”, a customer who goes to a restaurant may only have a basic need of filling up his/ her stomach. However, the customer would also have some more expectations on top of this basic need, such as:

- food consumed should be delicious;

- comfortable seat and dining environment are expected;

- a place where the customer can socialize with friends and relatives, etc.

Expectation refers to how customers perceive before experiencing services and it is always followed by and compared with customer perception (See Figure 2.1), i.e.

how customers feel after consuming the services. It, on the other hand, provides an indication of satisfaction level in the service delivery process by simply comparing the difference between perception and expectation. This concept can be further

Need Expectation



Figure 2.2 : Relationship Among Customer Satisfaction, Expectation and Perception If Perception > or = Expectation, customers are satisfied

If Perception < Expectation, customers are dissatisfied

Detail explanation related to the differences between customer perceptions and expectations would be provided in Section 2.4.2 - Parasuraman’s Gap Model of Service Quality.

Links for reference: ception-is-king-of-market/

Satisfaction = Perception - Expectation



It often helps to put yourself in your customers' position. Imagine you are visiting a hotel for the first time – what would your expectations be? Make some notes below to share with the class.

• Your first visit

• Describe your experience of staying in a hotel or visiting a hotel restaurant.

• What would you expect the place to look like (particularly the reception area)?

• How would you expect the hotel's staff to treat you?

• What would you expect from the hotel services (in terms of price, facilities, reputation and reliability)?



Complete the following table by:

• choosing any products and/or services you feel would be appropriate to meet their needs and write it in the want column; and

• briefly list what you think the expectations of each consumer type would be in the expectation column.

The first one is done for you as an example.

Consumer Need Want Expectation

A teenage

American Hunger McDonald’s Fast




A male German

tourist Hunger



Consumer Need Want Expectation A Chinese female

tourist going out for shopping



Note that you should try to find out as much as you can about your “typical customer” and know how to satisfy them.


Look at the examples below and for each example you have to:

• identify the “average or typical customer”

• assess their needs (N), wants (W), and expectations (E) and

• give one (1) example of a service that would satisfy their needs, wants and expectations.

The first one is done for you as an example.

Market example

Average customer

Needs (N), Wants (W) and Expectations (E)

Example of service

Deluxe business hotel

Affluent business traveller

N Higher order esteem needs

Airport limousine pickup W High degree of luxury

E Individual, personal and detailed service


Market example

Average customer

Needs (N), Wants (W) and Expectations (E)

Example of service

Fast food restaurant (e.g.


N W E Family

Dining Restaurant

N W E Coffee shop



N W E Snack

counter in a cinema

N W E School

Canteen N



Additional Information –

1) Examples of Customer Expectation

What customers expect and what customers actually get can be completely different!

Guests in a hotel, passengers on a cruise ship or tourists travelling to another country will expect:

• the right product or service

• at the right price

• at the right time

• in the right place

• with a positive and helpful manner from staff.

Figure 2.3 : Service with a smile (Photo: Miles Gehm)

That may be asking a lot. But if a company wants satisfied customers it is important they find out exactly what it is that their customers expect.

Apart from their specific expectations about the products and services that are offered, customers have a number of general expectations of the service organization.

They expect that anyone dealing with customers will:


• listen to them

• understand them

• care about them

• treat them as individuals

• treat them intelligently.

For many people, the key to providing effective customer service is putting yourself in the customer's position.

Figure 2.4 : First impressions make an impact on customers (Photo: Jos Tan)

If your customers' expectations aren't met, they will be disappointed – it is only a small step from 'disappointment' to 'dissatisfaction' – and a dissatisfied customer is just what you don't want!


2) Ways to Meet Customer Expectations

All customers expect the customer service staff to satisfy their demands. Demands are refer to as an efficient service with value for money. In order to meet their expectations, organizations nowadays would keep improving their service quality and management ensure of product enhancement. To satisfy customers, organizations should identify the services most needed by customers, and then try their best to reach or even exceed their expectations. The following are some approaches to meet customer expectations:

i) Respect

Sending a thank-you letter or birthday card to customers would make them feel that they are respected. For example, the customer service staff should take the initiative in providing customers with information that they need.

If you are busy with your work while a customer approaches, you should smile to him/her or indicate him/her to take a seat and wait for a moment.

In this way, the customer will understand that you are aware of his/her presence.

ii) Polite

Use polite expressions such as “please” and “thank you”. Any vulgar language or behavior is prohibited. You have to be polite even if the customer may not be right. When a customer complains, the service staff should listen to his/her requests patiently and carefully. Ask for help from others if you are unable to solve the problem.

iii) Efficient

The customer service staff must manage time efficiently. Do not neglect the customer you are serving nor let them waiting for too long.

iv) Enthusiastic

A smile and warm reception from customer service staff and their initiative in helping to solve problems will promote the message of quality service and commitment to customers.

v) Dedicated

Try to look at problems from the perspective of customers and understand their actual needs. For example, if a customer from Beijing is not fluent in English, you should arrange a customer service staff who can speak Putonghua to serve this customer. If a customer complains, you must listen and explain the reasons to the customer patiently, and express your understanding and care, and apologize when necessary.


3) Exceeding Customer Expectation - Acceptable and Exceptional Service

Can you tell the difference between acceptable and exceptional service? Here are some examples.

Behaviour /Manner

Acceptable Standard Exceptional Standard

Undivided attention

Concentrates on what person is saying.

ALSO gives listening signals:

“yes”, “I understand”, “I’m sorry to hear that”, and has a lot of eye contact.

Using person’s name

Uses it once. Use name several times during the conversation.

Listening skills Concentrates on what person is saying.

Summarizes and confirms what the person has said.

Friendly manner “Thank you sir”. “Is there anything else I can help you with?”

Helpful “Let me give you the number of the taxi company”.

“Let me call a taxi for you. Would you like the taxi immediately, Mr.




List some things hospitality and tourism organizations should do and shouldn’t do to ensure their customers are satisfied with their services and products? Think of at least 3 things they should do and 3 things they should avoid doing. We have done the first one for you

Things to do Things to avoid

1. respond quickly to customer requests 1. keeping customers waiting in line too long

2 2.

3 3.

4. 4.

2.1.3. Section Review

This section looked at what customers expect from a hospitality or tourism organization. By thinking about what you would expect from an organization, you identified ways in which any organization you visit or purchase from could improve its service.


• Visit a local tourism attraction, eat in a restaurant or go on a shopping trip.

(or you may want to talk about a recent trip you took when you stayed in a hotel with your family)

• Take note of the customer service experience you receive – what was good, what could be improved and what was poor

• Report back to the class on your customer service experience on what was good, what could be improved and what was poor

• Discuss in class what could be done to improve customer service in the hospitality and tourism industry in Hong Kong



To complete this section we would like you to compare the “servicescapes” of two types of restaurants who offer the same type of food. Servicescape is like a

‘landscape’. It includes the exterior (external facility design, signage, parking, surrounding environment) and interior (interior design & decor, equipment, signage, layout, air quality, temperature). It can include things like employee dress, uniforms, brochures etc. Try to visit two restaurants and make your comparisons based on first hand knowledge.

Compare a specific quick service restaurant (e.g. McDonald’s, Maxim’s Express, Café de Coral, etc.) with a family dining Chinese restaurant (e.g. your favourite local family dining Chinese restaurant where you live). In making your comparison, try to answer the following six questions.


Question Fast service restaurant Family dining restaurant 1. What is done well, give

one or two examples.

2. Which aspects of customer service have a positive influence on customer perceptions of the overall service experience?


3. Which aspects of customer service have a negative influence on customer perceptions of the overall service experience?


4. Which of the following characteristics (colour, lighting, shapes, sound, smell) influences the customer’s experience?


5. How does each establishment use the

“servicescape” to let you know the type of service you should expect from them?

6. What suggestions would you make to improve the

“servicescape” and other physical evidence for each establishment?


2.2. Customer Life-time Value and Loyalty

This topic looks at the value of repeat customers, also known as the life-time value of a customer to a business and looks at strategies to encourage repeat business.

Customer Life-time Value is the present value of the future cash flows from a customer relationship.

Defining customer loyalty - In a business context, loyalty can be defined as a customer’s commitment to do business with a particular organization, purchasing their goods and services repeatedly, and recommending the services and products to other people. Mallory & Barnett 2000 (Source: A Restoration in Hotel Loyalty - Developing a blueprint for reinventing loyalty programs by Deloitte & Touche LLP).

2.2.1. Keeping Customers

The most important thing for any businesses to do is to keep their customers because repeat business is the lifeblood of every business. Here are some of the benefits to the businesses:


Studies show that it is between five to ten times more expensive to attract new customers than it is to keep existing ones.


With the cost of attracting new customers being much greater than the cost of providing the exceptional service that keeps them coming back, it is clear that the more customer loyalty a business develops, the less it needs to spend on attracting new customers. But, remember it is always important to be attracting new customers.


It is expected that increased customer loyalty leads to lower price sensitivity and stronger brand attitude, as a result customers have a lower chance to switch to another brand (Preeta and Piyush, 2008).


If you are interested in doing some calculations on Customer Life Time Value, Harvard Business School offer a free ‘Lifetime Customer Value Calculator Toolkit’

(Excel Workbook) you can download here:


2.2.2. Customer Loyalty Programmes

What is a customer loyalty programme?

The basic idea behind a customer loyalty programme is to gain a bigger share of customer spending by rewarding individuals for shopping at a particular store or group of stores. The more money that a customer spends, the greater the rewards.

Sometimes rewards come in the form of discounts on products in the store. Other loyalty programs allow members to accumulate rewards ‘points’, which they can then redeem for a variety of ‘free’ goods or services (Worthington and Fear, 2009).

Successful tourism and hospitality businesses have found that loyalty programmes are very important in capitalizing on existing customers and bring in new customers while stimulating revenue growth. Many businesses have started to develop programmes and strategies to create customer loyalty, for example airlines offer

“frequent flyer” programmes.

Loyalty programmes yield benefits both to the business as well as consumers (Stone and Crick, 2004).

Benefits to the business:


Loyal customers cost less to retain – it costs a business about 5-10 times more to acquire a new customer than it does to sell to an existing one


Loyal customers will recommend the services they frequent to 12 persons on average


Loyal customers are more likely to reflect their comments to the business management


Loyal customers spend more - they pay little attention to prices, and they are willing to pay higher prices for quality products and services.

According to research, existing customers spend 67% more than a new

Figure 2.5: Airline’s frequent-flyer programme



Loyalty fosters a deeper emotional connection between the customer and business


The average costs of loyalty programs is 0.5 - 1% of sales and customer databases have allowed businesses to collect, store, and monitor customer activities. This allows businesses to understand and recognise individual customers and what they are interested in buying.

Benefits to the customer:


Customer is psychologically reassure when dealing with the same firm. In other words, customer has established trust towards the quality of the products or service offered by the firm.


Customer also gets a feeling of being a smart shopper


Customer gets something for nothing (free) economic benefits are accrued by staying loyal


Customer receives high value for the services and products


Customer receives respect from the firm under the tier system. In other words, customer who spends more on the firm’s products or services is rewarded with a higher tier status.

In short, a good customer loyalty program should build business and enhance profitability while simultaneously rewarding a firm’s most profitable customers.

Types of customer loyalty programmes:

Generally, there are three types of customer loyalty programmes commonly used by tourism and hospitality businesses (David Robinson, 2011). They are:

1. Simple Points System 2. Tier System

3. Partnership System 1. Simple Points System

This is the most common loyalty programme. Repeat customers earn points, which translate into some type of rewards. Whether it’s a discount, a freebie, or special customer treatment, customers work toward a certain amount of points to redeem their reward. This type of loyalty programme is most appropriate for businesses that encourage frequent but short-term purchases (David Robinson, 2011).


Example 1(a) shows a local coffee shop offers a free drink to its customers when a customer has collected 10 points.

Example 1(b) shows a local casual dining restaurant offers a buy 5 get 1 free loyalty programme in rewarding its customers.

2. Tier System

Offers a small reward to initiate the loyalty programme, but encourage repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder. The key is to offer benefits in the early stages to hook the customer into coming back. Once they do, they’ll realize that “next” tier isn’t unattainable, and offers really good benefits. It also helps solve the problem of customers forgetting about their points and never redeeming them. Example 3 shows a local airline’s tier system. This system offers its customers with four different tiers.

Example 1(a): Simple Points System – buy n and get 1 free

Example 1(b): Simple Points System – buy n and get 1 free


Example 3 – a tier system of a local airline’s loyalty programme

The difference between simple points system and tiered systems is that customers extract short-term (points system) versus long-term (tier system) value from the loyalty programme. You may find tiered programmes work better for high commitment and higher price businesses like airlines and hotels.

3. Partnership system

This type of loyalty programme is very common in the tourism and hospitality business. Many businesses form partnerships with non-competing firms to facilitate the task of accumulating points and to increase the variety of reward options (Ferguson and Hlavinka 2009). Example 4 shows members’ reward options are interchangeable with the reward programmes of both banks’ credit cards and airlines’

frequent-flyer. In addition, partnership system can be extremely effective for customer retention and company growth. In this example, airlines’ frequent-flyer members and credit cards’ members are likely to continue flying with the airlines and making purchases with the credit cards in order to accumulate points and receive the rewards.


Technological advances:

Loyalty programmes should take advantage of technological advances. The days of the paper loyalty cards are quickly vanishing. Advancements in loyalty management technology such as bar code, magnetic strip and RFID have facilitated the development of more sophisticated loyalty management in recording points and rewarding customers (Shugan 2004). Instead of using paper-cards shown in Example 1, card with advanced technology such as RFID (Octopus card) in Figure 2.6(a); magnetic strip in Figure 2.6(b); and bar code in Figure 2.6(c). These technological improvements should increase customer satisfaction with the loyalty programme. Customers no need to renew their paper cards regularly because of damage or misplace; reward programme’s balance can be easily checked and updated. While also reducing operating costs because less printing is done, reward coupons can be stored digitally, and special promotions can be notified to customers by emails (Cornell Hospitality Report, June 2010).


Today, advancements in loyalty management technology are developed beyond card-based format. The latest technology used in mobile phone is called mobile bar code in Figure 2.6(d). A mobile bar code is an electronic bar code that can be stored on a mobile phone. Mobile bar codes can be used to create virtual loyalty cards, gift cards and coupons that shoppers can carry right in their mobile phones — no more plastic credit card style cards and paper coupons to manage. Some of the benefits of using the mobile bar code technology are:


Very ‘green’: Loyalty programmes using mobile bar code do not generate any paper or plastic refuse, promoting a company’s environmentally friendly image.


Very low cost: Mobile bar code initiatives cost are relatively low, there is no need to print, mail or issue physical plastic cards, paper-based cards and coupons.


Increased brand awareness: A business gets the most direct channel possible to promote the brand to the customers straight to their personal mobile phone.

Mobile phone is already playing an increasingly important role in customer loyalty

Figure 2.6(b): Points System – cash reward (Magnetic strip) Figure 2.6(a):

Points System – cash reward (RFID technology)

Figure 2.6(c) : Points System – cash reward (Bar code technology)



David Robinson, 2011, Customer Loyalty Programs: Best Practices, Haas School of Business, University of California, Berkeley.

Ferguson, Rick and Kelly Hlavinka (2009), “Colloquy Censustalk – The Big Sort:

The 2009 Collogquy Loyalty Marketing Census,” Colloquytalk, April.

Merlin Stone, David Bearman, Stephan A. Butscher, David Gilbert, Tess Moffett and Paul Crick,(2004)”The Effect of Retail Customer Loyalty Schemes-Detailed Measurement or Transformed Marketing?” Journal of Targeting, Measurement and Analysis for Marketing, Vol. 12,3,305-318.

Michael McCall, Clay Voorhees, and Roger Calantone (2010), “Building Customer Loyalty: Ten Principles for Designing an Effective Customer Reward Program”, Cornell Hospitality Report Vol. 10, No. 9, June.

Preeta, H. Vyas and Piyush, K. Sinha (2008), “Loyalty Programmes: Practices, Avenues and Challenges, December.

Shugan Steven, (2004),” The Impact of Advancing Technology on Marketing and Academic Research, ”Marketing Science,23(4) , 469-475.

Worthington, Steve., Fear. Josh. 2009. “The hidden side of loyalty card programs”, The Australian Centre for Retail Studies, December 2009.

Figure 2.6(d) : Points System – using Mobile bar code technology


2.3. Cultural Issues in the Provision of Customer Services

2.3.1. Customs and Etiquette in the Major Tourism Regions

The United Nations World Tourism Organization lists the main tourism destinations, see the table below:

Table 2.2: Tourism Arrivals by Country 2012 (UNWTO) Rank Country Arrivals

2012 (million)

Rank Country Arrivals

2012 (million)

1. France 83.0 6. Turkey 35.7

2. United States 67.0 7. Germany 30.4

3. China 57.7 8. United Kingdom 29.3

4. Spain 57.7 9. Russian Federation 25.7

5. Italy 46.4 10. Malaysia 25.0

Source: Data as collected by UNWTO June 2013

We are going to look at the top four destinations shortly, but to get you thinking about the differences between cultures, and how service staff deal with foreign guests or customers, have a go at this fun ‘eating out’ quiz first. How much do you really know about different dining culture?


Which dining culture did you find the most unusual, and why?



It is very important for customer service staff to have a good understanding of some of the important differences between cultures, and to be sensitive to cultural issues.

If not, we are likely to make mistakes, upset people and possibly lose the goodwill


friends with people from outside our own country can be very helpful and enriching.

Maybe you can get a pen-friend to correspond with or do a student exchange to learn about other people and places, this will be something that will help you a lot in your personal and business relationships in the future.


To help you consider some of the cultural differences – search the following websites and compare some of the business customs and protocols of the top four world tourism destinations.

– Understanding other people’s languages, cultures, etiquettes and taboos

– Business etiquette – International Business Etiquette and Manners

– Understanding other people’s languages, cultures, etiquettes and taboos – Cultural differences

– Etiquette:

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Using the above hyperlinks, and fill in the boxes below:

France USA China Spain

Meeting &


Exchange name cards. Shake hands. Use formal titles until you know each other well.

Be calm.

Gifts Exchanging

gifts is common. Do not give

scissors, knives clocks.

Relationships Very important

to show respect and to develop relationships.

Business Meetings

Be punctual. Set an agenda. Be polite. Make compromises.

Family Emphasis on

duty, sincerity, harmony, loyalty, honour, respect for age and seniority.

Other Face/respect is

very important.


2.3.2. Differences between Eastern and Western Traditions

Nowadays, with the increasing contacts between people of different cultural backgrounds, cross-cultural communication becomes the world’s growing trend.

Etiquette varies in different regions, countries and social systems. Among different cultural traditions, there is a vast difference between the Eastern traditions and Western traditions. Eastern etiquette prevails in countries such as China, Japan, Korea, India and Singapore; while Western etiquette is practiced in countries such as the United States, England, Italy, Germany and France.

Characteristics of Eastern traditions 1. focus on family love and kinship 2. modest and implicit

3. accept the reality and satisfy with current status 4. emphasize on common features (holistic) 5. reciprocity

Characteristics of Western traditions 1. simple and practical (practicality) 2. advocate personal freedom 3. cherish time

4. free, equal and open-minded

2.3.3. What is Etiquette?

The three fundamental elements that form etiquette include language (in writing or verbal form), behaviour and costumes. The basic forms of etiquette vary depending on a number of factors such as living conditions, historical traditions, cultural mindset and ethnic customs. The variation of these factors resulted in the four common types of etiquette:

1. Protocol:

It is the code of behaviour in showing respect and friendship to each other in the course of interpersonal, social and international contacts.

2. Courtesy:

It is the usual form in expressing greetings, regards, wishes and sympathy in daily life and sometimes in special socializing occasions. The expressions may vary from countries to countries due to regional and ethnic differences. Examples include nods and handshakes which are


commonly accepted all over the world, or putting palms together in India (Namaste), or hugging and kissing in Europe and America.

3. Manners:

It is the behavioral code in expressing modesty, respect and friendship among people by using words, facial expression and gestures. The forms of manners include:

1) appearance, grooming and deportment;

2) language and style of conversation;

3) apparel, clothing, hairstyle;

4) facial expression and gestures; and 5) ways in dealing with people, attitude, etc.

4. Ceremony:

Those are the things that are said and done on a formal event or formal occasion. Examples include inspection of parade and cannon salutes when welcoming a head of foreign state or a head of government, curtain-unveiling, ribbon-cutting during exhibitions, or foundation laying for large projects.

Activity 2.9

Think about:

What are the functions of tourism etiquette in tourism activities?

Suggested answers: the functions of tourism etiquette can:

1. increase the mutual understanding and communication between tourism staff and tourists

2. help to solve the disputes between the tourists and the hosts 3. improve the behaviour of tourism staff

4. improve service quality


2.3.4. Etiquette and the Tourism Industry

During a visit, there are always interpersonal contacts including contacts between tourists, tourists between tourism staff, and tourists between local residents of the host country. These contacts are diversified in nature, we need “etiquette” to manage our behaviour, enhance mutual understanding and friendship.

Tourism industry must provide tourists with quality service etiquette in addition to the provision of tangible products and services such as transportation services, accommodation services and recreational facilities. Quality customer service etiquette aims to help tourism services staff to understand the different types of protocol, courtesy, manners and ceremony. Therefore, quality customer service etiquette is one of the essential factors for tourism industry in meeting the customers’ demand for service satisfaction.

2.3.5. Greeting Etiquette of Meeting People from Different Countries


Handshake originated in Europe. It was meant to reassure each other that neither person held any weapons. Handshake is commonly accepted in most countries. Therefore, a decent handshake is a good way to show happiness when meeting a foreign guest. However, never use your left hand or both hands to shake hands with an Indian because they never use their left hand except when using the washroom.


In some Asian countries such as South Korea (Republic of Korea) and Japan, people usually bow with their hands placing flat on their knees when they meet a friend. Bows are usually accompanied by verbal greetings. Graceful motion should be ensured when making a bow.


Before hugging, you should first have a certain understanding about the degree of friendship between both of you, and also the relevant customs. Otherwise, your hug could be turned down. In particular, when a gentleman meets a lady, he should observe if the lady has the intention to hug. It is advised that the gentleman should wait for the lady to hint for a hug first.

Cheek kissing

Cheek kissing is prevailing in many countries. Generally, only the right side of the cheek would be kissed. This etiquette is especially popular in countries such as Spain and Italy.


an etiquette generally practiced by soldiers; putting palms together (Namaste) is a religious etiquette; hand kissing is an etiquette practiced in the upper class in Europe and the US. When a gentleman meets a noble lady and the lady holds out her hand with her palm facing downward, the gentleman should take the offered hand and touch it with his lips. Hand kissing will not be performed unless the lady holds out her hand.

We should determine the form of etiquette depending on the country, religion and personal background of the person receiving the greetings. Otherwise, we may probably offend other people. Certainly, it would be safer if you express pleasant facial expressions first and observe the intention of the other party before determining which form of etiquette would be appropriate.


The website of Civil Aviation Resources of China (only available in Chinese)

2.3.6 Dining Étiquette

In the business of hospitality and tourism, we need to encourage our customers and guests to return and visit our country and our hotel or business. The human touch can help so much, by being friendly, interested in others, welcoming and tolerant of different customs and behaviours. Remember that people may look different, speak another language and behave in a different way to us, but nevertheless, their needs as a guest or customer are the same. Learning another foreign language can help you communicate and develop closer relationships with your visitors, and this is something you may consider in your future studies.


Figure 2.7: Cross-cultural communication (Photo: Paul Penfold)



Internet research: Choose three countries of the world – from Asia, Africa, Europe and the Middle East and identify different dining étiquette for each one. This activity will help you understand the differences and things you need to be aware of in travelling and eating in these countries. Some useful websites include:

1. International dining étiquette:

2. Business étiquette: 3. International Business Étiquette and Manners:

– Etiquette:

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Cultural aspect Asia - Country 1 Africa - Country 2 Europe - Country 3 Middle East - Country 4 Seating – who

should sit where?

Should you wait to be seated? Is it alright for men and women to sit next to one another?

Body language - how should you sit?

Is it impolite to put elbows on the table?

If you sit on the floor what is the correct position?

Eating - what utensils are used? Is there any étiquette for using them?




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