Choose a company that you feel is an outstanding services company. It cannot be any of the companies covered in the cases or discussion questions (or Disney because it has been written about too much). Identify how they do such a good job of providing a service, why they are better than their competition, provide examples of when/how they have shown their ability to provide excellent service, and what is it about their corporate structure or culture that allows them to provide excellent service.
EXECUTIVE SUMMARY
Costco Company gained and sustained a competitive advantage due to its excellent services. By understanding the customer needs and requirements, the firm has successfully developed its people, especially the bottom line, to increase effective customer interactions. Costco, along with its high-quality services for people, also produces some exceptional service standards and techniques to enhance the visibility of customer satisfaction and loyalty. The firm intends to keep the service advantage by being the second largest retail chain in the world. The firm provides excellent services by using its website and utilizing the Brick & mortar business model. Also, the bottom-line of the firm is developed dramatically to know the customer needs and fulfill them according to expectations. Innovation and creativity in the service process are two prominent components to make it different from other firms. It got the edge in the market by service innovation. Collaboration, cooperation, interrelated steps, and customer focus are linked to excellent service, and it leads towards competitive advantage. Costco increased the ability to provide superb service by reducing the cost of different processes. It has a direct impact on the service process. The structure of the company facilitates the change or trend adaptation. Culture is triggered by value, vision, and voice. People are trained, motivated, and empowered to adopt skills and shape excellent service outputs. Now, the firm needs to sustain these services and keep its intense customer focus to make some changes or evolve with time. The retail industry has become competitive due to the emergence of many existing and new competitors. The management has to keep its eyes open to find new ways to provide unique services. Unique service is a powerful source for the organization to emerge differently and service customers in a manner which has not been observed or experienced in the retail market.
INTRODUCTION
Every business intends to provide excellent services to its customers in the competitive market. In an intense rivalry, the firm needs some excellent service strategies to make the difference and get an edge over other companies. The service industry has become competitive with the time, and organizations have to integrate with several service industry trends to be relevant and lucrative. The culture and structure of the company also play a vital role in providing excellent services.
Costco Background
Costco is a multinational American retailer. The company was founded in 2000. The firm provides Merchandise, Cash & Carry, and Warehouse club services. Due to extensive service operations and sustainable revenue growth, the firm became the 2nd largest retailer of the world in 2015. The company was just behind Wal-Mart Company. The membership-only warehouse club is the mainstream service of the company. According to 2017 financial reports, the revenue of the company is US$129.0 billion (Return And Refund Policy).
Study Scope & Road Map
The firm is in the limelight due to its excellent services in the competitive landscape. The management has some exceptional service standards, which helped to differentiate the services. Significant components of the report will depict the excellent customer service initiatives and their impact on the customers in the competitive landscape. First, it seems imperative to describe how the company provides different services. Furthermore, several service strategies will be elaborated to assess the possible competitive advantage of the company. It is essential to investigate the ability of the firm to shape excellent service and get an edge (Kotter). Finally, the study will reveal how the firm uses its corporate structure and culture to provide differentiated services. The firm successfully built the brand image and customer relationship. Apart from the competitive advantage and customer satisfaction and loyalty, Costco ensured the business sustainability.
PROVIDING EXCELLENT SERVICES
Well, the service process starts from Costco’s website. The best thing that this company did well in the competitive industry services is the differentiation (Preez). Frequently customers face different service levels when dealing with companies in the same industry. Costco has done it differently, as customers can find the information and assistance from the management right there at fingerprints. The website streamlines possible services, which can be provided immediately. The service representatives are working effectively at the back end, and they perceive the customer needs sharply.
Developing Bottom-Line
Providing excellent services to customers is a process that can make them satisfied and loyal for the long run. Interestingly, it has increased the switching cost for customers. Costco management always aims to develop its bottom-line to serve customers as customer service managers in the future. For Instance, it has been revealed that 76% of managers served the company as hourly employees (Rossi). These employees worked at the bottom line of the company as cashiers and sales representatives. These employees have worked with customers intimately, and they know the actual intrinsic and extrinsic customer needs.
Cashier turned Managers
Thus, developing its people from the bottom-line and making them active service representatives is a part of the customer service strategy. The cashier turned service managers perceive the customer needs effectively and enable immediate actions. It has changed the customer service experience with time (Kotter).
Warehouse Approach
Costco does not contain large items in the warehouse. Interestingly, it helps the company improve its negotiation power with the customers. For Instance, a service representative knows what they intend to sell. Limited stock in the warehouse facilitates service employees to provide adequate information to customers. This warehouse strategy has helped us us us to answer typical customer questions effectively. The Director of customer satisfaction index managing has admired these service traits. According to him, Costco has a useful service model, which streamlines what Costco does, what it sells, and what is to be done to satisfy the customers (Garcia).
EMPLOYEE COMPENSATION & SATISFACTION
Also, the firm is willing to make employees happy. Fair and attractive pay, motivation, and frequent training and development processes are the main strategies to make customers satisfied and happy. For Instance, Costco believes in employee satisfaction to provide excellent customer services. People enjoy working in this company, and it increases the better customer experience. The friendly work environment is also quite visible for employees, as it motivates employees to integrate with Costco’s service standards (Cooperstein).
COMPETITIVE ADVANTAGE
Costco intends to provide premium services at low prices, and it seems a primary strategy to gain a competitive advantage in the competitive market. However, due to excellent service for customers, the firm also gets an edge over other rivals in the retail industry. The most important thing for the company is to shape the behavior of its employees and depict the customer-focused services (Morgan). Interestingly, the company has identified the customer gap which exists between expected service and perceived service. If a customer buys a product from any retailer, it may have to return it within the provided or offered limit. However, Costco receives the returns without any limit.
Liberal Return Policy
The company has initiated the liberal return policy, which is included in the excellent service process. Costco has guided the customers regarding the return policy on different touch points. For Instance, the firm steered customers that how they can return different products such as mobile, camera, laptop and many other electronic products within 90 days. It seems a remarkable service because it allows customers to use these products in the whole summer and return it in a normal condition. The customer service management also works with customers to optimize product care. Some products are enlisted by the administration, which is to be returned within 90 days. The liberal return policy makes the whole customer service different from other companies, and it also contributed to the competitive advantage, customer satisfaction, and customer loyalty.
High Service Expectation
Interestingly, it looks like the ideal expectation of desire. The firm integrates with the high service expectation of customers who have never been experienced with other companies. Thus, it opens ways for the firm to get an advantage over other major players. Instead of streamlining acceptable or tolerable expectations, the firm has optimized this consideration to make the difference. Costco has initiated the service innovation. Service managers like to integrate with the customer feedback to create better customer strategies. Working with employees and customers is the right approach to shape strategies, which are to be generally accepted by these stakeholders. The source of the competitive advantage is the service design thinking and techniques (Kotter).
Customer need assessment
In the competitive landscape, the firm has identified the needs of both employees and customers. Employees know what customers want. They perceive the customer level due to their experience. Conversely, the customer portrays the expectations which are to be met by the company to enhance the visibility of attraction and customer satisfaction.
Interrelated Steps
Costco has tried to reduce interrelated steps in the service process. The firm lowered the time which is to be spent in the customer service process. Physical presence, process, technology, employees, customers, and subcontractors have been considered in the service process. The collaboration and cooperation across functions have enabled the differentiated service process. Ultimately, it increased the customer experience, and the firm got the competitive advantage
ABILITY TO PROVIDE EXCELLENT SERVICES (EXAMPLES)
Costco’s ability to attract loyal customers has been perceived positively. The firm is still focusing on its Brick & Mortar business model to attract customers and increase sales. For example, the company has expanded its ability to provide excellent services through cost reduction. Customers want high-quality service at low prices, and it looks like one of the prominent expectations.
Cutting Cost
The firm increased this ability by cutting freight costs, reducing packaging, scaling the merchandise and negotiating process with vendors. It sets the base for the company to design several customer services and customer satisfaction measures. It provides a roadmap or boundary for the company to streamline its differentiated services. Costco has created the ability to provide 80% to 90% back to customers, and it is a big difference, as far as the service level of other retailers in the market (Kell).
CORPORATE STRUCTURE OR CULTURE TO PROVIDE EXCELLENT SERVICE
The organizational structure of the company is flexible, which assists us us us to make some changes according to the new customer and market trends. The organizational structure and culture play an important role in shaping and delivering excellent services to customers. For Instance, if the firm intends to adopt a new service trait or trend, the flexible structure reduces resistance in the internal business environment.
Cultural Components Driving Excellent Service
On the other hand, the culture of the company revolves around three main components or elements. These elements are vision, value, and voice (Stallard).
Vision
Costco management communicates an inspiring vision to all key internal stakeholders. The administration has created urgency by communicating the vision of customer services, and it shapes the appropriate behavior of the bottom-line as well. Interestingly, the customer service vision has been aligned with the vision of the corporation. It helps to understand the importance of services. (Kotter).
Value
Also, generous compensation and benefits to employees, especially at the bottom line of the company, has become the best approach to valuing people. The company has created value for customers by recognizing customer perception in the competitive market. The company assesses the market with the customer’s eye and is also shapes the behavior of all internal key stakeholders. Internal stakeholders, especially employees, always intend to be adroit and nimble to react quickly. The culture of the company is one of the main sources of customer value as well (Byrnes).
Voice
The democratic culture has worked for the company. The management aimed to consider ideas, opinions, thoughts, and reservations of internal stakeholders. It increases the voice power, and it enables the best services for customers. Moreover, the organization has given people a voice to deal with customers. For example, Costco survived in the market or industry by using defensive marketing approach. Thus, pertinent traits are delegated at the bottom-line of the company to serve customers. The current culture, which revolves around these elements, sets a direction to retain existing customers (Wirtz and Lovelock).
CONCLUSION
In the end, it is to conclude that Costco Company built its capability to streamline its services. Merchandise, Cash & Carry, and Warehouse club services are shaped according to customer desires and expectations. Apart from these mainstream services for customers, after-sales services are also essential for customers. In this comprehensive analysis of Costco Company, the major component of the excellent service is described along with several insights. With time, the firm must integrate with the change and create an urgency to be a customer service leader in the retail industry. The firm’s development will help to retain current customers and grab new customers. high-quality services and after-sales facilitations increased the switching cost. Dramatically, it reduced the threat of existing and new rivals. And customers are not willing to take any service risk. They became loyal and satisfied, and Costco is getting the advantage.
Work Cited
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Rossi, Jason. “Here’s Why Everyone Loves Costco’s Customer Service So Much.” Cheat Sheet. Cheat Sheet, 12 November 2017. Web. 21 December 2018. https://www.cheatsheet.com/money-career/costco-best-customer-service-america.html/.
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