Customer service theory

laptop, salesman and the customers image by Dmitri MIkitenko from

The theory of customer service and satisfaction is about retaining customers. Loyalty remains the key element. It is by nature an intensely practical theory. Without a firm grasp on the basic principles of customer service, a firm cannot survive.

Few want to do business with a firm that cares little about customers, their comfort and concerns.


Adam Smith's famous Wealth of Nations (1776) made customer service the centre of the basic theory of competition. If a firm owner or manager wants to be successful, that person needs to be very involved with meeting customer needs, or the customer will go elsewhere. Therefore, profit seeking firms, regardless of their true motivation, are forced by the nature of the marketplace to treat customers with respect and seek their loyalty and return business.


Customer service is almost synonymous with customer loyalty and customer satisfaction. They are links in a broader chain. Customer service is that which creates customer satisfaction, and in turn, creates customer loyalty.


There are five main features of customer service that leads to satisfaction. The firm must be reliable in its services, such as deliveries. It must be highly responsive to customer needs and, therefore, must strive to become flexible. The customer must be assured that the firm is consistent in meeting needs and keeping its side of the bargain. Firm staff must be empathetic with clients and customers, creating real relationships and friendships to keep clients. Lastly, the "tangible" aspects of the firm must be in order. This includes the basic appearance and atmosphere of the physical plant. It needs to stress brightness, welcoming and warmth. It should be a comfortable place to do business.


Customer service leads to customer loyalty. This is done through what customer relations expert Maxine Kamin calls the "equation of fantastic service." The first step is to greet the customer, making him feel welcome and at home. Then the client's specific needs must be determined. Third, those needs must be met efficiently. The purpose here is to create a friendly and personal relationship that provides positive associations between the customer and the establishment. Those met needs need to be checked and rechecked to make sure nothing was left out. Finally, fantastic service "leaves the door open," making sure the client has an incentive to return. The benefit to the customer is a pleasant and efficient experience, and the firm has just recruited a loyal customer.


Kamin holds that the basic structure of customer satisfaction is that the basics are seen first: the environment or the availability of help. These are the first impressions that can colour the remainder of the experience. But once those variables are taken care of, the customer then worries about more specific things such as the reliability of the staff, price, friendliness and the possibility of maintenance after the purchase. The customer experience, therefore, goes from most general to most specific.