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The following appeared in a memo from the customer
service division to the manager
of Mammon Savings and Loan.
“We believe that improved customer
service is the best way for us to differentiate ourselves
from competitors and attract new customers. We can offer our customers better
service by reducing waiting time in teller lines from an average of six minutes
to an average of three. By opening for business at 8:30 instead of 9:00, and
by remaining open for an
additional hour beyond our current closing time, we will be
better able to accommodate the busy schedules of our customers. These changes
will enhance our bank’s image
as the most customer-friendly bank in town and give us
the edge over our competition.”
Discuss how well reasoned... etc.
The customer-service division of Mammon
Savings and Loan recommends that the best way for the bank to attract new
customers and differentiate
its competitors is to improve its service
to customers—specifically, by reducing waiting time in teller lines, opening
for business 30 minutes earlier, and closing an hour later. These improvements,
it is argued, will give
the bank the edge over its competitors
and make it appear more customer-friendly.
For the most part this recommendation is well-reasoned; a few concerns must
be addressed, however.
First, the author assumes that Mammon’s
competitors are similar to Mammon in all respects other than the ones listed. In
fact, Mammon’s competitors may be more
conveniently located to customers, or offer other services or products on
more attractive terms
than Mammon. If so, Mammon may not gain the edge
it seeks merely by enhancing certain services.
Secondly, the author assumes that the
proposed improvements will sufficiently distinguish Mammon from its competitors.
This is not necessarily
the case. Mammon’s competitors may
already offer, or may plan to offer, essentially the same customer-service
features as those Mammon proposes for
itself. If so,
Mammon may not gain the edge it seeks merely by enhancing these services.
Thirdly, the author assumes that Mammon can
offer these improved services without sacrificing any other current features
that attract customers. In fact, Mammon
may have to cut back other services or offer accounts on less attractive terms,
all to compensate for the additional costs
associated with the proposed improvements. By rendering its other features less
attractive to customers, Mammon may not attain
the competitive edge it seeks.
In conclusion, Mammon’s plan for attracting
new customers and differentiating itself from its competitors is only modestly
convincing. While improvements in customer
service generally tend to enhance competitiveness,
it is questionable whether the specific improvements advocated
in the recommendation are broad enough to be effective.