The Purpose and Importance of Customer Service in Logistics

Provision of strong customer service is crucial to the performance of any business, and logistics/warehousing businesses are no exception.

In the context of a logistics/warehousing business, customer service has the following purposes:

1. Stimulates new and repeat business by improving customer satisfaction.
2. The company can develop its reputation and win business when its customer service becomes a business-winning capability.
3. Customer-orientation is most visibly/publicly perceptible through the company’s customer interfacing activities, of which, customer service is the most obvious. When services are substitutable, i.e. there are many companies offering comparable services and pursuing business from similar companies, then customer service capability can become a distinguishing factor.
4. Customer services shows the public that the company is customer-centric and responsive.

In the context of a logistics/warehousing business, customer service is important for the following reasons:

1. If customer service is inadequate, business can be lost. Long-term contracts maybe broken or accounts not renewed if service levels deteriorate over time. Customer service is also crucial to attracting new business. Often, the opportunity to secure new contracts is won or lost in the very earliest stages of interaction. Contracting and sales activities are a customer service consideration. Hence, all staff who are customer-facing are effectively sales staff. Any perceptible lack of professionalism will reflect badly on the entire business and likely lead to revenue opportunity losses.   
2. Customers may require high levels of pipeline inventory. If the customer service staff are unable to provide real-time inventory visibility, the customer’s business performance maybe negatively impacted. Stock levels, auto replenishment, dispatch details, and delivery window estimates may all be required. If the customer service staff cannot offer such information in an accurate and prompt way, then both companies will suffer. Customer service can be improved by the utilisation of inventory management systems comprising hardware and software that provides high levels of client stock visibility. Customers may have other questions and worries about their warehoused stock. Most of these will be manageable provided the requisite technologies and staff skills are present. If customer service staff cannot provide immediate reassurance and information, then they must be able to do so as soon as possible.
3. Effective interfacing through customer services develops trust with customers. Long-term, dependable business relationships are more likely to emerge from high-trust than low-trust dynamics. Trust relationships are contingent on consistently high levels of customer satisfaction, which stems from effective solution of problems, absence of errors, efficient customer service, value-adding activities, and sustained positive outcomes (or at least absence of negative outcomes).
4. Corporate reputation. This relates to 4. (earlier); positive perception results from customer service as well as generally satisfactory levels of service provision. Although customer is a secondary business function in terms of value to the customer (problem-free warehousing is the primary function, for which the customer is willing to pay), any activity that simplifies or improves the achievement of satisfactory service levels. Positive brand awareness is the product of primary and secondary service level satisfaction. Customers may recommend a warehousing firm to other people looking for warehousing solutions. Likewise, customers may also publicise a company for negative reasons, e.g. as a form of complaint, or to warn people from engaging with a company that has caused them more problems than benefits.