Introduction The purpose of this research is to evaluate the importance of understanding culture in order to deliver customer service excellence from both an organisational perspective and the perspective of the customer. This paper will apply customer service excellence theory to a number of case studies in order to demonstrate organisational successes and failures in understanding cultures when expanding into new territories.
In addition to this, the perspective of the customer will be considered, to discuss whether these organisations have managed to successfully deliver customer service excellence. Understanding Culture According to Goodenough (1971, pg. 13), culture can be defined as ‘a set of beliefs or standards, shared by a group of people, which help the individual decide what is, what can be, how to feel, what to do and how to go about doing it. ’ Similarly, Kotler and Armstrong (1994, pg. 27) describe culture as ‘collective programming of the mind which distinguishes the members of one group or category of people from those of another. ’ It is, according to Frost (2000), an internal and external issue that is becoming increasingly important due to the growth of global organisations. Frost also explains that in order to understand the expectations and perceptions of different cultures, an organisation must identify its own position in the dimensions of culture.
This emphasises the importance of organisations needing to understand their own internal culture in order to be able to deliver customer service excellence in international cultures. The Impact of Understanding Culture – The Positive Affect on Customer Service The success of McDonald’s can be attributed to many contributing factors, including the ability to understand customers’ needs and expectations in order to strategically deliver customer service excellence on an international scale (Wurston et al, 2009).
McDonald’s recognises that delivering customer service excellence is a strategic technique to gain competitive advantage (Kotler and Armstrong, 1994). This is supported by McKinsey’s 7 S framework (Waterman et al, 1980) when applied to McDonald’s global expansion strategy to penetrate markets through understanding the local cultures and customs. McDonald’s is the leading global food retailer operating over 33,000 restaurants in 119 countries and structurally, over 80% of the restaurants are franchised (McDonald’s, 2011a) demonstrating the power of the McDonald’s brand across the world.
Strategically, McDonald’s enters countries with an existing brand culture to encourage further expansion through franchising following the success of its flagship stores. From an organisational perspective, McDonald’s is providing community benefits such as employment opportunities, which could be interpreted as customer service excellence through employing local people with knowledge of the local culture. This improves the level of customer service received by the customer. McDonald’s has adapted its style in terms of how they are perceived when entering different cultures.
From a moral and ethical perspective, McDonald’s has changed the style in which they presented themselves in Hong Kong to demonstrate its Corporate Social Responsibility credentials and how as a company, they limit the impact of McDonald’s restaurants on the environment (Vignali, 2001). In advertising campaigns in China, McDonald’s introduced an additional character called Aunt McDonald to feature alongside Ronald McDonald, reflecting China’s low individualism/collective index whereby close relationships built on lifetime loyalty with non-immediate family are highly valued (Cateora and Graham, 2002).
From an organisational perspective, this can increase sales through matching the company image to that of the country’s culture, therefore gaining competitive advantage. McDonald’s, as a global business, has a wide skills base including public relations, international marketing and strategy experts (Vignali, 2001). McDonald’s, as an organisation, utilises these skills to adapt the business model to match the cultural values and expectations of each country it enters with the overall objective of being successful in the venture.
McDonald’s is committed to employing local staff and promoting internally to ensure that the management fully understand both the corporate and local culture and, as an employer, the company aim to recruit customer-focused individuals who are looking to progress within the organisation (McDonald’s, 2011b). McDonald’s recruits customer-focused individuals in order to differentiate themselves from competitors with the aim of satisfying every customer on every visit (Vignali, 2001). McDonald’s adapts its style in order to provide customer service excellence depending on the culture of the area in which each store is located.
In Beijing, the cultural norms and expectations require a high level of interaction with the customers, so at least one member of staff is employed to deal with public relations and over five receptionists are employed to look after the children and speak to the parents (Vignali, 2001). McDonald’s understands that whilst Beijing’s high power distance culture (Hofstede, 1984) demands this level of service to provide customer service excellence, this style may be considered excessive in other countries and cultures, as such close communications throughout the visit may not be an expectation of the customer.
Hall (1959) identifies that in some western cultures, close bodily contact or intense eye contact can induce discomfort or unease within the customers; in these cultures, too much interaction in a fast food establishment could be seen as an encroachment on their personal space. In addition to this, western cultures tend to value time as a resource (Hall, 1959). Eating fast food is a time-conscious exercise, demonstrating that in some cultures, McDonald’s serving the customers quickly without discussion can provide customer service excellence.
Shared values across all McDonald’s stores can be summarised by its brand mission, which states that they aim to ‘be our customers’ favorite [sic] place and way to eat’ (McDonald’s, 2011c). McDonald’s plans to achieve this through its global strategy called Plan to Win derived from what they determine as the five basics of an exceptional customer experience: People, Products, Place, Price and Promotion (McDonald’s, 2011c).
The shared values of McDonald’s are uncovered through the application of McKinsey’s 7 S model (Waterman et al, 1980) by understanding cultural differences and adapting McDonald’s business model to provide customer service excellence. McDonald’s alter their menu in order to adapt to the customer needs and demands when they have entered new countries incorporating each country’s religion and culture into their menu. Examples include serving Big Macs without cheese in areas with a high Jewish population, serving vegetable nuggets in India, and serving croissants in Germany (Vignali, 2001).
This delivers customer service through providing a choice of suitable products catered to the needs of local customers. From an organisational perspective, catering to customer demands becomes beneficial to McDonald’s since it increases sales and demonstrates to the customer that McDonald’s as an organisation, not only understands, but respects and accommodates their religion and culture. Apple is another organisation that has experienced international success following global expansion.
Apple offers cutting-edge products sold in well-designed stores and the employees are encouraged to ‘delight’ customers rather than force sales (Denning, 2011). This creates an organisational culture focused on meeting customers’ needs and exceeding expectations, providing customer service excellence through understanding the customer. From an organisational perspective, delivering customer service excellence is a marketing strategy to retain customers, as it is expensive to attract new customers through advertising and promotional offers (Little and Marandi, 2003).
Increased profits and decreased costs are organisational benefits that can be gained through customer retention, which can be successfully implemented when customers feel that the company understands them and their needs. Apple’s global marketing strategy does not vary greatly from country to country for the iPhone product, due to Apple not needing to differentiate it in the global market other than changing the language and designing different applications (Apple, 2011). The lack of need to differentiate the Phone and the global demand for the product indicates that the technological global marketplace, particular for mobile telephones, could be becoming homogenous. Identifying where homogeneity exists globally allows Apple to form a global niche strategy that applies to people on an international scale in different countries and cultures (Pickton and Broderick, 2005). Customer service excellence is provided in this case by developing products that can globally cater to customer needs demonstrating an understanding of the intended market.
Failing to Understand Culture – The Negative Impact on Customer Service Sainsbury’s entered the Egyptian market in 1999, a decision that puzzled analysts at a time in which the company was struggling to maintain its UK customer base, only to withdraw after just 2 years and incurring losses of over £100 million (BBC News, 2001). A lack of understanding of Egyptian culture contributed to the unsuccessful attempt to move Egyptians away from shopping at small independent family-run stores, towards embracing Sainsbury’s as the future of grocery shopping for Egypt (El-Amir and Burt, 2008).
As customers, the Egyptians were accustomed to tipping shop assistants who gave them a personal service; as Sainsbury’s have a policy whereby tipping is not allowed, this caused embarrassing and often uncomfortable situations for the customers when their tips were refused by employees (El-Amir and Burt, 2008). Through failing to understand the culture of Egyptian people, Sainsbury’s demonstrated poor customer service leading to the loss of repeat business from customers who believe that the company cannot accommodate the Egyptian culture and customs.
Sainsbury’s also failed to listen to the opinions and advice of the Egyptian people that they employed. El-Amir and Burt (2008) explain that despite the employees’ market knowledge of what cuts of meat or fish would sell, the British management would not listen and subsequently proceeded to make ill-advised decisions that would cost the business heavily. In this case, British management allowed self-reference criteria to be an obstacle to the success of Sainsbury’s in Egypt by making decisions based on their own cultural values, experience and knowledge (Cateora and Graham, 2002).
Cateora and Graham (2002) also discuss ethnocentrism, whereby, management allow their own culture to influence decision-making and believe that their own company or culture is better at deciding what will work for the organisation, rather than implementing any of the suggestions from people with local cultural knowledge. For Clemmet (1988), organisations should treat employees like customers since ‘only satisfied employees will satisfy customers’.
However, in the case of Sainsbury’s, they left their staff feeling undervalued and ignored. In addition to the financial costs, these incidences also damaged the relationship between the management and the employees; the affect was a decreased employee morale which led to frustration and causing some employees to become internal ‘terrorists’ (Jones and Sasser, 1995). An increase in corrupt practices followed, such as selling meat that had passed the expiration date and stealing money from the tills (El-Amir and Burt, 2008).
The damage to the internal relationships was extremely detrimental to the operation of the business and the level of customer service offered to the customer suffered as a result, further worsening the existing issues Sainsbury’s were attempting to overcome. Another example of an organisation failing to understand cultural differences is when Marks and Spencer entered the Chinese market in October 2008 by opening a 40,000 square foot department store in Shanghai (Moore, 2010).
Waldmeir (2009) reported that the Chinese customers found the clothes too big and boring and a Chinese business consultant said that Marks and Spencer had misunderstood Shanghai as the clothing did not match the fashion trends in China at the time. This demonstrated a lack of knowledge of Chinese culture and provided poor customer service as the clothing in store was not suitable for the majority of the customers.
Following changes to the store, Simeon Piasecki who is responsible for the China and Hong Kong regions of Marks and Spencer, identified that the majority of the Chinese customers fall within the age demographic of 35-45 years old and are style aware, brand conscious as well as looking for fashionable quality clothing before looking at the price (Moore, 2010). This contradicts the opinion of a Chinese newspaper cited in the same article indicating that both the clothing and food are unaffordable for most people in China, which could be indicative of China having a high power distance culture (Hofstede, 1984).
China’s high power distance culture is attributed to an uneven distribution of wealth, as the annual income of those living in urban areas is three times the annual income of those living in rural areas (China’s National Bureau of Statistics, 2009). Marks and Spencer is therefore able to gain competitive advantage through offering customer service excellence because in a high power distance culture, the customers like to be ‘treated like royalty’ (Wursten et al, 2009, pg. 3).
A further example of an organisation failing to understand the importance of culture in providing customer service excellence is Wal-Mart’s unsuccessful attempt to become the market leader in the German supermarket industry. Wal-Mart entered the German market in 1997 by acquiring 74 Spar Handel and 21 Wertkauf stores and changing them all into Wal-Mart superstores (Pioch et al, 2009). By the end of July 2006, Wal-Mart had made the decision to withdraw from Germany, marking the venture a failure due to a lack of understanding of German culture and how German customers shop (Landler and Barbaro, 2006).
Wal-Mart also experienced difficulties with attempting to impose its organisational culture on the German staff and customers. Wal-Mart believed that to give good customer service, the sales clerks needed to smile at the customers. However, this had to be stopped because some German males were misinterpreting this behaviour as flirting. Moreover, Wal-Mart’s morning chants were also discontinued in Germany as it is not considered normal, that is, conventional behaviour in German culture (Landler and Barbaro, 2006).
Both of these practices are examples of poor internal marketing as they made the German employees working for Wal-Mart at the time feel uncomfortable by encouraging them to act in a way that is unnatural to their behavioural and cultural norms. This meant that Wal-Mart did not deliver customer service excellence internally to its employees, which impacted externally on the customers. Wal-Mart also employed American executives with little knowledge of what
German customers wanted rather than recruiting executives from Germany who understand the marketplace and the manner in which German customers shop (Landler and Barbaro, 2006). This meant that the internal marketing suffered again as the German employees were silent voices and did not feel that their opinion or knowledge was valued. It also demonstrated that American management allowed self-reflective criteria and ethnocentrism (Cateora and Graham, 2002) to dominate their decision-making contributing to the failure of the venture.
Conclusion From an organisational perspective, understanding culture means that companies can use delivering customer service excellence to gain competitive advantage over similar companies operating in the same marketplace. Understanding cultural differences in order to provide customer service excellence can increase customer retention, which has financial benefits to the organisation such as increased profits and reduced spending on advertising campaigns.
When entering the international marketplace, employing local management and employees can give a greater insight into customers’ needs and expectations in order to provide customer service excellence. Utilising employee knowledge can prevent unnecessary spending on market research in addition to the added benefit of making the employees feel valued and involved, improving the organisations internal marketing relationships.
From a customer perspective, an organisation that understands international culture can tailor the customer service excellence it delivers in order to match the needs and expectations of the customers. In high power distance cultures, high levels of customer service excellence is imperative in order to satisfy a customer, whereas in other cultures, it would be considered excessive and may make customers feel uncomfortable.
If an organisation recognises these cultural differences, the customer will feel valued and understood. Customer service excellence can only be delivered to customers when the organisation is delivering customer service excellence to their employees internally. Organisations are able to deliver customer service excellence to both their customers and employees when they understand cultural differences and reflect them both internally and externally.
