Month: November 2011

Many companies focus on spending money on advertising campaign and the marketing of their goods, but completely underestimate the importance of having a good customer service. Referring to Rachel Lee’s blog post “Americans Fed Up With Poor Customer Service”, over 60% of customers are dissatisfied after walking out of a store or hanging up on a phone with a call center.

Although it is understandable that companies try to keep their costs low to get away with their quality of customer service such as companies like Walmart, I agree with Rachel that if a company wants to grow big and have their customers coming back next time, a good customer service system has to be developed. In the beginning it may cost a lot of money and resources to provide training to the employee, but in the long run, the training will bring in more revenues as customers are more satisfied with the service and are comfortable to visit again.

Furthermore, increasing the quality of customer service is a better business strategy than simply just lowering the costs of the products. It takes time to develop the strategy, so it will create a higher barrier of entry and there will be less competitors in the market.

In economics, we assume that all companies want to maximize profit and it usually makes sense that every move a company makes it caused by this incentive behind. On the other hand, in the past decade in business school the term “social entrepreneurship” has been rising up. Social entrepreneurship means that business people should also make social change to give up to the society while making money. In other words, companies are making too much money that they are willing to give up some of them to do some “good things”. However, it just generates them more money eventually.

TOMS, the fabric shoes company that has been getting more and more popular recently has a “One for One” business strategy, meaning that for each pair of shoes its customers buy, they will donate a pair to someone in need. However, how much of an impact is TOMS actually making? People in Africa would rather have more schools built and shoes that are durable on rocks and pebbles. Rather TOMS can simply just donate money to charities which has a much better idea of what those people really need. In my opinion, social entrepreneurship is just another business strategy to increase sales.

This is a response to an external blog entry – “The TOMS Footprint: Is ‘ One for One’ really the answer?” by Esther Tung, SFU