essay - GMAT: Argument 25

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 fs image as the most customer-friendly bank in town and give us the edge over our competition.

Discuss how well reasoned . . . etc.

Answer:
In service industries, the quality of customer service has a critical role in enhancing the competitive advantage. The author of the memo tries to convince the managers that Mammon Savings and Loan can have a competitively strong position over the competitors through improving its customer services. His plan is to shorten customer's waiting time in the lines of teller and broaden its service window one and a half hour. His argument is generally reasonable, but for several reasons it fails to convince the readers to go about the plan.

First, and most important, the argument ignores the side effect of its improvements. That is, the service improvement plan comes with huge costs, and the author by no means mentions the aspect. Apparently, if the argument is not equipped with necessary information, the argument fails to function. In terms of this, the argument is so weak that the manager of customer service department fails to obtain agreement from his colleagues. Then, what types of cost can be considered? Above all, payroll costs would rise up much higher than expected. One of his plans is to increase open hours for customer's convenience one and a half hour, but the increase of the payroll costs is not the proportion of the increased time. In order to enhance the time window, generally, more resource than increased timeframe is required. Also, regarding one of his proposals, improving the customer's waiting time, the company needs to put much effort to cut it in half. The company, for instance, needs to set up new service desks and hire new service personnel, as well as restructure its business process maybe by using a consultancy agent. In sum, if the company implement the improvement plans, then its customer satisfaction might show the improvement. But don't forget that it would come with huge costs.

Second, he fails to show a specific approach to improve the customer's waiting time. Although he easily says that the time can be half of current one, it's easier said than done. As I mentioned earlier, it needs much effort to realize. Therefore, the manager should have mentioned his approach for the improvement.

In conclusion, it's right that improvement of customer satisfaction in service sectors considerably contributes to the increased brand image and differentiation from the competitors, but as I mentioned above, due to the lack of necessary information, the argument fails to be convincing.