The sales process and customer service
The sales process is the sequence a business uses to turn interest into a completed purchase, and customer service is everything that happens around it.
Before you start
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Method
- Identify the type of purchase in the case, because it changes everything. A high-value, infrequent purchase such as a car or a boiler needs product knowledge and after-sales; a low-value repeat purchase needs speed and consistency.
- Name the stage of the process the question is about, then explain what good practice at that stage does for the customer and for the business.
- Analyse through retention: better service leads to repeat purchase and recommendation, which leads to higher revenue with no extra marketing spend.
- Cost the service side honestly. Training, staffing levels, longer opening hours, free delivery and generous returns all cost money, and the answer should say where that money comes from.
- Use reviews and word of mouth explicitly when the case involves online selling, since that is where a service failure becomes public and permanent.
- For a judgement, compare service against the alternative uses of the same money, such as a lower price or more advertising, and decide which suits the business's market position.
Worked example
Broadwell Bikes sells bicycles from one shop. The owner is deciding between spending 8,000 pounds a year on staff product training and after-sales servicing, or spending the same on local advertising. Average customer spend is 400 pounds and gross margin is 35 per cent. Analyse the choice.
- Convert the spend into customers needed. Gross profit per customer is 400 x 0.35 = 140 pounds, so either option must generate 8,000 / 140 = 57.1, so 58 additional customers a year to break even.
- Analyse the advertising route: it reaches people who do not currently know the shop, so it can grow the customer base, but the effect stops when the spending stops and it does nothing about whether those customers come back.
- Analyse the service route: trained staff sell the right bike for the customer's use, which reduces returns and increases the chance the customer is satisfied. Free servicing gives a reason to return to the shop, and every service visit is an opportunity to sell accessories or a second bike.
- Bring in the market context: a bicycle is a considered purchase where the buyer wants advice, and the shop competes with online retailers that cannot fit a bike or service it. Service is therefore the point of difference that price cannot be.
- Note the risk of the service option: it takes time to build a reputation, so the 58 customers may not appear in year one, whereas advertising can produce traffic immediately. A shop short of cash cannot always wait.
- Reach the judgement: service is the better long-term investment because it builds retention that keeps paying after the spend, but if Broadwell needs revenue now it should split the budget, using advertising to bring people in and service to keep them.
Practice questions
Try each question, then tap to reveal the answer.
Q1List four stages of a typical sales process.Show answer
Answer: Any four of: first contact or greeting; identifying the customer's needs by asking questions; presenting the product and explaining how it meets those needs; dealing with objections or concerns; closing the sale; after-sales follow-up.
Q2Explain why product knowledge reduces returns as well as increasing sales.Show answer
Answer: Staff who understand the product recommend the item that actually fits the customer's need, so the customer is less likely to discover after purchase that it is wrong for them and bring it back.
Q3Give three examples of after-sales service.Show answer
Answer: Any three of: delivery and installation, warranties and guarantees, servicing and repairs, technical support or helplines, a returns and exchange policy, follow-up contact.
Q4State two costs of providing excellent customer service.Show answer
Answer: Any two of: staff training; higher staffing levels so customers are not kept waiting; the cost of honouring returns and warranties; longer opening hours; free delivery or servicing.
Q5Explain why keeping an existing customer is usually cheaper than winning a new one.Show answer
Answer: An existing customer already knows and trusts the business, so no advertising or persuasion is needed to reach them. Winning a new customer requires marketing spend before any sale is made, and many people reached never buy.
Q6How can good customer service justify a higher price?Show answer
Answer: It adds value the customer receives beyond the product itself, such as expert advice, a longer guarantee or free servicing, so the customer compares total value rather than price alone and may accept a higher figure.
Q7Why is a single poor service experience more damaging online than in a shop?Show answer
Answer: The customer can publish a review that every future potential customer sees before buying, so one incident affects many purchase decisions and remains visible indefinitely, unlike a private complaint in a shop.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Hallam Kitchens designs and fits fitted kitchens, with an average order of 9,000 pounds. It has recently received several reviews complaining about poor communication during installation. The owner is considering appointing a customer liaison coordinator at a salary of 26,000 pounds a year. Gross margin on a kitchen is 30 per cent. (a) Calculate how many additional kitchen orders a year would be needed to cover the salary. (b) Analyse whether Hallam should make the appointment.
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Evaluate the importance of after-sales service to a business selling high-value products.
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See real GCSE Business past-paper questions, with official mark schemes →
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