Every business textbook starts with the statement that customers are essential for the survival of a business. Without customers, there are no sales and the business fails. But there is a balance to be struck between profit and service. Delivering a world class service is costly in terms of time and that puts pressure on the bottom line. Provide a very low level of service and customer complaints rise as well as customers walking down the street to the competition. Business owners therefore need to realise why customer service is important and why it should receive a higher priority in the business.
What is customer service?
“Looking after” a customer is at the heart of this definition but also is the fact that customers have different touchpoints with a business during their customer journey. A business interested in delivering excellent customer service will ensure that the user experience is spot on at every touchpoint – from answering a social media enquiry, serving a cup of coffee or even a follow-up email to ensure that everything was to the customer’s satisfaction. In other words, rolling out the red carpet for every customer.
So having determined what customer service is, why is it important to a business? Here are the top seven reasons.
#1 Excellent customer service leads to more repeat business and increased customer loyalty
Imagine it’s time for a takeaway coffee and there are two coffee shops in your area. Both sell excellent coffee and their prices are the same. But you have a favourite coffee shop – the one with shorter queues and friendlier staff. A few welcoming words can make all the difference and even better, when staff get to know and use your name. A repeat customer can spend hundreds or thousands of pounds more in your business and all for the sake of “looking after” a customer in a way that shows they really care.
So the number one reason why customer service is important to a business is because it is linked to sales. 84% of organizations working to improve customer service report an increase in sales and that’s a figure that you can’t afford to ignore.
#2 Customer retention is cheaper than customer acquisition
On average, it costs approximately five times more to attract a new customer than it costs to retain an existing customer. It therefore makes economic sense to get it right for every customer every time in terms of stock availability, price and customer service. Keep your existing customers coming back to you and hopefully they will spend more on your products at future visits.
You are also more likely to sell to your existing customers as they already know your business, your products and your staff. After all, people buy from other people and if the relationship is already there, you are off to a flying start. Research indicates that there is a much higher probability of selling to an existing customer (60-70%) than a new customer (5-20%). Existing customers are also likely to spend more in your business as they have already had a positive experience with you in the past.
#3 Excellent customer service improves the customer’s overall user experience with an organisation
You may be selling an absolutely fantastic product or service but if the customer service doesn’t match the product quality, the customer is disappointed with your organisation. The next time they wish to purchase the same product (and all other factors being equal), it is very likely that they will shop with another business. In other words, excellent customer service is the icing on the cake for a quality product and is a major contributor to customer satisfaction.
The converse is true too. Should the customer service be poor, this can push many customers to look for alternative providers. A staggering 89% of customers will begin doing business with a competitor following a poor customer experience.
#4 Excellent customer service can lead to a reduction in formal customer complaints
No business wants to receive complaints but whenever you are dealing with customers, it is highly likely that complaints will pop up from time to time. Formal customer complaints can take a long time to investigate and after all “time is money”.
With excellent customer service, customers are more likely to make more informal complaints which can be resolved more quickly.
#5 Excellent customer service can improve the organisation’s reputation and strengthens your brand
By investing in high levels of customer service at every point in the customer journey, the organisation’s reputation is enhanced, and your brand is strengthened. In other words, you become a business that people want to do business with. This helps to attract future investors and employees as well as new customers.
#6 Staff have more job satisfaction and pride in the company
Management depend on their staff to deliver excellent service to customers. If the staff team feel empowered to devise new ways to please customers and the business owners take on board at least some of their suggestions, staff will have more “buy in” to the company’s success.
By valuing customers and working hard to look after them, a more customer-centred organisation is born. Overall helpfulness increases for both the “paying” external customer but also for work colleagues ie the internal customer.
Staff satisfaction levels should rise as should their pride in the business as well as a reduction in employee turnover. Of course, happier staff will lead to happier customers who will keep returning to the business and spending more. It is therefore important to continually invest in customer service training to enhance staff’s customer care skills.
#7 Excellent customer service leads to more word-of-mouth recommendations and more positive online reviews.
When you delight your customers, they become part of your marketing machine and spread the word about their customer experience. This is the best type of advertising to do and it’s free! Some people will recommend your business when talking to friends and family but the more digitally savvy ones will write a review on Google, Facebook, Trip Advisor or Trustpilot. Online reviews can potentially be seen by hundreds of people so that is excellent PR for your business.