While organizations emphasize the importance of customer service, there is a surprising amount of misunderstanding about how critical it is to company success. After all, some businesses with notoriously poor customer service continue to thrive. Here are the details: When customer service is done well, it may significantly increase a company’s bottom line. So, regardless of how a firm defines “success,” there may be a substantial positive link between customer service and commercial success.
However, this positive association is not unavoidable or limitless. Some businesses have put too many resources into enhancing customer service, and they have paid a high price. The goal is for businesses to create customer service operations that are successful without significantly increasing their budget.
A group of academics looked into this topic as well, searching through over 400,000 customer service-related tweets and following up with customers months later. The researchers reported their findings in the Harvard Business Review, stating that “prompt and personable customer service does actually pay off – customers remember good and negative customer service experiences, and they’re eager to reward firms that treat them well.” Customers who received answers from airlines on Twitter were prepared to spend an additional $9 for tickets, but those who received responses from cellular providers were willing to pay an additional $8 each month.
The effects are minimal.
Organizations should monitor the outcomes of their efforts to prevent overpaying on customer service.
According to the researchers in the MIT Sloan Management Review, “for example, a big beverage distributor in the midwestern United States discovered that the return on its satisfaction initiatives was negative.” “Despite higher income from more pleased customers, the initiative raised customer service expenses by 10%, which outweighed any gain from increased sales.”
And, because so many other variables influence people’s purchasing decisions, firms with bad customer service – such as those dubbed “America’s most-hated companies” by Bloomberg – might suffer.
Budget-friendly customer service
The good news is that providing outstanding customer service does not have to be expensive. Many of the most critical measures a company can take are completely free. Businesses should train their customer service personnel to apply a personal touch, keep a pleasant tone, react to inquiries quickly, and be proactive in addressing issues. Online self-service solutions that are easy to use and really benefit consumers may save time and money while relieving some of the pressure from staff. Building online communities in which product consumers express questions and offer each other ideas and advice may also improve the experience for everyone involved.
Some company executives increasingly consider customer happiness to be an indicator of overall success. “Praise from pleased customers offers a feeling of success that for some company owners is as significant as the financial gains they earn,” writes Home.