Understanding the Impact of Great Customer Service on Your Business

Even the best products and services often have issues that need resolving. However, nothing frustrates customers more than encountering an issue and contacting a company’s customer service department, only to be put in queue for over ten minutes before a representative attends to them. This frustration amplifies when the customer service representative cannot adequately resolve their issues.

The days of businesses focusing on customers only until they purchase a product or service are long gone. Today’s business landscape requires businesses to offer excellent customer service. Otherwise, these organizations won’t last long in this fiercely competitive landscape.

The impact of great customer service on businesses cannot be overstated. After all, your company’s customer service team is the bridge between customers and your organization. If your customer service is poor, customers cannot directly communicate with your company. Eventually, customers will lose faith and trust in your company. As a result, their loyalty will wane, meaning they’ll buy fewer products and services and might switch to a competitor. Your revenue and profit will decline. Moreover, your company will acquire a negative reputation, leading to fewer referrals.

Thus, you must focus on building an excellent customer service team combined with an AI customer service coordinator to ensure smooth operations. If you’re still unsure about customer service’s impact on your business, this article will make you reconsider.

How Good Customer Service Helps Your Business

Here’s how good customer service helps your business:

1.      Customer Retention

Every business wants to acquire more customers. However, acquiring customers is costly. Companies try to reduce customer acquisition costs as they scale but also want to retain their existing customer base since they’ve spent considerable time and money acquiring them.

Good customer service may necessarily help you acquire more customers, but it’ll help you retain your existing customer base. Research shows getting a new customer can cost about five to seven times more than retaining an existing one, depending on your industry.

Retaining customers is essential because existing customers contribute a considerable percentage of sales. According to research, approximately 20 percent of your customers will contribute to 80 percent of your profits.

Therefore, you want to ensure your existing customers are satisfied. How can you accomplish that? By valuing their feedback and showing you care about them even after they’ve purchased your products or services. Hence, ensure your customer service also focuses on providing a stellar after-sales experience.

2.      Builds Customer Loyalty

Customer loyalty is important for any business because it means greater customer retention. In addition, it’s also vital because it ensures your customers won’t switch to another competitor. Organizations also want to develop customer loyalty because it results in repeat customers. An excellent example is Apple. The tech giant has an extremely loyal consumer base who will purchase every iPhone iteration, even if other superior smartphones exist on the market. Apple’s customer service has helped the company develop such customer loyalty.

While excellent customer service will certainly help build customer loyalty, you can also try introducing customer rewards programs and offering regular discounts to encourage customer loyalty.

3.      Upsell Opportunities

Businesses are profit-maximizing enterprises, and one of the best ways to increase revenue is by upselling. Upselling refers to offering customers add-ons to an existing product or service they’re purchasing. For example, McDonald’s employees always ask if you want to upsize your meal from a regular to a large. This interaction is a perfect example of upselling.

Organizations with excellent customer service find it easier to upsell customers because the consumer trusts them. The consumer already has a positive company perception, meaning they’re more willing to spend more on your products and services.

4.      Greater Sales

Customer service also contributes to greater sales. A study shows that companies with better customer service in various industries grew their revenues twice as fast as their counterparts. Furthermore, research shows that American companies lose approximately $137 billion annually because of avoidable consumer losses. Excellent customer service allows your business to avoid losing customers and close more sales.

5.      Customers Prefer Organizations with Better Customer Service

Have you ever dealt with a company with poor customer service? Let’s assume your Internet Service Provider (ISP) has a lackluster customer service department. You were at home streaming your favorite TV show when your internet suddenly stopped working. You call your ISP, but it takes you ten minutes to connect with a customer service representative who cannot adequately help you resolve your issue, causing you to lose confidence in your ISP’s services. Repeated negative experiences will likely prompt you to change ISPs. You’re not alone in this situation because customers don’t want inconvenience when paying for products or services.

Hence, it’s unsurprising that customers often pay more to companies with better customer service. Research shows that 80 percent of customers reported that excellent customer service makes them likelier to purchase products or services at a higher premium from a company than to switch to a competing firm.

6.      Customer Service Boosts CLV

Every business looks at Customer Lifetime Value (CLV) because it’s an important metric. CLV refers to how much total revenue a customer will give your company. Organizations ideally want to increase CLV because it means customers purchase more products or services or shop with them more frequently.

Providing better customer service can boost CLV. Customers are likely to purchase more often from your business if they have a positive experience. In addition, they’re also likelier to refer you to others.

7.      Assists with Marketing Opportunities

While most customer service is reactive, the hallmark of excellent customer service is a proactive approach. For instance, have your customer service team contact consumers before they report issues. Ask them about their experience with your product or service and if they have any feedback that will help improve the product. Your customer service team can use this interaction to promote another product or service that satisfies the customer’s needs. 

8.      Provides Consumer Insights

Consumer perception of your brand matters because they’ll dictate your marketing efforts. For instance, let’s assume your company manufactures and sells sports apparel. You might perceive your brand as resonating with fitness enthusiasts. However, customers might purchase your products because they’re comfortable and suitable for most casual occasions.

Obtaining such insights requires learning more about your customers and their preferences. Your customer service team can help by getting customers’ feedback when interacting with them. It’ll save you the trouble of designing and administering surveys to customers.

Conclusion

The modern world requires businesses to provide excellent customer service since a single negative online review can spread like wildfire and tank a company’s reputation. However, excellent customer service does more than maintain your company’s reputation. It can also contribute to better revenue and profit margins and help you develop stronger brand perception and customer loyalty.