Good customer service is one of the most important aspects of a business, especially when you consider that acquiring new customers is more expensive for the marketing department than investing in making current customers happy. For this reason, customer service should fall under the marketing department and be considered a business investment, rather than an expense. Many companies say that customer service is a priority, however actually executing a customer service plan and delivering excellent customer service takes planning and effort on behalf of management.
By Eric Thomas
How important is a good customer experience?
Excellent Customer Service Center experiences positively affect customers:
- *Willingness to buy from the company 80%
- *Perception of that company 94%
- *Likelihood to recommend the company 81%
The value of making the customers you have happy:
- Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer
- Over a 5 year period customer attrition rates could reach as high as 50% if databases are left dormant
- Businesses which boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.
“Bad Customer Service” is cited as a reason that customers would not do business with a company again more often than other factors such as, “Poor Quality,” “Price” or “Functionality”. Source: CRMGuru
There is a payoff in the investment for customer service because customers are willing to spend up to 21% more for excellent service.
These statistics prove just how much bad customer service can cost; all the more reason to provide excellent customer service and a good customer experience. When companies focus on customer service, it brings many other aspects of the company together and garners success. As part of this integrated customer service strategy, a focus on customer retention and taking the time to better engage customers will result in an increase in the lifetime value.
What is Life Time Value? It is the way that marketers calculate how much the business can expect to make on an average customer; that is taken into consideration when forming a marketing budget. The Life Time Value equation is: (Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer).
3 Ways to Increase the Life Time Value of Your Customers:
1. Concentrate on Providing an Excellent Customer Experience through all stages of the lifecycle of a customer. Too often companies spend time during a “sweetheart” stage of courting the customer, but once they have the customer, they forget about them and stop offering them the same discounts or offers from before they were doing business with the company.
2. Personalized Communications Make Customers Feel Special. Businesses with thousands of customers can segment their database for personalized messaging. This helps drive customer loyalty by creating the feel of the past when a store proprietor knew all of his or her customers, what they like, and what their preferences are.
3. Spend More on Your Top Producing Customers. Follow the 80/20 rule (80% of your revenue comes from the top 20% of your customers); find the top 20% of your customers and focus on what makes them happy.
6 Steps to Excellent Customer Service:
1. Strive to find what customers want. Surveys, polls, and voice of customer research can help you to understand the real motivation as to why customers shop with you. Your goals should be to find out why they shop with you over the competition, what is their favorite thing about your company and what is the real motivation behind their purchase. When you have those answers, you might be able to offer other products or services and you will be empowered to predict the future of the business. Companies that determine the motivation behind buying CDs was to listen to music were able to adapt to the new digital music revolution; those companies who thought customers’ purpose was to buy a shiny round disc did not survive.
2. How You Want Your Customers to Feel? How should your customers feel when they hear your company name? What about when they use your product or service? The same question should be asked about when they see your advertising? A consistent message across all departments will insure that your customers have a consistent sentiment about the company as a whole. One way to improve upon the sentiment and convey a message about your brand is by using branded gifts. Not only will customers remember you, but studies have shown that receiving promotional gifts improve the way customers feel about a brand. Design everything around that feeling and your customers will always feel important and reward you with loyalty.
3. Train All Employees to Deliver Excellent Customer Service. Even though different employees across different departments might have different skills and different goals, their primary goal should be making sure that customers are happy, and they should be trained in customer service in addition to whatever skills they need to perform their job. Make sure that employees’ compensation goals do not conflict with delivering good customer service. Employees that are paid on a commission basis might engage in high pressure sales and not consider the customers’ experience. A billing department whose primary goal is collecting payments often does so at the expense of including customer service. Make sure that delivering customer service is a priority over all other goals.
4. Create a Common “Voice” of the Company. Many successful companies, such as Zappos and Priceline, develop a company persona. Marketing executives sit down and create a “person” by identifying a gender, age, likes and dislikes. When customers interact with employees, they should respond as if they were that persona. This not only creates a consistent customer experience, but provides a firm set of guidelines for all employees to follow.
5. Employee Performance Reviews. The only way to know if employees are performing properly with customers and following the company guidelines is to perform regular employee reviews, this can include surveying customers, watching employees on the job, and listening in on call center conversations. These evaluations should be performed at random and often.
6. Empower Your Employees to Solve Problems. Much more than just training employees to “be nice” to customers is necessary, there is skill training and you must empower your employees to be able to solve problems for customers on their own without having to escalate everything to a management level.
Is Customer Service on the top of your priorities list?