How Much More Do Companies with Good Customer Service Profit?
Companies with good customer service enjoy several benefits in both financial terms and dollars-and-cents. Even so, it’s not uncommon to see businesses across the globe — from fresh upstarts to long-established corporations — routinely drop the ball.
The profitability of strong customer-oriented businesses is indisputable. And in the following article, we’re going to discuss all the ways it affects your bottom line. But first, let’s examine how it can go wrong.
The Costs of Bad Customer Service
Every industry is in the customer service business. That can take on different mechanics, but the goal is the same: to please the people who keep you going.
Bad customer service is cancer to every business. It can poison yours in the following ways.
Making Competitors’ Work Easy for Them
Any time you deliver poor customer service, you are creating opportunities for competitors who get it. If you could get the same product without annoyance and attitude, wouldn’t you? Your customers will find that option that exists if you treat them poorly.
The problem is quantifiable. A study in May of 2018, for example, found that businesses that rate poorly in customer service lose $75 billion annually as a result of their poor actions. That money ends up somewhere.
The chain reaction of sending customers to the competition is that you’ll lose sales. For every lost sale, you create negative word-of-mouth.
That old saying that there’s “no such thing as bad press.” That’s a lot of hooey. And that’s especially true when you consider negative comments on social media alone can result in a 12 percent revenue loss, on average.
If you can’t make a profit, it becomes harder to justify keeping your talent. And labor is the biggest expense you’ll have as a business so it’s also the first logical place to cut.
Tarnishing Your Brand
As bad as losing money and cutting jobs sounds in the short term, it’s not what will ultimately kill your business. We’ve reserved that place for here and the next cost factor.
Your brand suffers when you treat customers badly or fail to live up to their expectations. If this goes on long enough, you’ll become synonymous with poor customer service and people will avoid you like the plague.
The loss of brand prestige naturally leads to a breakdown of public trust. Before you know it, anything you or your employees touch will be suspect in the eyes of others. When you lose trust, you lose your company.
Getting It Right
Now that you know what bad customer service will cost you, let’s look at the ways you can benefit when you get it right. As far as actual dollars and cents are concerned, that will depend on your product, service, or industry.
You’ve heard a lot of bad customer service examples in the news and what it does to a brand’s reputation. But when you excel at customer service, it has the opposite effect.
For example, companies like Barnes & Noble have managed to survive the Amazon onslaught that hit the book industry a few years ago by offering customers friendly and knowledgeable service. Independent bookstores are making a comeback for this very reason as well.
2. Customer Attraction
When you establish and uphold customer service values, it will bring others to you in the best kind of way, word-of-mouth marketing.
One famous example of WOM marketing done right is Pinterest. The now-massively-popular social network used one-on-one connections with its 3,000 subscribers in 2010 to grow the company to over 73 million users seven years later.
3. Customer Retention
Even more important than attracting new customers is keeping your old ones. Quality customer service helps you to do that. As a result, you earn more revenue for every customer you have.
4. Happier Employees
Of course, your employees are the best customer experience tools you have at your disposal. Keeping them happy is paramount to delivering for your customers. But the experience of quality customer service is often reciprocated in how employees look at their jobs.
There’s something contagious about benevolence. When that’s how your customers view you, it reduces the number of complaints and makes your customers feel appreciated.
5. New Opportunities
New partnerships and opportunities are important to growing your business. But it’s difficult to work with other companies when they see you as a customer service pariah. The best customer service companies are places that attract positive attention, and that’s something with which other movers and shakers would like to be associated.
Walmart is a famous example of this. The company was not established until 1969. But its founder had about 20 years of strong customer service experience under his belt through his Walton’s five-and-dime store before he decided to expand.
Sam Walton famously said, “The customer is always right,” and he instilled that mantra in his employees. The 1969 expansion took off and by 1990, it had gone multinational.
Today, Walmart operates more than 11,000 stores worldwide. It’s stocked with a variety of brands that realize the value of playing in the Walmart sandbox. That would have never been possible had Sam Walton not first established those customer service principles.
6. Overall Bottom Line
Knowing what good customer service delivers to your bottom line is important because it helps you to continually improve. That’s why you may wish to invest in customer engagement software for help tracking and implementing new plans.
Through tracking, you’ll know what the overall quantifiable benefit of good customer service is to your company. In pretty much every case, you’ll like what you see.
Join the Other Companies with Good Customer Service
Companies with good customer service set themselves up for success through stable revenue, steady growth, and top-notch reputation. They’ll be around much longer than those without. Won’t you join them?
If you feel your customer service performance could use a boost, check out some more of our tips before you go.