Is Customer Service Over-Rated?

Not according to a study by American Express. While you have probably always appreciated good customer service and become a repeat customer and a referral source for a business that provides good customer service, did you know that Americans will spend 9% more on products from companies whose customer service is excellent.

How does this affect your bottom line? If you currently mark up your product or service by 150% with a 33% gross margin and you were able to sell your product for an additional 9% you would increase your gross margin by 27%. This means there is a big opportunity for companies to improve service and increase revenue and their bottom line. Why? Because good customer service does not add anything to the cost of the item or service.

According to the American Express data, Americans 61% of Americans report that quality customer service is more important to them in today’s economic environment. However, only 37% of Americans say that companies have increased their focus on quality customer service. 27% say businesses have not changed their attitudes towards customer service, and another 28% say companies are actually paying less attention to good customer service.

Most Believe Customer Service Is Important

Nine out of 10 Americans say they consider the level of customer service when they decide to do business with a company – but just 24% say they believe companies value their business and will give top-notch service in order to keep it. Most feel companies are falling short: 48% say companies do not do anything extra to keep their business, while 21% say companies take their business for granted.

The Better the Service, the More Word Is Spread

An strong opportunity exists for companies to improve word of mouth by improving customer service, because customers are more inclined to talk about a positive experience than a negative one. 75% are “very likely” to speak positively about a company after a good experience, while 59% are “very likely” to talk about a negative experience.

Consumers are also far more likely to give repeat business to a company after a good service experience (81%) than they are to never do business with a company again after a poor experience (52%), according to the data.

So how do you improve your customer service and add 9% to your fee or price?

  1. Examine every point of customer contact and develop strategies for your staff. i.e. Front door, website, phone etc
  2. Develop standard greetings for customers and a cycle to check back to see if the customer is finding what they need.
  3. Follow up with customers / clients by phone, email or letter.
  4. When you say you will do something…do it.
  5. Have suggestion cards and encourage customers to complete them.
  6. Recognize staff for both good customer service and poor customer service.
  7. Employ secret shoppers to check that your customer service policies are being implemented.
  8. Treat people like you would want to be treated.
  9. Establish the life value of a customer and ensure your staff understands the cost of losing a customer far exceeds the cost of improving customer service. In the case of a coffee shop the disgruntled customer does not represent a $ 4.00 latte, but $800.00 worth of lattes over the course of the next year as long as they keep coming back. Accept responsibility. Correct the problem. Satisfy the customer.
  10. Empower employees to use their judgement and err on the side of great customer service.

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