November 27, 2014

Customer Service Matters Much More Than You May Think

customer service matters

Customer service is a big “elephant in the room” for so many businesses out there. It’s really not easy to train yourself or your employees with the virtues required to be a well-rounded, service-minded personality – a person with all the necessary attributes to make patrons to your business happy each and every time.

Learn From the Baby Boomers…

One thing that’s caught a lot of young entrepreneurs off-guard as they’ve built their business is the fact that there’s an aged segment of customers out there (baby-boomers) who care just as much about the customer service experience they receive, as they do the quality of the product you’re selling them.

Scott Hume, Editor at BurgerBusiness, says:

“Baby boomers, guys like me, really value good service and a good experience.”

Gen Y and Gen Z individuals often don’t have the same expectations. To them, the concept of chivalry is a foreign one, and they’ve learned not to expect too much, particularly with regard to value-added-service.

Does that mean if your business sells more to one and not so much (or at all) to the other, that you should develop customer service practices that suit that specific demographic? Absolutely not. Even if your target demo doesn’t expect much of you, they’re ten times more likely to come back and do business with you next time, if they have a decent experience.

This is a universal reality across all businesses, regardless if you sell tangible or intangible products.

Poorly Misunderstood Benefits From Providing Top-Notch Customer Service

1. Getting it Right the First Time Generates More Profits

Poor service can be about how the order system functions, how the sales staff treats prospects, how you develop and then satisfy consumer expectations of your product/service, or simply the overall perception they’re left with after doing business with you (i.e. did they feel treated fairly or rudely).

What does this have to do with saving money, you ask?

Poor service = Poor quality = Poor Profits

It’s all about reworking. Every time you have to rework something it costs you money. If the customer feels like they were deceived, treated rudely, or any of their expectations weren’t met, it’s likely they’ll demand a refund, a redo, or a freebie – if you’re lucky. They may simply not come back and certainly won’t recommend you. One time sales rarely a rich man make.

Every rework costs you money, unless the customer’s the type to only give you one chance. Then you just lost a repeat customer and the word-of-mouth marketing they could have provided you. Indeed, poor service quality directly affects your bottom line.

2. When They Come Back and Bring Others With Them, You Make More Money

In most businesses, return customers and word-of-mouth are what will make you successful. Using the burger analogy, let’s run with a fictional customer service scenario about two different burger joints:

Exhibit A: The first burger place (Let’s call it “McGurdy’s”). Customers are greeted with a smile and the staff is taught to take their time answering any and all questions the customer might have. Each staff member is paid above minimum wage and the atmosphere is one of teamwork and positivity.

The burgers aren’t going to be featured on Gordon Ramsay’s signature menu at Caesar’s Palace, but the health standards are excellent, the service impeccable, and the food is on par with other fast food joints.

Exhibit B: The next burger place (“The Burger Pit”) makes the best burger mankind has ever tasted. This little shop is run under the thumb of one man; a surly old fella who screams orders at his staff, who get paid the minimum pay allowed by law.

The customer service staff jumps every time the old fella yells, often interrupting the customer service flow and interaction. The old man screams at staff for “talking to customers for too long” and tells customers who complain to leave his store and never return. The health standards are impeccable under the iron rule of the old fella, service is slow and disjointed, and the burgers are a fantastic experience to say the least.

Which would you choose? Naturally, customers will choose the best burger on the planet, no? After all, the quality of the product should dictate popularity. But it doesn’t.

Customers want to feel respected and listened to. Very few return customers would go to the Burger Pit over McGurdy’s because going to get the best burger means their patience is likely to be tried to the extreme, and they might have a downright unpleasant experience. The majority will go where the combination of product quality and service are best (a “happy medium” in the absence of a business that truly has all elements of their product and service covered.)

3. Staff Turnover Will Burn a Hole in Your Pocket

Franchise businesses understand this concept very well, yet they deal with more turnover costs than most small businesses make in a year. The small business owner has to learn this lesson the hard way, often letting ego get in the way of good judgement. The “take it or leave it” approach to staff management will eat a hole in your profits every time.

You’re probably wondering: How the heck did we get here? What does this have to do with good customer service and how poor service can cost me loads of cash?

Most employees, including front-line service employees, want to take pride in what they do. Also, every one of those employees is, and will again be, a customer at some point in their life.

Question: So they’re not happy because you don’t care about the service level – what are they going to do?

Answer: They’ll be less passionate about their job, making the customer’s experience even worse. Eventually, they’ll quit. Creating a positive, customer-focused environment is key. If your service levels are up to par, the majority of new hires will stick around longer-term, even if you’re in a high turnover industry like fast food.

How much money does turnover cost your business?

A lot more than most inexperienced managers and business owners think. Most employees are worth at least a couple of thousand (just in paperwork and training costs) after their first few days on the job.

Customer service matters – much more than you may think.

Customer Service Photo via Shutterstock

32 Comments ▼

Ivan Widjaya


Ivan Widjaya Ivan Widjaya is the Founder/CEO of online marketing agency Previso Media, small business online magazine Noobpreneur.com and several other business blogs/online magazines. He is a Web publisher, Web property investor, blogger and Web property builder.

32 Reactions

  1. Very well said. Should be obvious, but it helps being reminded

    • George,

      Indeed. You know what, business owners are often too busy to realize that they have done what they shouldn’t be doing – even though they know what’s the right thing to do. Well, at least that’s what happening to me :)

      That’s why we need mentors and coaches who “nag” and “yell” at us, keep us grounded and on-track.

  2. Having been on both sides – a customer and worked in customer service – I’m very much aware of how much it matters. I think every business needs to take it seriously regardless of the age of the customer they’re serving and the customer’s expectations. A customer is more likely to remember a crappy service than a good one. Bad news also travels fast.

  3. Ivan got it exactly right!! Keeping an existing customer is vastly more profitable than chasing after a new customer. We explain the math behind that observation, and provide lots more ways to keep customers, in our new book, The Marketing Strategy & Planning Workbook For Successful Businesses. You can find it at http://www.digitalworkbook.com. It is a perfect tool for managing a smaller business in the 21st Century.

  4. After having spent 17 years leading teams who cater to casino high-rollers, it somehow still amazes me when I encounter bad service. It’s sad that the business’s leadership doesn’t recognize how much continued service failures will cost them in lost repeat business and negative word-of-mouth “advertising.” There are entire chains with whom I refuse to do business because of their awful customer service (I’m looking at you, electronics big box store with an alliterative name…) Sadly, I can’t think of any chain that consistently gets it right.

  5. I am amazed that business owners and employees do not understand the impact their service has on the bottom line. People think delivering exceptional customer service is easy and that everyone can do it. It’s not. You have to be aware of how you’re impacting your customers, and learn techniques for providing the kind of service that keeps customers coming back. I train my clients that customer service is the secret sauce that makes the difference in profitability. Thanks for an eye-opening article and for pointing out what should be obvious but isn’t.

  6. I believe the small business owners & small companies do realize the value of customer service. Unfortunately the large corporations do not or if they are aware of it, they simply do not care. We have become a sad example of society due the corporate way, the customer doesn’t matter, the employee doesn’t matter, everything is money, the bottom line, even when profitable, it is never enough. We need to revert back to having more small businesses open up & generate more business. This is where the both the customers & the employees are valued and this in turn helps the economy thrive.

  7. Customer service to me is what brings in loyal customers. They will stay with you even if another supplier is offering the service a bit cheaper.

    • Sometimes I think that some people get a little too complacent and when the repeat customers return they slip a little with the service. I am experiencing this with the car dealer i have been doing business with for 20 years. I have decided that it probably would be a good time to do business elsewhere!

  8. Ivan: It is to take care of the whole supply and value chain…

  9. Ivan: Customer service is to take care of the whole supply and value chain… You have both internal and external customers.

  10. You have both internal and external customers. I have worked as a purchaser for a long time and in order to serve the end-customer, I supplied my internal customer, the factory, with raw material for the production of welding electrodes, on time, at a competitive price (cost) and with a quality according to a specification.

  11. Ivan, great job! Nothing takes the place of creating a memorable experience with customers. Might as well do early on and often to solidify the bond.

  12. The only thing I would add is that good customer service takes time. Something that is all too frequently at a premium. It is another part of that happy medium you describe. Some things dont add much time. A smile, a thank you. But a customer that has questions that are unusual, or a product that is poorly developed or marketed can cost plenty time wise. A manager or company whose productivity goals are ignorant of this fact will also drive those turn over rates, and that poor customer experience. Staffing levels that turn employees into robots who may even pencil whip productivity numbers is a sure bet that a customer will look elsewhere for their next customer experience

  13. Unfortunately, many small business owners have blinders on when it comes to good customer service and the value the employee brings to the table when hired on. After the employee has been around long enough to see the true workings of the business and the attitude of the owner is when the rubber meets the road. The employee can screech to a halt or can accelerate the customer service quotient by his or her experience within the company. Just remember that stuff roles down hill! From the owner down to the person that cleans the toilets, to your customers.

  14. Sometimes customer service (for some companies) can be common sense – but unfortunately it’s not always so common. The three great ideas in this article fall into that category. It makes total sense to do it right the first time – and it costs more to have to fix what should have been done right the first time. Happy customers recommend you and bring their friends; more sales means more profit. And finally, the cost of employee turnover in a non-customer focused environment is higher than one that is customer focused. So, why don’t more companies focus on service?

  15. If you service your customers, you’ll always have customers to service!

  16. Great post Ivan Widjaya, bookmarked, indeed customer service matters, matters a lot!!! let me give you some facts that would augment your post further :).

    Considering your first point, according to a study around 74% percent Customers in the USA consider late response, poor dealing as the major cause of dissatisfaction (1), its not 14% it is 74%, that’s makes up a big chunk of any niche.

    Regarding the point number two, exhibit a, b, that is so true, according to another study, customer perception of the brand (good or bad) depends solely on the behavior of the front line staff (2). In other words if you want your brand to be taken positively by your customers, to get that free advocacy, buzz then you have to have employees that know how to behave, interact with your customers.

    Since employees performance have been proved to restore customer trust (3). In other words bad employee performance can harm your business, therefore you need to have employees who love what they do, you and the brand they are working for. And that’s exactly what the point number three focuses on, to have your employees satisfied or else you will not get what you desire to get when it comes to “Business”.

    That’s it, Hope your readers would appreciate it :) and yeah if they want to know more on customer service, I recommend them a post, that gives practical steps on how to deliver effective customer service. Here, How To Deliver Effective Customer Service ? .

    Regards!
    References:
    1. wwwDOTaccentureDOTcom/SiteCollectionDocuments/PDF/Accenture-Global-Consumer-Pulse-Research-Study-2013-Key-Findings.pdf
    2. Cadwallader, S., Burke Jarvis, C., Bitner, M.J. and Ostrom, A.L. (2010), “Frontline employee
    motivation to participate in service innovation implementation”, Journal of the Academy of
    Marketing Science, Vol. 38, pp. 219-239.
    3. Kuehner-Herbert, K. (2009), “A growing defection: more clients ready to switch as trust wanes”,
    American Banker: The Financial Services Daily, available at: /-1_americanbanker_ may1409_interbrand.pdf . http://www.interbrand.com/. . ./-1_AmericanBanker_May1409_ Interbrand.pdf (accessed 29 June 2009).

  17. Love It – your greatest asset is your people!. Many say it, few really leverage it. Your 2nd best or maybe even your best sales team is your customer service team!

    Great Article!

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