Let’s throw some stats your way before anything else. A 2011 American Express survey outlined how 78% consumers have abandoned transactions with businesses because of poor customer service. The same survey also showcased that 50% Americans would switch brands for better customer service. The White House Office of Consumer Affairs released a report wherein it claimed that acquiring a new customer is about 7 times as expensive as retaining a current one. With numbers tilted so heavily in favor of customer service, it’s pretty obvious that big brands and companies are willing to invest a lot towards improvement of their customer service mechanisms. Let’s explore more on why big brands do and should spend their dollars on customer service.
Repeat Business: A Driver for Revenue Growth
There’s so much focus on outbound marketing budgets and strategies that business leaders and operations managers tend to lose sight of the core revenue engine. For most companies, existing customers contribute to anything between 60 to 80% of annual business. This is because of repeat sales made to existing customer. Now, note that these repeat sales are not an outcome of chance. It’s only because companies invest their money in delivering high quality customer support, that the buyers are confident enough of repeating their transactions with the business. Follow up emails, responsive resolutions to customer queries, feedback calls, positive customer experiences around complaints and claims – all the factors add up to create a service experience for the customer. If your company is witnessing anything less than 70% revenue contribution from existing customers, it’s time to think long and hard about your customer service.
The Maker and Breaker of Reputations for Consumer Businesses
A report from White House Office of Consumer Affairs explained that negative word of mouth about a disagreeable customer service experience reaches twice the number of ears as any positive word of mouth. No business with a long term approach can afford letting its reputation suffer; no wonders, customer service has become such as sought after and critical department for most multinational companies. When a satisfied customer spreads a positive message about your brand, the likelihood of the audience trying out your products is significantly more than anything that your marketing expenses can deliver. Over the long run, customer service and support is the single biggest factor that helps create or disparage a company’s reputation in the consumer market. And after Cloud technologies, it’s now easier for businesses and customer care executives to manage everything.
Strong Customer Care Services As Enablers of Premium Pricing and Fast Growth
Unless you are operating in a monopolistic market or a niche market, price pressures are soon going to put a tab on your growth potential, because you will be competing with the business that can deliver a comparable product at the lowest price. However, with market leading customer support, you get the cushion to price your products up to 9-10% higher, without witnessing customer churn. Also, because of superb customer support, your business will experience the dual impetus of lower customer churn, and higher rates of new customer acquisition. Because of the pricing cushion and growth impetus delivered by customer support services, increasing number of businesses have shown the tendency to increase yearly budgeting for customer support.
Customer Support as a Niche Builder and Differentiator
It’s remarkable how several companies continue to invest less than 2% of their expense budgets on customer support services, despite the massive benefits. Firstly, companies that operate in B2B markets, where customer support has never been a primary determiner of success, can adopt the customer support approach to differentiate and deliver greater value to their enterprise customers. Secondly, companies in the B2C market can enhance their reputation and leverage the same as a differentiator from similar brands. By emphasizing on customer service as a part of your marketing messaging strategy, you can appeal to customer segments that value long term relationships and are looking for post-purchase convenience.
Customer Support Service as a Strong Feedback and Product Improvement Mechanism
When a customer interacts with a customer care representative, he/she is in the frame of mind for open communication, and this is where the most important and genuine feedback regarding product use and service experience can be gathered. Not only product based, but also service oriented companies can leverage their customer support department’s interactions to understand customer pain points, and fine tune their products and services to ensure the voids are bridged. Several specialized customer support helpdesk service providers offer mechanisms to capture important information and feedback from customers, organize the same into actionable information, and share with product and service design and improvement teams.
There you have it, a complete primer on how customer service and support directly contributes to revenue generation, customer retention and acquisition, brand equity, and product improvement. No wonders, customer support budgets are bloating every year.