There is no doubt about the fact that good customer service is critical to a company’s profits. Many upper management officials have not yet been convinced that the cost of a customer satisfaction program is worth it. In fact some even believe that the extra cost of a customer satisfaction system will end up making the company lose money.
This simply is not so. In fact customer retention strategies costs very little compared to the increased profits that it will generate. It is the hallmark of a successful company to be able to translate customer service words like satisfaction and loyalty into the financial language of executives, when they speak of profits, revenue and investments.
The fact of the matter is that customer loyalty is priceless and just 20% of a company’s loyal customers will yield 80% of its profits. This makes it very important to give customers the best customer service so that the company can maintain good relationships with its customers. When this is done there will be an increase in spending by the consumer and more interest will be generated for other products and services. An additional plus will be the fact that loyal customers will recommend your business and products to others.
Investments in customer service training will keep loyal customers buying exclusively with your company. Training customer service reps and management can be an uphill job if they do not understand what the significance of customer satisfaction and loyalty really mean in financial terms to the company. They will need to understand the 80/20 principle and know that these loyal customers should be treated like VIP’s as they are the company’s greatest asset.
So what are the options facing businesses today?
They can keep hunting for new customers by direct marketing and customer service incentives. Or they can invest in improvements in customer loyalty and retention. These two alternatives seem to be on opposite poles but both can be discussed and understood by customer service managers and direct marketers by using the language of finance. What is the language of finance? This is basically the profit and losses of the company. It can be translated into investments and opportunities etc. This is the language that must be used by representatives of the customer service management, if they wish to put their points across to the company executives.
Dissatisfied customers will cost the company money:
- Customers are not happy when they have to call multiple times to resolve an issue. These extra calls will cost the company money.
- If the merchandise is defective customers are not happy. In order to save the customer returns have to be processed and goods replaced. This can add up to quite a bit of money lost for the company.
- When customers have to wait for issues to be solved they get angry and impatient with the company. Again these problems will cost the company money and they may even end up losing the customer.
There are 5 ways customers produce profits for the company:
- New customers: these are customers who are brand new first time buyers.
- Referrals: some customers will like your products and service so much that they will recommend your company and goods to others.
- Percentage of income spent
- Willingness to pay a higher price for goods.
- How long a customer has been buying from your company?
Considering all these factors it is critical to a company’s success for them to examine their level of customer service in depth. Investment in customer satisfaction will pay substantial dividends. Retention of customers is a key factor in the 80/20 rule of business. There is definitely a business case for improvement in customer service.
If you would like to know more about how the ASK LISTEN RETAIN System or how it can help create customer retention and loyalty, please contact us.