Katie Smith from the International Customer Service Institute has just written an excellent article on why customer service is so important. We have reproduced it below, and at the end of the article is a link to the Institute in case you would like to find out more about their work.
Why is customer service so important?
Anyone who is serious about making considerable headway in business needs to understand why customer service is so important. It's not just for all the obvious fiscal reasons. It goes far beyond that. It delves into the very existence of who we are and why we do the things that we do.
The way we treat our customers is indicative of the way we look at things in life. Are we short-sighted, merely searching for the next pay day, or does our vision give us a deeper understanding of the long-term implications of our actions? Clearly, if you want to make strides today, you really do have to place the customer on a pedestal.
And while there are ample reasons why any person should start a business in the first place, everyone needs to pay homage to the customer so that they can stay in business. The less short-sighted the approach is from any enterprise, the more likely it will be to achieve long term success.
1. Customer retention is far less expensive than customer acquisition
On average, it costs approximately five times more to attract a new customer to your business than it costs to retain an existing customer. That logic on its own should highlight the importance of providing excellent customer service. Why risk losing a customer? It's costly enough to locate new customers in the first place, and every business should do whatever it takes to ensure they stay happy and continue doing business with them.
2. Existing customers are more likely to buy for you than new customers
Aside from simply trying to retain your existing customers for sake of it being less expensive to do so, it's important to note that selling anything to anyone new is also far less likely. For the most part, the probability of selling to a new customer hovers in the range of 5 - 20 percent, whereas selling to an existing customer resides in the range of 60 - 70 percent.
3. Great customer service results in a reduction of overall problems
By treating your customers like gold, you are sure to reduce the overall problems associated with your business, sales and the potential for any legal issues that might arise. Treat your customers poorly, and you can almost be certain that you'll run into problems at one point or another. And those problems can oftentimes lead to the ominous and untimely demise of your business.
4. Excellent customer service improves public persona and strengthens your brand
If you're interested in public perception, your reputation or the strength of your brand, you absolutely have to insure a high quality of customer service. Not only does this result in positive reviews, but it helps to solidify you in the minds of anyone searching for your type of products, services or information.
5. You're more likely to retain your customers for longer
When you offer a great customer service experience, your customers are far more likely to stick around and use your business any chance the moment arises. Even when it comes to ancillary services, consumers more willing to work with a business that they've had a great experience with before than to find someone new.
6. Word-of-mouth advertising is the best kind of advertising that money can't buy
You absolutely cannot buy word-of-mouth advertising - the kind that can have a monumental affect on a business. It's priceless. People are considerably more likely to listen to the advice of a friend than they are to heed the guidance from some online review or advertisement. Whether you're trying to make money online or offline, great customer service will create an army of raving fans that will champion your business for you.
7. It improves employee turnover in your business
Employees pay careful attention to how a company treats its customers. That resonates powerfully with people. When they see an employer treating their customers like gold, it delivers a sense of endowment, making them proud to be part of the team and making them more willing to stick around. When employees, on the other hand, are taught to undercut and discount customers for whatever reason, it does quite the opposite.
8. Great customer service opens doors for new partnerships and other opportunities
Treating your customers like gold is infectious. It opens the doors for new partnerships, especially when other businesses see just how well you take care of your existing customers. It says a lot about a company and what they value when they care deeply about their customers. It's something that you rarely find in business these days, but it most certainly paves the way for powerful partnerships, collaborations and other opportunities.
9. It conveys strong moral values and beliefs in the company's mission
Taking care of your customers conveys a strong set of moral values and beliefs in the company's mission. It means that it's transcending the necessity for profits by focusing on building its tribe. It also means that there are greater forces at work here than mere profits. It's indicative of a deeper desire to build something of value, to help others, and to somehow, in some way or another, change the world a bit by doing so.
10. It elongates the life of any business
Today, only four out of every 100 businesses last through until the 10 year mark. That's a massive failure rate. When you ignore the needs of your customers, and you don't focus on going out of your way for them, you're cutting short the potential for longevity in business. With so many obligations and responsibilities, if you're serious about your business, you have to focus on the core - your customers. Because without them, you have no business at all.
The International Customer Service Institute