Friday, February 09, 2007
Customer service: Good for the bottom line
What constitutes good customer service varies from company to company. Ranging from the customer is always right, to who cares what the customer thinks, and everything in between, business owners and managers have their own views on the issue. Interestingly, companies practicing all levels of quality in customer service are in business, and are very often flourishing. The question arises, however, could companies who ignore customer service do even better financially than shown on their current income statements?
My answer to that difficult question would be a yes. A business improving their customer service will be more profitable than if the previously cavalier practices remained in force. Good customer service pays real monetary dividends.
People like to be treated with respect and with dignity when making their purchases of goods and services. That simple concept is often forgotten by many otherwise astute business people. In place of assuring a good customer experience while interacting with the organization and its personnel, many businesses simply expect other people to take the disgruntled purchaser's place.
This slash and burn approach to business relationships works well if the economy is very strong, and if there is an unlimited pool of customers upon which to draw. For most independent business owners, this harsh system is not sustainable, and the supply of customers and clients is soon exhausted. Without concern for establishing repeat business, profits will be short circuited by the customer attrition.
Returning customers have real value beyond what they contribute to the immediate bottom line. Since they are already familiar with your products and services, they will return at minimal added advertising and marketing expense. On the other hand, to acquire a new customer is very costly, both in advertising and marketing costs, and in time and personnel. Very often, the cost of acquisition of a new customer or client exceeds their initial purchase value. Adding new customers is costly, while maintaining existing customers is much cheaper in terms of time and money.
Satisfied customers form a free and effective sales force for your company. If they are happy with your products and services, and with your after sales treatment, they will recommend your business to others. This customer evangelism factor is even more powerful if you handle a customer complaint well, and to their satisfaction.
A dissatisfied customer, who feels that you made things right, will be one of the most powerful customer evangelists in the entire organiation. They will never tire of telling their friends, family, and associates of how you fixed their problem when they were expecting the worst possible outcome. Helping others with problems pays.
While there will always be a few bad apples who will attempt to exploit your customer service policy and your strong customer guarantee, these freeloaders are actually few and far between. Any free rides they obtain will be made up many, many times over from loyal repeat business and strong customer referrals. While the problem customer will stick out from the batch, it's important to understand that one sick tree doesn't destroy the entire forest.
Good customers are like gold to your business. Treat them well and they will boost your company's bottom line with their referrals and recommendations.
Good customer service doesn't cost. It pays.
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