How does customer service drive sales and profits
The Role of Customer Service in Driving Sales and Profits
Customer service had mostly remained unassociated with marketing and brand image a few decades ago. However, as time passed and with the proliferation of internet technology, brands came to realize its integral role in business success. The reason was that bad word of mouth could affect your reputation easily. There was also a bigger reason and that was customer satisfaction had become a measure of business success. Dissatisfied customers did not just mean loss of trust but also a lack of ethics. Companies that took customer service and customer satisfaction seriously emerged to be the winners in the short as well as long run. The growing competition was also a reason that made businesses grow their focus on customer satisfaction and customer service.
Companies that realized the central role of customers and customer satisfaction provided better customer service and performed better than their competitors. So, what once was seen as something peripheral, became an intrinsic part of the business. Several businesses had adopted the practice of directing customers to different departments for after-sales service. While this complicated practice where customer complaints were bounced from one department to another was counterproductive for the business itself, for the customers it meant a loss of time and higher frustration.
A fragmented customer service model was not profitable for businesses and it did not suit the customers either who started gravitating towards competing brands that provided better service. Many technologies and telecom companies had realized it that faster growth was nearly impossible without efficient customer service which was a prerequisite for customer retention and managing customer relationships. T-mobile changed its customer service model in 2018 and created a Team of Experts who would address all the post-sales concerns of the customers at one point and the customer would not be forced to reach several people or several departments for any small or large concern. Such steps while help companies better manage and respond to customer complaints, efficient customer service also results in stringer reputation and brand image. Customer service is now being linked with the brand image, brand equity, and profitability as well.
Competition has increased in the 21st century leading to a higher focus on customer attraction and retention. Customer relationship management has emerged as another important area focusing on which can yield great results. There is so much focus on forming stronger relationships with customers because it reduces the customer acquisition costs on the one hand, on the other, it strengthens the brand image and gives rise to better word of mouth.
Overall, customers are now the central focus in terms of business. Every company needs and wants positive word of mouth and great customer service is one of the simplest tools to drive higher loyalty and stronger relationships. A satisfied customer can be retained for longer and he will refer several more. So, one strong relationship can lead to many. Customer service can help you obtain several major benefits.
Advantages of great customer service:
1. Higher customer retention:
Customer service is not just about addressing customer issues and solving your customers’ problems. It is also about retaining your customers for longer. It is about providing your customers with an overall better experience. Customer service is therefore an important part of your business strategy. Retaining your customers for longer is like adding to your customers' lifetime value.
While every customer is valuable, your business cannot afford to leave customers dissatisfied. Dissatisfaction among customers leads to higher churn rate. To create highest satisfaction and drive customer retention rate higher, you must focus on better customer service.
It is also a way to understand your customers better and makes them realise you truly care. There are a few important things regarding great customer service and one of them is communication. Communicate with your customers to engage them and retain them for longer.
2. Opportunity for promotion of new products:
Customer service also provides you some attractive new opportunities to grow your relationships with your customers. While addressing a concern or issue, you can promote your new products before your customers. You can promote new packages or warranty extensions or even delight the customers with special savings and promotions. This will help grab new sales and create higher customer loyalty as well. Customer service, if taken seriously can lead to emergence of new opportunities.
3. Word of mouth:
Word of mouth is a great tool for marketing your brand and there are several examples in the industry which show that it can be a powerful weapon that can maximise your brand recognition. Starbucks and Apple have used this tool with great skill and success.
Delivering best customer experience gives rise to better word of mouth. It affects sales directly through acquisition of new customers. The bigger benefit is that your customer acquisition costs are automatically getting lower. In this way, you can turn your customers into your sales reps.
The customers would vouch for your services and this will lead to higher trust and growth in the customer base. Nowadays a customer first goes through a review of your products/services before trying them. If your customers post positive reviews of your brand and talk about you on social media, it’s a great sign for your business. Businesses are constantly on the lookout for such signals on social media and other channels. Your fame propagates faster and you get to create a positive image among your customers. Several major brands have been able to increase their earnings through customer referrals. When your customers are satisfied, their chances of referring others are higher.
Customer service should not be seen as distinct from sales and marketing but as an opportunity for more marketing and generating more leads. Amazon is a unique case that proved how brands could grow extra-large just through excellent customer service.
More and more brands are focusing on the quality of their customer service to grow their reputation and retention rate. It is now a proven remedy for high customer churn rate. You must compliment your marketing with excellent customer service. Apart from creating higher satisfaction, you will get an opportunity to attract new prospects and benefit from extended CLTV (Customer Lifetime Value). While customer experience affects brand image more directly now, investing in customer service will help businesses create a better customer experience and thus grow faster.