Budget Cuts? Be Careful What You Sacrifice
With the Economy down and budget cuts on the rise, customer service is often first to be cut. When money gets tight, telephone operators are replaced with voice recordings, service staff is laid off, and customers suffer the consequences. Many business owners neglect to see the importance of great customer service.
Customer service is so important because it is what keeps people coming back to your brand instead of turning to your competition. No matter what business you have, you make the big bucks from your returning customers.
The importance of customer retention is something that many business professionals seem to agree on. Robert Herjavec compares running a business to waiting tables in his book Driven: How to Succeed in Business and in Life. Anyone who has ever waited tables to put themselves through college will agree that your “regulars” are the ones you score the biggest tips from. Even on those cold rainy days (or seasons) when no one seems to be leaving their houses, you can count on your regulars to make your work-day worth while.
Bain and Company published a study in 2001 revealing that it costs six to seven times more to acquire a new customer than to retain an existing one. The study showed that increasing customer retention rates by 5% can boost profits anywhere from 25%-95%. Building customer loyalty means increasing profits, while acquiring new customers means spending more money on advertising.
Customer Service and Web 2.0
Let’s not forget to note that customer loyalty can be a form of advertising in and of itself. With the birth of Web 2.0, people’s opinions, recommendations and reviews are plastered all over the Internet, which can work for or against your company. The problem with Twitter, for example, is that any little problem or complaint a customer has becomes public. The solution is simple: address the problem publicly too.
Allowing direct and public communication between the company and the customer makes it easier for consumers to feel like the product or service is personally catered to them. When The Molson Coors Brewing Company received a comment on twitter from a customer who didn’t like their new beer, they replied to the customer, suggesting another one of their beers that he might prefer, and offering to send him a free six pack to test it out. The customer went on to blog about how impressed he was by Molson’s customer service. Just by doing this one little thing for this one customer, Molson was able to establish itself as a company that cares.
This form of advertising is not only easy and effective, but in the long run, it’s also relatively inexpensive. Cutting costs doesn’t have to mean cutting customer service, it just means finding inexpensive ways to take better care of your customers.
Employee Service –> Customer Service
Great service starts at the top of the pyramid. In order for the customer to be satisfied, the employees must be satisfied first. You must be careful in selecting your employees, and make a constant effort to make them happy.
More than just finding someone qualified, or people-friendly, it is important to seek employees who have an invested interest in your company. For a retail company, this means finding people who really want your employee discount. For a recipes app, this means finding people who love food – even if their job has nothing to do with generating content. Employees who really care about your company will really care about your customers too.
Great customer service isn’t just about prioritizing the budget, it’s about making smarter decisions in communication, advertising, and recruitment, in order to hang on to existing customers and ultimately boost profits for your business.