The Case for Customer Service | Facts and Figures

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Rarely if ever do companies look to customer service as a way to achieve their yearly sales growth. Often, the budget and the focus is given to departments such as sales or marketing. It makes sense though, for years, we have been indoctrinated to believe that sales and sales support (marketing) is the only way to generate increased revenue. But in what I’d like to call the Starbucks age, companies cannot simply depend on aggressive sales and marketing campaigns regardless of how in demand their products are. These days consumers expect good quality product, good sales service and exemplary AFTER SALES service. To get our point across, let’s look at the figures.

Michael Maoz, Vice President at Marketing Research giant, Gartner, Inc., says that while marketing beefs up the number of prospects, and sales closes the deal it is still the over-all impression a customer has with a company that separates one business from another. Suffice to say, in order for a business to stand out from the fray, it must invest effort and resources into making sure that the customers feel taken care of and thought about.

For example, according to a survey by American Express in 2011, 59% of Americans will transfer to your competition if they feel that your competition provides better customer service. According to McKinsey and Company, a multinational management consulting firm, 70% of a client’s buying experience relies heavily on how well they are treated regardless of whether they bought online or in-store. What’s more, according to Lee Resources, 91% of unhappy customers will refuse to work with a company again after a bad customer service experience. Doesn’t matter if you have the best prices or the best quality product, if a client has a negative experience with your company and the issue remains unresolved, the client is not very likely to come back.

Financially, it really pays to establish great relationships with your customers. In a 2008 report from Forrester Research Inc. the company found that a large retailer can expect as much as an $184 million increase in revenue from improved service quality alone. According to the White House, loyal customers are worth up to 10 times their original purchase. And how pray tell do you tap into the business of loyal customers? Three words—excellent customer service.

Aside from a gradual increase in value from repeated purchase, it is far easier to sell to a loyal customer than to new ones. A salesman has a 12.5% chance of closing a sale with a walk-in client while, the same salesman regardless of his sales skill will have at least a 65% chance of closing a sale with a repeat client.

It is not only loyal clients who appreciate being treated well by the businesses they patronize. Zendesk.com reports that 24% of customers will continue to patronize a vendor 2 years after a good customer service experience. However, 39% will continue to avoid a vendor 2 years after a bad customer service experience. Let me ask you, what kind of customer service are you giving to walk-in clients?

Take a look at this data and more on the infographic below:

Finally, this is the clincher. These numbers will without a doubt prove that customer service directly affects sales. Fifty two percent of clients reported that good customer service led them to purchase from a vendor. Meanwhile, 55% said they switched to a different company after a bad customer service experience and 48% of these customers told others in their circle to avoid the vendor.

Now you tell me, how does customer service NOT affect every aspect of  your business?

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