This Personal Impression connected with Customer Service.
July 20, 2020 Internet
Customer service is what drives the success of the any business. Some would surely say, “No Errol, a good product or service concept drives the success of any business.” While that statement is somewhat true, a good product or service concept without great customer service is like expecting your beautiful garden flowers to flourish without your giving awareness of them. I’ve often unearthed that you do not get upper management’s or the owner’s full attention regarding customer service unless you provide the financial impact to the company. Customer service features a dual role as it both creates and preserves revenue. Allow me to explain why I think this to be true.
Customer service creates revenue via the person to person avenue. When a great product or service is in conjunction with great customer service, your customers become your ambassadors. Their willingness to speak positively about your business contributes to additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) shows that for each 10 people hearing either positive or negative “person to person” information, 1 person takes action. That certain new customer, should they receive the amount of service expected, will subsequently keep carefully the positive “person to person” cycle in motion. Another form of revenue creation as a result of great customer service are price increases. TARP in addition has studied the impact of price increases on the customer’s willingness to carry on to accomplish business with companies. In a study of the banking industry, only 10 percent of survey respondents who’d not experienced a customer service related problem expressed dissatisfaction having an upsurge in fees and charges. Which means that 90 percent of survey respondents were okay with the price increases as a result of the amount of customer service provided by their particular bank.
In relation to customer service acting as a revenue preserver, there’s one question that really must be answered before we continue. That question is – How much is the customer worth to your business? Whether your company is small or large, the necessity to determine what your customer is worth to your business is critical when calculating the quantity of revenue being preserved by addressing customer service related issues. Telus webmail down For example, if your business has 1,000 customers and the typical annual revenue generated by each customer is $400.00. If 10 percent of those customers experience customer service related problems, that’s 100 customers. Bear with me as we start the calculations! Now let’s think that 50% of those customers don’t even bother to complain, they just simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.
Think about another 50% that do complain? Let’s say that you’re in a position to satisfy 40% (20), 40% (20) become frustrated together with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s consider the repurchase behavior of those complaining customers. Should 10% (2) of the customers that you’re in a position to satisfy once they complain decide never to repurchase, that represents $800.00 in lost revenue. In the frustrated together with your attempts to satisfy group, 25 % (5) discontinue purchases together with your company, which represents $2000.00 in revenue. On to the customers that remain dissatisfied after complaining – 60% (6) of this group decide never to repurchase from your company, meaning an additional $2400.00 in lost revenue. The sum total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “person to person” factor discussed earlier. These dissatisfied customers will tell others about their experience together with your company. In this scenario, considering the 50 customers that left without complaining, add the 13 customers that complained yet decided not to repurchase, that’s 63 customers who’ve the potential to work with negative “person to person” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the information (63 people), there’s potential revenue missed as a result of dissatisfied customers. Even when the brand new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t neglect the cost side of poor customer service – the employee costs to eliminate customer complaints and the material costs when rework must satisfy the customer. Take this example and apply your real numbers to ascertain the financial impact to your business. Whew! Lots of calculations, but it’s definitely worth it in regards to determining the financial impact of customer service.