The Financial Impact of Customer Service

What determines the success of every organisation is customer service. Some would definitely say, “No Errol, the success of any company is driven by a great product or service concept.” While that statement is quite accurate, without great customer service, a great product or service concept is like expecting your beautiful garden flowers to grow without paying attention to them. I have also learned that you do not get full customer service consideration from upper management or the owner until you owe the business the financial effect. As it both generates and retains sales , customer service has a dual function. Let me clarify why I assume that this is valid. CheckĀ

Through the word of mouth route, customer service generates income. Your clients become your ambassadors when a great product or service is combined with great customer service. Their ability to talk favourably about the company contributes to new clients, producing extra sales. Recent research by the Technical Assistance Research Program (TARP) suggests that 1 person takes action for every 10 people who hear either positive or negative “word of mouth” information. That one new customer would in turn keep the optimistic “word of mouth” loop in motion if they obtain the desired level of service. Price changes are another form of revenue creation as a result of great customer service. TARP has also researched the effect of price rises on the ability of the client to continue to do business with businesses. Just 10 percent of survey respondents who had not encountered a customer service related issue reported disappointment with a rise in fees and charges in a banking industry report. This indicates that, due to the quality of customer service offered by their specific bank, 90 percent of survey respondents were okay with the price increases.

There is one question that must be resolved before we proceed with respect to customer service serving as a revenue preserver. The question is: How much is your client worth to your company? If your company is small or big, when measuring the amount of revenue being maintained by solving customer service related problems, the need to assess what your customer is worth to your business is important. For example , if your organisation has 1,000 clients and each client generates an average annual revenue of $400.00. If 10% of those customers encounter issues associated with customer service, that’s 100 customers. As we begin the calculations, bear with me! Let’s say now that 50 percent of those clients don’t even bother moaning, they just go inside. Their decision to leave without complaint constitutes a lost gain of $20,000.00.