The definition of customer service
Customer service is the assistance you offer your customers, before and after they buy and use your products or services, to help them have a simple and pleasant experience with your brand. But customer service isn’t just about solving a customer’s problem and closing the ticket. Today, customer service means providing proactive and immediate assistance to customers at any time on the channel of their choice: telephone, e-mail, SMS, chat, etc.
Customer service is so important that it is now considered a strategic function for organisations in all sectors. Three quarters of agents say their company sees them as customer advocates and brand ambassadors.
Why is customer service important?
Retention: more satisfied customers are more likely to continue doing business with you. This helps your bottom line. It costs less to keep existing customers than to attract new ones.
Customer service is also a differentiator that sets your brand apart from competitors offering similar products or services. Service teams don’t just answer questions; they make every experience personal to the customer. In fact, 80% of customers say that the experience offered by a company is as important as its products or services.
Meanwhile, frustrating customer experiences contribute to churn. 80% of shoppers will abandon a retailer after three bad experiences, for example. Excellent customer service is also important for your brand’s reputation. After all, customers are quick to share their negative experiences with the online masses.
When your business has a small budget, several functions are likely to take priority when allocating funds. Sure, your product team could use some financial help, and marketing – especially advertising – could always use some padding. However, it may seem pointless to invest money in your customer service team. After all, how can it really improve?
Contrary to popular belief, your customer service team should be just as important, if not more important than your other teams. After all, it’s the direct link between your customers and your business. Still not convinced? Read the following list to understand just how essential customer service is to improving your business and your relationship with customers.
Customer service is important to your business because it builds customer loyalty and value. By providing first-class customer service, businesses recoup customer acquisition costs and cultivate a loyal customer base that refers customers, serves as case studies and provides testimonials and reviews.
Investing in customer service activates your flywheel because loyal customers will help you acquire new customers, free of charge, by convincing prospects to interact with your brand. And their positive testimonials will be more effective than any of your current marketing efforts – and cheaper too.
Why invest in customer service?
Benefits:
- Customer loyalty is less expensive than customer acquisition.
An increase in customer retention of just 5% can equate to a 25% increase in profits. This is because repeat customers are more likely to spend more with your brand – 300% more, to be exact – which means your business then has to spend less on running costs.
According to our research team, the Customer Acquisition Cost (CAC) – how much it costs to acquire a new customer – is higher for a business that doesn’t invest a small percentage of its budget in customer service. Ultimately, investing in customer service can reduce your churn rate, which lowers the amount you need to spend to acquire new customers and lowers your overall CAC.
- Customer service represents your brand image, your mission and your values.
You may have an idea of what your brand stands for. However, your customers can’t get inside your head and will make assumptions based on your social media presence, advertising, content and other external marketing.
Your customer service team, however, is where you have the most control over this perception. These people speak directly to your customers and are responsible for representing your brand when interacting with current or potential buyers. In fact, 96% of customers say that customer service is important in their decision to remain loyal to a brand.
Without your customer service team, you have no means of direct communication. For this reason, your customer service team is essential in conveying to customers what you want your brand image to be. They can help influence customers and convince them of your strengths over your competitors.
- Satisfied customer service employees will create satisfied customers.
No employee will enjoy coming to work if they feel undervalued compared to employees in other teams. The same goes for your customer service team. After all, 69% of employees say they work harder when they are appreciated.
It’s important to note that 55% of employees who strongly disagree about being satisfied with their job will still work particularly hard for customers.
However, their reasoning behind serving customers is less about wanting to provide a quality service. Instead, it’s about maintaining their professionalism and integrity, not wanting to get fired before quitting, being empathetic to customers, but getting their appreciation in the end.
So if you want your customers to do their best, they need to feel respected and appreciated. Only then will they find an intrinsic motivation to do a good job and serve their customers in the right way, which will make your customers feel more respected and appreciated too.
- Satisfied customers will recommend others.
And when your customers are happier, they’re more likely to share it with their friends, family and colleagues. In fact, 72% of customers will share a positive experience with six or more people. Think about it: if you have an amazing experience with a brand, you’re likely to praise it to your friends over dinner later that night. It’s natural; you want your friends and family to engage with a brand you trust.
It’s a chain reaction. If you have a happier customer service team, they’ll work harder to meet and exceed your customers’ expectations. Then, those customers will be extremely happy with your brand and will refer others. Your customers can be your best and cheapest form of word-of-mouth advertising, as long as you give them a reason to do so.
- Good customer service encourages customers to stay loyal.
As we said earlier, it’s much cheaper to keep an old customer than to acquire a new one. In this sense, the higher the lifetime value of a customer – the total revenue a business can expect a single customer to generate over the course of their relationship with that business – the higher the benefit to your business.
Compared with hundreds of competitors offering similar products and services, your company needs to do more than just savour the attractive features of your products. By offering excellent customer service, you can differentiate your company in the eyes of your customers. Loyalty is rooted in trust, and customers may trust real people more than a brand’s ideas and values. So, by interacting with your customer service team, these customers can hopefully build lasting relationships with your business.
- Customers are willing to pay more for companies that offer better customer service.
67% of customers would pay more for a better customer service experience. Clearly, customer service matters so much to customers that they would literally pay more to interact with a brand that does it well.
These are statistics that cannot be ignored. At a time when companies are learning to put customer service first, any business that doesn’t will crash and burn.
Customers are influenced by even a single experience; a positive experience could be the deciding factor for them to stick with a brand, while a negative experience could send them running to a competitor.
- Customer service employees can offer important insights into customer experiences.
It doesn’t matter how you perceive your brand. What matters is how your customer perceives it.
For example, if you work for a sportswear company, you may associate your brand with fitness, health and wellbeing, and people who play sport. However, your customers may buy from you because they associate your brand with leisure, comfort and attractiveness. So you need to align your marketing with these values too.
Your customer service team can answer many of these probing questions for you. Rather than having to spend time and money constantly surveying customers, you can ask your customer service staff to simply ask these questions while interacting with customers. Their answers can provide you with a wealth of information about how to improve your products, your marketing, your objectives and the training of your employees.
And the more you improve the customer experience, the harder your employees will work. Research shows that companies that invest in customer experience also see employee engagement rates increase by an average of 20%.
- Customer service increases customer lifetime value.
If you’re running a business, customer lifetime value (CLV) is a pretty important metric. It represents the total revenue you can expect from a single customer account. Increasing this value means that your customers buy more frequently and/or spend more money in your business.
Investing in your customer service offering is a great way to improve customer lifetime value. If customers have an excellent experience with your service and support teams, they’ll be more likely to shop in your shops again. Or, at the very least, they’ll share their positive experience with others, building relationships with your customer base.
This makes new customers more trustworthy of your business and allows you to sell additional and cross-sell products with less friction. New users will trust that your sales team is recommending products that really suit their needs, creating a smoother buying experience for both the customer and your employees.
- Proactive customer service creates marketing opportunities.
If you’re looking for a cost-effective way to invest in your business, you should consider adopting proactive customer service. Rather than waiting for customers to report problems, this approach contacts them before they even know they have a problem. This way, customers know that you are constantly working to remove obstacles to their user experience.
But proactive customer service isn’t just used to please customers. It’s also an effective marketing tool for introducing and promoting new products and services.
For example, if you create a new feature that solves a common problem with your product, your customer service team can refer it to your customers. They can use your CRM or ticketing system to find customers who have already experienced this problem, contact them via the service ticket and present the new feature and its benefits. And this can sometimes be more effective than a sales pitch, because customers get the impression that the service representative really understands their problem after solving it.
- Customers expect high-quality service.
People don’t just expect your company to have a customer service team; they expect your customer service team to be world-class and ready to help at a moment’s notice.
In fact, according to new data collected after the COVID-19 pandemic, more than half of those surveyed (58%) said their expectations of customer service are higher today than they were a year ago.
But customers don’t just want high quality customer service, they demand it. 66% of customers said they would switch brands if they felt they were “treated like a number, not an individual”. Customers have more options than ever before, and now that they’ve realised it, they’re not afraid to take their business elsewhere if they’re not happy with their experience. It is now up to brands to meet customer expectations if they want to attract and retain customers.
- Companies need omnichannel solutions.
Before COVID-19, businesses were gradually exploring new digital ways of engaging and supporting customers. But once the pandemic hit, this timeframe accelerated dramatically and it was no longer a convenience for businesses to communicate with customers via social media, live chat or video calls .
While we are still in the midst of a global pandemic, these communication channels will be here to stay for the foreseeable future. Not only do customers love using these channels, but over time they will expect them to become the norm in the customer service industry. That’s why businesses need to invest in omnichannel solutions to connect these new media and create a seamless customer experience.
Rather than each channel operating independently, channels are linked together so that messages and information can be shared freely between them. This way, customers don’t have to stray far from what they’re doing to get help from your business. Whenever they need help, they can reach out on any channel of their choice and will get an immediate and reliable response.
- Excellent customer service is a competitive advantage.
Whatever your industry, you want your business to stand out. After all, no one strives to be the “second best” at anything. You want to be better than every other company you compete with and you want your customers to know that too. That’s the key to building customer loyalty and getting them to interact with your brand all the time.
Customer service can be an excellent differentiator for your business. In fact, 60% of customers stop doing business with a brand after a poor service experience. And 67% of this churn is avoidable if the customer’s problem is solved during their first interaction. This means that if you provide excellent customer service, you’ll not only retain your customers, you’ll also win them over from your competitors.
There’s no denying that a well-trained, positive customer service team can make your business the best version of itself. Their ability to communicate directly with customers can revolutionise your business and grow your customer base.
- Positive customer service makes people more likely to do business with you.
Consumers take customer service into account when making purchasing decisions. In fact, 90% of Americans use customer service as a factor in deciding whether or not to do business with a company. This means that the reputation of your customer service will have an impact on a large majority of potential customers.
What’s more, customer service doesn’t begin and end with your front-line representatives. The customer service that potential customers experience during the sales process will also have an impact on their purchasing decisions. Providing positive customer service should be the goal of every customer-facing role.
- Excellent customer service will protect customers who make a mistake along the way.
As we mentioned, when customers have a bad customer experience, they don’t hesitate to speak up and leave the business. However, if your company provides excellent customer service overall, 78% of consumers will do business with a company again after a mistake.
What’s more, only one in five consumers will forgive a bad experience with a company whose overall customer service is rated as ‘very poor’, while almost 80% will forgive a bad experience if they rate the service team as ‘very good’.
- Customer service can generate more revenue.
At the end of the day, you probably make your budget decisions based on what brings you the most revenue. You may be surprised to learn that customer service can generate revenue and impact the bottom line. Companies can increase revenues by 4% to 8% above their market when they prioritise better customer service experiences.
What’s more, 89% of companies whose customer experience is “significantly better than average” achieve better financial results than their competitors. A positive customer experience has a direct impact on your revenues and growth.
- Personalised customer service can improve your online conversion rate.
Similar to the point above, better customer service can also improve your conversion rate, not just your revenues.
In fact, your online conversion rate can improve by around 8% when you include personalised customer experiences. A higher conversion rate should lead to more sales, and then more revenue. At the end of the day, customer service drives your flywheel, just like marketing and sales.
Without customer service, customer loyalty and success would be impossible. In fact, the flywheel would probably stop turning altogether. With excellent customer service, you’ll attract new customers, prevent customer churn and strengthen your brand’s reputation and image. What’s more, the data continues to support the fact that excellent customer service is an expectation, not a “nice to have”.