How customer service shapes your bottom line
The quality of the customer service experience is one of the biggest influencing factors on a business' bottom line, according to research from the Institute of Customer Service into the Retail, Banking, Insurance and Utilities sectors, which found that almost two thirds (58%) of consumers would stop buying from a company as a direct result of poor customer service.
The study, entitled 'Recommend or Avoid? How Engaged Employees Influence Customer Service and Buying Behaviour', concluded that customer experience has a real and significant impact on purchasing decisions, highlighting a distinct shift in power over recent years as customers become more knowledgeable and discerning (largely due to the fact that they increasingly have more and easier opportunities to go elsewhere if they don't receive the level of service they expect).
More than three quarters (77%) say they would avoid using a company again where there is another option available after experiencing poor service. Conversely, 63% of people who have a good customer experience would purchase again from the same organisation.
"Good customer service is highly prized. It is clear that most customers want a balance between customer service and price. But about a quarter (23%) of purchasers said that they would pay more - on average an additional 10% - in return for a better customer experience," noted Jo Causon, CEO for the Institute of Customer Service. "Customers are using a wide variety of methods and devices to interact with organisations, whether electronically or in person. The value of recommendation in this new environment is more important than ever as consumers have access to this information at their fingertips on smartphones or tablets and, in many sectors, have a wide range of choices allowing them to vote with their feet if they are not happy."
Implications for retailers
In the run up to Christmas, the busiest time of the year, shops and restaurants are focused on maximising revenues. Yet, busier than normal and keen to secure large numbers of staff for the Christmas rush, retailers often recruit temporary workers with limited customer service experience or training, at a time when delivering a positive customer experience is especially crucial. Get it right, and organisations can benefit from high levels of recommendation and repurchase from customers. But bad customer experiences are highly likely to lead to customers avoiding an organisation and even warning others about it.
However, there is no excuse for businesses not to be prepared for Christmas. The study highlighted that investing time and effort into customer service training will have a tangible effect on customer perception and make a real impact on the bottom line.
Implications for banks
Though levels of customer satisfaction in the banking sector have been flat in the last year, as measured by the UK Customer Satisfaction Index (UKCSI), the good news for banks is that the sector scored higher than insurance, retail and utilities for friendly, helpful and knowledgeable staff. This suggests that as banking enters a new era of increased competition and regulation, engaged employees can be a key asset in improving customer relationships and building trust.
Implications for Utilities
Utility companies, especially in the energy sector, have come under the spotlight for price increases and this scrutiny has intensified since the political party conference season. Our research found that over half of customers who remembered a memorable experience with a company (54%) reported a bad customer experience - higher than any of the other sectors customers were asked about.
"One tangible initiative that utilities can focus on to build trust with customers is providing consistently high standards of service across all channels. Central to this is ensuring that all staff are equipped to deliver knowledgeable, helpful and professional service. Not only will this increase customer satisfaction, it will also encourage more customers to recommend organisations to their friends and associates," concluded Causon.
Sources: Institute Of Customer Service / The Marketing Factbook.
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