It's no news that good customer service is important for a business. Happy customers translate to more sales and more revenue. It's simple enough to understand. That's why Forbes calls customer service the ''biggest factor for company success.''
However, customer service is evolving like any other field. McKinsey has hailed AI-enabled customer service as the ''quickest and most effective'' method for delivering personalized experiences. In such dynamic times, it's crucial to understand the importance of good customer service.
Below, we'll discuss in detail the importance of customer care and what it can do for your brand.
Having good customer service is paramount. There, we said it. But we don't make hollow claims. Here are eight factors that back up our statement.
Do you know what all the top-ranking companies have in common? They retain most of their customers. In fact, the top five companies in different industries have a 94% customer retention rate.
That is to say, if they have 100 customers this year, they'll have 94 of them next year. That means they don't have to spend extra money on acquiring new customers to fill up the gap.
The importance of customer service becomes even more evident when you learn about the cost of customer (new) acquisition. On average, you should be prepared to spend four to five times the amount you spend on retaining an existing customer. So, what is it that makes customers stay loyal to your brand?
96% of customers say it's customer service. It makes a lot of sense. If a customer has a question or an issue and receives prompt, helpful assistance from your company, they're likely to keep doing business with you.
Similarly, if you offer perks like loyalty programs and discounts to your existing customers, they will shop more from you.
Customer lifetime value (CLV) is an integral metric in SaaS businesses. It is the projected revenue that a customer will generate throughout their lifetime for your business.
Ideally, you want to increase customer lifetime value as much as possible since that translates into higher revenue for your company. Providing excellent customer service to your subscribers is a sure-shot way to ensure this.
The good news is just a 5% increase in longer customer retention (eventually leading to higher customer lifetime value) can increase profits by 25%.
Even better, your existing customers spend 67% more than new ones. So, improving CLV with good customer service can increase your revenue generation in a recurring revenue sales model.
Good customer service also has a positive impact on your brand image and reputation. Providing exceptional customer service can create a lasting impression on customers, which in turn gives your business a stellar reputation.
Take companies like Amazon or the Ritz-Carlton as an example. You might hear about issues like wage discrepancies or poor working conditions, but there's hardly a peep out of Amazon for its customer service quality.
Amazon's CEO, Jeff Bezos, himself says that a brand does for the company what the reputation does for a person. The key to earning this reputation is by ''trying to do hard things well.'' What could be harder than keeping over 310 million buyers happy?
Modern customers don't want to be treated like a number. Instead, they want businesses to see them as individuals. 66% would actually switch brands if they don't feel valued as a customer. Putting effort into providing personalized and attentive customer service can help you build a positive brand image and reputation.
It does two things. One, it keeps your existing customers satisfied and improves retention. Two, it shows prospective customers that you will tend to their needs, urging them to choose you over your competitors.
In 2021, Nielsen conducted a global Trust in Advertising Study, which included consumers from 56 countries. According to this study, 88% of customers reported trusting recommendations from people they know, such as peers and family members.
Trust in primary sources is not a regional trend. It is similarly prevalent globally, as the Nielsen study explains.
What does this tell you? It means you need your customers to become advocates for your business. Word-of-mouth marketing still trumps other forms of advertising, so it's time you put your loyal consumers to use.
If you provide excellent customer service, your customers will spread the word. The more satisfied they are, the more likely they are to recommend your business to friends and family. Since 23% of people tell their friends and family about their favorite products daily, your company's name will come up in some conversation.
Over time, this cycle continues, ultimately leading to an increased customer base and further growth of your brand's reputation. Current customers bring in new customers, then the new ones bring more, and so on. It's a gift that keeps on giving.
All the factors mentioned above, including retention, higher CLV, word-of-mouth marketing, and a solid reputation, do the same thing: bring in more revenue. Now, you might think the cost of providing excellent customer service is not justified by the revenue it brings in.
But that's not the case, either. About 65% of consumers will pay up to 5% more for your product or service if they get good customer service. Everything adds up, and in the long run, your business will thank you for the investment in customer service.
Customer service importance is also tied to the need for customer loyalty for brands to grow and stay relevant. Let's say your town has a couple of new coffee shops, but you always go to the same one. Why? Because you know what to expect, and they never disappoint.
If you have no reason to give up your favorite coffee shop, why would you? The same goes for your customers. If they are satisfied with their experience and get good service every time, they won't leave either.
In a Zendesk survey, three out of five consumers said their loyalty towards a brand is highly dependent on good customer service. The customers themselves have told you what they need to stay loyal to you. Now, it's up to you to provide it.
When it comes to SaaS and e-commerce businesses, upselling is one of the main ways to increase revenue. The principle is simple: offer customers a better and more expensive version of the product they're already interested in.
Why would customers pay more, though? Because they trust your brand. In a Hubspot research, 49% of salespersons said it's important to understand the goals and needs of customers to upsell successfully.
A great customer service experience can help you do just that. Your customer support team is in direct contact with your clients and knows their needs. They can collect the data you need to determine what the customer is actually looking for. Then, you can offer them the exact service or product that meets their requirements.
If your exceptional customer service has retained consumers, you're golden because your current clientele is 50% more likely to spend money on your new offering. They also spend 31% more than your new customers. So, this is the group you can upsell to.
No customers, no business. That's how the business world works. If you aren't putting your customers first and providing them with their desired service, chances are that they will go somewhere else for their needs.
The business landscape today is more competitive than ever. New businesses are opening up every other day. There's cut-throat competition in pretty much every industry.
One way to stay afloat in such an environment is to make sure that your customers stay loyal to you. You'd be surprised at how much difference even small efforts can make.
For example, if you improve customer experience, it can boost your sales revenue by 2% to 7%. Plus, your profitability goes up by up to 2%.
At the same time, satisfied customers become your advocates. They talk about you in family gatherings and friend hangouts. More importantly, they make videos about your brand on social media or tag you in their posts.
When people close to them see how happy they are with your brand, they become more likely to give you a try.
Now that you know the importance of customer service across the board, you can start focusing on its components. A huge part of good customer service is resolving queries quickly. Larger enterprises can afford to invest in a host of platforms or hire a full-fledged support team. However, early-stage startups have to think twice before spending their resources.
That's where JustReply comes in with its Slack-enabled platform.
JustReply's platform is specifically designed for entrepreneurs, allowing them to provide top-notch customer service without breaking the bank. You can use the built-in help center to provide support articles to your customers. The minimalist inbox makes it easy to see conversations and prioritize urgent queries.
Get started with JustReply to see its features in action.
