How To Judge The ROI Of Customer Service

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Everyone talks about customer service or the ‘customer experience’ as it’s become known.

And for good reason.

In today’s business environment, where customers have so much choice over who to buy from, and most businesses selling roughly the same products at the same prices, the customer experience can be the only differentiator.

And it’s something customers pay attention to.

80% of customers say the experience they have when buying something is just as important as the product or service.

And two-thirds of companies compete on customer experience now.

But can customer service deliver a return on investment? Or is it a cost a business needs to absorb?

Well, according to research, there’s plenty of ROI to be generated from better customer experiences.

In this blog, Andy MacGregor, MD of telephone answering service company Face For Business, looks at the impact customer service can have on a business.

 

Short term cash flow

Providing a great customer experience can generate instant results for your bottom line.

Nearly seven in 10 customers say they’re willing to pay more for a product or service if they know they’ll have a better customer experience.

Just think about that for a second.

Even if you’re the most expensive option on the market, customers will still shop with you if they know the experience will be smoother.

That means you can charge a premium for your products and immediately improve your business’ cash flow.

 

Long term revenue

Although it can generate short-term revenue gains, the biggest payout from providing better customer experiences than the competition is in the long run.

That’s through winning repeat business, which every company strives for.

Nearly 90% of customers say good customer service would be most likely to turn them from one-time customers into long-term advocates for a brand.

89% of consumers are more likely to make future purchases after having a good customer experience, according to research by Salesforce, while research from HubSpot put that number around 93%.

Businesses that prioritise the customer experience can grow revenues around 4% and 8% above their market, according to research from Bain & Company.

So, clearly, investing in your customer service can pay dividends long after the initial transaction.

 

Brand loyalty

Creating brand loyalty might seem like a vanity project, but it has real commercial benefits if you can get it right.

Customers loyal to a brand won’t just shop with them repeatedly.

They’ll encourage other people to do the same.

Yes, they’ll do your sales and marketing for you by convincing other people you’re the best brand to use for your product and service.

And the customer experience is a critical part of generating that brand loyalty.

96% of customers say experience is key in their decision to be loyal to a brand.

 

The cost of getting it wrong

Looking at the benefits of customer experience, it’s essential to understand what can happen if you don’t get it right.

And it’s not good.

Nearly three quarters of customers have switched brands because of a poor customer experience in the past.

So it’s not like customers see a terrible experience as an inconvenience.

It can be a deal breaker with your brand.

Even if they don’t leave you immediately, it can be expensive and time-consuming to win a customer's trust back.

In a report by customer experience expert Ruby Newell-Legner, it was found that it takes 12 positive customer experiences to make up for a single negative one.

You also have to consider the ramifications (as well as the investment you’ll need) if customers start to post about bad experiences with your brand on social media.

Combatting this negativity can take a toll on your company and take time to repair.

 

Winning in the short and long term with great customer experiences

Providing a customer experience is no longer an ‘add on’ that can win you some extra points with customers.

It’s a central part of your offering and one that you need to get right.

As lucrative as the rewards for great customer service can be, the consequences of failing can be brutal.

So it’s something businesses need to focus on.

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