Customer care is what drives the success of the any business. Some would surely say, “No Errol, a good product or service concept drives the success of any business.” While that statement is somewhat true, a good product or service concept without great customer service is like expecting your beautiful garden flowers to flourish without your giving attention to them. I’ve often unearthed that you do not get upper management’s or the owner’s full attention regarding customer service unless you provide the financial impact to the company. Customer care features a dual role as it both creates and preserves revenue. I’d like to explain why I believe this to be true.
Customer care creates revenue via the word of mouth avenue. When a great product or service is in conjunction with great customer service, your visitors become your ambassadors. Their willingness to speak positively about your company leads to additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) suggests that for every single 10 people hearing either positive or negative “word of mouth” information, 1 person takes action. That certain new customer, whenever they receive the level of service expected, will consequently keep consitently the positive “word of mouth” cycle in motion. Another kind of revenue creation as a result of great customer service are price increases. TARP has additionally studied the impact of price increases on the customer’s willingness to keep to complete business with companies. Telus webmail not working In a study of the banking industry, only 10 percent of survey respondents who’d not experienced a customer service related problem expressed dissatisfaction having an upsurge in fees and charges. Which means 90 percent of survey respondents were okay with the price increases due to the level of customer service supplied by their particular bank.
In regards to customer service acting as a revenue preserver, there’s one question that really must be answered before we continue. That question is – Just how much can be your customer worth to your company? Whether your company is small or large, the requirement to know what your customer is worth to your company is critical when calculating the quantity of revenue being preserved by addressing customer service related issues. Like, if your company has 1,000 customers and the typical annual revenue generated by each customer is $400.00. If 10 percent of those customers experience customer service related problems, that’s 100 customers. Bear with me as we start the calculations! Now let’s believe that 50% of those customers don’t even bother to complain, they only simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.
Think about one other 50% that complain? Let’s claim that you’re in a position to satisfy 40% (20), 40% (20) become frustrated with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s think about the repurchase behavior of those complaining customers. Should 10% (2) of the customers that you’re in a position to satisfy when they complain decide not to repurchase, that represents $800.00 in lost revenue. In the frustrated with your attempts to satisfy group, 25 % (5) discontinue purchases with your company, which represents $2000.00 in revenue. Onto the customers that remain dissatisfied after complaining – 60% (6) with this group decide to not repurchase from your own company, this means an additional $2400.00 in lost revenue. The total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “word of mouth” factor discussed earlier. These dissatisfied customers will tell others about their experience with your company. In this scenario, if you think about the 50 customers that left without complaining, add the 13 customers that complained yet decided not to repurchase, that’s 63 customers who have the potential to utilize negative “word of mouth” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the info (63 people), there’s potential revenue missed due to dissatisfied customers. Even though the new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t overlook the cost side of poor customer service – the employee costs to resolve customer complaints and the material costs when rework is needed to satisfy the customer. Take this example and apply your real numbers to find out the financial impact to your business. Whew! Plenty of calculations, but it’s definitely worth every penny as it pertains to determining the financial impact of customer service.