Customer service 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 care is much like expecting your beautiful garden flowers to flourish without your giving focus on them. I’ve often discovered that you do not get upper management’s or the owner’s full attention regarding customer care if you don’t supply the financial impact to the company. Customer service features a dual role as it both creates and preserves revenue. Let me explain why I believe this to be true.
Customer service creates revenue via the recommendations avenue. Whenever a great product or service is coupled with great customer care, your web visitors become your ambassadors. Their willingness to speak positively about your organization leads to additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) suggests that for every 10 people hearing either positive or negative “recommendations” information, 1 person takes action. This one new customer, whenever they receive the amount of service expected, will consequently keep consitently the positive “recommendations” cycle in motion. Another type of revenue creation as a result of great customer care are price increases. TARP has also 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 care related problem expressed dissatisfaction having an upsurge in fees and charges. This means that 90 percent of survey respondents were okay with the purchase price increases as a result of the amount of customer care supplied by their unique bank.
When it comes to customer care acting as a revenue preserver, there is one question that must definitely be answered before we continue. That question is – Simply how much can be your customer worth to your organization? Whether your company is small or large, the requirement to determine what your customer is worth to your organization is important when calculating the quantity of revenue being preserved by addressing customer care related issues. For instance, if your organization has 1,000 customers and the typical annual revenue generated by each customer is $400.00. If 10 percent of these customers experience customer care related problems, that’s 100 customers. Bear with me as we start the calculations! Now let’s assume that 50% of these customers don’t even bother to complain, they just simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.
How about another 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 consider the repurchase behavior of these 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. On to the customers that remain dissatisfied after complaining – 60% (6) of the group decide not to repurchase from your company, meaning one more $2400.00 in lost revenue. The total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “recommendations” factor discussed earlier. These dissatisfied customers will tell others about their experience with your company. In this scenario, considering the 50 customers that left without complaining, add the 13 customers that complained yet didn’t repurchase, that’s 63 customers who’ve the potential to utilize negative “recommendations” 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 as a result of dissatisfied customers. Even if the brand new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t forget about the cost side of poor customer care – the employee costs to solve customer complaints and the material costs when rework must satisfy the customer. Take this example and apply your real numbers to determine the financial impact to your business. Whew! A lot of calculations, but it’s definitely worth it when it comes to determining the financial impact of customer service.