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 support is like expecting your beautiful garden flowers to flourish without your giving attention to them. I’ve often discovered that you don’t get upper management’s or the owner’s full attention regarding customer support unless you supply the financial impact to the company. Customer service includes a dual role since it both creates and preserves revenue. Allow me to explain why I believe this to be true.
Customer service creates revenue via the person to person avenue. Each time a great product or service is in conjunction with great customer support, your web visitors become your ambassadors. Their willingness to speak positively about your business results in additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) indicates that for each and every 10 people hearing either positive or negative “person to person” information, 1 person takes action. Telus webmail not working This one new customer, should they receive the level of service expected, will subsequently keep carefully the positive “person to person” cycle in motion. Another type of revenue creation consequently of great customer support are price increases. TARP has also studied the impact of price increases on the customer’s willingness to keep to complete business with companies. In a study of the banking industry, only 10 percent of survey respondents who had not experienced a customer support related problem expressed dissatisfaction having an upsurge in fees and charges. Which means that 90 percent of survey respondents were okay with the purchase price increases because of the level of customer support provided by their particular bank.
When it comes to customer support acting as a revenue preserver, there is one question that really must be answered before we continue. That question is – Simply how much is the customer worth to your business? Whether your company is small or large, the requirement to figure out what your customer is worth to your business is crucial when calculating the amount of revenue being preserved by addressing customer support related issues. Like, if your business has 1,000 customers and the common annual revenue generated by each customer is $400.00. If 10 percent of those customers experience customer support related problems, that’s 100 customers. Bear with me as we start the calculations! Now let’s think that 50% of those 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.
What about the other 50% that do complain? Let’s claim that you’re in a position to satisfy 40% (20), 40% (20) become frustrated along with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s look at the repurchase behavior of those complaining customers. Should 10% (2) of the customers that you’re in a position to satisfy after they complain decide to not repurchase, that represents $800.00 in lost revenue. In the frustrated along with your attempts to satisfy group, 25 % (5) discontinue purchases along 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 company, which 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 “person to person” factor discussed earlier. These dissatisfied customers will tell others about their experience along with your company. In this scenario, if you think about 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 “person to person” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the information (63 people), there’s potential revenue missed because of dissatisfied customers. Even if the new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t neglect the cost side of poor customer support – 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 ascertain the financial impact to your business. Whew! Lots of calculations, but it’s definitely worth it in regards to determining the financial impact of customer service.