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Why Is Customer Service Important to an

Organization?
Customer service handles company issues in stores, over the phone and even by email.
Companies that produce highly technical products, such as software or satellite television,
often have technical support stafs to resolve problems. Customer service is important to an
organization for a number of reasons. Foremost, it would be difcult for a company to
survive without customer service, as there would be no one available to handle payments or
answer questions from prospective customers.
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'igni$cance
Customer service is important to an organization because it is often the only contact a
customer has with a company. Customers are vital to an organization. 'ome customers
spend hundreds and even thousands of dollars per year with a company. Consequently,
when they have a question or product issue, they e(pect a company%s customer service
department to resolve their issues.
)denti$cation
Customer service is also important to an organization because it can help diferentiate a
company from it competitors, according to the article titled &*he )mportance of Customer
'ervice& at +rew 'tevens Consulting website. For e(ample, it may be difcult to tell the
diference between two small,town drug stores, especially if their prices are similar.
*herefore, putting e(tra eforts into customer service may be thing that gives one drug store
a competitive advantage.
Related Reading: )mportance of Customer 'ervice in -uman !esources
Function
A company with e(cellent customer service is more li.ely to get repeat business from
customers. Consequently, the company will bene$t with greater sales and pro$ts. Contrarily,
companies with poor customer service may lose customers, which will have a negative
impact on business. )t costs a lot more money for a company to acquire a customer than to
retain them, due to advertising costs and the e(pense of sales calls. *herefore, the eforts
that go into maintaining quality customer service can really pay dividends over time.
/ublicity
/eople that have a positive e(perience with a company%s customer service department will
li.ely tell two or three others about their e(perience, according to Consumer Afairs website.
*herefore, quality customer service can be a source of promotion for organizations.
Contrarily, a person who has a bad customer service e(perience will li.ely tell between nine
and 01 people.
/revention2'olution
Customer service is important to an organization because of potential complaints.
Consumers can $le a complaint with the 3etter 3usiness 3ureau, Consumer Afairs or even a
class action attorney if they are dissatis$ed with a company%s customer service. As long as a
customer owns a product, they e(pect to be able to service it. "therwise, they have certain
rights to sue the company, as consumers are protected by the Federal *rade Commission.
Why Customer
Satisfaction Is
Important (6 Reasons)
Customer 'atisfaction , 4anuary 01, 0156 3y !oss
3eard.
53
63
Customer satisfaction is a marketing term that measures how products or services
supplied by a company meet or surpass a customers expectation.
Customer satisfaction is important because it provides marketers and business
owners with a metric that they can use to manage and improve their businesses.
In a survey of nearly 200 senior marketing managers, 71 percent responded that they
found a customer satisfaction metric very useful in managing and monitoring their
businesses.
Here are the top six reasons why customer satisfaction is so important:
Its a leading indicator of consumer repurchase intentions and loyalty
Its a point of diferentiation
It reduces customer churn
It increases customer lifetime value
It reduces negative word of mouth
Its cheaper to retain customers than acquire new ones
1. Its a leading indicator of consumer
repurchase intentions and loyalty
Customer satisfaction is the best indicator of how likely a customer will make a
purchase in the future. Asking customers to rate their satisfaction on a scale of 1-10 is
a good way to see if they will become repeat customers or even advocates.
Any customers that give you a rating of 7 and above, can be considered satisfed, and
you can safely expect them to come back and make repeat purchases. Customers
who give you a rating of 9 or 10 are your potential customer advocates who you can
leverage to become evangelists for your company.
Scores of 6 and below are warning signs that a customer is unhappy and at risk of
leaving. These customers need to be put on a customer watch list and followed up so
you can determine why their satisfaction is low.
See how satisfaction provides so much insight into your customers?
Thats why its one of the leading metrics businesses use to measure consumer
repurchase and customer loyalty.
2. Its a point of diferentiation
In a competitive marketplace where businesses compete for customers; customer
satisfaction is seen as a key diferentiator. Businesses who succeed in these cut-
throat environments are the ones that make customer satisfaction a key element of
their business strategy.
Picture two businesses that ofer the exact same product. What will make you choose
one over the other?
If you had a recommendation for one business would that sway your opinion?
Probably. So how does that recommendation originally start? More than likely its on
the back of a good customer experience. Companies who ofer amazing customer
experiencescreate environments where satisfaction is high and customer advocates
are plenty.
This is an example of where customer satisfaction goes full circle. Not only can
customer satisfaction help you keep a fnger on the pulse of your existing customers, it
can also act as a point of diferentiation for new customers.
3. It reduces customer churn
An Accenture global customer satisfaction report (2008) found that price is not the
main reason for customer churn; it is actually due to the overall poor quality of
customer service.
Customer satisfaction is the metric you can use to reduce customer churn. By
measuring and tracking customer satisfaction you can put new processes in place to
increase the overall quality of your customer service.
I recommend you put an emphasis on exceeding customer expectations and
wowing customers at every opportunity. Do that for six months, than measure
customer satisfaction again. See whether your new initiatives have had a positive or
negative impact on satisfaction.
Related: 15 tactics to reduce customer churn
4. It increases customer lifetime value
A study by InfoQuest found that a totally satisfed customer contributes 2.6 times
more revenue than a somewhat satisfed customer. Furthermore, a totally satisfed
customer contributes 14 times more revenue than a somewhat dissatisfed customer.
Satisfaction plays a signifcant role in how much revenue a customer generates for
your business.
Successful businesses understand the importance of customer lifetime value (CLV). If
you increase CLV, you increase the returns on your marketing dollar.
For example, you might have a cost per acquisition of $500 dollars and a CLV of $750.
Thats a 50% ROI from the marketing eforts. Now imagine if CLV was $1,000. Thats
a 100% ROI!
Customer lifetime value is a benefciary of high customer satisfaction and good
customer retention. What are you doing to keep customers coming back and
spending more?
Learn more about customer lifetime value:
Customer Lifetime Value For Beginners (4 Step Guide)
5 Strategies To Increase Customer Lifetime Value
5. It reduces negative word of mouth
McKinsey found that an unhappy customer tells between 9-15 people about their
experience. In fact, 13% of unhappy customers tell over 20 people about their
experience.
Thats a lot of negative word of mouth.
How much will that afect your business and its reputation in your industry?
Customer satisfaction is tightly linked to revenue and repeat purchases. What often
gets forgotten is how customer satisfaction negatively impacts your business. Its one
thing to lose a customer because they were unhappy. Its another thing completely to
lose 20 customers because of some bad word of mouth.
To eliminate bad word of mouth you need to measure customer satisfaction on an
ongoing basis. Tracking changes in satisfaction will help you identify if customers
are actually happy with your product or service.
6. Its cheaper to retain customers than
acquire new ones
This is probably the most publicized customer satisfaction statistic out there. It costs
six to seven times more to acquire new customers than it does to retain existing
customers.
If that stat does not strike accord with you then theres not much else I can do to
demonstrate why customer satisfaction is important.
Customers cost a lot of money to acquire. You and your marketing team spend
thousands of dollars getting the attention of prospects, nurturing them into leads and
closing them into sales.
Why is it that you then spend little or no money on customer retention?
Imagine if you allocated one sixth of your marketing budget towards customer
retention. How do you think that will help you with improving customer satisfaction and
retaining customers?
Here are some customer retention strategies to get you thinking:
Use blogs to educate customers
Use email to send special promotions
Use customer satisfaction surveys to listen
Delight customers by ofering personalized experiences
The Importance of Good Customer Service
&*he customer is always right& is a
famous business slogan. *he underlying
truth behind this statement is recognizing
that customers are the life blood for any
business. 7nderstanding the importance
of good customer service is essential for
a healthy business in creating new
customers, .eeping loyal customers, and
developing referrals for future customers.
8(cellent customer service begins at the initial
greeting, whether that%s in person, on the phone, or
via email. )n all of these situations, using good people
s.ills will increase the chances for a positive $rst
impression. For e(ample, saying hello with a smile to a
customer who 9ust wal.ed in the door will invite that
person in and ma.e them feel welcome. "n the other
hand, when an employee doesn%t ac.nowledge the
client, or ma.es them feel li.e an inconvenience, that
customer immediately feels slighted. *hat negative
feeling doesn%t get the customer in a buying mood,
and it will most li.ely turn them away from ever
coming bac. to that particular store.
)f the employee is utilizing good customer service on
the phone, the initial greeting will be courteous. Again,
this ma.es the client feel comfortable. )n turn, the
customer will appreciate the pleasant greeting and
usually be more agreeable on the other end of the
phone. *his is a much better situation for the client
instead of leaving messages on answering machines,
never getting any returned phone calls, or trying to
e(tract some product information from an uncaring
employee.
"f course, good customer service goes beyond the
initial contact. :hen helping customers choose the
right product or service or answer their questions,
assisting them with their needs is a great e(ample of
going the e(tra mile. *his .ind of service establishes
good will, and it%ll eventually lead to loyal customers.
8ven if that person doesn%t purchase anything at that
time, the good shopping e(perience will bring the
customer bac. again.
*hin. about how you%ve been treated whenever you%re
the customer. )f you%ve ever had a bad e(perience with
a company, you .now that it%s not easy to forget the
encounter. /erhaps a cler. was too busy stoc.ing
shelves to help you pay for your items. ;aybe there
wasn%t anyone around to answer your questions or
help you with some additional information. <ou might
have had to deal with an employee that won%t help
you because of some company rule. )n any of these
instances, the managers or the owner of the store
usually aren%t noti$ed of the poor customer service.
)nstead, the people that do hear about the negative
e(perience are many of the customer%s family and
friends. 8specially with social networ.ing, word travels
very fast when it comes to communicating negative
e(periences to the world.
:hen dealing with clients, sometimes there are
situations that need to be resolved. )f the customer is
upset about a product or service they%ve received from
the company, the $rst thing an employee should do is
to listen. 3y ta.ing the time to hear through the entire
complaint, the customer feels that you care.
"ccasionally, the issue is actually not related to your
company at all, but the initial problem is merely a
catalyst for that person%s frustration about other
things. 8ither way, attentive listening will brea. down
that barrier and begin to build a bridge to $( the
situation. 7sually, discussing diferent options will then
bring about a positive outcome for both sides.
ood customer service leads to many bene$ts. =ot
only will you gain trust with your current clients, they%ll
also become a wonderful referral system as they
spread the word about your business to other
prospects. 8specially with any internet business
transactions, product reviews are quite common.
:hether it%s positive or negative feedbac. about a
product or service, people are writing freely about
their shopping e(periences. )n the long run, treating
people fairly and with respect will bring business to
your company today and in the future.

Quality customer service is about
exceeding the expectations of your
customers.
Superior customer service can help your business to grow by increasing:
the number of customers attracted by favourable word-of-mouth advertising
the dollars spent by each customer per transaction
the frequency and number of times your customers shop with you.
Other benefits of high-quality service include:
improved customer satisfaction
stronger customer loyalty
consistency of work-flow practices
reduced marketing costs
competitive advantage
improved market position
staff pride and satisfaction.
Customer service is sometimes the only way a business can differentiate itself from its
competitors. It isn't just about the way you greet and serve your customers. It involves many
aspects of business operations, including:
products and services information
counter and face-to-face service
telephone service
taking customer orders
follow-up documentation
billing and managing payments
visiting the customer
making repairs
handling complaints
managing the service culture.
Improving customer service in your business
ake a moment to think of your favourite shop, restaurant or other business. hink about why you
keep going back. !ow do the proprietor and"or employees greet you# !ow do they sound on the
telephone# !ow are the premises presented# !ow do you feel while you are there doing business#
!ow do you feel when you have completed your business#
$usinesses earn your long-term support because they e%ceed your e%pectations. hey treat you
with respect. hey make you feel that you are the most important part of your business. hey go
the e%tra mile to win your loyalty and, in return, you keep going back to them.
If that's the way you would like your customers to feel about your business, consider taking some or
all of these actions.
rain your staff to deal with customers.
rain your staff about product features and about the benefits offered by the goods and
services you provide.
&ake the work as satisfying as possible so that staff are committed and happy working
in your business. his contentment will be reflected in their dealings with customers.
&ake your premises pleasant, welcoming, clean and tidy.
&aintain equipment in a good state of repair, so that work can be completed on time.
'stablish a clear policy for dealing with complaints from customers.
(ccept ownership of problems when customers complain or return goods.
)rovide prompt service to customers and ensure that your business is appropriately
staffed to achieve this.
$e reliable * do what you say you are going to do, do it when you say you will do it, do
it right first time, and get it done on time.
Invest in a first-class image * your customers will draw conclusions about your business
from what they see, feel, touch, hear or smell concerning your operations.
$e responsive, accessible, available and willing to help your customers whenever they
have a problem.
&easure your service standards regularly and make improvements where necessary.
When it comes to the business world, customer service is one of the most important
aspects of having a successful business. It doesnt matter whether you are selling
something or providing a service, you arent going to get far if you dont have good
customer service. If you are noticing that sales are down and you cant figure out why,
you may want to look at your customer service techniques. If your customer service is
less than satisfactory, then it is important to make sure that your customer service
training is getting the job done. Here are several reasons why its important to have
ecellent customer service.
It Keeps The Customers Happy
!eeping your customers happy is one of the most important things you can do for
your company. !eeping your customers happy means that you are much more likely
to keep them, and they are much more likely to recommend you to others. Word of
mouth is etremely important, and it doesnt take long for a company to get a good or
bad reputation. "ost of your reputation has to do with how pleased your customers or
clients are. With the popularity of the internet these days, its not uncommon at all for
people to do some research to figure out which company is the best at what they do.
If you want to have good ratings across the internet, then make sure that customer
service is high on your priority list.
It Determines How You Do !ainst The Competition
If your competitors have great customer service and yours is lower than average, then
you can almost be certain that your competitors will do better than you. #n the flip
side, if you have ecellent customer service and your competitors need to work on
their customer service, you are likely to do much better than they are. How happy
your customers are will say a lot about how well your company does. If your
customers arent happy with your customer service, then they are likely to switch to
another company. However, if the competitors customers arent happy with their
customer service, and they see that you have good customer service, then they will
be very likely to switch over to you.
It Says "ot #out How "on! You $i%% &a'e It
When you look at companies that have been around for a long time, you will likely
notice that many of them have great customer service. $enerally, companies that
treat their customers poorly or act like they dont care about them arent likely to last
long at all, especially in this day and age. If you need to work on customer service
improvement, make sure you do so as soon as you can so that you can keep your
customers, making your company much more likely to be successful and thrive.
He%pin! Your (u#%ic Ima!e
#nce a company gets big, it isnt long before people who havent even visited your
business or used your services have their own opinion of you. %s mentioned above, a
lot of this has to do with word of mouth. It is important for your public image to be
positive so that more people are likely to consider you as a place they go for
business. Having good customer service is important to keep your customers happy,
to do well against the competition, to have a good public image, and to stay around
for a long time.
Customer service
&rom Wikipedia, the free encyclopedia
Customer service is the provision
of service to customers before, during and after a purchase.
%ccording to 'urban et al. ()**)+,
,-.
/0ustomer service is a series
of activities designed to enhance the level of customer
satisfaction 1 that is, the feeling that a product or service has met
the customer epectation./
'he importance of customer service may vary by product or
service, industry and customer. 'he perception of success of
such interactions will be dependent on employees /who can
adjust themselves to the personality of the guest,/
,).
according to
"icah 2olomon. 0ustomer service can also refer to the culture of
the organization 3 the priority the organi4ation assigns to
customer service relative to other components, such as product
innovation or low price. In this sense, an organi4ation that values
good customer service may spend more money in training
employees than average organi4ation, or proactively interview
customers for feedback.
&rom the point of view of an overall sales process
engineering effort, customer service plays an important role in an
organi4ation5s ability to generate income and revenue.
,6.
&rom that
perspective, customer service should be included as part of an
overall approach to systematic improvement. % customer service
eperience can change the entire perception a customer has of
the organi4ation.
Contents
,hide.
- 0ustomer support
) %utomated customer service
6 Instant feedback
7 2tandardi4ation
8 0riticism
9 2ee also
: ;eferences
Customer support)edit*
Main article: Customer support
0ustomer support is a range of customer services to assist
customers in making cost effective and correct use of a product.
,7.
It includes assistance in planning, installation, training, trouble
shooting, maintenance, upgrading, and disposal of a product.
,7.
'hese services even may be done at customer5s side where
he<she uses the product or service. In this case it is called "at
home customer services" or "at home customer support".
;egarding technology products such as mobile phones,
televisions, computers, software products or other electronic or
mechanical goods, it is termed technical support.
Automated customer service)edit*
0ustomer service may be provided by a person (e.g., sales and
service representative+, or by automated means. =amples of
automated means are Internet sites. %n advantage with
automated means is an increased ability to provide service )73
hours a day, which can, at least, be a complement to customer
service by persons.
,8.
%nother eample of automated customer service is by touch3tone
phone, which usually involves a main menu, and the use of the
keypad as options (i.e. />ress - for =nglish, >ress ) for 2panish/,
etc.+
However, in the Internet era, a challenge has been to maintain
and<or enhance the personal eperience while making use of the
efficiencies of online commerce. /#nline customers are literally
invisible to you (and you to them+, so it5s easy to shortchange
them emotionally. ?ut this lack of visual and tactile presence
makes it even more crucial to create a sense of personal,
human3to3human connection in the online arena./
,9.
%utomated means can be based entirely on self service, but may
also be based on service by more or less means of artificial
intelligence.
%n automated online assistant with avatar providing automated customer service on a web page.
=amples of customer service by artificial means are automated
online assistants that can be seen as avatars on websites.
,8.
It can
avail for enterprises to reduce their operating and training cost.
,8.
'hese are driven by chatterbots, and a major underlying
technology to such systems isnatural language processing.
,8.
Instant feedback)edit*
;ecently
,when?.
, many organi4ations have implemented feedback
loops that allow them to capture feedback at the point of
eperience. &or eample,@ational =press has invited
passengers to send tet messages whilst riding the bus. 'his has
been shown to be useful, as it allows companies to improve their
customer service before the customer defects, thus making it far
more likely that the customer will return net time.
,:.
'echnology
has made it increasingly easier for companies to obtain feedback
from their customers. 0ommunity blogs and forums give
customers the ability to give detailed eplanations of both
negative as well as positive eperiences with a
company<organi4ation.
% challenge in working with customer service, is to ensure that
you have focused your attention on the right key areas,
measured by the right !ey >erformance Indicator. 'here is no
challenge to come up with a lot of meaningful !>Is, but the
challenge is to select a few which reflects your overall strategy. In
addition to reflecting your strategy it should also enable staff to
limit their focus to the areas that really matter. 'he focus must be
of those !>Is, which will deliver the most value to the overall
objective, e.g. cost saving, service improving etc. It must also be
done in such a way that staff sincerely believe that they can
make a difference with the effort.
#ne of the most important aspects of a customer service !>I is
that of what is often referred to as the /&eel $ood &actor./
?asically the goal is to not only help the customer have a good
eperience, but to offer them an eperience that eceeds their
epectations. 2everal key points are listed as followsA
-. !now your product 1 !now what products<service you are
offering back to front. In other words, be an information
epert. It is okay to say /I don5t know,/ but it should
always be followed up by /but let me find out/ or possibly
/but my friend knowsB/ Whatever the situation may be,
make sure that you don5t leave your customer with an
unanswered question.
). ?ody Canguage<0ommunication 1 "ost of the
communication that we relay to others is done
through body language. If we have a negative body
language when we interact with others, it shows that we
don5t care. 'wo of the most important aspects of positive
body language are smiling and eye contact. "ake sure to
look your customers in the eye. It shows that we are
listening to them and hearing what they are saying. %nd
of course smiling is more inviting than a blank look or
frown.
6. %nticipate $uest @eeds 1 @othing surprises your
customer more than an employee going the etra mile to
help them. %lways look for ways to go above and beyond
the epectations of your customer. In doing so, it helps
them to know that you care and it will leave them with a
/&eel $ood &actor/ that we are searching for.
Standardization)edit*
'here are few standards on this topic. I2# and 'he International
0ustomer 2ervice Institute ('I02I+ have published the following
onesA
I2# D**7A)***, on performance improvement
I2# -***-A)**:, on customer service conduct
I2# -***)A)**7, on quality management in handling
customer complaints
I2# -***6A)**:, on dispute resolution
'he International 0ustomer 2ervice 2tandard ('I022+
'here is also an Information 'echnology service management
standardA I2#<I=0 )****A)**8. Its first part concerns
specifications and its second part the code of practice.
Criticism)edit*
2ome have argued
,E.
that the quality and level of customer service
has decreased in recent years, and that this can be attributed to
a lack of support or understanding at the eecutive and middle
management levels of a corporation and<or a customer service
policy. 'o address this argument, many organi4ations have
employed a variety of methods to improve their customer
satisfaction levels, and other key performance indicators (!>Is+.
,citation needed.