6 min

Why Customer Service Is Important – the Key to Retaining Customers

We explore why providing better customer service is important and how retaining customers is the key to increasing your bottom line.

By Yext

Sep 13, 2021

6 min

For many companies, customer service is an afterthought. The focus needs to be on delivering a great product or service, but your business is made of people for people. That means that every time a potential or existing customer reaches out, the people who respond carry the weight of your company's reputation.

Why Customer Service Is Important – the Key to Retaining Customers

Even companies that agree that customer service is important often don't dedicate enough time, personnel, and resources towards improving it. Typically, customer service professionals deal with customers who are having issues implementing or using your products or services, and as long as someone is answering questions, that's enough, right?

Considering the other departments or teams vying for budget, it is understandable why businesses might not value their customer service as highly, but it is a crucial mistake that can lead to devastating consequences for your bottom line.

We address some of the main reasons your business should take a long look at your customer service and see where improvements can be made.

Retaining Customers Costs Less

Retaining consumers is the most cost-effective strategy to increase revenue since it costs far less to attract current customers than it does to acquire a new client. In fact, numerous consumers in today's world will continue to do business with firms that have proven excellent customer service, even if competing companies provide identical products and services with more features or at a lower price.

On the other hand, even if your rivals don't provide all you do or are more costly, you will definitely face higher customer churn if your firm fails to meet customer service requirements. Some businesses have taken advantage of this by creating various subscription tiers, with premium assistance included in the higher tiers. If this model applies to your company, you may test it to determine how much extra consumers are prepared to pay for superior customer service, such as priority for inquiries or availability of more communication channels.

Repeat customers don't just cost less to interest than new customers; they're also more likely to spend larger amounts on your products. That means that not only are you saving money on customers who aren't churning, but you're also bringing in more revenue from your existing customers and the new customers to whom they spread the information.

Expanding Your Audience

It is quite easy for potential clients to check up on your company before making a purchase, thanks to the accessibility of social media and the extensive awareness of firms across numerous websites. Clients depend largely on word of mouth and review sites from others to make purchasing decisions, and if your business is renowned for providing bad or sub-par customer service, many people will be hesitant to try your products or services.

Many consumers are unwilling to give businesses a second opportunity and are ready to leave after a single bad encounter, particularly when it comes to customer service. Clearly, this is dependent on the sort of competition your business faces. Because one area generally only has one or no other alternatives for the internet, but there are several options for clothes, internet service providers may not experience the same amounts of turnover as a clothing shop.

However, when you instill a deep sense of loyalty among your customers, they can become brand evangelists, spreading the good news about your company and giving new people incentives to become your loyal customers, too. Knowing that a business values its customers enough to invest in its customer service provides a deep sense of assurance to people, especially millennials.

This is an easy and convenient way to expand your audience. When fans of your company do the legwork for you by posting on social media about their experiences with your business, it will automatically reach out to any of their followers. Your fans don't need to all be influencers either, the average person still has a pretty decent social media reach, and everything is free.

Your Reputation Rides on Customer Service

Even without the financial incentives, the fact is that many people will get to know your company; what you make, who you employ, what you support, and what you stand for through your customer service. Customer service is much more than just calming disgruntled people over the phone nowadays; it also means responding to questions and comments through social media.

What and who you choose to respond to will inform existing and potential customers about how your company interacts with clients. When people know what your brand represents and how you're working towards your goals, they can make better decisions about whether to stick with you or take their business elsewhere.

Your marketing and how you respond, or how long it takes you to respond to inquiries on social media about your company, are large factors in millennial and Gen Z's decision-making. Since your customer service representatives are your only direct link with your customers, it is vital that they are well-trained and deliver the right message to your clients: that you care about their opinions and want them to be satisfied.

Happiness is Contagious

When your company puts more time and resources into great customer service, you won't only increase customer retention. Your customer service representatives will enjoy their work, reducing employee turnover.

By showing that you care about your employees and giving them the tools they need to provide positive customer experiences, you will also spread some of that happiness to your customers too. Everyone has experienced trying to talk to someone who is obviously not listening or interested in the conversation. If you want your support agents to provide customer satisfaction, you have to make your employees feel special first.

Employees tend to work the hardest when they are adequately prepared and happy with their jobs. When you start respecting and appreciating them more, they will find more motivation to provide the highest quality customer service. You'll notice more customers sticking with your business over time, increasing their customer lifetime value.

The Human Factor

Additionally, customers are likely to remember their experiences with individual support reps than to think of a nebulous business as a whole. Humans want to connect with other humans, instead of a chatbot. This means that trust in a company will be built on real customer interactions.

This is why Facebook, Instagram, and other social media influencers are so effective. It's word-of-mouth advertising. Your customer service representatives are the direct line of communication for information and assistance so you want to ensure that customers can relate to them and appreciate their efforts.

Important Customer Insights

A good customer service interaction can deliver plenty of otherwise untapped information about your products that can help you change tactics to increase customer lifetime value (CLV). They can advise you as to how customers perceive your brand image and how you should be marketing your items or if lots of people all have the same questions or feedback about implementing your service.

Surveys and online reviews aren't always the best way to find out more of this information since people often don't have much incentive to complete them. If you start offering incentives, that can quickly become an expensive endeavour. However, when people have to talk to your customer service reps, they have the motivation to answer a few questions during their call and how they've used the features.

In Summary

Investing in your customer service team drives down customer acquisition costs and increases your company's revenue from happy customers who buy more and tell their friends to try out your products. The more you put into keeping your customers satisfied and raving about your awesome service, the more profit you'll have to invest in upgrading or inventing new services or features.


Prescription for Cutting Costs

12 Data-Backed Reasons Customer Service Is Key to Business Growth

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