Businesses heavily invest each year to attract new customers. As a consequence, the average publicly-traded company’s budget for marketing and sales is 10%-11% of annual revenues, with some tech companies spending in excess 25% of revenues to spur growth. Shareholders today idolize chief marketing officers (CMOs), the rock stars of modern business, and Boards of Directors loosen the corporate purse strings in efforts to create a credible brand in the marketplace. By contrast, the funds spent to ensure the satisfaction of their existing customers - what management gurus call the “customer experience - is often an afterthought.
Relying on a “churn and burn” customer acquisition strategy overlooks and undervalues your organization’s existing customers. Ignoring customer losses and concentrating on new customers for revenue growth is akin to filling a leaky bucket, wasting time and effort for momentary success.
Fortunately, most customers are willing to overlook product or service deficiencies if the company makes a genuine effort to solve their problem. According to one poll, customers who have a “good” customer experience are 34% more likely to buy again, and 37% will recommend the company’s products or services to other consumers.
The Importance of Customer Service
Numerous studies and polls quantify the benefits of an effective customer service program, including:
- Lower sales expense. Finding a new customer costs five to six times the cost of retaining an existing one.
- Repeat sales. The link between repeat sales and customer service is clear: Customers are 64% more likely to try a company’s new offering if they think the company has excellent customer service.
- Better product/customer alignment. Collecting and analyzing the data that flows through customer service operations provides real-time, verifiable information about customer needs in addition to a company’s product or service shortcomings. This knowledge can be a source of innovation and invention, leading to improved design and higher customer satisfaction.
- Brand reinforcement. In layman’s terms, a brand is simply a company’s reputation. Every business seeks to satisfy its customers’ needs. Companies that get it right enjoy an advantageous position in the competition for customers and employees.
- Customer base stability. An American Express 2017 poll found that more than half of Americans have scrapped a planned purchase or transaction because of bad service. One-third of respondents say they’ll consider switching companies after just a single instance of poor service. Companies that want to keep their customers had better get customer service right.
- Competitive Advantage. “Customer experience is the last source of sustainable differentiation and the new competitive battleground,” claims Tiffani Bova, a Gartner Vice President. Customer service after a sale is inextricably linked to the total customer experience, meaning it can be challenging to provide an exceptional experience without an effective customer service operation.
Technology Advances and Customer Service
According to Statista, more than one in four customers report that
“ineffective customer service” is their number one frustration; one in ten complain about the time it takes to solve a problem. With the existing tools and training available to customer service representatives, every company has the opportunity to deliver a positive customer experience.
Companies like Talla are developing new programs that are revolutionizing customer service. Applying artificial intelligence and machine learning to the chaotic, extraordinarily complicated task of resolving a customer issue simplifies and speeds up service problems’ resolution. Rapidly reviewing hundreds, even thousands of previous customer service interactions to identify optimum solutions in a single instance, benefits customers and a company’s customer service representatives.
Using AI-driven chatbots and other customer-facing communication channels increase customer satisfaction and leverage the expertise of CSRs to produce better results. The representatives at companies who employ AI systems spend over one-half of their working hours with complex customer queries. In contrast, CSRs in older environments spend two-thirds of their time dealing with mundane, quickly resolved issues requiring little product or technical knowledge.
How essential are the new tools, especially AI and machine learning? A recent SalesForce report found that companies with the highest levels of customer service ratings are currently employing both. Demand for AI in customer service operations will grow 143% in the next eighteen months alone, predicts the report.
Company management teams who are focused on customer acquisition while ignoring the customer experience - effectively, chasing their tails - should reconsider the role of customer service in their operations. Today, excellent customer service is a competitive advantage; tomorrow, it will be a competitive requirement.
The use of AI and machine learning is well past the pioneer stage, where risk sometimes outweighs the reward. The benefits of AI are incontestable. Delaying its use in business will place the organization in a constant catch-up position with no certainty of eventual parity.