As an entrepreneur, understanding the value of customer service is absolutely critical to the success of your business. Besides solidifying your customer base and increasing your revenues, good customer service cuts to the very core of what your business is all about and what you stand for. To put it another way, the manner in which you treat your customers reveals a lot about the outlook of your business. Customers can determine whether you’re simply in it for a quick buck or actually concerned with offering meaningful solutions to their everyday problems.
So, regardless of the reasons why you’re in business, prioritizing the satisfaction of your customers is very crucial if you hope to solidify your name in the market and enjoy long-term success.
Let’s now take a quick dive into some of the reasons why you should invest in good customer service.
1. Increases Customer Retention
Good customer service is arguably one of the most powerful driving forces behind customer retention. Customers are generally more likely to transact with a business again in the future if they had a good experience the first time. For this reason, prioritizing your customer service can help you not only acquire customers but also keep them long-term which obviously earns you more profits over time.
The power of customer retention can hardly be overstated. After all, research has shown that the probability of selling to an existing customer is significantly higher (60-70%) compared to new customers (5-20%). Many businesses also seem to agree that the cost of acquiring new customers is much higher (5 times) compared to retaining already existing ones. This explains why the vast majority of businesses put a greater focus on customer retention compared to seeking out new leads.
2. Strengthens Your Brand
If you value the public perception of your business (which you should as an image-conscious entrepreneur), then you simply have to ensure you provide the best quality customer service. Brands that are perceived to care about the satisfaction of their customers are generally viewed as superior and more reputable compared to those that don’t put a lot of premium on customer service. Consequently, the manner in which you respond to your customer’s needs can go a long way toward establishing your brand as a leader in your niche.
More than that, the quality of customer service that you provide your clients gives them insights into your mission and vision, hence making them more receptive to your business and more likely to align with what you stand for.
3. Earns You More Referrals
Referrals are a very powerful tool to expand and grow your business since they allow you to attract new customers without necessarily investing in conventional marketing tactics. According to research, 92% of customers trust referrals from people they know. Moreover, customers who are referred to a business by other customers have a 37% higher retention rate than those who find businesses by themselves.
As you can see from these statistics, the value of referrals to the growth and success of your business can hardly be overstated. However, you will only be able to leverage referrals if your customers are pleased with your business. For this reason, you should focus your attention and resources on providing your customers with the best customer service. To do so, you might consider enlisting a reputable company such as Odigo to help you strengthen your customer experience.
4. Improves Your CLTV
Customer Lifetime Value (CLTV) is a metric that describes the amount of revenue that a customer is expected to bring into a business over the course of their engagement with the business. In other words, it is a predictor of the value that your relationship with a customer can provide your business.
CLTV is one of the most important metrics to be aware of as a business owner since it allows you to better understand your customers and their needs, thus optimizing your marketing strategy to maximize your revenues.
So, how does it relate to customer service? Well, when customers are pleased with your service, they are not only inclined to return and spend more money on your business, but they also draw new customers. The higher your customer retention and conversions, the more revenue you stand to receive from each individual customer over time.
5. Raises Employee Morale and Turnover
Employees generally tend to be very observant when it comes to how businesses treat their customers. When they watch the organization they work for treating its clients with respect and honor, it fills them with a sense of belonging and pride, making them glad to be a part of the team and encouraging them to stay and deliver their best. On the other hand, when employees are encouraged to undercut customers, they are likely to be unmotivated and put off, which impacts their turnover.
Wrapping Up
Treating your customers like gold is crucial if you want your business to thrive in the highly competitive market of today. By providing your customers with the best experience, you will not only improve your customer retention and solidify your brand’s reputation but also increase your conversion rates which translates into more profits.
