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Why Customer Service is an Investment, Not an Expense

By Special Guest
Gabriel Bristol, CEO of Intelicare Direct
November 24, 2015

It is hard to overstate the value of excellent customer service.

According to a 2015 U.S. State of Multichannel Customer Service Report, 98 percent of American consumers believe customer service is important. So important, in fact, they back up that belief with their spending habits. According to a survey from American Express, 78 percent of consumers have bailed on a transaction or not made an intended purchase strictly because of bad service.


While business owners and CEOs know these numbers on some level and understand the value excellent customer service adds, many are simply unwilling to pay for it, viewing it as an almost optional “expense” rather than what it truly is, an absolutely necessary “investment.”

For some companies, truly focusing on providing the best possible customer service will require a paradigm shift in their approaches. Here are three reasons such a move is justified.

  • Helps your bottom lineStudies revealed that U.S. companies lose $41 billion due to poor customer service and that 44 percent of customers switch to a competitor following a poor customer service experience. These statistics paint a pretty clear picture. It doesn’t matter how low your prices are, or how conveniently you’re located, or what your online reviews say. If you are losing almost half your customers because of bad customer service, then it’s clear how essential rectifying that is to your bottom line.

  • Keep your current customers—Each company has their own cost to acquire new customers. While those costs vary across industries, there is one constant: no matter how much it costs to bring in new customers, it is still more cost-effective to keep existing customers happy, satisfied and coming back. In fact, it is 6-7 times more expensive to acquire a new customer than it is to keep a current one. Additionally, once customers have become loyal, they are easier to upsell or re-sell.
  • Customers trust word-of-mouth recommendations— As a rule, American customers aren’t easily taken in by advertising, no matter how flashy or poignant. In fact, only four percent of us trust advertising as a reliable source for product and service information. However, 83 percent of us trust independent sources with whom we have built a personal relationship. A strong customer service team is able to build lasting connections with customers and they in turn are more likely to share their experience with friends, family and colleagues and even on social media.

If you are still not convinced of the added value investing in good customer service can bring to your company, then consider some statistics on how often people share their negative customer service experiences.

According to a ZenDesk survey of more than 1,000 consumers, those who had a bad customer service experience are 34 percent more likely to share that experience on an online review site like Yelp! than those who had a good service experience. Perhaps even more alarming is that 88 percent of those respondents said that negative online reviews affected their purchasing decisions.

I know a lot of companies that worry about labor costs, but I don’t know of any company that can sustain a 44 percent loss in their customers or who could survive 88 percent of them leaving negative online reviews.

When doing a cost-benefit analysis, it seems pretty clear that investing in good customer service is a phenomenal value-adding proposition.




Edited by Kyle Piscioniere


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