Henry Ford said ‘The only foundation of real business is service’. In many companies, the customer service function sits outside of the sales channel as it is seen in some way inferior to sales. Yet customer service is integral to sales success. Without good customer service there will be no repeat sales, and repeat sales are the most best omnichannel software profitable revenue any company can generate.
The selling process is not complete merely because the customer has stated that he or she will buy your products or services. Throughout the entire selling process, the maintenance of goodwill is important, but even more so after the purchase. Regardless of your customer’s previous feeling towards your company, the experience they have after they have bought will have a significant impact on future sales. Customer service doesn’t complete the sale; it reignites the sales cycle. A worthwhile maxim to adopt is: ‘a customer cannot be regarded as satisfied until we get their next order.’
Whilst customer service represents the last element in many standard sales processes it could also be argued that it is the first element in a recurring sales process. Ask yourself:
Did I ensure that the agreements reached with the customer actually happened?
Did I attempt to up-sell?
Did I ask for a referral?
What records are kept and maintained?
What feedback did I get about how the customer benefited from my product/ service?
How could customer service be improved?
Why Is Customer Service Important?
There are a number of empirical studies on the value of customer service and the effect of repeat business on the bottom line. Frederick Reicheld and Earl Sasser said that ‘if companies knew how much it really costs to lose a customer, they would be able to make accurate evaluations of investments designed to retain customers’. They found that customers become more profitable over time as increased sales; reduced costs of distribution; referrals; and the opportunity to up-sell all add to the bottom line.
Heskett, Sasser, and Scheslinger collaborated on a training programme to assist managers in understanding the lifetime value of customers and in addition advised on the importance of developing a culture whereby employees are engaged to contribute to the value chain. They postulated that employee satisfaction leads to service value which produces customer satisfaction and which in turn results in profits and growth. It is hardly surprising that happen employees produce happy customers.
What is Customer Service?
Is it just about smiling and being nice to customers? It’s a good place to start but it can’t just be about that.
It is generally accepted that it is very difficult to deliver high standards of customer service. Some say we have not been educated for it – it is not our tradition. This observation is often justified by stating that since late Victorian and early Edwardian times fewer and fewer people have worked in ‘service’. What was a major employment sector in those days has now dwindled to almost nothing.
While this has happened, employment has increased in manufacturing, sales, administration, information technology, and social sciences. Through the years ‘working in service’ came to be regarded as a dead end job that nobody wanted and would only take as a last resort. As a result, the label ‘service’ has almost fallen into disrepute, and many people see giving service as something beneath them that lesser mortals do.
However, the truth is that everybody likes and appreciates good service.
Difference between Good & Poor Service
An often quoted but unattributed statistic is that where people have been asked the question – ‘what would you say was the main difference between somewhere where you received good service and somewhere you received poor service’ – in 70 percent of cases the response has been – ‘the attitude and behaviour of the person delivering the service’. Whether true or not, it seems probable that if we receive poor service from somewhere we are unlikely to buy from that source again.
It is therefore reasonable to assume that good customer service does not involve the quality of the product (unless you have advertised a product as being something it is not) but the quality of the people delivering the product or service, and the experience the customer has of buying your product or service.
It is also reasonable to assume that you yourself know the difference between good and poor service and can put yourself in the customer’s shoes when buying your product or service.
It should be relatively easy to establish a list of thing you have purchased in the last couple of months and determine whether the experience you had of buying was good, bad or indifferent. Obviously a lot of buying and selling these days happens without the interaction of people (e.g. buying on the web) and for the purposes of this exercise perhaps you should record those activities separately. Although it might appear simple, an appraisal of your own experience, coupled with putting yourself in the customer’s shoes should provide you with a wealth of information regarding the difference between good and poor service.
Analysing Good Customer Service
Ask the customer
A simple yet highly effective way of establishing the quality of your customer service is to ask the customer. Attached is an example of a customer service questionnaire used in a car distributor showroom (customer service questionnaire).
You might check out the set of customer service standards as determined by the Institute of Customer Service. In 2007 they conducted some research into what they believe customers wanted. The top ten responses were as follows:
Overall quality of the products/ service
Friendliness of staff
Handling of problems and complaints
Speed of service
Helpfulness of staff
Being treated as a valued customer
Competence of staff
Ease of doing business
Being kept informed
In 2004 the Institute of Leadership published the results of a survey with staff regarding the reasons for poor customer service. The top four reasons given were:
60% of staff believe that the main contributing factor contributing to poor customer service was bad line management
45% claim that their relationship with their line manager impacted significantly on the service they provide to the customer
60% felt they were not praised enough for good customer service, and
10% said they never receive any praise for a job well done
I have defined customer service as being:
A set of business behaviours which seek to provide superior service to existing and prospective customers; build customer loyalty and repeat business; and influence the acquisition of new customers.
The Follow-up of a Sale
A major life insurance company revealed that in nearly 60% of all life insurance lapses, the policy terminated after the second premium payment. The same company pointed out that after a policyholder makes four premium payments, lapses are negligible. The significance of these statistics is that customers must remain convinced that their buying decisions were correct or repeat purchases are likely to stop. You, through the final step in the selling process – the follow up – can influence the satisfaction your customers derive from their purchases.
Consider one of your customers whose purchases have been poor during the past year and are not likely to increase significantly in the future. Also assume that you have one highly profitable account whose purchases amount to nearly 25% of the total volume of your business. What sort of follow-up and service should you provide to each? Naturally the larger, more profitable account would probably receive greater attention on your part.
For all customers, you should analyse how extensive your follow-up should be. For most accounts, an occasional email, letter or telephone call should suffice. For more active customers you might need to make in-person calls every week or so. Customers who have made or are likely to make large purchases at some time in the future certainly deserve the best personal service you can provide.
Many salespeople are fond of quoting the Pareto Principle in regard to sales, saying that around 80% of their customers provide them with only about 20% of the total sales volume in their territories. Conversely, about 80% of total sales volume comes from only 20% of their customers.
Your principal responsibility as a salesperson is to sell products or services profitably. This should be your rule of thumb when servicing accounts. Your time is limited, but time spent with customers is often an investment in greater sales and future profits. Even accounts that are semi-active or lacking in potential might become high volume purchasers if service and follow-up activities can improve their attitudes toward you and your company.