When To Say When: Tips For Investing In Customer Service In A Slow Economy

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

When business travelers or leaders need an icebreaker, a surefire subject is to share war stories of inferior customer service. No topic builds rapport faster than that of the inept waiter, the inaccurate reservation or the incompetent returns department. Recently, while participating in such a discussion, I wondered if customer service was so bad during the boom years, what do we have to look forward to in tighter times? With cutbacks and spending freezes, how does a business leader determine the appropriate investment in customer service? If service is great, should it be scaled back to save money? If service is deficient, will further investment create a competitive advantage?

Obviously, there is no easy answer. But before thinking about how to spend more or less money serving customers, step back and remember the reasons for customer service.

Assess The Objectives

Customer service has taken on a life and importance well beyond its mission or purpose. Thanks to commercials, gurus and lawyers, when you make mundane everyday purchases like buying supplies you are told to expect a near-religious experience. With such high expectations, it’s no wonder that disappointment soon follows. Just one critical misstep by a vendor and their otherwise excellent performance is ruined. Conversely, when you get a defective product repaired or upgraded, you may become an overnight advocate for a company and its products.

Given the consumer’s irrational expectations, what is a business leader to do? How can an intelligent investment in customer service be made? To start, every firm should individually define customer service for their business by customizing this generic statement: The goal of our customer service is to enable customers to effectively purchase and consume more products or services.

Simply stated, if you can create a relationship between better service and increased sales, it is possible to measure investments and expectations for the delivery of customer service.

Set Benchmarks

While there are countless ways to measure customer satisfaction and service, consider this: If a customer demonstrates satisfaction when he or she spends more, makes a referral of you to another customer or serves as a reference for your firm, then your firm’s customer service is effective.

While this definition may be trite for many customer service experts, the value of this approach is the financial connection it creates. Take your total investment in customer service and divide it by the value of incremental referrals, references and sales traceable to your investment in customer service. That will allow you to derive the cost and value of your customer service.

Invest Wisely

You can expand the above equation to accommodate the reactive nature of the times. During tough times, business owners are more concerned with saving sales and customers than growing sales and finding new customers. Compare this cost and value to other investments and cost-cutting initiatives under consideration. To fine-tune the analysis to your individual circumstances, here are some of the examples of measurements of customer service in tough times. Which one is best fits your business’s challenges to justify investments in people, money, resources and time?

 

  • Number of orders saved
  • Number of referrals made
  • Number of references sought
  • Number of reorders secured
  • Number of cross-sales/up-sales made
  • Number of lost customers saved

Conclusion

Today, when sacred cows are suddenly suspect and scapegoats are many, customer service is often sacrosanct or too poor to cut further. Rather than make an arbitrary decision, examine what you expect of your firm and develop clear measurements of value. You may well be surprised with the answer you get. Not only will you feel you have a better handle on this area, but one that should stay relatively constant in good times or bad.

And, if all else fails, do not despair. Remember how poor customer service is throughout this country. What would it take for your firm to stand out? If added customer service could create measurable results, consider doing what it takes. Your customers will thank you and your bottom line will as well.

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at  (412) 973-2080, by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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