Business success has always been elusive, but, as the economy tightened, businesses stepped up their search for the next trick to give them a competitive advantage. Maybe social media marketing would work? Or increasing appeal to a specific demographic? What about the next gee-whiz product, might that help? Or using AI to streamline operations and make them more efficient? But, these marketing tactics are very expensive and the ROI from them is often speculative. One marketing tactic sure to deliver now and forever in the future is providing great customer service. In fact, copying great customer service is hard to do, that’s why it’s a perfect tool for building a sustainable competitive advantage. An unmatched customer service record means not only instituting zero product defects but instilling customer service as a priority for every member of your staff and motivating them to deliver great service day in and day out.
A recent study by McKinsey found that:
Customer experience is more important than ever—yet it has never been more challenging as companies face a perfect storm of increasing call volumes, talent shortages, and rising customer expectations.
Other businesses tried to “shrink to greatness” thinking business success came from cutting costs to a minimum. These efforts are often misguided since cutting costs often translates to cutting corners that force customers into the arms of a competitor. Cutting costs may also mean cutting your promotional expenses which amount to cutting off your nose to spite your face.
Another popular solution to create business success is copying what competitors do under the mistaken notion that, if competitors are making money doing something, you should do it too. This, in effect, keeps you swimming in the red ocean (as opposed to the blue ocean), which is never a good thing and often dooms the business to failure.
The solution for business success is right under your nose — providing great customer service
No matter how well you manage your marketing and promotion, poor customer service will TANK your business. In fact, the more customers generated by your marketing efforts, the GREATER your loss if your customer service fails. The days of treating customers as if they don’t matter are gone. In today’s competitive markets, you have to prove yourself to customers every day. That’s because 5 times as many people complain when they get bad service as promote you when they get great service.
Below, you see the impact of poor customer service on your ROI. You can recover from a service failure, but it’s better not to fail in the first place.
Thus, negative word of mouth travels 5 times faster and farther than positive. Disappointed customers don’t just complain to you — they complain to anyone who will listen. And, they might keep complaining for years. Twitter is the perfect vehicle for customers who feel they received poor customer service and complaints are one of the most re-Tweeted types of posts. Twitter is also a darling of traditional media outlets, which love to find a customer complaint and amplify it through their vast broadcast networks.
And, most folks who experience poor customer service will never say anything — they’ll just leave and never come back. Data show that replacing an existing customer is five to seven times more expensive than keeping that customer in the first place. So, every customer you lose represents a big hit to your bottom line.
Resting on past laurels also doesn’t help much as customers expect ever-increasing improvements in service quality and additional services. I mean, think about hotels. It used to be fine if you had a nice clean room and good TV reception. Then, people demanded premium TV channels and designer rooms, because EVERYONE had a nice clean room and good TV reception. Now, hotels compete on branded amenities, such as Westin’s “Heavenly Bed”, free parking, free breakfast, and WIFI.
Why is customer service so challenging?
At the end of this post, you’ll find a nice infographic that details data regarding customer service that highlights the challenges faced by businesses to meet the ever-changing demands of customers.
One piece of data you should consider carefully is the fact that over 60% of consumers report their issue wasn’t handled in the first interaction, requiring more than one contact. For instance, I had a bad interaction with Buffalo Wild Wings who totally screwed up for many consumers who ordered food for Super Bowl parties in 2023. I contacted them several times and still never got my money back after canceling the order that wasn’t ready (with no idea as to when it might be ready). I’m still waiting. I’ll never buy from them again and I’ll share my bad experience as widely as possible, just ’cause I can.
Similarly, more than 60% of consumers report they’ve been ghosted by a company over issues of customer service! Are you kidding me?
So, why is customer service so challenging?
- it’s expensive. You need to hire, train, and incentivize workers to handle customer complaints across multiple platforms because consumers want a variety of ways to contact you with complaints and questions. Some want self-service options, such as chatbots, some want to send an email, while others want you to answer the phone. And, they expect prompt response regardless of what time they contact you.
- it’s complex. Customer service doesn’t start with a customer complaint or question. It starts with reducing the potential for a customer’s need to contact you.
- it never ends. If you don’t handle all the customer complaints and questions you got today, you’re even more overwhelmed when tomorrow comes with a new batch of customer interactions.
Great customer service doesn’t just HAPPEN
And, ensuring great customer service is just as much a part of marketing as your TV advertising and social media presence. In fact, if your customer service (or product quality) isn’t up to snuff, your efforts are better spent in fixing these problems rather than publicizing your offering.
Remember, the rule of 5 I mentioned earlier. The more visibility you create while failing to provide good products and service, the more likely complaints will surface and these complaints are increasingly likely to go VIRAL.
How do I ensure great customer service, you might ask? And here’s the answer.
1. Talk to customers
Don’t just ask customers what they liked and didn’t like about your service. Track sales to see whether customers stop coming to your store or buying your brand. Monitor what customers say about you on social media with an active listening program. This is invaluable as it can turn up issues before they become widespread.
When customers say something wasn’t good, fix the problem right away and make it up to them. The trick to handling service failure is:
- communicate – don’t just do things internally, own your problems publically. Let customers know they’re valuable, you heard them, and you’re doing things to fix their issues.
- make the customer whole — make sure they are at least as well off as if you hadn’t failed them in the first place.
- do it fast — the longer customers are dissatisfied the bigger your problem. That means empowering customer service staff to make decisions about compensation. In my example of Buffalo Wild Wings from earlier, all the staff needed to do to make me happy when they made a mistake was to hand me a coupon for a free product and refund my money on the spot. But, they didn’t have sufficient personnel to accomplish this or the authority to hand out coupons without approval from corporate.
- establish a process that consistently uncovers problems and charges specific individuals with fixing the problem. Your customer shouldn’t be your quality control staff. That’s a recipe for failure. If you find a delivery is likely to be delayed, immediately let customers know so they can adjust their expectations. The same goes for other anticipated failures. Don’t hide from failure. If possible, make it up to them for your failure. For instance, Amazon gives you a small credit when a package will arrive late.
- fix underlying problems to reduce future service failure. For instance, if it’s tricky to install a product properly, provide online videos to step users through the process. If your product doesn’t work well with other products the consumer owns, make that very clear upfront.
2. Do a SERVICE AUDIT
A service audit tracks customer experiences from the beginning of the sales cycle through post-purchase issues such as returns. Where do problems or delays arise? What can the company do to fix these problems so they don’t happen in the future? How can you improve the customer experience? Remember, according to Deming, most problems are SYSTEM problems, not human laziness or stupidity.
I once attended a discussion with a business owner who discovered problems with his customer service. He was delivering cement, which, as you might imagine, was often delivered to job sites and some of these involved new construction. Late deliveries occurred when drivers couldn’t find the job site on current maps or GPS. This had a high piss-off quotient as contractors paid workers to stand around and wait for deliveries. To fix the problem, he trained his staff to get detailed information about the job site, such as cross-streets, landmarks, and other information so drivers could find the site easily. Complaints disappeared overnight.
3. Keep your promises
No one likes it when you don’t deliver on your promises. You don’t seem trustworthy and consumers start to think everything you say is a lie — witness the way consumers don’t believe anything they hear in commercials and trust influencers of TikTok more than what you have to say. It’s much better to deliver MORE than you promise than to not keep your promise EVERY time. People are thrilled when they get more and angry (possibly lawsuit angry) when they don’t get what they thought you promised. Remember, all marketing is about perceptions — what THEY think you promised — not on reality — what you really promised. The distinction may help you in a lawsuit, but not in a court of public opinion.
I love to tell a story from Club Med. Passengers boarded the plane from hell — not enough meals to meet demand, late take-off, and poor handling of their complaints onboard. The plane wasn’t managed by Club Med but they sold the package to travelers so the passengers, some of whom were attorneys, were forming a class action lawsuit midair. The pilot contacted Club Med to let them know about the problems aboard. In response, the manager organized a group of limousines to transport a band and food to the airport to meet passengers and then take them to the property where a party was organized in their honor. Instead of facing a lawsuit, passengers reported the vacation as one of the best they’d ever taken.
4. Cater to internal customers
Internal customers are your employees. These folks are critical, especially if they’re forward-facing — interacting directly with customers like your customer support staff. Poor employee morale translates into poor customer service. Moreover, employees see and hear what’s going on in your stores, hotels, and restaurants. They can give you valuable, free feedback on improving your service before things get out of hand. But, they won’t do that if they don’t like you.
5. Employee empowerment
Forward-facing employees are in a perfect position to fix problems that occur on the spot. Say a guest at your hotel finds their room wasn’t cleaned to their satisfaction. Who do they complain to? The front desk, of course. So give front desk employees leeway to discount room charges, give out free meals, etc to appease dissatisfied customers.
Plus, as you can see in the infographic below, dissatisfied customers don’t just complain. They scream out their frustration, which not only makes the job of dealing with them tough for employees, it pisses off other customers. For instance, a guest at a hotel might overhear the yelling from someone at the front desk, which distorts their perceptions of the entire visit. Plus, they must wait for service behind the other guest so that dissatisfaction spreads. A customer service employee who gets yelled at all day also has a tendency to start yelling at customers, according to data in the graphic. Ultimately, staff quits, customers are unhappy, and your business is in trouble.
Conclusion
Creating business success isn’t hard when your focus on great customer service first. Ideas? Suggestions? Gripes? Please post below.
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