Your Fiscal Result involving Customer Service.

Customer service is what drives the success of the any business. Some would surely say, “No Errol, a great product or service concept drives the success of any business.” While that statement is somewhat true, a great product or service concept without great customer care is like expecting your beautiful garden flowers to flourish without your giving attention to them. I’ve often discovered that that you do not get upper management’s or the owner’s full attention regarding customer care if you don’t provide the financial impact to the company. Customer service includes a dual role since it both creates and preserves revenue. I’d like to explain why I think this to be true.

Customer service creates revenue via the word of mouth avenue. When a great product or service is coupled with great customer care, your visitors become your ambassadors. Their willingness to speak positively about your company results in additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) suggests that for every single 10 people hearing either positive or negative “word of mouth” information, 1 person takes action. Any particular one new customer, should they receive the level of service expected, will in turn keep the positive “word of mouth” cycle in motion. Another form of revenue creation consequently of great customer care are price increases. TARP has also studied the impact of price increases on the customer’s willingness to continue to accomplish business with companies. In a study of the banking industry, only 10 percent of survey respondents who had not experienced a customer care related problem expressed dissatisfaction with an escalation in fees and charges. This means that 90 percent of survey respondents were okay with the purchase price increases due to the level of customer care provided by their unique bank.

In relation to customer care acting as a revenue preserver, there is one question that must definitely be answered before we continue. Telus tv support That question is – How much can be your customer worth to your company? Whether your company is small or large, the requirement to figure out what your customer is worth to your company is important when calculating the quantity of revenue being preserved by addressing customer care related issues. Like, if your company has 1,000 customers and the average annual revenue generated by each customer is $400.00. If 10 percent of the customers experience customer care related problems, that’s 100 customers. Bear with me even as we start the calculations! Now let’s think that 50% of the customers don’t even bother to complain, they only simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.

How about the other 50% that complain? Let’s claim that you’re able to satisfy 40% (20), 40% (20) become frustrated together with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s consider the repurchase behavior of the complaining customers. Should 10% (2) of the customers that you’re able to satisfy once they complain decide to not repurchase, that represents $800.00 in lost revenue. In the frustrated together with your attempts to satisfy group, 25 % (5) discontinue purchases together with your company, which represents $2000.00 in revenue. On to the customers that remain dissatisfied after complaining – 60% (6) with this group decide not to repurchase from your own company, which means yet another $2400.00 in lost revenue. The sum total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “word of mouth” factor discussed earlier. These dissatisfied customers will tell others about their experience together with your company. In this scenario, considering the 50 customers that left without complaining, add the 13 customers that complained yet do not repurchase, that’s 63 customers who have the potential to make use of negative “word of mouth” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the information (63 people), there’s potential revenue missed due to dissatisfied customers. Even when the new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t overlook the cost side of poor customer care – the employee costs to eliminate customer complaints and the material costs when rework is required to satisfy the customer. Take this example and apply your real numbers to ascertain the financial impact to your business. Whew! Lots of calculations, but it’s definitely worth it as it pertains to determining the financial impact of customer service.

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