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Retain More Customers with Effective Customer Service

Business.com / Last Modified: January 8, 2018
Photo credit: Pressmaster/Shutterstock

If 65 percent of consumers only need one bad experience to stop buying from you, then it's essential for you to maintain very high customer service standards. It may be costing you more than you think to disregard customer loss.

More than half of your customers might switch to your competitors if you make one specific mistake. Do you have any idea what that one mistake could be?

You got it – customer service.

With so many individual customers in the balance, it's important to understand how customer service affects your business and why it's so important to retain your current customers.

Customer service in B2C companies


According to research by Parature, 65 percent of consumers have cut their ties to a particular brand after just one poor customer service experience.

B2B companies may have some slack because of their more complex relationships with clients. But as a direct-to-consumer business, customer service must be a top priority – it will set you apart from other brands.

Losing customers is expensive


If 65 percent of consumers only need one bad experience to stop buying from you, then it's essential for you to maintain very high customer service standards. It may be costing you more than you think to disregard customer loss.

Bain and Company discovered that a tiny increase in customer retention of 5 percent could increase your company’s profits by 25 to 95 percent. It's time to plug the leaks and stop giving customers a reason to leave.   

Some customer turnover is expected in every business. Generally speaking, you can't keep every customer forever. The problem comes when you give up entirely and focus more on constantly seeking out new customers without attempting to keep your existing ones.

Depending on your industry, finding and converting a new customer can be anywhere from five to 25 times more expensive than retaining an existing one. Failing to retain customers is expensive. Don't let poor customer service be the reason they leave! 

How customer service affects retention

In today's marketplace, there is a lot of competition.

Even if you're starting a new business that no one else is doing yet, there's a good chance someone else will compete with you in a few short years. Barriers to entry are generally low, especially in ecommerce businesses, and more products and services are becoming alike.

The way to differentiate yourself is to provide excellent customer service.

Since we know that customers are willing to leave after one bad customer service experience, the focus should be on improving your standards and giving customers the best experience possible.

In cases where customers have an issue, 82 percent say that quick resolution is the most important thing. The key here is remembering that the issue should be completely solved, not partially.

If your line of business is notorious for providing poor customer service, you have the advantage of standing out all the more if your reps are easy to reach and are kind, informed and helpful. Large companies with their infamous automated answering systems and long wait times generate a lot of complaints (and ire) among consumers. 

Your front-end customer service makes a huge difference. When consumers are treated well to begin with, they are more likely to perceive your company as one that offers more value than that of your competitors. The bottom line is always the perception of value, which is not necessarily tied to price.

This sense of value is what keeps people coming back again and again to good businesses. You can't hope to create that kind of positive reputation without first valuing your customers and practicing effective customer service.

A simple step towards excellent customer service might lead to a disproportionately large rise in your profits.

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