In my last entry, I looked at investments I made in nine distinct companies more than a decade ago and analyzed the returns on those investments based on each companyâ€™s customer service record. When all was said and done, it was clear that the companies that maintained exceptional cultures of customer service yielded far better investment returns than those that did not.
My investment in Amazon, a company which has always understood the value of customer service, grew more than tenfold. Meanwhile my investment in Dell, a company that has effectively ruined its reputation for customer service, was cut in half. In spite of figures such as these, many executives still fail to understand the extent to which a companyâ€™s service culture can influence their revenue growth.
How can a great service culture generate revenue?
- Promote customer retention: It typically costs companies far more to attract first-time customers than it does to keep return customers. By developing a strong service culture you can increase the percentage of your customer base that consists of return customers, and consequently cut costs on attracting new ones.
- Give you a leg-up on competition: How do companies keep money in their pockets? By keeping it out of the hands of their competitors. A single bad service experience can drive customers out your doors into those of your competitors. Likewise, good service experience can make life-long customers out of potential converts. Establishing a strong service culture gives people a compelling reason to choose to do business with you rather than your competition.
- Create a Foundation for Growth: Savvy executives know that thereâ€™s security in strong service cultures. Not only do they typically promote employee empowerment and facilitate open lines of communication, they also help to develop a reliable, devoted customer base. That customer base constitutes the lifeblood of your organization that will allow it to grow and thrive in the future.
You donâ€™t have to look far to find success stories of companies with great service cultures. Itâ€™s far less common, by contrast, to hear about successful businesses with reputations for poor customer service. This simple metric alone is reason enough for companies to strive to develop robust, effective service cultures.