When your business is on a low budget, there are probably several functions that are high-priority when allocating funds. Of course, your product team could use some financial assistance and marketing -- especially advertising -- could always use a little padding.

However, it might seem like a waste to invest money in your customer service team. After all, how can it really improve?

Contrary to popular belief, your customer service team should be just as important  -- if not more important than -- as your other teams. After all, it's the direct connection between your customers and your business.

Still not convinced? Read the following list to understand how essential customer service is to improving your business and relationships with customers.

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Investing in customer service helps activate your flywheel because loyal customers will help you acquire new customers, free of charge, by convincing prospects to interact with your brand. And, their positive testimonials will be more effective than any of your current marketing efforts -- and cheaper, too.  

Aside from that, below are a few more reasons why you should invest in your customer service team. 

1. Customer retention is cheaper than customer acquisition.

An increase in customer retention of merely 5% can equate to an increase in profit of 25%. This is because repeat customers are more likely to spend more with your brand -- 67% more, to be exact -- which then results in your business having to spend less on operating costs.

14-customer-service-revenue

Source: HubSpot

According to our research team, the customer acquisition cost (CAC) -- how much it costs to acquire a new customer -- is more for a company that doesn't invest a small percentage of its budget in customer service. Ultimately, investing in customer service can decrease your churn rate, which decreases the amount you must spend on acquiring new customers and decreases the overall CAC.

2. Customer service represents your brand image, mission, and values.

You may have an idea of what your brand represents. However, your customers can't get into your head. They'll make assumptions based on your social media presence, advertisements, content, and other external marketing.

Your customer service team, however, is your connection to your customers. Thus, that team has the responsibility of representing your brand to them.

Without your customer service team, you have no means of direct communication. Due to this, your customer service team is essential in relaying to customers what you want your brand image to be. They can help influence customers and convince them of your strengths over competitors.

3. Happy customer service employees will create happy customers.

No employee is going to enjoy coming into work if they feel under-appreciated compared to employees on other teams. The same goes for your customer service team. After all, 87% of employees who are happy with their jobs are willing to work extremely hard for their business's customers.

It's important to note that 55% of employees who strongly disagree about being happy with their jobs will still work especially hard for customers.

However, their reasoning behind serving customers is less about wanting to provide quality service. Instead, it's about maintaining their professionalism and integrity, not wanting to get fired before quitting, being empathetic to customers, but getting recognition from them in the end.

Therefore, if you want your customers to do their best work, they should feel respected and appreciated. Only then will they find intrinsic motivation for doing a good job and serving their customers the right way, which will lead to your customers also feeling more respected and appreciated.

4. Happy customers will refer others.

And, when your customers are happier, they're more likely to spread the goodness to friends, family, and coworkers. In fact, according to our research, 77% of customers have shared positive brand experiences with others. Think about it: if you have a stunning experience with a brand, you're probably going to rave about it to your friends over dinner later that night. It's natural; you want your close ones to commit to a brand that you trust.

It's a chain reaction. If you have a happier customer service team, they'll work harder to satisfy and exceed the expectations of your customers. Then, those customers will be extremely happy with your brand and refer others to it. Your customers can be your best -- and cheapest -- form of word-of-mouth advertising, as long as you give them a reason to do so.

5. Good customer service encourages customers to remain loyal.

If a customer has a positive experience with your brand, there's no reason for them to look elsewhere. As said before, it's a lot cheaper to retain an old customer than to acquire a new one. In this sense, the higher a customer's lifetime value -- the total revenue a company can expect a single customer to generate over the course of their relationship with that company -- the higher the profit for your company.

In comparison to, possibly, hundreds of competitors with similar products and services, your company has to do more than relish in the exciting features of your products. By providing stellar customer service, you can differentiate your company to customers. Loyalty is rooted in trust, and customers can trust real-life humans more than the ideas and values of a brand. So, by interacting with your customer service team, those customers can build, hopefully, life-long relationships with your business.

6. Customers are willing to pay more to companies who offer better customer service.

50% of customers increase their purchasing with a brand after a positive customer service experience. In fact, 86% of customers would pay up to 25% more to get a better customer service experience. Clearly, customer service matters so much to customers that they would literally pay more to interact with a brand that does it well.

These are statistics that can't be ignored. In an era where companies are learning to prioritize customer service, any company that doesn't do so will crash and burn.

Customers are influenced by even a single experience; one positive experience could be the deciding factor for them to stick to a brand, whereas one negative one could send them running to a competitor.

7. Customer service employees can offer important insights about customer experiences.

It doesn't matter how you perceive your brand. What matters is how your customer perceives it.

For instance, if you work for an athletic wear company, you might associate your brand with fitness, health and wellness, and people who play sports. However, your customers may purchase from you because they associate your brand with leisure, comfort, and attractiveness. So, you should align your marketing with those values as well.

Your customer service team can answer a lot of these probing questions for you. Rather than having to spend time and money on constantly surveying customers, you can have your customer service employees simply ask these questions while interacting with customers. Their response can give you a lot of insights into improving your products, marketing, goals, and employee training. Without a solid customer service team, your brand may fall behind on shifting customer trends.

8. Customer service grows customer lifetime value. 

If you're running a business, customer lifetime value (CLV) is a pretty important metric. It represents the total revenue you can expect from a single customer account. Growing this value means that your customers are shopping more frequently and/or spending more money at your business. 

Investing in your customer service offer is an excellent way to improve customer lifetime value. If customers have a great experience with your service and support teams, they'll be more likely to shop again at your stores. Or, at the very least, they'll share their positive experience with others, which builds rapport with your customer base. 

This makes new customers more trustworthy of your business and allows you to upsell and cross-sell additional products with less friction. New users will trust that your sales team is recommending products that truly fit their needs which will create a smoother buying experience for both the customer and your employees. 

9. Proactive customer service creates marketing opportunities. 

If you're looking for a cost-effective way to invest in your business, you should consider adopting proactive customer service. Rather than waiting for customers to report issues, this approach reaches out to them before they even know they exist. That way, customers know you're constantly working to remove roadblocks from their user experience. 

But, proactive customer service isn't just used for customer delight. It's also an effective marketing tool for introducing and promoting new products and services. 

For example, if you create a new feature that solves a common problem with your product, your customer service team can refer it to your customers. They can use your CRM or ticketing system to look up customers who have had this problem in the past, reach out to them via the service ticket, and introduce the new feature as well as its benefits. And, this can sometimes be more effective than a sales pitch because customers feel like the service rep truly understands their issue after troubleshooting their problem.

10. Excellent customer service is a competitive advantage. 

No matter what industry you're in, you want your business to stand out. After all, nobody strives to be the "second-best" at something. You want to be better than every other company you're competing with and you want your customers to know it, too. That's the key to keeping customers loyal and getting them to continuously interact with your brand.  

Customer service can be an excellent differentiator for your company. In fact, 60% of customers stop doing business with a brand after one poor service experience. And, 67% of this churn is preventable if the customer's problem is resolved during their first interaction. That means if you provide excellent customer service, you'll not only retain your customers, but you'll acquire your competitors' as well.

It's undeniable that a well-trained, positive customer service team can make your company the best version of itself. Their ability to communicate directly with customers can totally revolutionize your company and grow your customer base.

For more information, read this next post about how to maintain a positive attitude working in customer service.

customer support plan

 support strategy

Originally published Dec 20, 2019 1:29:00 PM, updated January 29 2020

Topics:

Customer Service