Why Is Customer Service Important: 4 Benefits You Cannot Overlook
When Jeff Bezos was asked by CNN what the single most important feature of Amazon’s success was, his response was telling – “the most important thing is to focus obsessively on the customer.”1
With 90% of American consumers citing customer service as an important deciding factor in doing business with a company or not, providing great customer service can give companies a competitive edge.2
But what exactly does good customer service entail? The answer today is different from what it was ten years ago. Customers today have more expectations than ever before — like wanting quick resolution times or expecting their data to be protected. As such, the needs of the modern customer are complex.
To give you an understanding of what good customer service is and why it’s vital for businesses, this article will look at what impact good customer service can have on a business and some of the expectations customers have in 2021.
What Is Good Customer Service?
Good customer service means providing polite, timely, attentive service to a customer while making sure customer needs are met in a manner that reflects well on your company.
This often encompasses certain customer service best practices, such as ensuring speedy customer response times, having an effective resolution process for customer inquiries and complaints, and ensuring customers have positive, consistent experiences in every interaction.
Why Is Customer Service Important to an Organization?
1. Good customer service leads to revenue growth
The number one reason good customer service is essential is that when customers are happy, you will see an increase in revenue.
Bain & Company notes that a 5% increase in customer retention can lead to a 25% increase in profit.3 Additionally, 68% of consumers are willing to pay more for products and services from a brand known for offering excellent customer service experiences. 
Great customer service also opens up opportunities to upsell and cross-sell to customers later down the line. Providing the original product or service a customer has purchased has met expectations, they are likely to be open to hearing about new product offerings down the line.
Existing customers spend, on average, 31% more than new customers4 and are 50% more likely to try new products when they’re released.5
Overall, there’s no downside to offering good customer service. High-quality customer service improves customer satisfaction, lowers customer churn, improves customer retention, and increases each happy customer’s lifetime value.
2. Customer feedback influences business and product decisions
Support agents spend their days talking directly to customers.
Through these conversations, support agents can get direct feedback on how customers are using a product or service, what pain points they are experiencing, what they dislike about the product/service, and any improvements they’d like to see.
These insights can provide you with invaluable information that you can then use in every area of your business.
For example, if multiple customers are letting support agents know that they’d like to see a particular new feature that will improve the product, it might be time to start developing that feature.
Another example would be multiple customers reporting that the product or service they’ve purchased didn’t meet their expectations. This could point to miscommunication in how the product is being sold or miscommunication in the customers’ understanding.
Whatever feedback your customers are giving a support team, it’s important that companies listen to feedback regularly to see if there are opportunities to improve your customer’s experience.
3. Good customer service = more referrals
In an interview with Entrepreneur.com, Shawn Henry, the CEO of Efficient Home services, was asked how he grew his business from an initial cash amount of $5,000 to more than $63 million in just six years.
His response emphasizes the importance of consistent, high-quality customer service and the impact it will have on referrals and revenue.
You need to operate with urgency every day in your business and never stop striving to give your customers the best experience possible. My entire business has scaled through these referrals because of this urgent mindset6.
Referrals show how the effect of good customer service can compound. All it takes is one positive interaction with a brand for a customer to refer it to someone they know. There’s a chance that this person will then go on to become a customer.
You multiply this principle across an entire customer base, and you’ve got a powerful method for bringing in new customers.
Customer referral stats back this up and show how heavily influenced consumers are by their friends and family members.
67% of buyers are more likely to buy a product after it’s shared on social media by a friend or family member7, while 82% of Americans state that they seek recommendations from friends and family when considering a purchase.8
Those customers that purchase via a referral are also more likely to stick with a company or brand. Research shows that referred customers have a 37% higher retention rate than customers brought on by other means.9 
If you’re looking to drive referrals from your customer base, here are some pointers to get you started.
Implement an Attractive Referral Program
An attractive referral program is a great way to incentivize your customers to inform others about your business.
For example, if you run a subscription-based service, you could offer an existing customer a discount or a free month of service for every person they refer that becomes a paying customer.
This kind of referral program incentivizes a customer to refer your product/service to others.
Ask Your Customers for Referrals
While it won’t always be appropriate, there are plenty of times when businesses can ask customers for referrals.
For example, if a customer support agent has just had a positive interaction with a customer and they’re enjoying the product or service, they can simply ask the customer if they know anyone else who might be interested.
This approach, coupled with an attractive referral program, is a tried and trusted method of increasing referrals.
4. Good customer service boosts a company’s reputation
Outside of profit, arguably the most important factor that can make or break a business is its reputation.
93% of customers are likely to consider making repeat purchases with companies who offer excellent customer service10. A massive 92.4% of B2B buyers are more likely to purchase a product or service after reading a trusted review.11
The reputation that a company holds goes a long way in determining the types of customers, employees, investors, and partnerships it attracts, and this reputation begins with its customer service.
By employing customer service best practices such as empathy, patience, consistency with customers, having an effective resolution process, and providing an omnichannel13 customer experience, businesses can continue to strengthen their reputation among their customers.
What Do Customers Expect From Companies?
1. Customers want personalized experiences
Though we live in an increasingly anonymous world where “self-service” options dominate, customers still want personalized interactions with the companies and brands they interact with.
Alongside personalized interactions, consumers also want to do business with companies that offer them personalized products and services.
63% of consumers expect personalization as a standard of service.12 On top of that, 80% of customers are more likely to purchase a product or service from a brand that provides personalized experiences.13
Ways of providing personalized customer service include:
- Delivering context-rich experiences based on the customer’s previous interactions.
- Using the customer’s first name during every interaction.
- Acting on customer feedback and recommendations when appropriate.
Companies can also look to technology to aid them in giving their customers personalized service.
For example, customer experience software like Freshdesk’s own Freddy AI can provide your customers with personalized responses without a customer support agent’s involvement.
If a customer sends through a frequently asked question, Freddy uses machine learning and artificial intelligence to instantly respond with the most appropriate answer based on the customer’s data such as their location, order history, etc.
2. Customers want companies to protect their data
With increasing scrutiny about how businesses store and use customer data, companies have been forced to start taking data protection more seriously.
Customers are also more skeptical about how companies are using their data, with 70% of American consumers believing that their personal data is less secure now than it was five years ago.14
Consumers are also concerned about how companies react if their data is misused. 79% of American consumers say they are not confident that companies will admit mistakes and take responsibility if they misuse or compromise their personal information.15
Although this data can make for a pretty bleak reading, there is a silver lining. Companies that prioritize the protection of customer data can use this as a way to attract new customers.
Cisco surveyed 2,601 people, and 32% of respondents said they care about privacy, are willing to act, and have switched companies or providers over data practices or data-sharing policies.16 While 90% of business leaders recognize that customer trust is a competitive advantage, less than half of business leaders consider privacy and security a top priority.17
People prefer to do business with companies that take customer data protection seriously. Savvy businesses that make data protection a priority can benefit from this.
3. Customers want an omnichannel experience
In 2021, it’s common for businesses to have multiple channels that customers can use to get in contact, including social media, a company website, a physical store, SMS, email, and conversational chatbots.
An omnichannel experience refers to the seamless experience a customer has across the various channels they use to interact with a brand. These channels should seamlessly connect and allow the customer to pick up where they left off and continue their experience on another channel without any inconsistency.
Research shows that companies with omnichannel customer service and engagement strategies retain on average 89% of their customers.18 Companies that provide weak omnichannel customer engagement retain around 33% of their buyers.19
To give your customers an omnichannel experience, invest in an omnichannel solution. Freshdesk is an omnichannel customer service software that enables you to deliver seamless customer service across digital and traditional channels.
From within the same dashboard, Freshdesk automatically converts customer conversations into tickets that can be tracked, prioritized, and resolved from one place. Support agents can also use Freshdesk to engage with customers on modern messaging channels such as live chat and messaging platforms such as WhatsApp and Facebook that customers love. Freshdesk- WhatsApp integration helps with improved customer engagement.
These features help customer support agents efficiently work through tickets, and switch between support channels effectively.
4. Customers Want Fast Response Times
Customers today have more ways of getting in touch with a business than ever before. With more ways of getting in touch, customers have higher expectations about how quickly a company should respond to them.
88% of customers expect a response from a business within 60 minutes of raising an inquiry20, while 96% of customers expect a response to an email inquiry within 48 hours.21
Unfortunately, due to the events of the past 12 months, over 40% of US customer service leaders have noticed increased first response times.22
To combat rising first response times, customer support teams can utilize technology, particularly AI-powered chatbots, to speed up their response times.
AI-powered chatbots such as Freddy AI from Freshdesk enable customers to get instant answers when they need them.
As we mentioned earlier, Freddy AI can instantly respond to customer questions with the best answer from your knowledge base. AI-enabled chatbots can also automate resolutions to frequently reported issues such as refund or product replacement requests.
On the other hand, Freddy AI’s agent-facing AI-assisted chatbots can also help your support agents respond to customers more efficiently.
When an agent is conversing with a customer over live chat, an Agent Assist bot can recognize a query and provide the support agent with an article link and canned response suggestions before replying.
These features help support agents get accurate, efficient answers while also allowing them to get through a higher volume of customer requests in a shorter amount of time.
Conclusion
As buyer expectations continue to increase, providing good customer service and a positive customer experience will continue to be integral to business success.
If your company can focus on giving customers what they want and keeping up with these expectations, you can look forward to increased customer loyalty, higher referral rates, and higher revenues.
If you’re looking to equip your team with the latest customer experience technology so they can continue to delight your customers, discover what Freddy AI and Freshdesk can do for you today.
Source:
1 – https://verbbrands.com/news/thoughts/amazon-founder-and-ceo-jeff-bezos-gives-us-6-business-lessons-to-learn-from/#:~:text=There%20is%20Nothing%20More%20Important%20than%20the%20Customer&text=Well%20Bezos%20has%20focused%20on%20this%20theory%20to%20an%20extreme%20level.&text=%E2%80%9CThe%20most%20important%20single%20thing,most%20customer%2Dcentric%20company.%E2%80%9D
2 – https://business.trustpilot.com/reviews/browsers-to-buyers/why-a-personalized-consumer-experience-matters-in-the-ecommerce-world
3 – https://media.bain.com/Images/BB_Prescription_cutting_costs.pdf
4 – https://www.invespcro.com/blog/customer-acquisition-retention/
5 – https://www.invespcro.com/blog/customer-acquisition-retention/
6 – https://www.entrepreneur.com/article/354546
7 – https://www.getambassador.com/blog/8-referral-marketing-statistics-that-show-recommendations-drive-growth
8 – https://www.getambassador.com/blog/8-referral-marketing-statistics-that-show-recommendations-drive-growth
9 – https://www.invespcro.com/blog/referral-marketing/
10 – https://www.brightlocal.com/research/local-consumer-review-survey/
11 – https://learn.g2.com/consumer-reviews
12 – https://www.retailcustomerexperience.com/news/consumers-expect-personalization-reveals-report/#:~:text=More%20than%20half%2C%2063%20percent,individual%20when%20sent%20special%20offers.
13 – https://us.epsilon.com/pressroom/new-epsilon-research-indicates-80-of-consumers-are-more-likely-to-make-a-purchase-when-brands-offer-personalized-experiences
14 – https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/
15 – https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/
16 – https://www.cisco.com/c/dam/global/en_uk/products/collateral/security/cybersecurity-series-2019-cps.pdf
17 – https://www.techrepublic.com/article/data-privacy-what-consumers-want-businesses-to-know/
18 – https://www.invespcro.com/blog/state-of-omnichannel-shopping/
19 – https://www.invespcro.com/blog/state-of-omnichannel-shopping/
20 – https://www.superoffice.com/blog/response-times/
21 – https://www.arise.com/resources/blog/customer-service-frustrations-series-email-response-times
22 – https://www.freshworks.com/assets/resources/The-New-CX-Mandate-US-Report.pdf?tactic_id=4098694&utm_source=Email&utm_medium=SM-CX&utm_campaign=New-CX-Mandate-US
