Wednesday, May 4, 2011

Tally the Costs of Customer Service

Are your shoppers willing to pay more if you provide them better customer service?
     The latest information says yes, overall they are. But there are important exceptions. Unless you appreciate those exceptions, giving people better customer service might fill your retailer’s heart with warmth, but fail to fulfill your profitability objectives.
     Let’s start with the overall. Yesterday, American Express Company announced their annual “American Express Global Customer Service Barometer” findings. Three months ago, adult consumers were surveyed in the U.S., U.K., Canada, Mexico, France, Germany, Italy, the Netherlands, Australia, and India by Echo Research. A random sample of about 1,000 respondents was included for each country.
     Results were generally consistent across the ten nations. About 70% of the Americans said they’d be willing to pay more to a retailer if they were assured of receiving excellent customer service. The average premium was 13% more. In last year’s survey, 58% said they’d be willing to pay more, and the average premium was 9%. It appears that the demand for customer service is up.
     But now the cautions: Other research finds that, indeed, people are willing to pay more for superb customer service than for good customer service. They also are willing to pay more for good customer service than for poor customer service.
     However, there is no firm evidence that your customers would pay more for very good customer service than for fair customer service. If you’re aiming for a price premium based on customer service, either settle for good or drive hard and long for consistently superb customer service. Moving from fair to very good will cost you more money than you’ll recoup from any decreased price sensitivity.
     Tally the costs of providing very good customer service: Selecting the right staff, since not every potential hire is capable of learning and maintaining service skills. Having rich staff-to-customer ratios. Arranging for ongoing training both in customer service and product knowledge. Monitoring the service quality and taking necessary corrective actions.
     Leverage the investment. Your customers might swear by your customer service while at the same time swearing at the customer service offered by other retailers. But unless you continue to remind consumers why to shop with you, they might end up forgiving the others and forgetting to give you their business. If you’re banking on customer service, then feature that fact in your advertising and give customers the opportunity to thank you.

Click below for more:
Assess the Costs of Customer Satisfaction
Keep Reminding People Why to Shop with You
Help Ecommerce Customers Thank You
Know the “Don’t Know” Answer Frequency

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