Customer Service and Revenue Growth

The connection between customer service (the relationship between your business and your customers) and the sustainability of revenues cannot be overemphasized. No matter how good the economy is, and especially when economic times are tough, your business is dependent upon the relationships you have with your customers. If you can’t make and maintain a relationship in which a customer feels valued and respected, not only are you going to lose that customer, but also you risk losing every customer connected to that customer. No news spreads faster than bad news, and it is bad news when a customer is unhappy with your products; it is even worse news when they are unhappy with your service.

Real World Case

A computer server was purchased from “Company A” for a small business, with the desire to use this technology to deliver its services:

  • Internet access
  • Access to and development of client file “content”
  • Online communication with its clients
  • Web conferencing for client and vendor meetings

The small business invested 10% of its profits in the server, recognizing it needed to upgrade its systems and desiring reliability. The small business also paid for a multi-year warranty on parts and labor, real-time monitoring, and a service contract. This definitely seemed to be a wise investment for a company that does its business via the computer more than 70% of the time.

From the beginning, things didn’t go as planned. Files weren’t transferred properly. Software wasn’t installed, and the business’ existing e-mail, calendars, and contacts were scrambled. After 3 weeks of downtime, debugging and incredible frustration, the chaos seemed to settle down … then came the “glitches” and loss of Internet connectivity. The server would shut down, different programs wouldn’t work at varying times; it was one thing after another … for months and months.

Exercising the warranty became an issue. Company A wanted to take the computer for five days, which meant shutting down the business for those days. As that was not an option, finally a day was set for the parts to be installed on-site, but the parts were defective! Yet another day had to be scheduled, and in the meantime the server continued to randomly shut down. Finally, the business was able to schedule another day for parts to be installed; but this time, the installation would be performed by another company. At this point the customer had enough of the “service” from Company A. Company A now held the warranty on the hardware, but had lost the customer.

The customer was willing to pay another service provider to provide service, even though labor was covered under the original warranty on the server. Why? Because the customer no longer trusted Company A to provide service or do the right thing when it came to customer satisfaction.

The saga didn’t end there. When the new computer service company arranged to pick up and install the replacement parts, the customer was required to sign for the parts, guaranteeing that the defective parts would be returned by a certain date and time or the customer would be charged for the parts. Why? Because Company A had ordered the replacement parts at an earlier date when they had planned to take the computer for five days.

Defective Customer Service

What went wrong in the relationship? Everyone knows that—like it or not—there will be instances when a defective product will be sold or when an employee will make a mistake in executing a project (e.g., not transferring every computer file and installing all the programs on the new computer). The customer service issue was neither taking responsibility for the problems nor rectifying them. Compounding problems by not stepping up to make it right for the customer makes a customer feel disrespected and that the company has the customer’s money and can walk away. An apology and a “we’ll make it right” go a long way toward keeping a customers business when situations go awry.

Additionally, how you manage your business internally should not become a problem for the customer. If you lose money due to a warranty issue, it isn’t the customer’s responsibility. If your employees make mistakes that require additional time and effort to make corrections, it isn’t the customer’s fault. If your team isn’t trained so that one person can handle a project solo and it takes the entire team to do one project and you didn’t plan for that in the project costs, it isn’t the customer’s problem. The internal project management, costs, and issues should be just that: INTERNAL. Learn from what went wrong and make sure that you acknowledge and hold your organization accountable, or else history will repeat itself, again and again. But not with a wronged customer, or anyone that customer knows or that the customer’s friends know, or their friends know … because it will get around.

Effective Customer Service Grows Revenues

Revenue growth comes from satisfied customers, even those for whom things have initially gone wrong on a project or with a product. Personally, I’m loyal to a couple of companies for whom things have gone wrong with their products; without hesitation these companies stepped up and made things right, with no attitude, no question, and a new product. I’m loyal because when there was an issue with their product they dealt with it immediately, decisively, and with respect for me as a customer. I’ve purchased their products for years and will continue to do so. I like being a valued customer and doing business with companies that recognize that the lifetime value of my business is far greater than a one-time sale of a product where something went wrong.

I’ve purchased a lot of technology products for personal and business use. Of all those purchases, two stand out, and both because things went wrong with a product. One did things RIGHT with their customer service and I still do business with them today. The other? Well, you can read between the lines. One understood how to grow revenues in the long term with effective customer service. The other is best left as a case study.

Copyright ©2009 F.O.C.U.S. Resource, Inc.

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