Customer care is what drives the success of the any business. Some would surely say, “No Errol, a good product or service concept drives the success of any business.” While that statement is somewhat true, a good product or service concept without great customer support is similar to expecting your beautiful garden flowers to flourish without your giving awareness of them. I’ve often unearthed that you never get upper management’s or the owner’s full attention regarding customer support unless you give you the financial impact to the company. Customer care includes a dual role because it both creates and preserves revenue. I’d like to explain why I think this to be true.
Customer care creates revenue via the recommendations avenue. Whenever a great product or service is in conjunction with great customer support, your visitors become your ambassadors. Their willingness to speak positively about your company contributes to additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) shows that for each 10 people hearing either positive or negative “recommendations” information, 1 person takes action. That one new customer, as long as they receive the degree of service expected, will subsequently keep consitently the positive “recommendations” cycle in motion. Another form of revenue creation as a result of great customer support are price increases. TARP in addition has studied the impact of price increases on the customer’s willingness to continue to do business with companies. In a study of the banking industry, only 10 percent of survey respondents who’d not experienced a customer support related problem expressed dissatisfaction having an increase in fees and charges. Which means that 90 percent of survey respondents were okay with the cost increases because of the degree of customer support supplied by their unique bank.
In regards to customer support acting as a revenue preserver, there is one question that must definitely be answered before we continue. That question is – How much can be your customer worth to your company? Whether your company is small or large, the need to determine what your customer may be worth to your company is critical when calculating the quantity of revenue being preserved by addressing customer support related issues. For instance, if your company has 1,000 customers and the average annual revenue generated by each customer is $400.00. If 10 percent of those customers experience customer support related problems, that’s 100 customers. Bear with me once we start the calculations! Now let’s believe that 50% of those customers don’t even bother to complain, they just simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.
How about another 50% that complain? Let’s say that you’re in a position to satisfy 40% (20), 40% (20) become frustrated along with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s look at the repurchase behavior of those complaining customers. Should 10% (2) of the customers that you’re in a position to satisfy once they complain decide never to repurchase, that represents $800.00 in lost revenue. In the frustrated along with your attempts to satisfy group, 25 % (5) discontinue purchases along with your company, which represents $2000.00 in revenue. To the customers that remain dissatisfied after complaining – 60% (6) with this group decide never to repurchase from your own company, meaning one more $2400.00 in lost revenue. The full total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “recommendations” factor discussed earlier. Telus webmail down These dissatisfied customers will tell others about their experience along with your company. In this scenario, when you consider the 50 customers that left without complaining, add the 13 customers that complained yet do not repurchase, that’s 63 customers who have the potential to utilize negative “recommendations” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the data (63 people), there’s potential revenue missed because of dissatisfied customers. Even though the brand new customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t neglect the cost side of poor customer support – the employee costs to resolve customer complaints and the material costs when rework is needed to satisfy the customer. Take this example and apply your real numbers to ascertain the financial impact to your business. Whew! Lots of calculations, but it’s definitely worthwhile as it pertains to determining the financial impact of customer service.