What is customer service and how should you define it? | Start Up Loans (2022)

Getting customer service right is vital for a new business.

Not only is it part of the overall experience your new business offers, get it right and you’ll enjoy revenue generated by repeat customers.

Most of us have experienced a range of good and bad customer service when shopping or buying services.

From pleasant staff in a local store willing to carry your purchase to your car to the frustration of dealing with obstructive support staff on the phone when trying to get help with a problem or order, you’ll likely have experiencedmany examples of both.

Customer service is everywhere and any time your new business deals directly with a customer their experience matters.

While customer service as a concept is relatively straightforward to understand, truly knowing what customer service is and how it can affect your business is vital for commercial success.

How should you define customer service?

There are lots of definitions of customer service and they’re all broadly similar.

In general terms customer service is the help, advice and service that your business provides directly to customers throughout their purchase with you.

Customer service is delivered in several ways, primarily through staff and also through systems such as phone services and online help and advice.

Customer service relates specifically to individual customers about their purchase rather than general marketing materials or items such as product instructions.

Why should I focus on customer service?

Customers are the lifeblood of any business.

Unhappy customers are likely to take their business to competitors and dissuade others from buying from your business through word of mouth and customer reviews.

The reverse is true for satisfied customers and customer service plays a vital part in how happy your customers are.

  • Customer service can impact your profits – finding a new customer can cost a business around six or seven times as much as it costs to keep an existing customer, according to business strategists Bain, and American Express found that 78% of customers have abandoned a planned purchase due to poor service. Simply put, customer service can directly affect the revenue your business generates.
  • Customer service can harm or help your reputation – while local businesses used to rely on good word of mouth to drum up trade, today’s connected social world means that customers can tell hundreds and even thousands of friends about good or bad customer experience. Poor service is far more visible and with online reviews such as Reevoo, Feefo and specialist services such as TripAdvisor and Checkatrade, it’s easy for customers to tell others about good and bad customer services. According to Touch Agency one million people read tweets on Twitter about customer service each week and 80% of these tweets are negative or critical.
  • Customers will pay more for better customer service – according to a 2011 survey by American Express 70% of customers said they would be happy to spend more money with companies that offer good customer service.
  • Customer service is vital to compete successfully – Kate Zabriske, CEO of Business Training Works, summed up how important customer services is in a competitive landscape: “Although your customers won’t love you if you give bad customer service, your competitors will.” Research firm Gartner found that nearly 90% of companies compete mainly on customer service – compared to just 36% a decade ago.
  • Support is part of customer service – once you’ve sold a customer a product your interaction with them doesn’t stop there. Providing on-going customer service – typically referred to as after-sales service – means being available and responsive to help with their support questions.

What are the elements that define customer service?

Customer service is more than simply a smile and a ‘thank you’ to a customer when they hand over their payment – although that plays a big role.

Customer service is actually made up of lots of elements. Making all these elements a core part of your daily business activities will ensure that you know your customers better, can meet their needs and importantly can measure how successful you are at delivering customer service.

  • Customer insights and understanding – fundamental to offering good customer service is to know your customers, their expectations and the kinds of experience they’re looking for. Read reviews by customers using competitors or similar businesses to learn about common complaints or things that delight them.
  • Customer relationship management (CRM) – having a CRM strategy means knowing who customers are and knowing their preferences, and provides a way to contact them and build relationships in addition to thetransactional part of the relationship.
  • Product and service excellence – a good understanding of your business and services, including stock levels, products and how they’re made, and which type will suit particular customers helps support customer service. Customers are looking for expertise and advice to help them buy the right product and service for them.
  • Staff interaction – as your business grows customer service is primarily delivered by staff unless you’re a sole trader, in which case you’ll be primarily responsible for delivering customer service. Elements such as staff training, clear guidance and expectations, and the ability to monitor staff performance help deliver customer service.
  • Customer feedback and customer service measurements – monitoring how customer service is being delivered and how successful it is allows you to tailor it to create more satisfied customers. Providing ways for customers to give feedback and using customer service measurement tools will help you understand your customer service performance.

How do I measure customer service?

Knowing how your customer service is being experienced by customers is vital for businesses.

According to Ruby Newell-Legner in Understanding Customers a typical business only hears from around 4% of unhappy customers – the other 96% simply don’t voice their complaints.

Alarmingly 91% of those unhappy customers vote with their wallet and simply take their business elsewhere.

What is customer service and how should you define it? | Start Up Loans (1)

Knowing how your customer service is performing is essential for any successful business.

Depending on the type of business that you’re running there are different kinds of metrics and methods for measuring how effective your customer service is.

Ways to measure customer service include:

  • Call monitoring – if your business involves customers calling your business or getting advice from staff on the phone, make a habit of listening into calls or playing back recordings. You’ll need to inform customers that calls are recorded for training purposes and use them to create a checklist that staff can follow, such as not interrupting the customer when they’re talking.
  • Customer surveys – asking customers about the service they get from your business is useful. You can ask direct questions such as “How well did we handle your complaint?” and “How would you improve how we handle complaints?”
  • Time measurements – customers want problems solved quickly so measuring how long it takes to resolve issues can give some understanding if this is a weak area of your business. Measure how long elements of the customer service journey take – such as how long a customer has to wait until the phone is answered or how many customers abandon their call before you’re able to answer them – and then set targets to improve the scores.
  • Count complaints – at a basic level noting the number and type of complaints your business gets is very useful. Record and track complaints to see how they change over time and look at the areas people are complaining about.

Using a Net Promoter Score

A quick and easy way to measure customer service is to use a Net Promoter Score – a simple system that at a basic level gives your business a score out of ten.

It’s a score given by customers in response to the question: “How likely is it that you would recommend our company to a friend or colleague?” Customers scoring 9-10 are called promoters – they tend to buy more products from you and remain longer as customers.

Those scoring 7-8 are known as passives and can be developed into promoters.

A score of 0-6 is given by customers who are detractors – they are less likely to continue being valuable customers.

The trick to measuring your customer service is to understand what makes the promoters happy with your customer service and where it’s going wrong for the detractors.

A NPS score helps you identify promoters and detractors and adjust your communications and relationship with them accordingly.

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