How Can Customer Service Add Value and Create Sales?

By Alison Aldridge, Client Services Director

In the past decade, customer service and managing the customer experience (CX) has changed beyond belief. Ask today’s industry analysts and management consultants about what should be on the CEO agenda, and the number one priority is improving CX. But why has this business function risen in importance so quickly and so dramatically?

Let’s start with the fact that the way that customers communicate and behave has changed. We are now a decade into the smartphone era. Not only have these devices changed the way that people speak to their friends and family, they have created a 24/7 always-connected environment that has redefined how customers expect to interact with brands. Combine the explosion in use of connected mobile devices with the growth of so many social media channels and it’s easy to see how different communication is today when compared to 2008.

But are executives investing budget in CX because customers who demand service across multiple channels force them into it, or is there a real return on investment (ROI) that can be demonstrated? In short, is there a return on investment, or is it essential just to stay in the game?

A bit of both is the answer. It’s true that in the present business environment, creating a good customer experience is table stakes. An additional benefit of this information-rich mobile internet environment is that customers can change brand very easily if they are not receiving adequate service. So, you do need to deliver great CX just to keep your customers satisfied, which also creates an opportunity to differentiate your brand.

However, you should not just think of customer experience as customer service. The ROI from CX comes just as much from the sales and marketing teams as it does from the contact centre. The incredible complexity of the modern customer journey means that interacting with customers takes place at many more touchpoints than ever before, from initial product awareness to a post-purchase relationship. The lifecycle focus is essential, as customers may well be interacting with your brand long before they ever make a purchase and for a long time afterward.

The Harvard Business Review published a detailed analysis of how they believe investment in CX can be quantified and the data shows that the impact can be huge. This research shows a clear connection between CX investment and increased revenue. For a transaction-based business model where customer experience is rated 10 out of 10, a company can possibly see customer revenue increase 2.4 times per customer. If the company rates 9 out of 10 then the increase in revenue is still 1.9 times per customer. In fact, even just average feedback of 4-6 out of 10 would still see a revenue increase of 1.3 times per customer.

Now let’s shift our attention to the growth of the subscription economy. A recent study by MGI Research suggests that the subscription economy could exceed $100 billion by 2020. Here the focus is on how great CX can create loyalty to the brand - think of a mobile phone service for example. Per the Harvard Business Review research, a customer who rates as having the poorest experience has only a 43% chance of being a subscriber a year later. Compare this to a customer who gives one of the top two experience scores — they would have a 74% chance of remaining a customer for at least another year. This data was also used to predict how long a customer would remain with the brand. The difference was that a customer with the lowest CX feedback score would remain for around one more year. A customer giving the best CX feedback will remain for six more years.

The message from this research is clear. You can demonstrate a clear and immediate ROI with CX. However, there are several points worth remembering, as implementing a CX strategy can be complex:

  • CX is bigger than just customer service alone. You may need to restructure your entire company so all customer-facing divisions are aligned to objectives and working together. Don’t underestimate the difficulties of getting teams such as sales, marketing, and customer service all working together as one.
  • CX strategy requires a complete analysis of brand-to-customer communications, including how, when and why. Do you really understand the modern customer journey? Have you explored the brand to customer relationship from the moment they learn about your products to the post-purchase relationship?
  • Technology is not a silver bullet. You can’t fix the customer relationship with software or bots. Use technology solutions to address specific requirements, but don’t plan an artificial intelligence strategy because it sounds like it might fix all your problems.

Let me know what you think about this research and the ROI of CX investment by leaving a comment here or get in touch via my LinkedIn.

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