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15 Reasons Why Customer Service Is Important to Your Business

Top reasons why customer service is important for Business

The benefits and importance of customer service are aplenty and if you think you can count them on your fingertips, you might want to think again. 

Whether it is about retaining your existing customers, resolving issues instantly with customer support software, or lowering attrition among your support team, excellent customer service can do wonders for your business. 

Don’t believe us yet? Take the likes of brands such as Amazon, Disney, or Starbucks that are known better for how they treat their customers rather than what they sell. 

But what happens to brands that succumb to poor customer service? 

According to a study, poor customer service is costing businesses more than $75 billion a year. But that’s not all. Around 39% of all the surveyed customers said they would never use the company again after just one poor customer service experience. 

No matter if you are a customer success manager at a Fortune 500 company or the CEO of a small startup, this blog will help you discover the top 15 customer service importance. 

It’s time to leave mediocre customer service behind and delight customers!

What is Good Customer Service? 

Good customer service is all about meeting your customers’ needs and expectations. Rather than simply helping customers, you ensure that they have a great support experience that will leave a lasting impression. 

In reality, good customer service involves various aspects such as respecting your customers’ time, offering a personalized experience, practicing empathy, and most importantly – exceeding customer expectations instead of meeting them. 

Why Customer Service is Important for a Business

Besides boosting your brand’s position in the market, unrivaled customer service brings many attention-grabbing benefits. Here are 15 impeccable reasons that highlight the importance of customer service for any business: 

1. Improve Customer Retention Rate

When you acquire a new customer, it costs you five times more than retaining an existing one. 

Modern businesses are focusing on customer retention more than ever before. The reason is simple – it is easier and cost-effective to keep your existing customers than attract new ones to buy your products. 

When you master acquiring new customers and retaining your existing ones, it sets a solid foundation for your entire organization.

Why does customer service play an essential role in customer retention? 

Customers are ready to repurchase from a business that offers impeccable customer service. According to a study, 52% of consumers say they have made an additional purchase from a company after just one positive customer service experience.

Therefore, it is clear that customer retention carves the most straightforward path to business longevity and success.

2. Reduce Employee Attrition Rate

According to a report by Gallup, companies that have happier employees show 147% higher earnings per share than their competitors.

Employee engagement is critical to reducing the employee attrition rate. Your employees will treat you in the same way as you treat your customers. This may read a bit weird, but your employees pay careful attention to how you behave with your customers. 

Value your customers like gold and refrain from engaging in any cheap sales tactic. Don’t train and urge your staff to discount or undercut customers with the sole purpose of beating your competitor.

As you stop playing sales and marketing gimmicks with your customers, your employees feel proud to be a part of your organization. They can relate to your company values and do not wish to leave the company anytime soon. 

Remember, for most businesses, their employees are also the first people who get to buy or test their products or services. If they are happy with your offerings and your service, you can be sure customers will feel the same way.

3. Boost Lead Generation

One of the major reasons why customer service is important to your business is that it helps in boosting lead generation

After all, why will your customers buy from you if they are not served well?

As your customer service reps assist them in making better purchase decisions, they start feeling valued and won’t even plan to switch brands. 

Consider this scenario.

Choosing a health insurance plan online can be tricky since there are several options, and a visitor may need a lot of information to make the right decision. Imagine that’s your business and how helpless a visitor can feel when they arrive on your website. 

In such a situation, if they chat with your operator or your operator shows help when the visitor is on your website, you can close the sale quickly. 

Using customer support software with a live chat integration can help you offer real-time assistance, generate genuine leads, and upsell your products. 

4. Encourage Word-of-Mouth Marketing

When you think of the number one factor that makes people think of your brand and recommend it to others, customer service is what comes to mind. 

As your customers feel delighted and are comfortable with your brand, they are sure to refer it to others. In fact, you don’t need to pay them for that or even make any lucrative offers.

You can find tons of review websites where your customers and prospects like to review your product/service and share their experiences. It is your excellent customer service that pays off. These customers are your existing customers. They make repeat purchases from you and serve as your brand advocates. 

To be honest, they fall in love with your brand and want their loved ones to experience this magic. 

Businesses realize the growing significance of word-of-mouth marketing. This is the fastest means of generating leads that are sure to convert for your business. 

Remember, people trust their friends and acquaintances more than they trust you, and if they find that their friend is happy with a brand, they will definitely give it a try.

5. Gain a Competitive Advantage

No matter what product you sell or what service you offer to your target audience, you must have close competitors. Competition in the business world is inevitable, and in order to survive, you need to stand out, not blend in. 

There was a time when businesses used to compete on crucial factors such as product quality, design, or pricing. However, things have taken a drastic turn in the last couple of decades. At present, excellent customer service is the factor that helps you gain the upper hand over business rivals. 

As per the report by American Express, 33% of US customers decide to switch to other brands after a single instance of poor support experience.   

When customers have more options than ever before, delightful customer service benefits your business by helping you stand out from the crowd. 

6. Create an Army of Loyal Customers 

According to a Microsoft report, 96% of consumers say customer service is an important factor in their choice of loyalty to a brand. 

It is clear that customers are likely to stay more loyal to a business that offers great customer service. Loyal customers can bring a lot to the table – they recommend your business to friends and family, become a member of loyalty programs, and are willing to spend more. 

If you are still wondering why customer service matters, here is an example-

Do you know how an online brand like Amazon became worth hundreds of billions of dollars in such a short span of time? The answer goes back to Amazon’s customer-first approach from the start. 

Online shoppers have always been skeptical of online shopping. They are never sure if the product they receive will match the actual image or if it will be delivered on time. 

However, through an undivided focus on its customers and by setting the bar of customer service high, Amazon created an army of loyal customers, and the rest is history. 

7. Bolster Company Culture

The difference between growing and struggling companies is the dedication they show when customers report an issue in a product or service. If you follow customer-oriented practices, your business will rise above the competition. 

Another importance of good customer service is that it helps you improve your company culture. By valuing customers and serving them when they need you the most, you create a business culture of helpfulness. Believe it not; culture is contagious. Team members, managers, and departments soon embrace this culture and work together to live up to customer expectations. 

Besides, when your employees see how much you’re dedicated to serving customers during unpleasant scenarios, they feel proud of working for you. Apart from reducing turnover possibilities, your employees will try to raise the bar while assisting unhappy customers. 

In brief, the whole company culture improves when you aim for customer delight. This is one of the top reasons why customer service is important for your business. 

8. Preempts Business Failure 

Did you know that businesses lose $75 billion each year due to inferior customer service?

Customers have always been the pillar on which businesses stand. And that’s why companies come up with different marketing strategies to acquire new customers. 

Simply put, both customer base expansion and business growth go hand-in-hand.  

Besides offering feature-rich products, you must offer phenomenal customer service to dwindle the odds of business failure. Taking this lightly could result in customer defection. Plus, the number of brand detractors would increase, which will make the process of customer acquisition even more difficult. 

In a nutshell, your business will be a goner unless you decide to focus on your valuable customers. 

9. Reduce Customer Acquisition Cost (CAC)

It wouldn’t surprise you that adding up new names to the list of customers is the key to business expansion. But the fact that would bring your interest in this pointer is bearing customer acquisition cost (CAC) isn’t easy for every business.

As per one of the stats consolidated by Neil Patel, customer acquisition costs seven times the capital required for retaining existing patrons. 

This is disheartening for companies with a tight budget. However, there is another importance of customer service in business – it helps you significantly reduce your customer acquisition costs. Don’t be surprised by this because when you deliver immaculate solutions during support interactions, then your existing customers automatically turn into brand advocates. 

Consequently, they encourage their friends, colleagues, and relatives to do business with you. All in all, you get a myriad of potential customers without investing too much in the acquisition process.

10. Happy Customer Service Agents Lead to Happy Customers 

Customer service agents who are satisfied and happy with their company are more motivated to serve customers with relevant information and enthusiasm.

According to Gallup, employees who are happy and engaged are more likely to improve customer relationships. 

Well, if you look closely, this makes sense. If your happier agent is more informed about the product and presents the right solution to the customer with enthusiasm and positive energy, certainly the customer will love the interaction with a positive individual. 

Whether positive or negative, human emotions can be easily transmitted from one to another. Ensure that the only emotion your agents are communicating with your customers is positivity. 

No wonder it is a great idea to invest in the overall happiness of your employees. In fact, you will be paid back with happy customers who want to buy from you again and again. 

11. Great Customer Service Creates New Opportunities

For any business, the importance of good customer service is undeniable. When you strive to reach customer service excellence and treat your customers with the utmost care and love, you open doors for new opportunities. 

When other customer-focused businesses see the value you put in the lives of your customers, they take notice and are motivated to repeat the same good deeds. For instance, your business might end up attracting new investors onboard who resonate with your vision. 

You can even partner with businesses that sell complementary products and run creative marketing campaigns to reach a broader audience.  

Whether you are a month-old startup or an enterprise, great customer service will pave the way for meaningful business partnerships, collaborations, and other opportunities. 

12. Satisfied Customers Can Reveal What Customers Really Want

Do you know what is common between great businesses? They are always identifying improvement areas, working on them, and moving ahead in the game. 

In order to make sure customers feel heard and respected, you need to take feedback from them using relevant surveys. No wonder CSAT and NPS surveys have become important tools to gauge customer satisfaction and loyalty. 

But why is customer satisfaction so important?

A satisfied customer can act as a benchmark for all team members. They can help you understand what customers really want – are they more intrigued by a knowledgeable support agent, or are they happy because you have enabled a live chat window on your website? 

The best way to do this is by sharing follow-up surveys that have open-ended questions. You can ask them questions like. ”Hey! We appreciate your positive feedback. Kindly help us serve all our customers better by highlighting what factors led to an amazing experience.

Remember, a single customer can hold the secrets to customer happiness. All you need to do is ask them the right questions at the right time. 

Read More: Survey Question: 250+Examples, Types & Best Practices

13. Pave the Way for Customer Segmentation

Customer Segmentation is an effective process to know your customers better and understand what works the best for them. It is not about bifurcating your customers into good and bad but into well-defined segments so that your business can personalize interactions and market different consumers differently. 

But how can customer service help you segment your audience?

When you communicate with your customers, you are not simply interacting with a faceless crowd. Every customer is unique, and customer service interactions, when monitored over time, can help you effortlessly segment your customers. You can understand aspects such as: 

  • Common problems faced by customers aged 25-50 (Demographics segmentation)
  • Communication channels preferred by customers residing in cities (Geographic Segmentation)
  • Number of contacts made by high-value customers compared to low-value customers (Value-based segmentation)

In a nutshell, customer segmentation highlights the value of customer service and helps you get closer to your audiences’ needs and demands. 

14. Increase Agent Accountability

Although customer service is known for qualitative aspects such as emotional connections, meaningful conversations, etc., there are quantitative aspects that can be measured from time to time. 

Another remarkable customer service importance is that it helps you monitor agent performance and keep them accountable. 

With the help of customer service reports, you can measure individual performance and increase agent accountability. When agents know that all their efforts are being monitored in a transparent manner, it encourages them to perform well and set the right examples for others. You can even appreciate your top-performing agents with suitable rewards and incentives. 

For example, you can increase agent accountability by measuring their average ticket resolution time or monitoring how customers rate their support interaction with an agent. 

There are many other critical KPIs and metrics you can track to make employees feel responsible for their actions, behaviors, performance, and decisions.

Read More: 15 Help Desk Metrics to Improve Customer Support

15. Proactive Communication Saves Your Business from Embarrassment 

Proactive customer service happens when you offer solutions to your customers’ problems before they start complaining. This could be in the form of an email to alert customers about outages, a knowledge base article, or a proactive news section on your website.

Whenever there is a problem at your end, proactively communicating the same with your audience can save your business from embarrassment and potential lash out on social media. Let’s see how Netflix excels at proactive communication: 

Video streaming issues are common among brands such as Netflix. The brand has been quick to identify the risk it posed to its business and takes proactive steps to communicate issues to customers. Whenever an issue is persistent at their end, Netflix proactively apologizes and, in some cases, gives all users credit on their accounts to make up for the lost time.

Well, Now You Know the “Real” Importance of Customer Service

No matter how lucrative your product design is or how strategically you price it, nothing helps you retain your customers better than an excellent customer service culture. 

Always remember the old adage- “customers remember the service for much longer than they remember the price.” By now, you must have understood why customer service is important for the overall health of your business. The stats, examples, and explanations offered in this blog should be good enough reasons for you to gear up and serve your customers like never before. 

A well-trained, enthusiastic, and positive customer service team can make your business reach for the sky. It’s always a great idea to couple your human strengths with the right technology. ProProfs Help Desk can ease your workload and make every support interaction count.

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About the author

The ProProfs Help Desk Editorial Team is a passionate group of customer service experts dedicated to improving your help desk operations with top-notch content. We stay ahead of the curve on trends, tackle technical hurdles, and provide practical tips to boost your business. With our commitment to quality and integrity, you can be confident you're getting the most reliable resources to enhance your customer support initiatives.