Recruiting a new customer is typically many times costlier to an organisation than retaining an existing one. That’s why reducing customer churn should be a key driver within any business and why customer service is just as, if not more, important to long-term success than sales or marketing.
The 2016 Microsoft State of Global Customer Service report found that customer service impacts brand choice and loyalty for 97% of consumers around the globe, while according to analysis carried out by Dimension Research on behalf of Zendesk, 79% of high-income households and 54% of Generation X respondents avoid vendors for two or more years after bad customer service experiences.
The focus on customer service is fuelled by the unattractiveness of the alternatives. For most businesses, competing on innovation is unrealistic. In the developed economies, successful products are often not genuinely new but evolutions of what has gone before. Markets are often dominated by powerful incumbents that benefit from economies of scale; as well as significant discounts when they buy raw products, enabling them, in turn, to sell them on cheaper at better margins. Competing on cost with these giants is likely to be difficult for most organisations while ‘mixing it’ with the myriad greenfield start-ups engineered from the ground up around a cost model, may be just as challenging.
So, for many businesses today, customer service is the key differentiator of competitive success. – but how can they deliver it most effectively? Ultimately, most customers want service to be fast but also effortless. In line with this, Amazon has opened an Amazon Go store in the US, which uses a combination of sensors, cameras and human staff to bill customers for items they take from the shelves without shoppers having to check out before they leave the store.
This is the kind of effortless, seamless service delivery that customers are increasingly looking for. Of course, businesses must also be aware that in any long-term customer engagement, there are likely to be what McKinsey defines as ‘moments of truth’, “those few interactions (for instance, a lost credit card, a cancelled flight, a damaged piece of clothing, or investment advice) when customers invest a high amount of emotional energy in the outcome.”
Ultimately, if businesses can deliver effortless, efficient service as standard and yet still ensure customers are handled in an exemplary manner at these moments of truth, they will have achieved a low-risk, high-return competitive differentiator in their chosen marketplace.