I’d think everyone would get the fact that outstanding customer service is critical in any organization. Zappos.com is a high profile example of a company that created astounding growth and success by leveraging “knock your socks off” customer service as their key differentiator. The July edition of the Harvard Business Review contained an article by Zappos founder Tony Hsieh that described how Zappos leveraged that strategy to become a billion dollar corporation. If you are REALLY interested in how Tony did it you can check out his book “Delivering Happiness: A Path to Profits, Passion, and Purpose.”
It is pretty easy to give lip service to great customer service but how many companies TRULY deliver it? Statistics from a leading customer service website indicated that over 90% of customers who were unhappy never complained to the offending company about their bad experience. They also confirmed the long held axiom that one unhappy customer will tell nine other people about the experience even though they probably DIDN’T tell the company that was involved. Similarly, the U.S. Department of Labor revealed that 54% to 70% of those unhappy customers WILL return if the problem is resolved. The Labor Department survey also found that an astounding 95% of unhappy customers will return if the problem is resolved QUICKLY. The conundrum here is obvious, if over 90% of unhappy customers will return with a quick resolution to their problems but over 90% of customers with a problem WON’T TELL YOU about it how can you fix a problem you aren’t even aware of?
I recently came across an older study from the Customer Service Association of Chicago, IL. Although the study was from 1999 it revealed five major ways that customer service can impact your bottom line. I can’t imagine these facts are any LESS true today than they were in 1999.
1) A 5% increase in customer retention equals between a 25% and an 80% increase in profits.
2) Increasing your customer retention rate by 2% has the same effect on profitability as cutting costs by 10%.
3) If a customer walks away unhappy 87% will tell 9 to 10 people about the poor experience. (note the corroboration to the more current statistics cited above) The remaining 13% will spread the news to 20 people!
4) Organizations that emphasize customer service (I wonder if Tony Hsieh saw these statistics?) see 12 times the return on sales as those that put a low priority on customer service.
5) A lack of attention from front line employees accounts for 70% of lost customers. The TONE OF VOICE customers hear on the phone accounts for 86% of the message customers perceive they receive!
If those statistics don’t prove that Zappos.com is on to something I don’t know what does. I challenge you to take a good look at the level of customer service your company is providing day in and day out and ask yourself this tough question. Is your company providing the best customer service possible EVERY time, most of the time, or some of the time? If the answer isn’t EVERY time then empower and inspire your service team to take customer service to the next level. It clearly pays big dividends to do so.
Chuck Terry is the Executive Vice President and CSO of Carew International and is regular contributor to Carew’s blog – Executive Insights
Carew International is a leader in sales training and leadership development; specializing in comprehensive, proven training programs for sales, sales management and customer service excellence. For over 30 years, Carew has earned its reputation of delivering increased productivity and profitability to our valued clients world wide.
