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Customer Service – focus on the revenue, not the cost

By Rob Urquhart

5 minute read

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Imagine an unhappy customer cuts contact with a local bookshop. Consider how much revenue that person might have spent on the particular failed transaction that caused the problem – let’s say just £10. Even in these tougher times in the industry, not an unrecoverable loss. Except that the individual usually visited the shop four or five times a year and has done so for the last five years. Potential future losses have now reached up to £500 in the next decade. This individual is so unhappy with her treatment that she tells three other friends who use that shop at around the same level. They stop in solidarity, and potential losses in the next period have now totalled £2,000.

Meanwhile the sad tale hits Facebook and Twitter, and the unhappiness is spread exponentially. Suddenly, that £10 transaction was found to be extremely important. It could have been avoided by, say, offering a 50% discount off the proposed purchase. An excellent £5 saved by not doing so!

Now this is not a fanciful tale, and the initial amounts were small. In such circumstances, the lifetime value of that singled failed transaction is often overlooked and this short-term action has frightening long-term consequences. It’s a terrific proof of the old adage about “knowing the price of everything and the value of nothing!” The price of failure was a saving of just that £5.

This example should truly persuade that customer service is not, if it ever was, a cost centre. It is a key source of both current and potential revenue. A prime example is how restaurants can benefit from positive reviews across social media, simply by offering terrific service matched to great food.

It’s often said that customer service cannot be measured. However, with social media as a driver, plus devices such as online reviews, email surveys of lost customers and the like, this is much less true than it perhaps once was. A sensible level of investment in staff and products, backed up by positive decisions in the use of online marketing opportunities and the willingness to genuinely investigate customer feelings and reactions, can help to build and manage a positive picture.

A final point. One major banking group discovered in a survey a few years ago that where customers had a problem and this was solved with both speed and professional courtesy, these people actually rated the bank more highly than if the problem had never occurred. Just one positive indicator of the importance of service and the prominence it now deserves.