- It costs 4-6X as much to acquire a new customer as keep a current customer (source: The Times)
- 80% of a company’s future revenue will come from 20% of its existing customers (source: Gartner)
- 5% increase in customer retention can increase a company’s profitability by 75% (source: Bain and Co.)
You get the idea. You can’t be in business without putting the customer first.
Customer service is the series of activities that enhance customer satisfaction to keep customers coming back.
Some have argued the quality of customer service has decreased in recent years. That it’s due to lack of understanding and planning at the executive levels on the Return on Investment (ROI) of customer service or, more specifically, Return on Service (ROS).
Do you think so? Here’s how 12 experts measure the ROI of customer service.
- “Customer service is not being completely about services, but also as the delivery tools to create company image and customer feelings. And customer feelings are the cornerstone of any successful business.” – Aida Alakbar, TeliaSonera
- “It is no longer good enough to simply satisfy your customers or to have a product that works. What will really make the difference is when the customer asks: when I went through that experience, did the provider really engage with me, did they understand my needs, did they think logically about what was best for me? – Jo Causon, CEO of the Institute of Customer Service
- “Global companies spend the equivalent of 2% of their marketing budget on actively maintaining relationships with existing customers, while 86% of us have stopped working with a company due to bad customer service – it suddenly all seems to add up.” – Tom Eggemeier, EVP of Global Sales, Genesys
- “The overriding factor for consumers will be trust. – a high level of trust will result in a good customer service ROI. Consumers have to trust a supplier to deliver against its promise. Whether that is providing the best price, being available when needed, or getting a response to an inquiry,” – Customer Champions
- Once you make an emotional connection with a person, the trust and respect you gain far outweighs the benefit that you get from any form of marketing or advertising efforts. The bottom line is, customer service banks on the long-term ROI. – Evergage
- “The rank that consumers assign to a brand relative to the other brands they use predicts share of wallet according to a simple, previously unknown formula, which we’ve named the Wallet Allocation Rule. The essential distinction of the Wallet Allocation Rule is that it takes into account both rank—Is your brand a customer’s first choice? Second?—and the number of brands in the set the consumer uses.” – Timothy L. Keiningham et al, Harvard Business Review
- “A simple, practical and intuitive approach is if a company asks itself, ‘What, specifically, do we want customers to do more of or less of?’ Attitudes (such as satisfaction) and feelings (such as delight) aren’t included – only observable behaviors, such as ‘use our service more often,’ ‘purchase more items on an average visit,’ and ‘return merchandise less frequently.'” – Kinesis
- “It’s best to start by understanding the value proposition of your company. For example, do you compete on customer experience, where satisfaction measures are of primary importance, or do you compete on cost, where efficiency and productivity measures are most important?” – Kate Legget, Gardner
- “The problem is that there is an inherent conflict – a tradeoff – between a customer’s current-period purchases and her lifetime value. Businesses are obsessed with short-term results. In sales and marketing terms, it means they are simply eating their own customers, a little at a time.” – Don Peppers, Pepper & Rodgers Group
- An organization must be able to make a direct connection to a performance metric. Many times organizations just give the customer what they want. But there is a big difference between what a customer says they want and what drives value ($). To get ROI, you need to focus on value. – Colin Shaw, CEO, Beyond Philosophy
- “Stop telling consumers about something they don’t want and will never buy, because eliminating that waste through data to focus on consumers who really care about certain products gives brands a 60% improvement in return on investment.” – Laurie Sullivan, MediaPost
- “The payoff of any project can either be a profit increase or cost saving. For most cases and especially customer service improvement initiatives, the payoff is likely to be cost saving, such as reducing staff time spent on a task, improving the quality and driving towards first contact resolution, and avoiding cost associated with errors.” – Etta AuYeung – Customer Service Advantage
For more facts on the value of existing customers, check out the infographic below
Do you think customer service has decreased in recent years? Do you agree with the way these experts measure Customer Service ROI?