The Importance of Customer Service: 9 Reasons Why It Matters for Your Business

We usually don’t expect that ignoring customer service will lead to bankruptcy. Do we?

US Airways outsourced customer service and mishandled numerous complaints, angering customers to the point that they stopped using the airline. Eventually, they were forced to file bankruptcy on September 12, 2004.

For any business, there are three important operations among others namely marketing, sales, and customer service/support.

While usually, we see marketing and sales as the most important pillars of a business since they make the business generate revenue, we neglect the importance of customer service or customer support.

Here’s the deal about customer service.

It does not and should not take place after the sale has been closed and it should not be limited to your customers, but extend to your prospects as well. 

Be on your toes to support even your prospects and not just customers. 

In this blog, we will understand what customer service is, and how critical it is for revenue generation. To support the argument, we will go through some real examples of businesses that flourished and flopped due to good and bad customer service respectively.

Table of Contents

What is Customer Service?

Customer service is the assistance provided to customers before, during, and after the purchase of any product or service from a company.

It includes practices that help your customers have an amazing experience doing business with you. 

We tend to believe that customer service has no significant role in revenue generation. Because, it typically takes place after the sale has been made and profits have been booked.

How Customer Service Helps a Business Grow?

While there are myriad of reasons for businesses to focus on customer service, these are a few which you just cannot miss.

1. Customer retention is cheaper than customer acquisition

While getting new customers is good, letting go of old customers is not.

With a promising product/service quality, you need to provide promising customer support so that they don’t leave you.

It’s less expensive to retain old customers than to acquire new customers.

20% of businesses fail in their first year, and 50% fail by their 5th year as a result of issues associated with poor customer service.

Fundera

2. Customer service represents your mission and values

Don’t just talk the talk, but walk the walk. This also helps your customers stick to you for longer periods of time, because they connect with what you believe in.

It is only when you love your customers that you aim to give the best services to them and this reflects your mission and values. 

3. Happy customers will refer others

Does this even require an explanation?

Happy customers are your best marketers. If your product is promising and your service is commendable then it comes naturally to your customers that they brag about it.

4. Good customer service encourages customers to remain loyal

While they find satisfaction in bragging about your product, they will tend to be more loyal to you. 

Don’t just remain transactional with your customers and take the extra mile to establish real relationships. This loyalty will do wonders when it comes to customer retention.

5. Customers pay more for customer service

Sometimes, money is not a major factor and customers are willing to pay a few bucks more if they know that you will be there whenever they need you.

This makes them feel confident about their decision in opting for your products and services.

6. Good customer service grows customer lifetime value

Just retaining customers won’t do the thing but having a high Lifetime Value (LTV) will help your business grow.

Not to our surprise, great customer service ensures a high LTV as well.

7. Proactive customer service creates marketing opportunities

Don’t wait for a customer to reach out to you about an issue, rather be proactive and be there for any problems they might face.

In the end, the customer is the king.

8. Customers expect high-quality service

They pay for your service/product and it’s their right to expect high-quality service. This makes it your duty to provide them with your best effort.

Focus on giving the best value for money and customer experience. And, you will witness customers coming back to you again and again.

9. Excellent customer service is a competitive advantage

While there can be many others in the industry selling the same product/service, there won’t be many who are willing to go the extra mile to make their customers happy.

Don’t miss this competitive advantage.

84% of organizations working to improve customer service report an increase in revenue.

Dimension Data

A lot of businesses are now realizing the importance of customer service and hiring dedicated CX consultants to gain the sweet competitive advantage with memorable customer experience.

Now that we know the benefits of good customer service, let’s understand it more through real examples so that you don’t neglect it.

Companies that Suffered Due to Bad Customer Service

Here are some examples of bad customer service and companies that suffered backlash because of that.

1. Dell

Journalist Jeff Jarvis started to blog about his negative experience with Dell’s customer service team. And surprisingly, the blog took off in part because others who were having a negative experience at the hands of the company related to what Jeff said.

So, as other angry customers started sharing the blog with their friends and eventually, the New York Times picked up on it.

This caused a huge amount of damage to the company, but Dell was able to make things favorable quickly.

2. Amy’s Baking Company Bakery Boutique & Bistro

Gordon Ramsay referred to them as too difficult to work with, in the show Ramsay’s Kitchen Nightmares.

Owners Samy and Amy Bouzaglo responded to criticism on their Facebook page by posting a series of bizarre rants, with statements including: “I am not stupid, all of you are. You just do not know good food.“

Therefore, the business had to close its doors, in part due to having a 1.2/5 rating from over 800 reviewers on Google. That’s what bad feedback management can do to your business.

3. United Breaks Guitars

When United Airlines broke Dave Carroll’s guitar and stayed indifferent for 9 months, Dave released a song called United Breaks Guitars which went viral.

The song, United Breaks Guitars, came with its music video and received 150,000 views on the first day.

Companies that Thrive with Great Customer Services

Let’s share some examples of good customer service.

1. IKEA 

IKEA is constantly improving to create better customer experiences, including elements in their stores like cafés and children’s play centers.

They’ve even added augmented reality apps for smartphones, allowing customers to virtually design a room with their furniture. 

2. HubSpot

HubSpot is known within the marketing world for its exceptional customer service. Their service team is easy to reach and helps customers quickly and easily. 

They even have an ‘Ideas’ section where customers can submit suggestions on how to improve their tools.

3. MailChimp

Email marketing software company MailChimp proactively engages with its customers from the very beginning.

This assistance allows customers to make the most of their software right off the bat, and thus pleases them greatly. 

4. Shopify

Shopify made a Twitter account dedicated entirely to providing support to its customers.

People can tweet their problems to Shopify and receive prompt responses for immediate assistance. 

5. Apple

Apple only hires the best of the best in their industry, which ensures that their people know what they’re talking about.

Their engagement with customers and expert knowledge makes for an amazing customer experience.

6. Amazon

Amazon consistently ranks at the top of lists for high customer satisfaction.

It is extremely easy for customers to return a product they don’t want. This has upped their credibility and trust among customers.

Frequently Asked Questions

Many questions floating in your mind about customer service and beyond, and we will make sure to answer them.

In Conclusion

It must be quite evident by now how customer service can make or break you, no matter how big or small your business is. 

Good customer service can help you grow into a giant and thought leader of your industry. Whereas, bad customer service can make you go bankrupt even if you are an industry giant.

For that reason and others, we saw in this blog, it is better to never ignore customers’ feedback and complaints.

Think of customer service as something more than just resolving tickets. 

And, now you know what you have to answer when someone asks why good customer service is important.

To get hand-holding support and consultation on customer service, book a free call with The Clueless Company now.