Customer care is what drives the success of the any business. Some would surely say, “No Errol, a good product or service concept drives the success of any business.” While that statement is somewhat true, a good product or service concept without great customer support is much like expecting your beautiful garden flowers to flourish without your giving focus on them. I’ve often unearthed that you don’t get upper management’s or the owner’s full attention regarding customer support if you supply the financial impact to the company. Customer care features a dual role because it both creates and preserves revenue. I’d like to explain why I think this to be true.
Customer care creates revenue via the person to person avenue. When a great product or service is in conjunction with great customer support, your customers become your ambassadors. Their willingness to speak positively about your organization contributes to additional customers, thereby creating additional revenue. Recent research by the Technical Assistance Research Program (TARP) shows that for each and every 10 people hearing either positive or negative “person to person” information, 1 person takes action. That certain new customer, whenever they receive the level of service expected, will consequently keep the positive “person to person” cycle in motion. Another form of revenue creation consequently of great customer support are price increases. TARP has additionally studied the impact of price increases on the customer’s willingness to continue to do business with companies. In a study of the banking industry, only 10 percent of survey respondents who’d not experienced a customer support related problem expressed dissatisfaction having an upsurge in fees and charges. Telus webmail outage This means that 90 percent of survey respondents were okay with the price increases because of the level of customer support provided by their unique bank.
When it comes to customer support acting as a revenue preserver, there is one question that must be answered before we continue. That question is – Simply how much can be your customer worth to your organization? Whether your company is small or large, the need to know what your customer is worth to your organization is critical when calculating the quantity of revenue being preserved by addressing customer support related issues. For example, if your organization has 1,000 customers and the average annual revenue generated by each customer is $400.00. If 10 percent of the customers experience customer support related problems, that’s 100 customers. Bear with me once we start the calculations! Now let’s think that 50% of the customers don’t even bother to complain, they just simply go away. Their decision to leave without complaining represents $20,000.00 in lost revenue.
Think about one other 50% that do complain? Let’s say that you’re in a position to satisfy 40% (20), 40% (20) become frustrated along with your attempts to satisfy and 20% (10) remain dissatisfied. So now let’s consider the repurchase behavior of the complaining customers. Should 10% (2) of the customers that you’re in a position to satisfy after they complain decide never to repurchase, that represents $800.00 in lost revenue. In the frustrated along with your attempts to satisfy group, 25 % (5) discontinue purchases along with your company, which represents $2000.00 in revenue. To the customers that remain dissatisfied after complaining – 60% (6) of this group decide not to repurchase from your company, this means one more $2400.00 in lost revenue. The sum total potential annual revenue lost in this scenario is $25,200.00! Wait, there’s more. Remember the “person to person” factor discussed earlier. These dissatisfied customers will tell others about their experience along with your company. In this scenario, considering the 50 customers that left without complaining, add the 13 customers that complained yet didn’t repurchase, that’s 63 customers who have the potential to make use of negative “person to person” marketing. If these dissatisfied customers tell 10 additional people about their experiences (630 people) and 1 in 10 acts on the info (63 people), there’s potential revenue missed because of dissatisfied customers. Even if the newest customers average annual purchases equals $300.00, you’re still possibly facing $18900.00 in lost potential revenue. Don’t forget about the cost side of poor customer support – the employee costs to resolve customer complaints and the material costs when rework is required to satisfy the customer. Take this example and apply your real numbers to ascertain the financial impact to your business. Whew! Lots of calculations, but it’s definitely worthwhile as it pertains to determining the financial impact of customer service.