Jonathan Elliott, managing director of Make It Cheaper, explains why good customer
service is key no matter what industry you are in and gives tips to
ensure that first time customers return.
Traditionally, companies have tended to treat customer service
and marketing as separate concerns, but a recent event I attended
at Henley Business School - which I was invited to by Capita - had
me concluding that the two principles are often bound together
inseparably. The fascinating insight provided by main speaker Moira
Clark, a professor of strategic marketing, went way beyond the
accepted wisdom that the customer is always right.
Here's a nugget of information that really struck a chord: the
level of service a customer receives should have nothing to do with
the amount he or she spends in any given transaction. That's not a
simple warning against favouring high-spending customers over more
thrifty ones - it's about the concept of Lifetime Value. In fact,
businesses that trade in low-value, high-volume products should
take special note.
To illustrate the point, Professor Clark used the example of a
well-known food takeaway establishment, who train their staff to
treat the customer like royalty even though any one transaction is
generally just a breezy seven pounds or so. If the customer has a
consistently good experience, he or she will spend up to £7,000
over ten years. The bigger figure is the one to keep an eye on -
but treat the first transaction like it's trivial and that future
revenue is in serious jeopardy.
We pay close attention to this at Make It Cheaper. The fact that
our service is free means the amount we spend on establishing
contact with a customer pretty much accounts for any revenue we
might get from suppliers on their first switch. We place a huge
emphasis on the customer having a fantastic experience the first
time around, because our business is only sustainable if that
customer uses us for future switches and other services.
The principle that it is more efficient to retain an existing
customer than recruit a new one rings true for businesses of all
shapes and sizes. Companies as large as Tesco are using Twitter to
handle individual enquiries in the knowledge that customers want to
be empowered and they want their voice to be heard. If that kind of
social media activity doesn't suit the nature and scale of your
business, you can encourage conversation simply by making yourself
easy to contact. Taking it one step further; something as simple as
a feedback form can make a customer an active stakeholder in your
company or brand.
As well as giving you fresh insight, a positive, productive and
personal two-way conversation with a customer helps foster
the loyalty that will create Lifetime Value. It will also have a
much larger reach, because a customer you retain is a customer who
recruits new customers for you. This emphasis on retention and
recruitment means customer service is not just about handling
enquiries - it's a crucial weapon in your marketing arsenal.
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