Great Customer Service Drives Revenue and Profitability

Too many people look at customer service as a cost center, when it really should be a profit center.

I recently read B-A-M!: Delivering Customer Service in a Self-Service World and it’s an important refresher and reminder of the importance of great customer service. Customer support is something I’ve obsessed over for many years.

The authors say it very clearly, and I’ve said it in the past as well, “Customer service is generally so bad that even a slight improvement can be a huge competitive advantage.” Customer service is critical for client retention as well.

Here are 9 important reminders + revelations from B-A-M!:

  1. Tie customer service to revenue & profits. Barry Moltz and Mary Jane Grinstead (authors of the book) make it very clear that the nice, fluffy, altruistic reasons for providing great customer service aren’t enough. You have to tie the support you offer to revenue and profits. That starts by understanding the economic value of each customer, and then understanding how customer service is implicated in generating that revenue (and future revenue). This is all about cold hard cash.
  2. Proactive support is key. In many cases, responding after a problem has emerged is too late. In that circumstance you tend to be dealing with angry people. But proactive support is all about reaching customers before the shit hits the fan, alerting them to problems, or reacting to what you see in terms of product usage. So look at what metrics you track on usage, and use those metrics to trigger proactive interactions with customers. For example, you might find a customer isn’t using your product a lot. Having that as a metric versus baseline usage (or expected usage) is a great way for customer support to reach out and ask, “Why? And, how can we help?
  3. Think of customer service as a feature. The more you think of customer service as an intrinsic feature of your product and not some ancillary thing you “have to do”, the better you’ll be.
  4. Think of customer service as part of your brand. You don’t get to define and control your brand like you used to. Your customers, prospects and users have taken it over. And that means how you service people has become a huge part of your brand awareness and value.
  5. Tie customer service to surprise. I’m still obsessing over Surprise and its uses and implications for Web businesses. Surprise should be incorporated into your customer service initiatives. This shouldn’t be done by “under promising and over delivering” (I agree with the authors of the book – this is bogus). But it can be done in a much more subtle (and proactive) way. Matt Brezina, founder at Xobni, calls at least one customer per week to stay close to his customers and make sure things are going well. That’s smart for customer service, word-of-mouth marketing, brand building and PR.
  6. Consistency is key. You want every interaction a customer has with your company to be very similar. You don’t want customers having a great experience one day only to be hugely disappointed the next. That inconsistency will make any great customer service you provide a moot point. This means investing significantly in training your staff and having well thought out policies in place.
  7. Empower your people. Customer service people are treated like shit. The jobs are often low paying and the work isn’t easy. You need to empower these people to make decisions on-the-fly and respond effectively to customers. If every “tough situation” results in escalation to managers, you’re going to eat into profits and have more frustrated customers.
  8. Loyalty programs work. The book has a section on using loyalty programs. They do work. But just to remind us that Barry and Mary Jane aren’t hippie socialists trying to kill companies by forcing them to spend all their money on customer service, I had to include this quote:

    “Let’s be clear. We appreciate loyalty. Companies that treat customers with dignity and respect want to reward that loyalty–but the primary purpose of loyalty programs is to create velvet handcuffs to lock our customers in and have them come back even when they have a choice.”

    Velvet handcuffs. Gotta love it.

  9. You should sweat the small stuff. The authors point out that even “…tiny slivers of a customer’s total experience has the potential to affect the big feeling the customer has for the company.” This speaks to the issue of consistency, and the importance of each and every customer interaction for the overall success of your customer service initiatives, and ultimately your business.

B-A-M!: Delivering Customer Service in a Self-Service World is a fairly quick read with some very good reference material / checklists at the back. In my mind we still have a lot of work to do in terms of elevating the importance of customer service inside the hierarchy of organizations. Too often, customer service is an afterthought, something scrambled together piecemeal to deal with customer complaints. That’s simply not good enough.

January 12, 2010 Posted in Business by

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  • brezina

    Hey Ben – this is a really helpful blog post. thanks for thinking through the whole spectrum of customer support and breaking it down in nice bites. I'm going to send this along to our support team.

    new technologies are going to help us scale caring so that we can all have a customer support organization like zappos. http://www.flowtown.com is one company that is talking about helping us do this.

  • http://www.instigatorblog.com Benjamin Yoskovitz

    Glad you enjoyed the post. I don't know how many Founders take time to speak with at least 1 customer per week – but that stood out about your post on making people care about your startup.

    I agree that technology will help, but as you know, it comes from the people first – top down through the organization. Even if your company has 5 people, the founders have to instill the right culture from the get-go.

  • http://www.NewMediaPlus.net/ Brett H. Pojunis

    Customer Service always creates an opportunity for an up sale!

  • http://www.scooter-shoppen.dk/ Scooter

    One important idea is that customer service is not seen as something you do after a customer approaches with a complaint, instead a proactive approach is advised to reach out to the customer and get his view about our services or product. The book suggests an all-round approach for a sound customer friendly service which will definitely provide an edge to any business.

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  • http://www.bestherbalifeonline.com/ herbalife

    one satisfied customer will always tell many other people, http://www.bestherbalifeonline.com

  • partysupplies

    From experiences with my business customer service is the difference between a good business and a great business. Your customers are always looking for that persoanl touch, the extra bit of effort that sets you aside from the competition. I have business's come to me willing to pay slightly more than my competitors bcause they know that if they make a phone call to me they will get the service they require. The easiest thing to do is ask yourself “what would i expect to happen when i phone a business? ” If you can answer that truthfully then put that into practice for your customers then youre onto a winner!

    Cheers

  • http://www.avicennaaccounting.com/ Accounting Services

    Hi,

    It is really a great post having deep insight into customer services. I am highly in a favor of customer service as a feature of the business services and to be very consistent.

    Thanks for sharing these points.

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  • sleeprun

    Read Granularity of Growth – it says service means nothing. Neither does marketing. Good data to support. Makes sense. Of course, it FEELS wrong. Good sign it tracks reality.

    Barry is very enthusiastic but data would be better, not anecdotes, please.

  • http://www.seozip.com/ seo services company

    yes i agree , Customer support service gives more advertisement than any other medium.if we give good service post sale of a product,then it takes to lot more

  • http://www.instigatorblog.com Benjamin Yoskovitz

    I'll check out the book for sure. But if service and marketing don't mean anything to a successful business – what does?

  • sleeprun

    In a hot market or not. Once you're in it, changing your share isn't
    likely, too risky and very expensive. Since changing share is unlikely,
    customer service is waste of effort.

    Likely being in a hot market is largely accidental. Plus, the popularity of
    a market can change suddenly w/out warning. They like acquisitions and
    divestment.

    I like their advice because the data is very good and it runs counter to
    what feels good and is popular. Usually a good sign.

  • http://www.5ca.com/ 5ca

    Interesting post: zappos is doing as well as it is because of its amazing service – yet a company like google does well regardless of their customer support (next to nothing). I guess if you aren't Google you need to worry about it :)

  • http://www.5ca.com/ 5ca

    Interesting post: zappos is doing as well as it is because of its amazing service – yet a company like google does well regardless of their customer support (next to nothing). I guess if you aren't Google you need to worry about it :)

Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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