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Florida State /  The Jim Moran Institute for Global Entrepreneurship / Services / Resources / Jerry's Articles / Selling Your Product or Service / Customer Service Data

Customer Service Data

September 2, 2010

By Jerry Osteryoung

”The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer.” ~Peter Drucker

Because customer service errors are so glaring and so easy to fix, I focus heavily on this topic in my articles. Recently however, a reader wrote to me (I respond to every email) saying that while she was a believer in the power of great customer service, her boss needed some convincing. She wanted to know what facts I could provide to persuade her boss that improving customer service would increase the company’s ROI.

Right then and there, it occurred to me that for all the time I spend writing about this topic, I have failed to give enough empirical data to support the merits of improving customer service.

A very impressive company named TARP (completely unrelated to the government bailout of banks) has been providing a great service since 1971. This company works with the most renowned firms in our country collecting data on customer service. Their website, http://tarp.com/home.html, offers an ROI calculator that computes the ROI you can anticipate when improving customer service.

TARP reports that 68 percent of customer defection results when customers feel they have been poorly treated. In a similar situation, a friend of mine walked into a store to buy some new running shoes. His feet tend to overpronate, which means he needs shoes that have special support features built in or else he will wind up running on his ankles.

The two salesmen (the term is used very loosely here) were both 16 years old and utterly devoid of any knowledge about the shoes or my friend’s condition. They were clueless about how to help. My friend would love to shop locally, but if he can not get the customer service he needs, he will simply do his research and order his shoes online.

Lee Resources reports that for every single customer complaint you receive, there are 26 others that remain silent. From this statistic, we gather that we must investigate each and every complaint in order to ensure the problem is not more widespread. Think of a customer complaint less as a “problem” and more as a “blessing.” It gives you the chance to correct a situation before it gets out of hand.

NOP Worldwide reported that a one percent reduction in customer service issues could generate an extra $40 million in profit for a medium-sized company over five years’ time. This solitary fact was earthshaking for me because it so vividly illustrates the considerable impact customer service has on the bottom line. Customer service is not an expense. It is a profit center in its own right.

Another interesting fact reported by Lee Resources is that 70 percent of complaining customers will continue to do business with you if you resolve their complaint. Ninety-five percent will continue to do business with you if you resolve the problem immediately. Too often I see businesses ignore customer complaints rather than dealing with them. Customers really want to stay with you even if there is a problem. If you want to keep these customers, it is crucial that you to make sure you rectify the problem quickly.

Now go out and make sure your customer service experience is great, and that you recognize its true value to your business.

You can do this!

Jerry Osteryoung is the Director of Outreach for the Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University, the Jim Moran Professor of Entrepreneurship; and Professor Emeritus of Finance. He was the founding Executive Director of the Jim Moran Institute and served in that position from 1995 through 2008. He can be reached by e-mail at jerry.osteryoung@gmail.com. All of Osteryoung's articles can be found in a searchable form at http://jmi.fsu.edu/Services/Jerry-s-Articles.

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