How Customer Service Affects the Success of an Organization

As a SaaS business owner, you probably already know how important customer service is. After all, you can’t do business with unhappy customers—they’ll leave you.

But when you’re building a business, there are many other aspects you need to consider, like improving your product, marketing, or sales. It’s easy to forget about customer service and leave it at the bottom of your priorities list.

That's a mistake many business owners make, but in this article, you'll learn how customer service affects the success of an organization and why you should prioritize it.

Good Customer Service Increases Brand Advocacy  

“When their needs are met, and their expectations are exceeded, your customers are the best marketers in the world.”

When a customer is happy, not only do they want to stay with you forever, but they’ll also recommend you to their peers. This improves your customer retention rate while also growing your business through referrals.

Customer referrals are a very powerful marketing tactic, particularly useful for expensive products or services that require a long-term commitment. Not to mention that it’s a lot cheaper than other marketing tactics! So, instead of investing in marketing, invest in keeping your customers happy.

Good Customer Service Decreases Customer Churn & Revenue Churn  

66% of B2B and 52% of B2C customers stop buying after a bad customer service interaction.

While you can’t prevent all churn from happening (there’s no such thing as a 0% churn rate in the SaaS world), making customer service a priority goes a long way towards ensuring your customers are happy.

Keep in mind that it’s more expensive to acquire a new customer than to keep a current one and that an increase in customer retention of just 5% can create at least a 25% increase in profit.

Learn more about how to reduce customer and revenue churn here. 

Bad Customer Service Damages Your Reputation  

Do you look at reviews before buying a product online? Then you know how important reputation is.

If a customer is unhappy and leaves, you lose one customer. However, if they also tell their friends or leave a poor review on your product, then you can lose hundreds or even thousands of potential customers—prospects will think twice before doing business with you.

In the best-case scenario, a bad reputation will prevent you from growing. In the worst case, you’ll keep losing customers until you can no longer afford to be in business. A bad reputation will also make it harder to upsell and cross-sell existing customers.

Also, keep in mind that a good reputation will help you attract investors, partnerships, and employees.

Good Customer Service = Increased Revenue  

Profitability is the number 1 priority for every business, and good customer service correlates with increased revenue. In fact, 84% of organizations working to improve customer service report an increase in revenue.

And the keyword here is working on improving customer service. Even if you can’t always provide stellar service, customers will still appreciate you going that extra mile for them.

Although pinpointing the exact relationship between customer service and revenue is hard, if you track and measure different customer-related metrics and revenue in parallel, you’ll likely see a pattern forming.

If, for your business model, you offer support as an add-on, know that 67% of customers would actually pay more to get a better customer service experience. Clearly, it's important to them!

Good Customer Service Increases Customer Lifetime Value (CLTV)  

Continuing on the topic of revenue, good customer service also helps you increase lifetime value. A study by Rosetta shows that “highly engaged customers buy 90% more frequently, spend 60% more per transaction, and have 3 times the annual value compared to other customers.”

One of the characteristics of highly engaged customers is that they also interact with your customer service team more frequently (either through direct communication or by accessing your knowledge base).

This is another reason to invest in customer service tools that let you do more than just reply to emails.

Customer Service Reps Can Make Data-Backed Recommendations On How To Improve the Product  

Because customer service representatives interact with customers daily, they know best how clients perceive the product and what their struggles are. Therefore, they can make insightful suggestions for many departments, including (but not limited to) product development, marketing, and sales.

Instead of spending time and effort surveying customers, check-in with your employees first to see if they have any recommendations. Or, they could ask customers during their interaction. This way, the responses you get are more accurate and insightful than those submitted through a survey.

 Summing Up  

Customer service is one of the most overlooked business components, yet it’s the one that can bring the best results. I hope this article has shed some light on how customer service affects the success of an organization and has encouraged you to pay more attention to it.

After all, happy customers make for a happy business, right?


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