Study Highlights The Value Of Good Customer Service

It is common knowledge that quality customer service can benefit a business, but its effect on the bottom line is sometimes murkier. The Harvard Business Review reported the results of a study that makes the value of customer service clearer, highlighting significant benefits for both transactional and subscription-based business models.

The study found that in transaction-based businesses—where the focus is on return frequency and how much is spent per visit—a good past experience boosts customer spending 140 percent more than a poor past experience. For a subscription-based business—which value retention and cross- and up-selling opportunities—the study found that 43 percent of subscribers who are having the poorest experience will be a subscriber one year later, compared to 74 percent of subscribers who are having the best experiences. The study also estimated subscription length based on customer experience, finding that those with the poorest experience will remain a subscriber for a little over a year, while those who are having the best experience can be projected to remain subscribers for seven years.

The report notes that the push-back against investing in great customer experience is the high cost. However, anecdotally, it reports that unhappy customers are actually more expensive, as they are more likely to return products or require support services.

filed under April 2019
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Jim Franklyn
April 25, 2019
Excellent reality check. Customer Service and Inside Sales are the two hardest positions for online transaction based companies. Sadly, most execs who sit around the ivory table with very little experience wearing a headset make decisions for those that are wearing the headset. That is one of the biggest mistakes you can make if your bread and butter is based on acquisition of customers and transactions. You have to pay to play, if you want to win. Pay these people! If you do not think they are worth base salaries in the mid $40's with small commission overrides based on activity, put on a headset, then tell me what you think!
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