Customer service man sitting at desk

The Importance of Customer Service

The importance of customer service seems fairly obvious, right? Most businesses, customers, and customer service professionals know the importance of customer service. However, exactly how does this benefit a company’s bottom line? Customer service is an integral component for attracting, converting, and retaining customers, and can often be vehicles for reduced business costs, increased revenue, and word-of-mouth marketing. According to HubSpot Research, 93% of customers are likely to make repeat purchases with companies that offer excellent customer service. This is just one snippet from the plethora of research available, highlighting the importance of customer service. 

Let’s delve into the multifaceted reasons why the importance of customer service should be at the forefront of any B2B and B2C business strategy.

Table of Contents

What is customer service?

Before we jump into the nitty-gritty of excellent customer service, it is critical to understand; what is customer service

In simple terms, customer service includes all the assistance a business provides to its customer before and after the sale of a product or service. At present, a company can offer its support through a myriad of alternatives such as email, social media, telephone, or text messages. Several businesses provide these services round-the-clock to ensure the consumer experience is enjoyable and hassle-free.

The most common branches under the customer service tree include customer success, customer support and customer I.T. support, and retail and hospitality customer service.

What is “good customer service”?

Now, we’re going to head into some gray-territory, as the definition of customer excellence or ‘good customer service’ is subjective, and varies across multiple demographics. Zendesk sought to tackle this arbitrary question, by breaking it down into a few key components:

survey on customer service by Zendesk
Source: Zendesk

The clear winner, according to Zendesk is the ability for customer service agents to resolve customer’s queries and problems quickly, followed by around-the-clock customer support availability. Therefore, customers want their problems solved quickly, at any given time. Simple, right? 👌👌

That’s what customers want, but how to track this? Many companies track their customer service excellence with metrics such as customer satisfaction ratings and average handling and average response times, according to Salesforce.

Importance of good customer service for businesses 

Now that we are aware of its definition, let us dive into the importance of good customer service.

According to a study by Salesforce, 89% of customers are likely to make a repeated purchase when they experience positive customer service. This powerful impact is the reason why several organizations across the globe are allocating their money and resources towards this service. However, sales aren’t the only motivation for a business to focus on delivering service excellence. Let’s explore what other benefits positive customer service draws. 

1. Consumer satisfaction = increase in revenue

Decisions for every business revolve around the simple idea of the revenue generated. After all, the growth of a business is driven by the money coming into the business. 

So, how is customer service related to revenue? 

Take any software that tracks customer service, and you will notice that an improvement in customer excellence will automatically drive the revenue. Delivering service excellence increases the number of happy customers. It, in turn, brings in more prospects for the business. Hence, improving the profitability of the company. 

2. Helps in customer retention

Survey on the importance of customer service according to Groove
Source: Groove

We live in a market where consumers have several alternatives to choose from. Additionally, switching providers or brands is often easy. In such an overly driven competitive market, businesses must retain their core consumers. 

Moreover, most companies spend nearly 5-25 times more to invest in new customers rather than retaining them. Instead of focusing on attracting new customers, businesses must invest in their existing ones as they are more likely to offer repeated purchases to the business. Moreover, their positive feedback and experience will attract new customers. 

On the flip-side, customer service excellence can also safeguard from potential customer churn, due to poor customer service experiences. According to Groove HQ, such experiences equate to 89% of customers taking their business elsewhere!

Yes, that is the power of customer excellence. If businesses recognize the potential in this, they can make a huge difference in reducing their customer acquisition costs. 

3. Speaks volumes about company ethics and values 

Consumers are willing to build relationships with brands that are ethical. After all, who would like to invest with brands involved in shady working practices? A positive brand image that aligns with good values is more likely to attract an audience. 

But what has customer service got to do with this? 

For instance, you recently had an exhausting and infuriating conversation with one of the representatives from customer care. The representative was rude and didn’t even solve your query. No doubt, the company has left a negative impression on your mind. Moreover, this incident speaks volumes about how the business views its consumers. This entire experience has resulted in losing a consumer. 

Instead, if the company focused on improving its customer service, it would have created a positive experience and highlighted its professionalism. An enhanced form of direct communication improves your brand image in the market, making you the best alternative in a sea of competition. 

4. Happy employees = happy customers

Source: Comparably

It all boils down to how a business treats its employees. If a company takes utmost care of its customer service employees, they are more likely to be motivated to work better. Research suggests that 87% of employees who are motivated will positively impact your business. 

Businesses must recognize that this particular department is demanding for their employees too. However, promoting an encouraging environment always helps in drawing happy employees. Additionally, these employees will ensure to stay committed to their job and bring the maximum number of happy customers for the brand. 

If you’re curious, Comparably released their list of the ‘happiest’ companies in 2020, i.e. the companies with the highest number of happy employees. Not surprisingly, two customer service tech giants, Microsoft and HubSpot topped the list. 

5. Loyalty is the key

Looking to stay in the market on a long-term basis? Then loyalty of your consumers is the key to reaching this stage. Consumers are more likely to trust your company when they are attracted to your ideas and values. By offering impeccable customer service, you are likely to retain your consumers and build loyalty for the long run. 

And guess what? 

90% of consumers only trust those companies which have been rated a 4/5 for their services or more. So, if you succeed at offering exceptional customer service, rest assured that you will attract new consumers too. 

6. Willingness to pay more 

Naturally, if a company offers exceptional services to their customers, they are more than willing to shell out a little more than needed. Consumers do so as they are satisfied with the offering of the business. 

Yes, that’s right!

Salesforce mentioned that 67% of customers are likely to pay more to receive great consumer service in return. Hence, companies investing in good customer excellence benefit via increased profit margins.  

7. Boost to customer lifetime value 

Have you heard of Customer Lifetime Value (CLV)? In a nutshell, it represents the scope of generating revenue from a single consumer over the course of a business cycle.

So, how can this help in understanding the importance of customer service

If your CLV improves, it simply means your customers are frequently purchasing from you or are purchasing higher value products/services. Efforts to enhance customer care services will ensure purchasers face minimum hassles during or after the sale. This hassle-free experience and positive rapport with the support team will bring repeated purchases, increasing the CLV over time. 

8. Customer service could be your competitive advantage

As mentioned above, markets are overly competitive in every industry. And to stand out from the rest, a business needs to differentiate itself. Customer service can help be a great differentiator for your business by retaining customers and maintaining loyalty. 

Great communication and positive engagement with customers make you a better alternative among competitors. In fact, this process is likely to attract your competitors’ market share too! After all, it’s better to have the first advantage in the market. It doesn’t matter who was the second in the process at the end of the day.

What is the importance of a follow-up in customer service?

It can be frustrating not to hear back from customer care representatives after repeatedly getting in touch with them. It is where the importance of follow-up in customer service comes into the picture. 

Firstly, follow-ups ensure you address issues that consumers are facing and leave no complaints unaddressed. Additionally, this improves the customer experience and helps businesses retain them. 

A crucial aspect of this process, often unnoticed, is the feedback provided by consumers. Their feedback helps improve the service provided to them and ensures you achieve the highest form of customer satisfaction. Consumers are often impressed by impressive customer service, turning into brand advocates for the company and promoting your business. Their loyalty and commitment to your business help attract potential customers. 

Moreover, you are more likely to beat the competition in the market if you constantly follow up with your consumers. This process makes them feel valued and that their concerns matter. This attitude will surely make the business a pioneer in bringing positive results to their consumers and making a difference in the consumer service process.

Final thoughts on the importance of customer service. 

Improving the consumer services of your business yields several benefits that impact long-term growth and revenue opportunities. Many companies recognize customer service’s importance, and whole brands have been built on customer service. In fact, it is for every businesses’ betterment to understand the importance of customer service and ensure to draw its benefits to their business too.

Want to know about the best customer support tools on the market? Check out our top 5 favorite picks here!

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