There are a lot of things you need to keep in mind when it comes to running a business. You have to think about your product/service, marketing, financial management and so on. As a result, a lot of businesses may forget to focus on their customer service. 

This guide will show you seven key reasons why customer service is so important for your business.

1) Customer retention

One of the most important challenges for companies is retaining customers. Keeping current customers happy enough to stay long-term is key to maintaining stable streams of income for businesses. Customer retention rate (how many of your customers stay with you over a period of time) is often the deciding factor on whether your business succeeds or not. 

It’s also a lot easier to sell to current customers rather than new ones, which is why providing great customer service is crucial. Your existing customers are more likely to try your suggestions if you have a good relationship with them.

A recent survey noted that 75% of people would return to a company with excellent customer service. No matter how good your product or service is, your customer service is key to keeping customers happy. It’s also much cheaper to retain a current customer than trying to acquire new ones. When acquiring new customers you have a lot of different costs:

  • Increased marketing costs to reach them through paid channels and content
  • You have to spend your time selling to them
  • Building an onboarding process 

Even after spending your hard-earned money and time on this, they still might not become a customer. 

2) Increase referrals and reviews

How often have you read the reviews of a product or service before buying a product or service? 

When you serve your clients well they are also more likely to refer you to people they know and leave online reviews where they praise your business. Word-of-mouth is one of the most effective ways of marketing yourself, but it can be tricky to generate. 

Good customer service is one way of doing it. In fact, 83% of people would recommend a business to family or friends after having an enjoyable experience with them. 

Having satisfied customers spread the word about your business allows you to reach more people and increases your chances of selling to them.

You can also list positive reviews as a testimonial on your website and social media channels or as a last step to convert prospects to customers. Even bad reviews online can be turned into positive reviews, depending on how you deal with them. For example, following up with the customer and helping them resolve the issue can turn a situation into a positive experience.

3) Improve your business’ reputation

As you’ve probably guessed from our previous points, providing good customer service is an excellent way to improve your brand reputation. A great reputation can result in a lot of positives for your business, including:

  • More customers flocking to your door or website
  • More people wanting to work for you
  • Business partnerships with different brands or companies
  • Eager investors wanting to buy shares in your company
  • Banks and vendors being more likely to give you a business loan

By prioritising customer service, you’re taking the first step towards an excellent reputation. 

4) Increase customer lifetime value

Customer lifetime value (CLV) is the amount of money that the customer could potentially bring to your business. However, their CLV depends on how well you treat them, continue to provide value and keep them engaged. 

Customer service is key to increasing your CLV. If you can keep your customers interested, they will spend 90% more with you. Engaged customers will also spend three times the annual value compared to disengaged ones. 

5) Generate positive customer feedback

Customer feedback can be very beneficial for a business. Having a fresh perspective and an unbiased opinion can help identify areas to improve your business. By encouraging your customers to give you feedback, you’re showing you want to listen to them. This might be able to stop your customer from leaving for your competitor.

Only one out of twenty-six clients will make a complaint before leaving. The other twenty-five leave without saying anything. There’s plenty of ways you can collect customer feedback and address it. You can use:

  • Social media to see what people are saying about your business
  • You can send them surveys
  • You could install a Chatbot on your website
  • You could ask them via email
  • Contact forms on your website
  • Ask for feedback during conversations

6) Boost revenue

Unsurprisingly, there’s a direct correlation between great customer service and revenue (money you make from sales). 52% of customers claim they have bought more from a company because of their customer service.  People are also more willing to pay 17% more to buy from companies with a reputation for excellent service. 

Offering good customer service is also a great way of differentiating yourself from the competition, proving that your product or service is better and, therefore, justifying higher prices. 

7) Build customer relationships

Good customer service isn’t all about helping your customers solve problems, it’s also about building trust and relationships with them. Good customer service is about:

  • Keeping track of their purchase history
  • Checking in with them to see how they are doing
  • Listening to them and seeing if you can provide a solution
  • Recommendations that have worked for your business
  • Offering free consultations on your products

By going the extra mile for your customers you can ensure that they continue to use your product or service and recommend it to their friends or colleagues. 

Foundations of a successful business

All of these factors help lead to the success of a business. Every business has problems and issues but what customers really care about is how you deal with them. If your business is customer-focused then customer service is one of the most important factors. The better you can serve your customers, the more satisfied your customers will be – and the more likely that they will turn into repeat business. 

So, what’s the best way to improve your customer service?

Reach out and ask for feedback

Letting your customers know that you’re trying to constantly improve their experience of your product or service is a great way to look after your customers. It’s also a good way to reach out and offer them your latest product or service that you know can help solve their problem. 

While you take care of your customers, the Countingup app will take care of your accounting 

Countingup is the business current account and accounting app that provides instant invoicing and automated bookkeeping features. It is saving thousands of business owners hours of time-consuming admin and helping them keep on top of their finances.

Find out more here to save yourself hours of accounting and financial admin so that you can focus on delivering excellent customer service and running a successful business.