Much has been written about the importance of customer service to retain and attract new customers. However, most of the evidence has been intuitive or anecdotal. This makes it difficult for companies to justify investments in technologies like CRM, which enable businesses to operate efficient and effective customer service programs.

A recently published article in the Harvard Business Review blog1 has, however, finally managed to put some numbers on the impact of good vs bad customer service. The effects are significant.

By carrying out a survey that tracked customer spending behaviour over a period of time, the study was able to show that in ‘transactional’ businesses, (where somebody is paying for goods or services), customers who experience good service 'spend 140% more compared to those who had the poorest past experience'.

A comparative study of membership organisations showed a similar distinction, where less than half of members in one year were likely to renew their subscription the following year, as a direct result of poor customer service.

As the study concludes: ‘unhappy customers are expensive’. They tend to absorb more of the company’s time than a contented customer will. It is also far more expensive for a company to continually have to win new business, than to look after the customers that they have.

By focusing on customer service, telecoms firm Sprint is turning around a poor reputation, to become the most improved company in customer satisfaction, across 47 industries, over the last five years 2. Far from costing the firm money, Sprint is on record as saying that their customer care costs have gone down by as much as 33%.

The secret of Sprint’s success is largely down to providing a joined-up environment for its workforce, where information is shared and consistent across customer-facing teams. This is supported by the introduction of self-service tools, regular feedback surveys and intelligent use of new media, to allow a closer interaction with customers.

Sage CRM provides all the tools that a business needs to run an efficient customer care service. Contact us, to find out how Sage CRM can help you to win and retain more business.

1. Peter Kriss, Harvard Business Review on 1/8/2014: