Exceptional customer service pays off – literally
By: Mark HaslanFebruary 24th, 2010
While exceptional customer service can certainly lead to increased sales, customer loyalty and brand strength, it can also provided a little-known benefit – stock returns.
A recent study from customer experience advisory firm Watermark Consulting found that companies who provided the best customer experiences also saw higher stock performance than other companies.
Specifically, the study looked at the top 10 and bottom 10 performers in Watermark’s 2007 Customer Experience Study, which ranked public companies on the quality of their customer experiences.
The company then followed the stock performance of these 20 firms for the next two years, and found that their customer experience ratings did in fact correlate with their stock returns.
"From 2007 to 2009, through the best and worst of times, customer experience leaders outperformed the broader market, generating total returns that were 41 percent better on average than the S&P 500 and 145 percent better than customer experience laggards," said Jon Picoult, founder of Watermark Consulting.
Consequently, businesses worried about the return on investment of campaigns aimed at improving customer experience need only point to this study as evidence that at least their stock returns, if not their actual sales and brand equity, will likely improve.
"These companies’ operational excellence and attention to detail, their simple and straightforward communications, their well-equipped and genuinely helpful customer service staff – the sum of these parts pays off in the end, even if the precise impact of individual components is uncertain," Picoult added.
But as beneficial as customer service is to companies that do it well, it can also be equally damaging for those who fail to provide adequate customer support, said another recent study.
According to a report from Genesys, Greenfield Online and Datamonitor/Ovum, 71 percent of U.S. customers have stopped doing business with a company as a direct result of poor customer service.
In total, poor customer service costs American companies $83 billion each year.
To ensure that they are on the top-performing end of customer service, businesses should invest in measures such as follow-up communications after a purchase or support call – whether as formal as a personal phone call or as informal as a postcard asking for comments.
In addition, businesses should not underestimate the power of simple accountability – having sales representatives give each customer or potential client a business card can show the person that they have a personal contact at the company who they can turn to with questions or concerns.
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