Most companies have two main departments — profit centers and cost centers. Customer service is often categorized as a cost center since business owners presume that it doesn’t bring any cash to the table.
The reality is that taking time to improve customer service skills is an investment and not a cost. Here are five reasons why customer service should be considered profit center and not cost center.
1. Customer Retention
Working to improve customer service skills helps retain customers. Today’s customers are highly whimsical; they will change suppliers if they get a better deal elsewhere. By providing exceptional customer service through live chat and other channels, you will be able to satisfy and even delight customers. This will give your business a competitive edge over rivals, resulting in increased retention rates.
2. Maximizes ROI
Every investment to improve customer service skills can be recovered through exceptional customer service. One recent study carried out by Harvard Business Review quantified the results of good customer experience. They examined two companies and found that customers spent 140 percent more on the company that offered good customer service as compared to the one that offers poor customer service.
The study also found that a person who received excellent customer service was 74 percent more likely to remain a customer, while a person who had received poor customer service was only 43 percent likely to remain a customer a year later. Lastly, the study found that customers who receive good customer service are likely to remain with a company for six years or more, while customers who receive bad customer service are likely to remain with the company for a little over a year.
3. Upselling & Cross-Selling
If you improve customer service skills, you give your customer service personnel the ability to up-sell and cross-sell products. Through live chat support, customer support personnel can recommend additional products during a checkout stage that can complement the product. This will ultimately lead to increased conversion and revenues.
4. Reduced Costs to Maintain Customers
Investing to improve customer service skills will result in increased retention rates. Acquiring new customers costs a company 5-25 times more than retaining existing customers. In addition, around 80 percent of a company’s revenue will come from repeat business.
5. Increase in Customer Lifetime Value
Companies that invest in improving the customer experience through omnichannel support and other ways are able to increase customer lifetime value. A customer lifetime value represents total purchases a customer will make during the entire lifetime. Focusing on increasing the customer experience will result in improved customer lifetime value.
Retaining just 10 percent of customers will result in as much as 30 percent increase in customer lifetime value. This will have a positive impact on the company’s bottom line. And for this same reason, efforts to improve customer service skills should be considered an investment and not an expense.