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As someone who’s based in Los Angeles, I’ve long taken stellar customer service for granted. Unhappy with your Uber ride? Go online and automatically receive a $5 credit for your next one. Unhappy with your Starbucks drink? Get another one made for free. Unhappy with a restaurant’s service in Malibu? Let the manager know and receive a discount and a personal apology.
The same principle applies to various other stakeholders within a business. Whether it’s their customers, investors or their employees, companies are highly aware of the impact a negative Yelp or Glassdoor review can have on their bottom line. After a pregnant Sheryl Sandberg couldn’t find a close parking space at Google HQ, the company started assigning priority parking spaces for expectant mothers. At Facebook, Sandberg introduced a 20-day time off period for employees mourning the death of an immediate family member. And unlimited paid time off has become another popular benefit at many well-known tech startups.
Not surprisingly, I have personally seen an increase in productivity when employees were afforded benefits that help build trust between them and the employer. On the client side, I have seen an increase in word of mouth for new clients when existing clients felt that their emails and concerns were responded to swiftly, sufficiently and consistently.
Customer service has long been recognized as an incredibly important revenue driver. Yet businesses all around the world seem not to recognize what many consider a well-known fact. I recently traveled to Europe, where I couldn’t help but notice the major differences in European versus American customer service. One particular difference I noticed was in hospitality. Just like you can always expect the same customer service in any Starbucks store, I’ve always received consistent, above-average treatment from Airbnb staff.
This time I opted to try out a new startup, essentially a European version of Airbnb. When I brought up an issue I was having with my London apartment, there was a lot of direct questioning to check whether what I was saying was true (the customer isn’t always right in Europe, and a lot more evidence has to be provided). The information I received via online chat differed from what I received over the phone, so the handling of the entire problem took longer and I was required to keep a tab on it and constantly call back.
Part of the difference in customer service is simply cultural. Europeans tend to go straight to the point, while Americans are known to take the friendly, helpful and slightly more time-consuming approach. Each one is great in its own way, depending on the type of customer you are. Aside from these cultural discrepancies, however, there is a good business argument for why “the customer is always right” mentality pays off better in the long run.
Lower Churn Rate
A churn rate is a ratio of customers who choose to end their relationship with a company over a specific period of time. On the contrary, when the customer chooses to return to the product or service, the company’s retention rate improves. Excellent customer service vastly lowers churn rate because customer acquisition can be anywhere from five to 25 times more expensive than customer retention. Consider the way we form friendships. Those that are able to survive through tough times are often stronger than the untested friendships. The same applies in business. When complaints are handled well, customers become more loyal than they were before the issue. Personally, I have reviewed over 50 homes on Airbnb, and having now had issues with its competitor and Airbnb, I know I am loyal to Airbnb. Given this fact, it should be a no-brainer for companies to invest more in better customer service.
Word Of Mouth
We know that word of mouth works. Sara Blakely’s company Spanx became a billion-dollar business through word of mouth without her having to spend any money on advertising. When you have a good product and excellent customer service, a word of mouth strategy will outweigh any flashy marketing campaigns. In addition, it is free and it ensures that companies will attract the right kind of customers who are more likely to stick around than add to your churn rate.
Running A Business On Kindness
Last but not least, I simply cannot imagine a good argument for why businesses shouldn’t always be striving to be kinder. Sure, some customers may abuse this privilege as we see with PayPal or Amazon, whose buyers sometimes take advantage of their lenient return policy. But for the most part, being good is the way to go. There is too much at stake in this hyperconnected world to not care about your reputation online and offline. Recent events have proven that we have the power to hold companies accountable for their actions, however large the corporation may be. Being kinder not only helps businesses stand out among their competitors but it also — as I like to believe — helps CEOs sleep better at night.
December 18, 2018 at 07:34AM
Forbes – Entrepreneurs