Definition & Importance of Customer Service for Your Business (2023)

What’s your company’s most valuable asset? It may be your great product, supportive shareholders, or dedicated team that comes to mind.

But you will certainly agree that without satisfied customers, you’re out of business. And that can be achieved by delivering extraordinary customer service.

What is customer service and why does it hold so much importance?

Great customer service has a direct impact on any business plus it is a key way to improve customer experience (CX).

Want proof?

Satisfied customers are the lifeblood of any business. It takes a lot of money to acquire a new customer, so business owners need to do what is necessary to ensure these customers come back.

Many retailers try to encourage repeat business through sales and promotions, but one shouldn’t underestimate the importance of good customer service.

Let us understand what is outstanding customer service and what makes it truly exceptional & effective?

What is Customer Service?

Excellent customer service is defined as going the extra mile in making a customer highly satisfied with both the products or services of your company.

Great customer service involves providing quality service promptly by using advanced customer engagement tools. It is the act of taking care of the customer’s needs by providing high-quality service before, during, and after the customer’s requirements are met.

Customer service representatives are the main line of contact between an organization and its customers, making CX a critical facet and the main priority. Offering amazing customer service is important if you want to retain customers and grow your business.

Note: You can look through this peer-reviewed scientific journal article on CX provides empirical evidence that customer service is one of the most critical aspects of CX due to its impact on customer satisfaction and loyalty.

It suggests that customer service representatives in omnichannel retailing should be courteous, helpful, and prompt across all channels. Also, they should be highly knowledgeable to answer customers’ questions.

What is Customer Service to You as a Business?

Successful small business owners understand the need for good customer service instinctively. Enterprises conduct in-depth studies and have concluded some key components.

Definition & Importance of Customer Service for Your Business (1)

The key components of good customer service are as follow:

  • Addressing the issues raised by customers in real-time is critical. Requiring a customer to wait in queue sours an interaction before it begins.
  • Customer service should be a single-step process for the consumer. If a customer calls a helpline, the representative should be able to provide the first contact resolution.
  • If a customer is routed to a department/team, the original representative should follow up with the customer to ensure that the problem is resolved.

Fundamental Steps Towards Delivering Outstanding Customer Service

In today’s hyper-competitive market, where information is more freely available, businesses need to meet the ever-changing customer expectations. It needs a concrete customer service plan that goes far beyond internal analysis.

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Below is the blueprint that, if implemented, could benefit your business by ensuring it continually focuses and improves customer service.

  • The first step is to outline policies to ensure the regular operations are consistent with all customers. The customer needs are broad so it is important to ensure your business can meet their expectations.
  • The second step is to put yourself in the customer’s shoes. Create a vision of how you would ideally like your customers to perceive you and consider the elements of your business that makes them choose you.
  • To really make your customer service model worthwhile you need to develop a solid customer engagement strategy to differentiate is the third step. Conduct research to develop a unique strategy and set customer service benchmarks.
  • The final step is to set clear goals. Aim to strengthen your customer relationships and ask for their feedback. Use technology to provide your customers with surveys and evaluate what attracts new customers and analyze customer retention.

Importance of Customer Service?

Excellent customer service creates loyal customers for life who are willing to refer your business to friends, family, and colleagues.

Providing such kind of excellent customer service starts with a mindset to delight your customers, but you also have to think beyond selling your products or services. It also requires superb communication and problem resolution skills.

Learn more about your customers to create a pattern of excellent service in your small business.

1. Increase Customer Retention with Exceptional Customer Service

Every business needs new clients, it is equally critical to improving customer retention as acquisition costs are five times more than retaining an existing customer.

Delivering prompt and effective service boosts customer satisfaction and enhances the experience.

Definition & Importance of Customer Service for Your Business (2)

When customer retention increases there is an increase in profit. It is because repeat customers are more likely to spend more with your brand, which impacts operating costs.

Keyways that help to deliver great customer service that improves retention:

  • Immediate assistance: Live chat helps to provide instant solutions to all the sales and support-related queries. By routing the conversation to the right support team the queries are solved faster.
  • Real-time personalized support: Using co-browsing and video chat allows real-time collaboration and encourages personalized conversations that help in building personal and reliable customer relationships.
  • Consistent omnichannel service: When you understand how customers interact with your brand across multiple channels, it increases customer satisfaction and acts as a great customer retention solution.
  • Deliver 24×7 support: Leverage an AI-based chatbot that can engage customers’ FAQs round the clock and reduce support tickets and improve customer satisfaction.

2. Good Quality Service = Boost Business Revenue

One of the key reasons for the importance of customer service in a business is because it correlates to revenue: 84% of organizations working to improve customer service report an increase in revenue.

Excellent customer service goes a long way and promotes more sales opportunities because you’re building a company with a reputation for always wanting to impress its customers.

Definition & Importance of Customer Service for Your Business (3)

Putting is simple – prioritizing good customer service in an organization increases revenue.

Studies show that 86% of people will pay more for great customer service.

Great customer service allows you to:

  • Ask for customer feedback to improve your product & services
  • Gain new and repeat customers that add value
  • Go the extra mile and deliver an unforgettable experience

3. Reduce Customer Churn with Excellent Client Service

Successful companies make it a strategic priority as they know the importance of customer service and to retain customers as retention has a significant impact on their bottom line.

Excellent customer service should be a core component in the strategy of every company seeking to retain customers long term.

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Investing in the same can reduce customer churn rate, which decreases the amount to be spent on acquiring new customers.

When customers are treated well, they’re more likely to remain loyal to that organization. With a well-trained and knowledgeable support team, your consumers will reward you by referring to their peers, helping the business to grow.

Conversely, poor customer service is utterly catastrophic. Almost 9 in 10 customers have left a business due to poor customer experience. In contrast, 86% of customers are willing to pay more just for a better customer experience—product aside.

4. Quality Customer Service Showcases Brand Image & Values

Brands that exhibit the best brand awareness gain popularity and fortune. And positive customer experiences play a huge role in brand awareness, as they often lead to word-of-mouth advertising.

Usually, customers choose to become the customer of a company because of their reputation for great customer service.

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Note: Brands should focus on providing a positive experience for existing customers and witness them rave about your brand.

With a well-defined customer experience strategy, you build your brand awareness and also measure everything from online reviews to social media sentiment to recommendation potential.

When you build a brand awareness strategy around customer loyalty, you’ll see authentic and sustainable growth.

5. Higher Customer Lifetime Value with Quality Support

Customer lifetime value (CLTV) is the amount of revenue that you can expect from a customer over the period that your service will be provided to them.

An increasing CLV means that your customers are spending more money each time they order.

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Providing extraordinary customer service is a great way to increase CLTV. If customers have a positive shopping experience, they will be more likely to buy from you again. It’s also easier to market new products to existing customers.

Best customer service techniques to increase CLTV are:

  • Better communications based on well-researched buyer personas and customer segmentation.
  • Go above and beyond by sending a personal thank you message, offer a special gift or deal based on a customer’s unique preferences.
  • Create a loyalty program as it is an effective tool for increasing CLTV, with a 20%
  • Take a proactive approach to train your team to ensure their standards for customer service are through the roof.

6. Extraordinary Customer Service Generates Referrals

Positive word-of-mouth referrals come directly from previous and existing customers that have had a great experience with your company.

One of the key importance of customer service is you can get more brand advocates with less investment. It improves brand credibility and face value as well.

Definition & Importance of Customer Service for Your Business (6)

(Video) 𝑫𝒆𝒇𝒊𝒏𝒊𝒕𝒊𝒐𝒏 𝒐𝒇 𝑪𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝒂𝒏𝒅 𝑾𝒉𝒚 𝒊𝒔 𝒊𝒕 𝑰𝒎𝒑𝒐𝒓𝒕𝒂𝒏𝒕 𝒕𝒐 𝒚𝒐𝒖𝒓 𝑩𝒖𝒔𝒊𝒏𝒆𝒔𝒔

Word-of-mouth advertising is often considered to be the company’s best and least expensive form of advertising.

When customers receive a satisfactory and delightful experience, they can’t stop sharing their success stories with their friends, relatives, colleagues and even post to their social network about your friendly and helpful customer service.

Such acts turn out to encourage their contacts to follow the same brand and make purchases.

7. Outstanding Customer Service Aligns Goals & Processes

When everyone at a company has the same end goal, the entire workflow becomes streamlined.

Keep your focal point on your customer, then move through each department to align them behind customer service.

For example, when everyone is on the same page, the flow for resolving an issue report should precisely look something like the below one:

Definition & Importance of Customer Service for Your Business (7)

To make sure this collaboration spans the long-term, set a larger goal to improve a customer experience-based metric, like NPS. Then, put the responsibility on every department to move the needle.

You’ll have happier customers, more streamlined processes, and easily hit your KPIs.

Understanding Different Degrees of Customer Service

Many customer-centric companies strive to differentiate themselves from the competition by offering outstanding customer service.

It is an excellent tactic since greater retention leads to significantly higher profits. In fact, an increase in retention rates of just 5% can boost profits from 25% to 95%.

Here is a brief overview of different degrees.

What is Good Customer Service?

The key to good customer service is building good relationships with your customers. A happy customer will return often and is likely to spend more.

To ensure you provide the best customer service:

  • Learn what your customers consider to be good customer service
  • Try to find out your customers’ expectations
  • Follow up on both positive and negative feedback

What is Great Customer Service

Diving right in with specific customer service techniques, or you could start with the core principles governing the quality of great customer service in the first place. They are speed, accuracy, clarity, transparency, and accessibility.

For providing great customer services, keep a tab on the following things:

  • Ensure focusing customer service in all aspects of your business
  • Continuously look for ways to improve the level of service you deliver

What is Quality Customer Service

The quality of customer service is the key differentiator between good, bad, and indifferent companies. Good quality service keeps customers coming back whereas bad service drives them away.

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Focus on a few things to maintain good quality customer service:

  • Understand your customers’ needs and meet them
  • Deliver consistent customer service across all communication channels
  • Focus on your core product design to lure customers
  • Realize what is follow up in customer service and implement its virtues

What is Exceptional Customer Service

Exceptional customer service refers to the unconditional commitment towards delivering the highest quality product or service to every customer. Such a service gives customers a complete, cohesive customer experience that aligns with the organization’s goal.

Best practices for providing exceptional customer service:

  • Surpass your customer expectations by making them feel important & valued
  • Be available to deliver a faster response to customers queries & issues
  • Practice active listening skills and deliver personalized customer support

Examples of Good Quality Customer Service

Competition pushes companies to exceed customer expectations to woo consumers away from other brands, while market dominators can generally set lower service standards.

Which companies excel at building long-term customer relationships? Here are some examples of brands delivering high-quality customer service, with takeaways.

#1. Yumble – Proactive Approach

While selling online, problems with shipping and delivery issues come with the territory. Between missed deliveries, damaged shipments, and delays, there are a host of problems that could arise. And while these issues technically aren’t your fault, you are still responsible for the customer experience.

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Yumble, a food delivery company when experienced delays in delivering the meals instead of waiting until the shoppers got in touch, proactively emailed customers about the problem and even issued a $10 credit to make up for the inconvenience.

Action Step

If you are selling online, stay ahead of the situation by proactively reaching out to customers instead of waiting for them to contact you.

#2. Spotify – Understand Customer Needs

Spotify identified that great customer service is also about finding what your customers love, then delivering it in ways that make their products a staple of their everyday lives.

Its business model is to learn a user’s preferences and provide the additional service of curating and customizing playlists and radio stations.

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Spotify went so far as to make interacting with customer service fun: Customers who tweet questions to the company are rewarded with individual playlists tailored to answer their questions.

Action Step

  • Utilize technology in innovative ways to give customers what they want, how they want it.
  • Reward your customers with fun, personalized customer service.

#3. Tesla – Connect With Customers Where They Are

When it comes to quality customer service, the delivery of services can be a game-changer. Tesla recognized the fact and implied to deliver excellent customer service.

Tesla engages with customers where they are and fixes issues. It is convenient for the customer because they don’t have to sit around a repair shop and it can be scheduled on their own time.

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Action Step

  • Learn your customer preferred channels and offer them the support channels to reach out to you conveniently.
  • Provide real-time support by using advanced customer engagement tools and self-service options.

Final Thoughts

Undoubtedly, good quality customer service plays a major role in your business. It is the top indicator for measuring customer loyalty. Identify your unhappy customers, reduce churn, and increase revenue. It is also a key point of differentiation that helps to attract fresh customers in a competitive business environment.

Top-quality customer service goes a long way to creating a great customer experience and increasing lifetime value. Customers today are not merely interested in the product or service they are buying, but also the add-on elements they get. Here is an easy way for you to strengthen your customer relationships. Sign upwith REVE Chat and give your consumers various channels and deliver exceptional customers service

FAQs

Why is customer service important for a business? ›

The number one reason why customer service is important in a business is because it correlates to revenue: 84% of organizations working to improve customer service report an increase in revenue. The keyword in that chart is “working.” Simply prioritizing good customer service in an organization increases revenue.

What is customer service also its importance answer? ›

Customer service is the support you offer your customers — both before and after they buy and use your products or services — that helps them have an easy and enjoyable experience with you. Offering amazing customer service is important if you want to retain customers and grow your business.

How do you define customer service best answer? ›

The short answer is, “making sure the customer is happy.” A longer answer is, “ensuring the customer or client is satisfied with the product or service provided.” Your interviewer wants to know what you consider quality customer service.

What are the 3 most important things in customer service and why it is so important? ›

Essentially, the 3 important qualities of customer service center around three “p”s: professionalism, patience, and a “people-first” attitude. Although customer service varies from customer to customer, as long as you're following these guidelines, you're on the right track.

What is most important for customer service? ›

Your List of the Most Important Customer Service Skills (According to Data)
  1. Persuasive Speaking Skills. Think of the most persuasive speaker in your organisation. ...
  2. Empathy. ...
  3. Adaptability. ...
  4. Ability to Use Positive Language. ...
  5. Clear Communication Skills. ...
  6. Self-Control. ...
  7. Taking Responsibility. ...
  8. Patience.

What is the most important role of customer service? ›

A customer support representative's primary objective is to understand the customer's problem and troubleshoot it with an optimal and effective solution. Customer support processes focus on short-term customer goals and do not directly impact revenue and other long term objectives.

What is a good example of customer service interview question? ›

General and Common Customer Service Interview Questions

What does good customer service mean to you? What's the best customer service you've ever received? What do you consider to be the most important skills when providing customer service? How do you ensure you maintain good communication with every customer?

How do I explain my customer service experience? ›

How to answer "Describe your customer service experience"
  1. Research the organization. Before your interview, research the organization. ...
  2. Think about the job. ...
  3. Highlight your most relevant role. ...
  4. Share a specific example. ...
  5. Discuss relevant skills. ...
  6. Ask the interviewer a question.
23 Nov 2021

What is excellent customer service definition? ›

Excellent customer service is a service that guarantees support to customers, exceeds their expectations, where agents have high communication skills and extensive knowledge about the products and services offered by their company.

What is customer service for you Example answer? ›

“Customer service means going above and beyond to keep the customer happy, whether that means answering any questions they have or resolving issues with a positive attitude. Customer satisfaction is the top priority, and hopefully creating loyal, returning customers.”

What are the 5 benefits of customer service? ›

Five benefits of good customer service
  • Customer loyalty. Loyal customers have many benefits for businesses. ...
  • Increase profits. These long-term customer relationships established through customer service can help businesses become more profitable. ...
  • Customer recommendations. ...
  • Increase conversion. ...
  • Improve public image.
28 May 2021

What are the 7 qualities of good customer service? ›

7 Must-Have Qualities of a Stellar Customer Service Rep
  • Problem-Solving Skills. The number one skill you need to excel in for good customer service is problem-solving. ...
  • Clear Communication. ...
  • Friendly Attitude. ...
  • Empathy. ...
  • Business Acumen. ...
  • Product/Service Knowledge. ...
  • Strong Time Management.

Why is good customer service important to us? ›

Good customer service builds trust and loyalty

When customers are happy with the service they receive, they are more likely to trust and be loyal to that company. Good customer service creates a positive experience for customers, which can result in repeat business and referrals.

What is your strength best answer for customer service? ›

You can try to relate your weaknesses to the role. For example, you may think that you can be over empathetic to the customer and provide them with too much advice, and feel that you need to work on that. Your strengths could be that you're patient, a good listener and have a positive outlook.

What are the 4 elements of good customer service? ›

There are four key principles of good customer service: It's personalized, competent, convenient, and proactive. These factors have the biggest influence on the customer experience.

What is a 5 star customer service? ›

We could define quality customer service as: “The act of taking care of the customer's (internal and external) needs, by providing and delivering professional, helpful, high quality service and assistance before, during, as well as after the customer's requirements are met.” Hence, providing 5-star customer service ...

What are the responsibilities of customer service? ›

Responsibilities
  • Listen to customers' concerns, issues and questions.
  • Resolve customers' concerns and answer customers' questions to your best ability.
  • Maintain a positive attitude and calmly respond to customers' complaints.
  • Open new customer accounts.
30 Mar 2022

What is the importance of service? ›

It's no secret that how well you serve customers will define your company's long term success. In fact, great customer service leads to better customer loyalty, higher revenue, and lower costs.

What is the importance of customers? ›

A customer is an individual or business that purchases another company's goods or services. Customers are important because they drive revenues; without them, businesses cannot continue to exist.

Why is customer service important facts? ›

It helps grow revenue, maintain customer loyalty, and improve your overall business strategy. Key customer insights like customer satisfaction score and NPS help your customer service team improve and grow their impact.

What are 3 benefits of good customer service? ›

Five benefits of good customer service
  • Customer loyalty. Loyal customers have many benefits for businesses. ...
  • Increase profits. These long-term customer relationships established through customer service can help businesses become more profitable. ...
  • Customer recommendations. ...
  • Increase conversion. ...
  • Improve public image.
28 May 2021

What is excellent customer service? ›

Excellent customer service means going beyond meeting your customer's basic needs. It involves much more than providing support in a timely and pleasant manner. More importantly, it means doing everything possible so your customers are not merely satisfied. They're actually happy with your products and services.

What is the definition of customer service excellence? ›

By definition, service excellence refers to the ability of service providers to consistently meet and occasionally even exceed customers' expectations.

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