Customer Service Is Crucial To Repeat Business and Profitability

by Jack Loechner, Jul 20, 2010, 8:15 AM

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According to the American Express Global Customer Service Barometer, 61% of Americans report that quality customer service is more important to them in today's economic environment, and will spend an average of 9% more when they believe a company provides excellent service.

However, only 37% of Americans believe that companies have increased their focus on providing quality service:

• 27% feel businesses have not changed their attitude toward customer service.
• 28% say that companies are now paying less attention to good service.

Jim Bush, Executive Vice President, World Service, says "Customers... expect superior service... (and) are focused on getting good value for their money... consumers say companies haven't done enough to improve their approach to service... it's important to see customer service as an investment, not a cost."

91% of Americans consider the level of customer service important when deciding to do business with a company, but only 24% believe companies value their business and will go the extra mile to keep it:

• 48% feel companies are helpful but don't do anything extra to keep their business
• 21% believe that companies take their business for granted

81% of Consumers are far more likely to give a company repeat business after a good service experience, while 52% are unlikely to do business with a company again after a poor experience. Consumers say the three most influential factors when deciding which companies they do business with include:

•  Personal experience (98%)
• Company's reputation or brand (92%)
•  Recommendations from friends and family (88%)

48% of consumers report always or often using an online posting or blog to get others' opinions about a company's customer service reputation. But when consumers go online they put greater credence in negative reviews on blogs and social networking sites than on positive ones (57% and 48%, respectively).
Mr. Bush continued, "... in the online space, positive recommendations are important, but people often give more weight to the negative. Because consumers... broadcast their views so widely online... every service interaction... becomes even more crucial... "

Importantly, consumers are far more forgiving if a company has earned their trust over time. 86% of consumers report they're willing to give a company a second chance after a bad experience if they've historically experienced great customer service with that company. But companies who get it wrong should realize it's at a cost:

• Half of consumers (52%) expect something in return after a poor customer service experience, beyond resolving the problem.
• Most consumers (70%) want an apology or some form of reimbursement.

For more about the study, including data from a variety of international countries, please visit American Express here.

  

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0 comments on "Customer Service Is Crucial To Repeat Business and Profitability ".

1. Sarah Federman from Telmar
   

   commented on: July 20, 2010 at 8:36 a.m.

   People often believe that superior service leads to savings or "extras." For example, it is easier to get your money back or a discount with a "nice" company rather than a "nasty" one. You may want to ask what makes people rate a company as having superior service and how often that rating is actually tied to financial gains. That 9% of additional spending might easily be regained in savings during a contract.

2. Howie Goldfarb from Blue Star Strategic Marketing
   

   commented on: July 20, 2010 at 1:39 p.m.

   This info has been known forever. There is nothing new. We all know businesses treat customers poorly because so many treat their employees so poorly. Normally the businesses that give the best service treat their employees like assets vs a cost of doing business.

3. Kate Lafrance from Hartford Woman Online Magazine
   

   commented on: July 20, 2010 at 2:09 p.m.

   GREAT article! Wish everyone could read it.

4. Catherine Lockey from oz 2 designs
   

   commented on: July 20, 2010 at 2:44 p.m.

   It is repeat customers who've kept my business alive during this "post" recession. Thanks for all of your customer service research briefs MediaPost.

5. Gregory Yankelovich from Amplified Analytics Inc
   

   commented on: July 24, 2010 at 9:57 a.m.

   Interesting study, but I am looking for actual evidence, beyond example of Zappos, where quality of Customer Service can be directly related to financial performance, i.e. increase in profitability. I wrote about it here http://yv2.me/q8ib and would like to hear about some specific studies and/or methodologies.

6. Sam Diener
   

   commented on: July 27, 2010 at 9:34 a.m.

   Greg --- a specific example: Enterprise Rent-A-Car... the motto is and has always been "take care of the customers and the profits will follow."

   I think they are one of the largest private companies in the world... but I know they are constantly cited for superior customer service.

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