• by John Larson , Columnist, June 25, 2018

How many times has one of your customers approached you with an issue or a problem? For instance, “I purchased this product from you and it does not work.” Or, “I thought this product had feature X, but I found out it doesn’t and I want to return it.” 

Situations like these happen every day. Often, we find ourselves threatened or at least uncomfortable when a customer approaches us with a complaint or some of other form of problem. Our lack of comfort can be exacerbated if the customer is temperamental or distressed in some way. In spite of this, how you handle these types of situations can have a very significant impact on the strength of your customer relationships.

I have found that what creates loyalty is the absence of perceived risk. When speaking with a company’s truly loyal customers, I’ve found they are completely confident that every time they deal with that business, they will have a great experience, and—in those rare cases when they do not—they have absolutely no doubt the company will take whatever steps are necessary to immediately rectify the situation.

When I speak with customers who do not consider themselves loyal to a client, I get a completely different impression. These customers speak about inconsistency — sometimes they have a very good experience, other times they do not. “You never know what you are going to get” is a comment I have heard often.

These conversations with customers highlight a key point. Loyalty does not come by “delighting” them or “exceeding their expectations.” Rather, it comes by consistently delivering your value proposition on a 24/7 basis. In this context, problem resolution is really an opportunity in disguise, a way to build trust with your customers when inconsistency of execution inevitably raises its ugly head.

I recently surveyed approximately 1,000 respondents who had placed an order with a targeted business in January 2014 and learned that customers whose problems were handled satisfactorily by customer service actually spent $106 over the same subsequent three-month period—6% more than the customers who did not have a problem at all (and 430% more than the customers whose problems were not resolved satisfactorily).

The tendency in this country over the last 10 to 15 years has been to regard customer service as a cost center. What do profit-maximizing companies do with cost centers? They try everything they can to reduce their costs. This has become increasingly easy to do with the substantial reductions in the cost of communications that have occurred over this time period.

What I have argued here is that far from being a cost center, customer service is actually a profit center. Customers whose problems are satisfactorily resolved subsequently spend more than those who did not have a problem and quantumly more than those whose problems are not properly handled. Moreover, they will tell their friends and colleagues the story about how well their problem was handled.

The choice is yours. What kind of stories do you want your customers telling about you?