3 Surprising Ways Service Excellence Drives Business Success
Among small- and medium-sized enterprises (SME), internationalisation is a topic of considerable relevance owing to the growth effects of cross-border ventures. As companies grow bigger and expand overseas, however, service excellence may sometimes slip through the cracks and fall on the wayside. This rings especially true for those that forsake customer experience in the pursuit of revenue and profit
However, as the classic Bob Dylan song goes, the times they are a changin’.
A growing number of companies have chosen a wholly different goal. Instead of concerning solely with revenue, profit and the bottom line, many companies now recognise the fact that delighting customers through service excellence, arguably more than anything else, is one of the best ways to generate growth and, in bad times, weather economic storms.
Here are three surprising ways service excellence can do wonders to your bottom line:
1. Service Excellence Boosts Revenue
Companies that care about customer satisfaction generally have higher margins. That is because high service quality is one of the top reasons customers are willing to pay extra for your products and/or services. Take Apple, for example. Since 2007, the Cupertino-based tech company consistently ranks first when it comes to overall customer satisfaction for tech support, according to Consumer Reports1. And, even though Apple’s worldwide mobile phone market in terms of unit sales stands at just 4%, its share of the profits is a whopping 50%. The correlation here is not accidental. For Apple, happy customers mean better business.
2. Service Excellence Increases Customer Lifetime Value
According to a recent service excellence survey of 1,600 participants conducted by ORC International, Canon Singapore’s quality of service staff led to the largest number of satisfied customers over the last 18–24 months at 84%. This number is particularly important when measuring Customer Lifetime Value (CLV).
CLV is a prediction of the net profit attributed to the entire future relationship with a customer. Achieving service excellence, then, goes a long way when it comes to increasing a customer’s CLV. According to a study by InfoQuest2, a ‘Totally Satisfied Customer’ contributes about 2.6 and 14 times more revenue over a lifetime than a ‘Somewhat Satisfied Customer’ and a ‘Somewhat Dissatisfied Customer’ respectively. It is clear, then, that when you establish a positive, long-term relationship with your customers, they will in turn yield exponentially more revenue over time.
3. Service Excellence Increases Productivity
A company whose operations are driven by service excellence — not revenue and profit — as the end goal tend to operate at higher efficiency and lower overheads. From trimming process times in factories and shortening production cycles of products to training frontline service staff, everything adds to the overall delivery of value to customers and customer satisfaction.
On the other hand, when customers take a backseat in lieu of revenue and profit, productivity will take an inadvertent hit. Take a company with traditional hierarchical bureaucracies, for example. In such instances, it is easy for work to sit amid multiple layers of approvals and nothing gets done. Low productivity is a direct consequence of that, but further downstream, customers and customer satisfaction are affected on the frontlines. How often do you hear of customers complaining about being put on hold for the umpteenth time, with no satisfactory answers or solutions in sight?
Ultimately, good service equals good business. Once you set service excellence as the ultimate goal of the corporation, productivity driven policies and ideas will naturally follow suit.