Customer Service, But at What Cost?

We talk a lot in this space about doing whatever is necessary to serve the customer, as
we consider the customer to be the lifeblood of every business. But oftentimes, skeptics
counter with talk of fiscal responsibility. Their fear is that the floodgates will open,
customers will take advantage of the company’s desire to please them, and make
unreasonable demands, ultimately leading to the company’s financial demise.

This is certainly a point worth considering. However, if you were involved in some sort
of accident which caused you to start bleeding, chances are, you would not form a task
force to mull over the most efficient and cost-effective way to stop the bleeding. You
would not refuse medical attention because it is too costly. You would most likely do
whatever it takes to stop that bleeding, and then, once the bleeding is under control,
you would review the cause of the accident, and make appropriate adjustments to
ensure that the accident does not get repeated.

Your dedication to the customer must realistically be tempered with the pragmatism of
common business sense. Using the analogy of the accident mentioned above, you
would not rush in for emergency surgery when you have a small scratch on your
arm. On the other hand, you would not try to put a Band-Aid® on a severed limb. The
remedy has to fit the wound. So it is with customer “injuries.”

Even a casual student of human nature can usually tell if a customer simply wants
satisfaction for the money and time they’ve spent, or if the customer wants to take you
to the cleaners. We caution businesses from creating their service policies with the
greedy customer in mind. This penalizes honest customers, and gives your company a
reputation for stinginess and paranoia, because of a few bad apples. Remember,
innocent until proven guilty.

However, giving away the store to someone who is simply trying to take advantage of a
situation does not make long term business sense. Most likely, they will take the money
and run. If they do tell their friends and family about the experience, it will more than
likely be a chest-thumping story of how they got over on you, rather than about the
outstanding service you provided.

The reality is, each and every business must decide for itself what level of service it is
willing to provide for its customers. It is a very personal decision, and never an easy
call to make, since some customers, frankly, are “more equal” than others. There are
many factors in determining just how much a certain customer gets from you, such as
their spending history with you, their spending potential, their ability to drive traffic to,
or away from, your business.

The product or service that you provide also factors in determining how far you should
go in trying to satisfy your customers. Some products or services better lend
themselves to guarantees, replacements, and upgrades. That said, here are some things
to consider when creating your service policies:

  •  What is the nature of your business? Do you make your money on a large
    volume of small transactions, or are there long sales cycles involved, leading up
    to occasional large payouts? This goes a long way in determining whether you
    replace the entire product, or fix the part that is broken.
  • Does the remedy fit the injury? General rule: do whatever it takes to fix the
    problem to the level of what the customer initially believed he was purchasing,
    and then put a cherry on top. Add something of value to it, no strings attached,
    as an acknowledgement of the customer’s inconvenience, and of his value to
    your business. Do anything less, and you add insult to injury. Can any business
    afford to insult customers?
  • Who are your customers, anyway? Are they all equal? If you think they are all
    equal, then you are not paying close enough attention to them. All customers are
    entitled to courtesy and fair play, but some are entitled to the royal treatment. If
    the 80/20 rule is true, then 80% of your business comes from 20% of your
    customers. Those customers in that 20% group have earned the “no-questions
    asked, give-them-what-they-want” service. Because if you lose one of those
    customers, you get a big dent in your business. The other type of customer that
    you want to keep happy at all costs is the matchmaker. They, themselves, may
    or may not bring you lots of revenue, but they are well-positioned in their
    industry, and are willing and able to send new customers your way. Give them
    a reason to. 
  • What kind of service incidents does your business typically experience? You
    should be on constant watch for trends in the realm of service. After resolving
    any customer issue, you should have a clear understanding of whether this was a
    freak occurrence, or a symptom of a larger problem. When the same type of
    misunderstandings occur over the course of a month, a quarter, or a year, then it
    is time to analyze how you are presenting the product or service in question, or
    the methods of ordering said products/services. Very often, “customer
    problems” are really “business problems.” When you fix one of these kinds of
    problems, you may find that a large percentage of your service issues disappear. 
  • How do you instill customer loyalty? Studies have repeatedly shown that
    customers who have had service issues swiftly resolved are far more loyal to
    those businesses than to businesses with which they’ve never had a
    problem. This is not as crazy as it sounds. It’s all well and good for businesses to
    be sturdy and pleasant when everything is going to plan. But to show grace
    under fire, when their best intentions have somehow gone astray and their
    customers are feeling anxious – this is the mark of a business that believes in
    itself, and is dedicated to its customer’s well-being.

These are just a few of the things you need to consider when creating your service
policies. When you start brainstorming, you will no doubt find many more. Your
service policies and your remedies for service issues are something you need to build
into your business plan and budget. This is the cost of doing business these days. The
better prepared you are for service hiccups, the better you will handle them. And the
better you handle them, the better your business will be perceived, and most
importantly, the better your customers will be served.

— Charles Dennis
© Knowledgence Associates, 2006 / All Rights Reserved

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