4x your share growth in comparison to your competitors through service
The share growth of companies that perform well in customer service return 4 times greater than the market average:
HBR wrote an article on these findings and concluded:
Now that this market inefficiency has been exposed, business leaders—especially CFOs—have a responsibility to seriously question decision-making criteria that result in stronger short-term earnings but could weaken customer attitudes and relationships. The stakes are high. Leaders who do not actively work to increase customer satisfaction will be responsible for damaging their companies’ future earnings and shareholder value.
Is it the CFO’s responsibility?
I believe the CFO has some responsibility in this however I believe it is the Director of service or the COO that hold the responsibility for understanding and articulating the value of service to the organisation. If presented well and supported by data then the argument becomes very clear and CFO can see the financial benefits to service investments, rather than cost cutting.
How do you articulate the value?
It all starts with the basis unit of value in service – the conversation. Be it phone, email or social. A conversation with a service agent can have one of four outcomes; the customer leaves, the customer stays, the customer increases spend or the customer goes away advocating the brand and selling for you.
How many times does that happen?
If we look at this unit of value, one service agent can have 50 of these opportunities in a day to destroy, sustain or create value. That about 12,000 opportunities in a year. If we had a service centre of 100 agents, that’s 1,200,000 opportunities a year from the service team!
What does this mean to the bottom line?
If we look at the yearly spend of a customer, the gross profit from that spend and the churn rate, we can work out the lifetime value. Now for a surprising number; lets say a customer was worth £150 to the company. Multiply this by the 1.2m conversations in the service centre you have £180m flowing through a team of 100 agents. No wonder share prices shift significantly in the long term in relation to the customer service performance!
If you can make small improvements in loyalty and recommendations in the service centre then large returns start flowing. Conversely; damaging or providing poor service also has a dramatic outcome.
In-gage help companies understand and articulate this value and put in place practical steps in the service teams, to improve profits.