Why Customer Service is Important [13 Reasons Too Good to Ignore]

If you are looking for a way to retain lifelong relationships with your customers and increase the company’s profitability, then your customer service department is a great place to start.

“If you build a great experience, customers tell each other about that. Word of mouth is very powerful.”

– Jeff Bezos

A happy and satisfied customer comes again and again to your organization, but once a customer gets dissatisfied, they never want to purchase goods and services again from you.

Yes, good customer service matters along with product, design, distribution, technology, marketing, etc. In short, happy and satisfied customers lead to more growth, profit, and sustainability for your organization.

According to Gartner Research, 89% of firms now anticipate competitors based mostly on consumer experience.

What Is Customer Service?

Customer service is the proactive guidance and support you provide to your customers throughout their entire journey with your brand—before, during, and after a purchase. Its goal is to create a seamless and positive experience that builds long-term relationships.

This differs from customer support, which is typically reactive. Customer support focuses on resolving specific, technical problems a customer encounters with a product or service. For example, fixing a billing error is support, while proactively checking in with a new customer to ensure they are getting value is service.

How to Deliver Great Customer Service

Providing great customer service is essential to any business’s success. Strong client relationships, improving the overall customer experience, and encouraging customer loyalty are the three main reasons why customer service is important.

Understanding the importance of customers in a business is essential to understanding the significance of customer service. Develop fundamental abilities, including effective communication, empathy, and problem-solving, to deliver good customer service.

Step 1: Recognize the importance of customer service

• Understand why customer service is crucial for business success.
• Acknowledge the significance of customers in driving business growth.

Step 2: Develop customer service skills

• Acquire essential skills like effective communication and empathy.
• Enhance problem-solving abilities to address customer needs.
• Participate in corporate soft skill training to build interpersonal skills and improve team collaboration, which is crucial for delivering exceptional customer service.

Step 3: Prioritize good customer service

• Emphasize the value of providing excellent service to customers.
• Build strong relationships to foster customer loyalty.

Step 4: Commit to continuous improvement

• Implement strategies for ongoing customer service improvement.
• Adapt to evolving customer expectations and needs..

Key Metrics to Evaluate Customer Service Performance

To improve your customer service, you must measure it. Tracking the right key performance indicators (KPIs) provides actionable insights into your team's performance and customer satisfaction.

• Customer Satisfaction (CSAT): Measures how satisfied a customer is with a specific interaction or experience, usually on a scale of 1-5.
• Net Promoter Score (NPS): Gauges overall customer loyalty by asking how likely a customer is to recommend your brand to others.
• First Contact Resolution (FCR): The percentage of customer issues resolved during the very first interaction, without needing a follow-up.
• Average Handling Time (AHT): The average duration of a customer interaction, from start to finish, including hold times and follow-up work.
• Customer Effort Score (CES): Measures how much effort a customer had to expend to get their issue resolved.

Why Is Customer Service Important?

“Why is customer service important?” I am sure you might have asked this question of yourself too often: You must also be wondering, “How does it affect the overall growth of your business?”

Especially when your business is on a low budget, it seems like a waste of money to spend on customer service when you have several high-priority functions.

But your customer service team should be as important as your other teams in the organization. After all, your customer service department has a direct connection to the customers.

Great customer service leads to a fantastic customer experience, especially when your support team goes beyond just reacting to customer problems and begins to anticipate difficulties.

When your customer support team is empowered to go above and beyond for your customers, they can create winning and outstanding experiences that help you stand out from the rest.

Still not convinced? Let me walk you through some of the reasons that are too good to ignore, and by the end of this article, you will surely understand why customer service is important for your business to grow.

1. Customer service represents your brand image, ideas, and values

You might have a notion of what your brand represents and what the overall idea behind it is. But do your customers know about the same?

That’s where your customer support team comes into play. Your customers build an assumption of your brand based on your social media presence, advertisements, newsletters, and other external marketing, including how you project your brand out there.

Just a simple example: A brand using an 1800 toll-free number in ads gets 30% more traction in comparison to brands not using toll-free numbers. Why? Well, because 1800 toll-free numbers are highly regarded and trusted by people.

Similarly, brands using an IVR menu in their customer service number are seen as more professional than brands using non-business numbers for customer service. All these small things matter.

• Customer service is vital for businesses due to its impact on customer perceptions and loyalty.
• Your customer service team holds significant control over factors influencing your brand image.
• Direct interactions with customers make support agents key players in portraying your brand.
• Suggestion: Add a citation for this statistic. For example, "(Source: Forbes)".Studies reveal that 73% of customers stay loyal to brands with pleasant and friendly customer service.
• The importance of good customer service skills cannot be overstated for customer satisfaction.
• Recognizing the importance of customers in business emphasizes the need for effective customer service.
• Sustaining a favorable brand image requires continuous development of customer service.
• Businesses must understand why customer service is important to foster a customer loyalty program.

You cannot represent your brand without having a customer service department because you have no direct connection to your customers without your call center software and customer support agent. The bottom line is that your customer service personnel are critical in conveying to customers your desired brand image. They can help you in persuading customers of your strengths and advantages, which in turn helps in retaining customers.

2. Word of mouth matters

Let’s just say you are a customer, if you were to buy products and services from a brand, and depending upon your experience, you are gonna rave about it to your family, friends, and close ones. Just that, when your customers are happier, they are gonna recommend it to others.

It’s totally human nature to rave about something you absolutely love, and, naturally, you want your near and dear ones to commit to a brand that you trust. It’s called a domino effect or chain reaction when one customer appreciates your brand in front of others, and then the other one in front of another customer, and this goes on.

• Satisfied consumers turn into strong brand ambassadors for your company.
• Customer service team satisfaction leads to dedicated efforts to please customers.
• Happy customers serve as an excellent form of advertisement.
• Customer satisfaction is a key driver for positive word-of-mouth marketing.

3. Customer service either makes or breaks your brand

Today’s customers know very well what they want or expect from a brand, and they have become accustomed to what they receive. In recent years, customers’ expectations have risen; in fact, 82% of CEOs stated that consumer expectations have risen in their firms and are much greater than they were three years ago.

• Provide service across all channels for strong customer relationships.
• Use social media to generate experiences with a broader audience.
• Establishing good customer relationships is very important from the start of any business.
• Recognize the importance of customer service in the age of widespread online sharing.
• Skills in customer service are essential for maintaining a positive brand image.

4. Customers pay a premium for superior customer service

According to research, more than 67% of customers are ready to spend extra for better customer service, and 50% of customers boost their purchases with that organization after having a great experience with them.

In today’s time, when businesses are learning to emphasize customer service, if any organization doesn’t do so, it will fail miserably.

• Single interactions have a big impact on what customers decide.
• A single great encounter can keep clients coming back.
• One bad experience could lead clients to competitors.
• Pro Tip: Understand the importance of customer service for customer loyalty.

As it is said, “it takes 12 positive customer experiences to make up for that one negative experience.”

5. Customer satisfaction is directly linked to a company’s long-term success

According to Fundera, around 20% of businesses fail in their initial year, and 50% fail by their fifth year.

There is a huge risk involved for entrepreneurs when starting a business. But providing the customers with outstanding service is the surest method to retain momentum and minimize losses for expanding start-ups.

Business failures stem from various reasons, like:

• Lack of strategic planning and vision for the business.
• Inadequate marketing and inability to connect with the intended audience.
• Poor leadership and management techniques.
• Inability to adjust to evolving technological and market changes.
• Pressure from competitors and a lack of ability to set oneself apart.
• Operational consequences for legal and regulatory matters.
• Limited cash flow and issues with financing.
• Low-value goods or services that leave customers unhappy.
• Internal conflicts and team dysfunction are affecting productivity.

If you are still wondering, “Is customer service important?” note that:

• Exceptional customer service is key to business growth and long-term success.
• Understand the value that customer service has for a company’s ability to survive.
• Customer service plays a crucial role in overcoming challenges and achieving growth for your business.

6. Your business requires omnichannel solutions to reach customers

COVID-19 has changed the business world upside down; even the biggest of businesses have been affected by the global pandemic. Before COVID-19, businesses used to explore different ways and approaches to engage customers, but this pandemic totally changed the way of doing business.

During the epidemic, businesses adjusted to engage customers via:

• Video calls
• Live chat
• Social media

These communication channels are enduring as the world continues to struggle with the global crisis. Consumers now view these channels as the norm for customer care and expect them to be helpful. Acknowledge the significance of adapting customer care tactics to address global issues.

Having the ability to communicate effectively across a variety of media is essential for providing good customer service. Omnichannel has become a must-have for businesses, and every organization must invest in these solutions, including cloud call center solutions, to connect with customers and provide a consistent customer experience.

7. Good customer service leads to valuable feedback

I can’t put enough emphasis on the above statement because feedback is one of the essential components for every organization. It can either make or break your brand. It only takes one negative feedback to lose customers.

According to the study, around 47% of customers share their experience on social media channels, be it negative or positive, but here is the catch: only one out of 26 customers shares their experience; others prefer to switch to another brand.

Everyone has a different opinion, and so does the customer. As a business owner and executive, you won’t know what your customers expect from your products or services, or what they perceive by looking at your products.

Everyone who works on a product, including team leaders, developers, and testers, has an opinion about it. That’s why getting feedback from customers is essential, and you don’t need to share every customer feedback in public; it is for you and your brand to do better and better to meet customers’ expectations.

Here are a few different ways you can use to collect feedback from customers:

• Customer feedback form
• Social media
• IVR calls
• On-site activity
• Emails

8. Customer service increases Customer Lifetime Value (CLV)

Customer Lifetime Value is one of the core metrics to measure when you are running a business. It shows how much money you can make from a single customer or how much a customer is spending on your business.

A simple way to calculate CLV is:

CLV = (Average Purchase Value) x (Average Purchase Frequency) x (Average Customer Lifespan)

Great service directly impacts all three variables by encouraging repeat business and fostering loyalty.

Investing in your customer service and improving it allows you to fine-tune your CLV. Clients are more inclined to return for more if a support agent pleases them during their engagement. Your customers may also share their experiences on social media, which in turn helps to build rapport with the customer base.

This creates trust between you and your customers and makes it easier for you to upsell and cross-sell other items. New users will have confidence in your sales team’s recommendations, resulting in a more pleasant purchase experience for both your customers and employees.

9. Great customer service builds trust and loyalty

Time has changed, and so have the buying expectations of customers. They want to know they’re buying from the proper source, and a well-trained support team can help you get there. Whenever customers have a second thought about a product, skilled customer representatives can put them at rest.

• Expert support agents encourage customer retention through their knowledge.
• Transparency and honesty are key in business, starting from the first encounter.
• Avoid pushy sales copy and complex marketing for an authentic customer approach.
• The success of a business as a whole is influenced by customer service that is always improving.

Research has shown that 94% of customers are loyal to the brands that are transparent with them, a nd 73% are willing to pay extra for complete transparency.

10. In 2024, customers expect a higher level of service

Customers don’t just expect your brand to have a customer service department in 2024; they expect it to be world-class and available to assist at any time.

• Customers demand high-quality service and are quick to switch if dissatisfied.
• Treating customers well is crucial due to the abundance of alternatives.
• Recognize the importance of customer satisfaction in brand loyalty.
• Focus on good customer service to retain and attract customers.

If you want to retain your customers and attract new customers, then you can meet their expectations at any level and cost. That’s why you also need to have the required tools in place to be real-time responsive to your customers.

For example, if you’re running a call marketing campaign using a virtual phone number, and if customers request a callback, you should be able to get back to them instantly using an IVR system or voicemail service and then follow up with the customer ASAP using an outgoing calling solution.

That’s one example of providing real-time service on call. The same strategy shall be in place for all media and touchpoints.

11. You get more marketing opportunities

More than 70% of the customers are more likely to appreciate a brand that reaches them first. This is the essence of proactive customer service; it’s a win-win situation for everyone if you are willing to offer a helping hand at any moment.

This way, they will know you’re doing everything you can to make their user experience as seamless as possible.

• Proactive customer service is a budget-friendly investment in your company.
• Addressing issues before customers report them enhances user experience.
• Demonstrates a commitment to improving customer satisfaction and service.
• Utilize proactive service as a marketing tool to introduce new products and services.

12. Customer retention is less expensive than acquiring new customers

I can’t help but say it again: Customer retention is less expensive than acquiring new customers. While expanding your business, you don’t want to let your old customers go.

To get you on board with this idea, here is one more finding: An improvement in client retention might result in a 25% increase in overall profitability.

Moreover:

• Customer service investment reduces the cost of acquiring new clients.
• Devoting resources to customer service lowers churn rates.
• Lower churn rates decrease overall Customer Acquisition Cost (CAC).
• Recognize the importance of customer service in cost-effective customer acquisition.

13. Customer satisfaction enhances company culture

When customers are happy and satisfied, employees are automatically happy, which in turn enhances company culture.

• Cultivate a service-oriented culture to influence employees positively.
• Customer service representatives set an example for the team.
• Love, compassion, and respect among teammates foster a positive work environment.
• Valuing customers contributes to a beneficial business culture.

A collaborative atmosphere:

• Increases productivity
• Enhances customer satisfaction
• Offers effective problem-solving
• Generates faster decision-making
• Improves communication
• Gains employee satisfaction

Pro Tips: Essential Customer Service Skills

1. Active listening is the key to improving customer service

Don’t forget that a customer is a human being, too, and he wants you to listen to his problems and concerns. The individual must feel heard, understood, and that you are there to solve their problems. Active listening is a valuable talent that you may enhance by practicing with your coworkers and family on a regular basis. This skill directly improves First Contact Resolution (FCR) rates by ensuring you understand the core issue immediately.

• Engage in conversations to get new knowledge.
• Pay attention to the speaker.
• As they finish speaking, ask clarifying questions.
• For better understanding, summarize the conversation.

2. Use positive language to build rapport

Have you ever experienced how one positive word can take all the stress away? That’s the same with your customers, too; using positive words or language with them can take all the stress away from them. Words are powerful, and they can leave a lasting impression on anyone; they may also help you build trust with your consumers. Using positive language consistently can lead to higher Customer Satisfaction (CSAT) scores.

• Make use of positive verbs.
• While interacting with customers, be sincere, friendly, and engaging.
• Even when the consumer is dissatisfied, stay calm and polite.

3. Know your products and services thoroughly

Before helping a customer out, the first and foremost thing is to know your products and services very well; you must have a thorough understanding of how your products function.

Each customer representative should spend some time onboarding with a seasoned product specialist so that they may ask questions and thoroughly comprehend the product. You’ll be able to assist customers in debugging difficulties, and you’ll have product tips and tricks to give to make the product more user-friendly. Deep product knowledge reduces Average Handling Time (AHT) because you can answer questions faster and more accurately.

Make Customer Service Your Greatest Asset

If you want a thriving business, then you must master customer service. One of the most undervalued assets in any company is customer service. Its success can positively affect every level of your business if you can establish its worth and get your team on board to harness the complete potential of customer service.

And the most important tip is that if you make your employees happy, then they will surely make your clients happy, too! So, go ahead, create a happy culture in your organization and convert your customers into loyal fans with great customer service.

Take charge of your customer interactions. Empower your team with the tools to deliver exceptional service and command every conversation.