Why Service Excellence is important?

We often hear companies saying that good customer service is very important for them, but in reality, actions do not seem to support that statement. Instead of that many organizations today tend to focus only on choosing faster and easier ways to get fast recognition and easy money. Company managers forget that front-line determines the success of the company.

We, as a customers, do not care about back-office procedures and efforts, we just want to be noticed, served and that our need will be met, so that we leave our money to the company. We do care about Excellent Service.

It is still well-known opinion that good customer service means few or non customer complaints, forgetting that the Service Excellence is more than that.

Here we can refer professionals in it’s field.

Johnston, R. & Clark, G. have written in their book Service operations management book that Service Excellence means that it is not about exceeding the expectations of customers, but primarily about “delivering what is promised and dealing well with any problems and queries that arise”.

Or Johnston, R. has said in other words that it is all about the organizations being “easy to do business with”.

In light of the recent economic recession, Service Excellence topic is drawing more attention. Being more customer-focused and providing Service Excellence is becoming a significant advantage and performance differentiator for both, private and public organizations. It helps business to win clients in an extremely competitive environment nowadays and it facilitates cost–saving.

Large amount of research executed around the world demonstrates that investments into customer service and people yield enhanced organizational results, so there is a high correlation between the customer service quality and profitability.

One of the proofs of this cycle could be the example of Sears and its US mail order business. Research has shown that “5% gain in employee satisfaction drives a 1% gain in customer satisfaction which, in turn, leads to an additional 0.5% increase in profit”.

Second example is Canadian Imperial Bank of Commerce, claiming that “using the Service- Profitability Cycle, has demonstrated that each 2% increase in customer loyalty generates an additional 2% in net profit”.

Latter (mostly in private sector) can be measured through sustained profitability, efficient recourse utilization, “higher levels of customer / client / user satisfaction, reputational enhancement that, in turn, generates grater public confidence”. Moreover it is said, that “superior customer service does not automatically incur higher costs. ‘Getting it right first time’ actually enables costs to fall”.

The research of customer satisfaction carried out by EFQM shows explicitly that customers’ loyalty has a direct influence on the company’s financial results – it increases profits generated by the company. It has been proved that most profits are brought by loyal clients who are lenient, forgive the company their mistakes and do not join the competitors when the circumstances become unfavourable. The main factor influencing the clients’ loyalty is the service – the best proof here are the results of classic research concerning the reasons why the clients join rival companies: in 69% cases it is because of unsatisfactory customer service. It is worth mentioning here that the low quality of the company’s products or services discourages only 13% of customers.

How much does poor customer service cost?

It is easy to imagine how much a company loses when a client is serviced in a way that does not meet his/her expectations and (s)he decides to refuse for service:

• the service which was almost paid for was not carried out – lost profit;
• an opportunity to gain a loyal client was squandered – lost potential profit in the future;
• the situation became a reason for anti-promotion of the company though it could have become its good promotion (oral recommendation) – lost opportunity to increase the number of clients through one client;
• attracting new clients will last longer and will cost more money – dissatisfied client talks about his/her experiences to six people on average so it will be more difficult to convince these people to use services of the company;
• company probably spent a lot of money on creating the image – as a result of the situation the money spent on gaining one client was wasted.

In this situation the company suffers significant losses, financial and non-financial. It would be worth learning how many such cases take place in a company every day, week, month or year. Does the management of the company know about these cases and can it assess how much money is lost? How much do such Moments of Truth cost?

The research results or situations described above show how much one can lose because of poor customer service. However, there arises a question if the expenditure on improving and then keeping high level of customer service will not be bigger than the possible income increase resulting from these actions.

It is not so because of a simple reason – good customer service does not require big investments but creating the proper culture of contacts with clients in the company and maintaining it on the same level.

The key element here is motivating the employees in a proper way and constant monitoring of the customer service quality.

It is important to involve the employees themselves in the process of deciding about the customer service – it is them who are in the direct contact with clients and meet them most often and that is why they usually have the best ideas concerning this issue. If the employees have an opportunity to communicate these ideas, they become responsible for the service – they want it to be as good as possible.

In such a situation the only expenditure that the company incurs is the cost of regular observing researches, which are connected with motivational baggage. Those results make the employees think about innovations and eliminating mistakes. The rest becomes the culture of the company and so it drives itself on.