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Why is Customer Service Important for Businesses?

By Editorial team | Updated October 10, 2022 (Published 3/10/2022)

A key element of running a successful business is having good customer service in place. Customer service can help answer customer enquiries, make them feel heard and can strengthen customer engagement. It has been demonstrated as one of the most effective methods of customer retention cross-sectorally.

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Aftercare of customers is as important as initial customer acquisition as it can encourage repeat business and word-of-mouth sales.

However, good customer service is something often overlooked by companies, especially when business is going badly or when it is booming and companies get complacent.

Why is it important to have good customer service?

“Good customer service improves customer experience which makes customers more likely to return,” says Dan Kettle of Pheabs.com.

“A positive customer experience also makes it more likely that customers will leave favourable reviews, which can attract new customers in the future.”

“Customer service is not just handling customer complaints; in fact, good customer service would work to improve customer experience at all stages of the sales pipeline to reduce the risk of customer complaints or negative reviews.”

From the point of initial enquiry, to point of sale to after-sale follow-up, there are many opportunities that a company has to engage with their customers and improve the customer experience. Improving good customer service at these stages will help improve a customer’s overall impression of your company and make them more likely to recommend your services.

It has been found that customers who have a bad customer experience are 50% more likely to share their experience with others, posting on social media or leaving a bad review. This can be determined for companies, especially those just starting out, as it can deter new customers.

On the other hand, 42% of those who experienced good customer service bought more from that company in the future. These statistics show the power and value of good customer service in improving customer satisfaction and ensuring future sales.

The importance of existing customers

“Customer acquisition is often considered one of the biggest challenges of businesses, especially those just starting out,” says David Soffer of price comparison, Proper Finance.

“By retaining existing customers and ensuring customer loyalty, you are guaranteeing future sales without the headache of acquiring a brand new client. To break it down, the probability of selling to an existing customer is 60-70%; far higher than the probability of selling to a new customer (only 5-20%).”

“Businesses rely on existing customers for the majority of their revenues, with 61% of businesses reporting that most of their revenues came from repeat business. Not only that, but it is widely reported by businesses that repeat customers spend more than new customers, approximately 67% more.”

Repeat customers know what they’re getting as they have already purchased from you. This makes them likely to buy from you again, if they were pleased with the product and customer experience. It also makes them more open to new products than new customers as there is already a level of trust.

How should customer service factor into a company’s business strategy?

When developing a business strategy, companies tend to focus on customer acquisition, thinking about their target market, how to reach them and how to secure those initial sales. However, it is important to factor in customer retention as part of their strategy and marketing plans. Gaining customer loyalty can ensure repeat business and can be hugely important for company revenues.

Customer acquisition and customer retention should go hand in hand. Companies should work on acquiring new customers as well as taking care of existing customers to ensure word-of-mouth sales, positive reviews across platforms and repeat business.

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