Guest Blogger – Jalene Nemec

We face unprecedented economic times in a globalized marketplace where purchasing from places as far away as China are just a click away. As a direct result companies have had to review, refocus and revamp their business scope to compete and sustain their livelihood.

Some have opted to accomplish this by changing their product line, cutting costs, slashing prices, removing excess overhead and reducing pay. All these options can prove successful and have. But there is a better solution. Improve your customer service and earn loyal customers!

Customer service by definition is to provide assistance with courtesy those who patronize a business. [1] A company that provides great customer service over their competitors creates loyal customers who will patronize their business year over year.  

The direct result of this is increased profits. Customers become loyal when they know they can trust your company to take care of their needs, even their most frivolous complaints and to do it with kindnesses.

To illustrate this, John Goodman used a simple calculation for getting customers to complain and then satisfying them. The assumption in this example is that a customer is worth at least $30 in profit over a year’s time.

The cost of handling a complaint is about $5 and at least 75% of callers are satisfied. To quantify the payoff of soliciting and handling complaints, it’s critical to know the prevalence rate of non-complainants and their loyalty, as well as the loyalty of those who complain and are not satisfied. The calculation for moving a customer with a problem from non-complainant to satisfied complainant is provided.

Payoff due to improved loyalty – Typically, moving a customer with a problem from non-complainant to complainant to a satisfied caller raises loyalty by about 30%, meaning loyalty) x (.75 satisfied) x $30 value). After covering the $5 cost of handling the complaint, one is left with $1.75 in profit and/ or an ROI of 35% ($1.75/$5 cost to handle complaint).

Over time, marketing executives have awakened to the fact that between 20% and 70% of all new customers are won by personal referrals, positive word-of-mouth. Research has also consistently shown that personal service interactions have 20 times the positive impact as advertising in fostering word-of-mouth referrals.

Payoffs due to enhanced word-of-mouth referrals: if, conservatively, one out of ten satisfied customers produce a word-of-mouth referral and one new customer worth $30 is won for every 40 who hear good things, then satisfying 10 customers adds $30 in word-of-mouth benefits, or $3 for each customer satisfied. That adds an additional $3 payoff for each satisfied customer, raising the ROI to 95%. [2]

The concept of these figures is intriguing. However they cannot come to fruition by doing nothing. Companies must be actively engaged in the task of improving and providing superior customer service.

Through my research, I determined that there were five key characteristics that lead to great customer service and ultimately increased profits. Those characteristics include: Attitude, Awareness, Accountability, Action, and Affability. Together they are my “5A-Wheel.”

Change begins with the right attitude. Before a company can change their customer service, they must establish a mission to provide quality service. Furthermore, the company should be aware of the current state of the service they provide. Change cannot be made without understanding the situation at hand. A business may question, has there been a noticeable decline in sales? If so, could it be a result of the customer service? 

The best way to kick-start change is to hold employees and managers accountable. Without effectively maintaining accountability for everyone involved, people will not see a reason to change their behavior and the business will suffer.

Holding personnel accountable is the first part of taking action. Unless a company makes a conscious decision to actively improve, change will be temporary or non-existent.

The final characteristic is affability. It seems like a minor detail, but consider some of your past consumer experiences. There were probably a few instances where an employee helped you in an “I have to” way, and there were times where you were helped in an “I want to” way.

This is the difference between attitude and affability. An employee has the right attitude if he or she understands a need to help the customer, but wanting to help the customer provides the best possible experience for everyone. 

Using these five characteristics as a guideline will help companies succeed in their customer service department. As you begin your career or start up your own business, be better than your competition and provide the customer service of yesteryear that people value, a customer service that people are loyal to.

Please share your thoughts with this guest blogger.

ABOUT THE BLOGGER

 

Jalene Nemec, MBA,  is the author of the upcoming book, Great Customer Service. She is also one of the brightest business thinkers in the world, having both extensive customer service and leadership experience.  She is a former Lincoln Memorial University MBA graduate.

REFERENCES

Entrepreneur. http://www.entrepreneur.com/encyclopedia/printthis/82148.html. 2011. (accessed   16 March 2011).

Goodman, John. “Manage Complaints to Enhance Loyalty.” Quality Progress, (2006).


[1] Entrepreneur.com

[2] Manage Complaints to Enhance Loyalty by John Goodman

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9 thoughts on “Guest Blogger – Jalene Nemec

  1. Jalene-
    Hello, I am one of Professor Green’s current undergraduate students. I agree with what you had to say about improving customer service. I work with the mentally ill and in my profession a dissatisfied customer may mean that a client is not going to come back for services ever, may end up in the hospital, or could even harm themself. I do believe that there is something to be said for just providing a listening ear sometimes and showing that you are concerned with the issue that the customer has. Thank you for your entry to this blog this week!

  2. Hello,

    I agree with your thoughts on the importance of customer service. I work in a family-owned collision repair facility, and most people do not enjoy coming in to see us. It typically means they have been involved in an accident which is a stressful situation in itself. We strive to ensure that there experience at our shop is the best it can possibly be. Most of our business is repeat and referrals, most likely due to our commitment to good customer service over the last 20 years. I really enjoyed your post!

  3. Dear Cindy and Katherine,

    I am so happy to hear that you both value providing good customer service in the work place. It is a valuable skill that is transferable no matter where your career takes you.

    As you interview for positions after you graduate be sure to mention these experiences in which you provided great customer service and the postitive results. It will set you apart from other candidates!

  4. Jalene,

    I enjoyed reading your post and agree with everything you said. You mentioned in your post about the difference between employees wanting to help, and having to help. With the majority of business transactions taking place today most of the time individuals never physically see the person on the other end, a positive attitude is important. I do agree that good customer service is how businesses stand apart in today’s market. Thank you for your contribution to this weeks blog!

  5. Jalene,

    I completely agree with you. I work in the banking industry, which is a service industry. Customer service is how we set ourselves apart from the competition. In fact one of our commercials is about our customer retention rate – are you one of the 96%? Thanks for sharing your research and insight!

  6. Jalene,

    First, I want to congratulate you on your book. It is an amazing achievement and something to be very proud of. Secondly, I wanted to say that I really enjoyed reading your blog post. I work as a manager for a retail drug chain and customer service plays a large role in what I do everyday. I had never seen the ROI estimates on positively resolving complaints. The numbers are very interesting. They lead me to believe that if some of the other managers I work with knew what they were losing they might be more pleasant when resolving difficult customer issues. Thank you for sharing your knowledge with us and best of luck with your future endeavors.

  7. Joshua,

    I am glad that you found the ROI figures interesting. I felt presenting this information was very important in my book. It is what makes it relevant. Hopefully it will awaken many managers.

    Thank you for your wishes.

  8. Jalene,
    I enjoyed reading your post and found it very interesting. I always knew that customer service was very important but seeing the ROI because of resolving customer issues makes it more of a realization. I agree with you on the statement that people can tell if you’re helping them because you “have to” or if it’s because you “want to”. That really makes a difference. I find it more offending if someone is helping me because they have to rather than not helping me at all. I used to work for a bank that put customer service first and foremost. They trained us using the Roxanne Emmerich techniques. We used those skills every day and were held accountable if we were not practicing them. It seemed to not only have an effect on the customers but the employees’ attitudes as well. We were more respectful to one another as a result. It really does make all the difference. Good luck to you! I look forward to reading your book!

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