How Customer Service Affects Customer Loyalty

According to the 2014 Convergys U.S. Customer Scorecard Research: Key Findings on Customer Loyalty and Satisfaction, 2013 saw a drop in customer loyalty with scores at 52 percent. In 2014, scores rose and leveled off, with 55% percent of respondents giving positive feedback. Customer loyalty may not have returned to 2011’s level of 59% yet, but the numbers have at least stabilized. The question is, “What type of customer service is affecting loyalty?”

The 2014 U.S. Customer Scorecard Research reports that customer service is the third most important factor of customer loyalty. Poor customer service drives disloyalty and can negatively impact the purchase decisions of others, since customers are more likely to talk about a bad experience than a good one. Quality customer service, on the other hand, helps improve customer loyalty, particular when a contact center agent is able to quickly resolve product issues and reduce customer effort. Great customer service can lessen the impact of negative product experiences.

Focusing on Existing Customers

Sustaining and building relationships with current customers is just as important as increasing brand awareness and attracting new customers. It is typically more expensive to get a new customer than to retain a current one. Unfortunately, many businesses aren’t using that strategy. A 2014 Forbes Insights survey showed that 49% of respondents said their company focuses mainly on converting new customers, and while 78% of respondents know that customer lifetime value metrics are important, only 58% of them regularly calculate those metrics.

In an effort to increase customer loyalty, subscription-based services are gaining popularity across a host of industries. Through these programs, companies offer products or services on a recurring schedule. The value of a customer occurs over time and in installments, not just at the time of the initial purchase. However, for a customer to continue being profitable to the business, the customer relationship has to continue to be positive. Great customer service has to be delivered not just before a sale, but after one as well.

Offering Value Instead of Rewards

In recent survey published in the April 2015 issue of Retail World, Colmar Brunton states that  30% of shoppers use their supermarket loyalty card, but they don’t believe that it adds value to their experience. Brands that offer a loyalty program offer purchase specials via online marketing. However, true loyalty is about creating strong relationships with customers, and past purchasing behavior shouldn’t be the only factor taken into account. Customers need to have a clear view of perceived product value, which plays a much larger role in customer loyalty.

Understanding Customer Goals

Customers are impressed when customer service agents show that they have knowledge and understanding of their problems and priorities. Referencing specific goals shows an investment in the customer. In turn, the customer will want to hear more about how their efforts can be helped along and they’ll be eager to purchase the product or service being offered. Ultimately, the customer’s needs must be at the center of the customer service strategy.

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