Why is Customer Service Important? 11 Ways Customer Satisfaction Correlates with Business Results

When building a successful business, everything screams for attention. Within that flood, why prioritize customer service?

When building a successful business, everything screams for attention. Within that flood, why prioritize customer service?

In short, happy customers lead to more money, growth, and sustainability.

But, you already knew that, didn’t you?

Yes, service matters. So does product, tech, design, distribution, marketing, sales, manufacturing… and the myriad of other resources in your company.

I don’t need to convince you why customer service is important. I just need to make sure you prioritize it.

More to the point, I need to help you help your company prioritize it.

Let’s dive into the 11 reasons why customer service is important and how to correlate it with business results…

1. Revenue increases with good customer service.

Revenue dictates every business decision. Companies measure success or failure based on money in minus money out. Profitability is king, regardless of whether it happens on day one or day 1001.

The number one reason why customer service is important in a business is because it correlates to revenue: 84% of organizations working to improve customer service report an increase in revenue.

why customer service is important reason 1 revenue
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The keyword in that chart is “working.”

Simply prioritizing good customer service in an organization increases revenue.

While it’s harder to show the one-to-one correlation between customer service and revenue, customer experience analytics provide the framework. Pick a few customer-related metrics to measure, and track revenue in parallel, to see the connection.

2. Happy customers build a better reputation.

Positive reputation leads to higher growth. Reputation goes a long way in a business. It attracts customers, investors, partnerships, and employees. When seeking to improve reputation, start with excellent customer service.

After a positive customer experience, 69% would recommend the company to others.

why customer service is important reason 2 reputation

For consumers overwhelmed with options, a recommendation from a friend often tips the scales.

The best way to sustainably grow a company is through word-of-mouth.

Viral social media campaigns and paid ads have their place, but nothing beats the oldest trick in the book. Great customer service leads to happy customers who talk about your product or service with future customers.

3. Retention correlates to customer satisfaction.

Customer retention carves the clearest path to business success. Keeping current customers happy results in more stable revenue and more accurate predictions. When you master not just attracting customers, but retaining them, it sets a solid foundation for your entire organization.

And, why is customer service important to retention? 75% of people would return to a company with excellent service.

why customer service is important reason 3 retention

The majority of consumers sight good customer service as a reason for sticking with a company. Beyond product satisfaction or value, customer satisfaction reigns supreme in today’s landscape.

Your unique product or service may reel them in, but customer service keeps them.

4. Churn decreases with more customer care.

Churn measures the amount of customers who leave a business after purchasing. It provides a fairly cut-and-dry measurement of satisfaction. Customers churn when they’re unhappy.

When it comes to churn, the importance of customer service is clear: 89% of consumers begin doing business with a competitor following a poor customer experience.

why customer service is important reason 4 churn

Products have issues. Services have flaws.

But if you can provide a seamless customer service experience, people will be forgiving.

Rather than push them right into the enemy’s arms, focus on excellent customer service to prevent customers from churning.

5. CLTV improves with better customer service.

CLTV (customer lifetime value) reveals the amount of money a customer potentially brings to a company over the course of their engagement. CLTV correlates directly with revenue.

How does it relate to customer service, though?

(For one, it’s got “customer” in the name. And anything involving the customer, involves the customer service team.)

These data points reveal a more specific breakdown: Highly engaged customers buy 90% more frequently, spend 60% more per transaction, and have 3 times the annual value compared to other customers.

why customer service is important reason 5 CLTV

A highly engaged customer refers to one who reads your emails, follows you on social media, and interacts with customer support (whether through individual correspondence or more general blog posts and knowledge base articles).

A good customer service team is involved in all of these mediums. Better customer service means higher engagement, which leads to more dollars spent.

6. Employee happiness correlates to customer happiness.

Customers aren’t the only ones who have options. Good employees are in demand in any economy. Especially at startups, employee happiness goes beyond a paycheck (and I’m not talking about snack perks).

Gallup found that highly engaged employees achieve a 10% increase in customer ratings.

why customer service is important reason 6 employee happiness
Source: Gallup

Create a mission-driven company where employees return everyday to find new ways to please the customer. Give your team a chance to be a part of something larger than themselves. Let them know how much each customer depends on their work.

The intangible feeling of having a purpose motivates people far longer than free food ever could.

7. Company culture strengthens with improved customer sentiment.

When you create a culture of serving people, your employees follow suit. Engineers help the sales team. Product listens to customer support reps. Teammates work together with kindness, compassion, and, above all, respect.

The term “company culture” elicits a buzzword, startup-y vibe. Like customer experience, it’s a new term used to describe something that’s been around forever.

Some companies write it on the office walls or make their employees memorize it. You don’t need to do all that. Company culture exists whether or not you define it.

why customer service is important reason 7 company culture
Company culture strengthens with improved customer sentiment

By valuing customers, and tirelessly working to serve them, you simultaneously create a company culture of helpfulness. Work gets done faster, productivity goes up, and both employee and customer sentiment thrive in a more collaborative environment.

8. Brand awareness soars with positive customer experiences.

Popularity doesn’t lose its significance after you leave high school. If anything, once you enter the business word, it’s value compounds.

The coolest brands on the blocks — meaning, those with the most and best brand awareness — get all the fame and fortune.

Positive customer experiences play a huge role in brand awareness, as they often lead to word of mouth advertising. 55% of customers become a customer of a company because of their reputation for great customer service.

why customer service is important reason 8 brand awareness

Provide a positive experience for existing customers and watch them rave about your brand. Analytics help you track awareness by measuring everything from online reviews to social media sentiment to recommendation potential.

When you build a brand awareness strategy around customer loyalty, you’ll see authentic and sustainable growth.

9. Marketing spend lessens with more customer advocates.

Customer marketing involves turning existing customers into advocates. Save money and time with every loyal customer. Not only do they purchase more, but they also bring in new business.

Your customers become your sales reps.

In fact, 56% of people would recommend a company with excellent service to family and friends.

why customer service is important reason 9 free marketing

Keep customers loyal with great customer service and they’ll be happy to promote your brand. What’s more, customer experience provides the personalization that marketers crave.

Before putting money into a marketing campaign, look at what’s already being done in your inbox and maximize its value as much as possible.

10. Valued customer service unites goals and processes.

When everyone at a company has the same end-goal, the entire workflow becomes streamlined. Place the ultimate emphasis on your customer, then move through each department to align them behind customer service.

For instance, when everyone is on the same page, the flow for bug reports should look something like this:

why customer service is important reason 10 efficiency

To make sure this collaboration spans the long-term, set a larger goal to improve a customer experience-based metric, like NPS. Then, put the responsibility on every department to move the needle.

You’ll have happier customers, more streamlined processes, and easily hit your KPIs.

11. Business longevity relies on satisfied customers.

Business owners take a huge risk when founding a company. For scaling start-ups, providing an excellent customer service experience is the surest way to keep up momentum and minimize loses.

According to Fundera, 20% of small businesses fail in their first year, and 50% fail by their fifth year. Reasons for failure range from lack of funds, to misunderstanding of market value, to inability to sustainably scale.

Satisfied customers resolve each of these issues:

why customer service is important reason 11 business longevity

Mitigate the risks of building a successful business with customer care.

Why customer service is important to your business

The question isn’t really, “why is customer service important?” It’s moreso, “how do I show that customer service is important?”

Maybe you’re up for a promotion and want to show your boss exactly why customer service is important to their bottom line. Or, perhaps you’re a founder who needs to convince investors to allocate more funds to build a robust customer service team.

Customer service is one of the most under-valued assets in business. If you can prove its worth, and get your team on board to harness its power, its success impacts every level of your organization.

These stats, examples, and explanations should help you get the funds, resources, and support you need to prioritize customer service in your company.

But, if you’re not using intuitive customer support software yet, it won’t be easy to do all this alone. Start your free trial of Groove to get access to simple reports and actionable customer insights that you can share with your entire team.

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