As the battle for customer growth and retention looks set to continue at a pace in the years to come, a recent BDO report – Return on Service – written by the Economist Intelligence Unit (EIU) has unveiled for the first time the impact of poor customer service on the bottom line of businesses around the globe.
Our report demonstrates that despite customer service draining profits for many (almost two thirds admit that a customer service failing has had a significant financial impact on bottom lines), boardrooms are blinkered.
Even with clear evidence that poor service is hindering profitability, far too many businesses are failing to invest in, track or apportion sole responsibility for service: one in four (27%) admit to having made no investment in service in the last two years, less than a third (28%) have a designated head of customer service on the board and only one third (36%) have a strategy that clearly recognises the link between service and the bottom line.
And, as a board executive with service responsibilities myself, perhaps more concerning still is that, despite its importance in customer retention, just a quarter of business leaders (29%) feel being seen to be customer-focused is key to their career progression.
So if companies are to realise the true financial benefits of putting the customer first what changes need to take place?
Of fundamental importance is that service quality is put on the boardroom agenda in its own right. Far too many companies willingly admit that service has had a serious financial impact on their business without taking appropriate action to plug the gap.
It’s no longer enough for customer service to be side-lined to the head of HR or of marketing. There must be a head of service too.
Secondly, businesses have to focus their energies on establishing clear metrics that link service quality and the bottom line. Companies must be vigilant about regularly reviewing the metrics they use to measure customer service. Only then will they be able to develop clear and effective strategies and make a return on service.
Looking at our own profession, we know that the accountancy world has changed. In tough times, our clients the world over are fiercely focused on cost, value and service.
They have high expectations and are more willing to shop around for their service providers. At the same time, while more and more services, information and thought leadership is available online, service expectations vary widely from market to market – our clients and their needs aren’t exactly the same the world over.
With all this in mind, we have developed our approach to providing exceptional client service and we believe this five point plan would work for most companies looking to dial up service delivery:
1. Anticipate customer needs
2. Be clear, open and swift in communications
3. Agree to and meet commitments
4. Hire and develop great people in order to provide the right people for our clients: set high standards and empower employees by providing them with the best in training, opportunity and reward
5. Create value through giving customers up to date ideas and valuable insight and advice that they can trust
In addition, businesses have to take a tailored approach, not off the peg. Some customers are content with a uniform approach to service, but others want a more personal approach which reflects the culture they work in, and the kind of business they are.
While our report has shown that many boardrooms are failing to take appropriate action to prevent customer service failings from hitting the bottom line, there is some cause for optimism.
Of the business leaders we spoke to, 84% believe that customer service is very or at least moderately important to their financial performance. So clearly, we’re moving in the right direction.
We now need to see more boards prioritising service at board level to ensure they realise a genuine return on service.
Allan Evans is global head of Clients & Markets at BDO
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