The first impressions your employees make on a potential (or returning) customer may have a lasting impact. That’s why focusing on providing top-notch service at all times is so crucial to customer retention and ongoing growth. Mastering some key customer service basics, and then adding your own spin to them with the tips in this guide, may transform your customer service and help you center this vital customer retention strategy in your business.
Why is customer service important?
Among the reasons why customer service matters are that it may:
Lead to customer loyalty
Attentive customer service shows how much you care about your customer, and it typically makes customer loyalty much easier to foster. Plus, it’s just human nature for customers who feel cared for to return to the source of that care – namely, your business.
Save money on marketing
Retaining loyal customers is five times more affordable than acquiring new ones. Since excellent customer service is a straightforward conduit to customer loyalty, it’s also a great way to potentially cut your marketing costs.
Encourage additional customer spending
Did you know that nearly seven out of 10 Americans would rather spend more money for better customer service? When you perfect your customer service, you increase the chances of people buying from you again instead of purchasing from a competitor.
Lead to positive word-of-mouth referrals
Think about the last time a friend told you about a great shopping experience – didn’t it make you want to shop there too? Maybe your friend had such a great time because the customer service was truly excellent. When your business offers similarly high-quality customer service, you set up the potential for these highly effective word-of-mouth referrals.
Drive brand awareness
Chances are you’re intimately familiar with the biggest example of how customer service drives brand awareness. Namely, a large part of Amazon’s e-commerce dominance is its excellent customer service. As word spread of Amazon’s customer-first service approach, more people flocked to it, knowing their concerns would be tended to with care. The result is that Amazon has developed a customer-oriented brand. With great customer service, your business may be able to do the same.
Lead to quicker problem-solving
No business will ever be perfect, but excellent customer service may help you solve problems before they become catastrophes. When a customer who calls you with a complaint feels that their concerns were addressed, the issue typically ends there. And if you’re especially kind and offer a highly meaningful solution, you might even turn your worried customer into a repeat one.
Allow for higher prices
If your customer service is so good that customers just can’t get that level of attention from your competitors, you might be able to raise your prices. After all, prices reflect both raw material costs and the amount you pay for labor and skills. Excellent customer service is both a type of labor and a skill that takes gradual refinement.
Improve employee morale
When customers are satisfied, so are employees. Great customer service means your reps are less likely to face an angry or unhappy customer who makes them unhappy too. The result is greater employee morale, which typically leads to more engagement and productivity.
Types of customer service
There are five types of customer service that you may want to incorporate into your strategy:
- Self-service. When customers need problems solved but don’t want to interact with people, they’ll seek out self-service hubs. Here, customers may find FAQs, access informational forums, or read product manuals. The goal of your self-service hub should be to enable customers to solve their problems before contacting you becomes necessary.
- AI Chatbots. Artificial intelligence may be able to help with your customer service needs. Setting up a chatbot to handle basic customer inquiries may be a wise financial move that also helps your customers who reach out after business hours. Instead of spending money on 24/7 customer service agents, you may be able to improve retention rates without spending money beyond the initial software purchase.
- Social media. One in every three consumers prefers social media customer service to phone or email. This may mean using Messenger as a live chat tool or fielding customer questions in your Twitter mentions. One way to streamline your social media customer service, install software that directs all messages across all your channels to one inbox. This way, it will be hard to miss a frustrated customer’s DM.
- Live chat. Roughly four in every five customers view live chat customer service favorably, given its rapid response times. To properly incorporate live chat into your customer service strategy, have employees ready to answer questions just a minute or two after receiving them. Train these employees to be as tuned-in and responsive as on a phone call.
- Email. Of all the customer service methods, email is perhaps the easiest to track. Customers may be able to include attachments and label or filter their emails to you in their inboxes. You may do the same for incoming emails. Additionally, all your communications will be clearly timestamped. Perhaps best of all, email lets customers contact you when your phone, social media, and live chat aren’t accessible.
- Phone. For especially complex problems – or for customers who simply want to have an actual conversation – phone support remains the gold standard. You’re best off combining interactive voice responses (IVR) with live phone support. You may use automated IVR to direct customers to the right agents for their needs. From there, a thorough conversation may be able to take place, and a meaningful solution might emerge.
Tips to have an outstanding customer service strategy
A good customer service strategy typically involves teaching your employees all about your products, using appropriate technology, and solving issues on the first touch. It also means leading a team of empathetic customer service agents who don’t need to seek approvals from higher-ups to offer meaningful solutions. To check all these boxes, take the four steps below.
1. Set your customer service goals and metrics
Customer service goals might be used to help you track your team’s performance in ways that lead to happier customers. And, of course, greater customer satisfaction means more potential repeat sales.
Any goals you set should be measurable, specific, realistic, and tied to a timeframe. You should also reevaluate your goals as you go to make sure they remain sensible and achievable. A great example goal might be going above and beyond for one customer per day. Doing so may distribute the most intense parts of your customer service workload over time. It also usually makes customers more likely to buy from you again.
To track your goals, use a wide variety of metrics, including your ticket volume, resolution time, response time, and customer retention rate. This should give you a strong sense of how well your team is addressing customers’ issues and maintaining customer satisfaction. It may also show you the relationship between great customer service and sales increases. And at the end of the day, both these goals are equally important.
2. Hire employees with the right skills
There are some key customer service skills that all of your agents should have the moment they start the job. These are:
- Communication
- Listening
- Empathy
- Patience
- Positivity
- Ability to learn the ins and outs of a product or service
- Confidence
- Persuasion
- Conflict resolution
- Adaptability
Even if your team has them at the outset, you should regularly work to refine and improve them. Some ways to do so include:
- Focusing on certain touchpoints. Make sure your team pays especially close attention to the customer during product purchase or service registration. Do the same during training, implementation, and the entire duration of a free trial. All these touchpoints are common sources of customer complaints, so keeping in contact helps you solve problems before they arise. The result, of course, is greater customer satisfaction.
- Using CRM software to track conversations. No matter how well you and your team think you know a customer’s wants or needs, your brain might go blank come conversation time. To avoid this obstacle, use CRM software to track conversations and document everything discussed. This way, you and your team have all the key points on hand to properly tend to customers when you speak with them.
- Train your customer service team on all channels. It’s great to offer all five of the customer service types mentioned earlier, but a problem may arise if you’re short-staffed on one channel. If you ask some phone staff members to fill in on live chat, they might not be as well-equipped for the job. Train your staff on how to use all your channels to ensure no gaps in the quality of your customer service.
3. Improve your customer experience
It’s easy to conflate customer service and customer experience, but the Venn diagram between the two is far from a circle. Where customer service comprises interactions between customers and your employees, customer experience includes every interaction with your brand. As such, the customer experience ranges from how your customers perceive your logo to what they feel when they read your online reviews.
It’s understandable if, upon understanding how customer service and experience differ, you feel that the former affects the latter but not vice versa. That’s not quite the case. Put yourselves in the shoes of a customer having a bad experience with your product but not yet ready to call your team for help. Let’s say this customer looks through your reviews to see if others have experienced similar problems. The customer sees other complaints about not just this problem but your company’s lack of effort to mitigate it. The customer could get angry.
Perhaps the customer feels angry enough to call your customer service line and demand a complete refund. Maybe you’ll grant them what they seek. If not, a bad review could follow. And then, this whole cycle of angry customers could continue uninterrupted. Your reputation will certainly take a hit. Of course, there’s an obvious solution to this.
4. Always prioritize quality
Since your customer service is part of your customer experience, providing high-quality care is a surefire conduit to a satisfied customer base. High-quality customer service is likely if you:
- Understand what your customers need. Consider what people with your customers’ lifestyles and demographics might need from your company. Then, make sure your customer service meets these needs. For example, if your customer base skews older and lacks internet access, put extra effort into your phone service and staffing.
- Train your employees on consistency. Personalities vary, so customers may experience your company differently based on the agent to whom they’re speaking. This difference may be disorienting, and consistency training might solve it. Teach your employees the acceptable and unacceptable ways with which to interact with customers, then put them to work.
- Make your channels accessible. Your website should have clear instructions on how to access all your customer service channels. Similarly, your social media pages should include links to your other customer service channels, as should your email signature. The goal is to give your customers easy access to their preferred method for contacting you.
- Always respond quickly. Unless you’re contacted outside your operating hours, there’s no good reason to delay responding to customer concerns. Even with emails sent overnight, an immediate response the next morning is key. The sooner you respond, the less likely customers are to feel neglected, and the more likely they are to feel satisfied.
- Fix problems. A customer service encounter full of positive interactions is all for naught if the customer’s issue isn’t solved. You should strive for all customer service encounters to end with satisfying solutions or at least proof of steps being taken to elevate the issue. Keep in touch as the issue is being solved to show the customer how much you care.
- Treat your team well. A team that enjoys its work is much more likely to radiate that positivity outward to its customers. Conversely, a team with low morale or job satisfaction will likely come off as uninterested and unhelpful. Great customer service truly comes from within.
The above steps may lead to excellent customer service, but perfecting your customer interactions is truly a never-ending pursuit. You should regularly set new goals, evaluate your progress, educate your team, prioritize the full customer experience, and assess the quality of your service. For more tips, check out our small business customer service guide.
Frequently asked questions
What's the actual ROI of investing in better customer service for a small business?
Strong customer service may deliver returns far beyond resolving individual complaints. Businesses that consistently provide positive customer experiences often see higher customer retention, more repeat purchases, stronger online reviews, and increased referrals, all of which may lower the cost of acquiring new customers. While the exact ROI varies by industry, retaining existing customers is generally more cost-effective than constantly replacing them, making customer service an investment that may contribute to long-term profitability.
What customer service channels should a small business prioritize if they can't do it all?
Focus first on the channels your customers already use most. For many small businesses, that means email, phone, and responses to online reviews. If your audience is active on social media, monitoring direct messages and comments should also be a priority. Rather than trying to maintain a presence everywhere, it's better to provide fast, consistent service on a few well-managed channels than slow or inconsistent support across many platforms.
What skills should I look for when hiring customer service reps?
Technical knowledge might be a teachable skill, but strong interpersonal skills are often harder to develop. Look for candidates who demonstrate empathy, active listening, patience, clear communication, and sound problem-solving abilities. Adaptability is also important, as customer needs and business priorities may change quickly. During interviews, consider using real-world scenarios to evaluate how candidates think through challenging customer interactions instead of relying solely on their previous experience.
How is customer service different from customer experience, and does it matter?
Customer service refers to the direct assistance customers receive before, during, or after a purchase, such as answering questions or resolving problems. Customer experience is broader. It includes every interaction someone has with your business, from visiting your website and making a purchase to receiving follow-up communication and ongoing support. Great customer service is one part of a positive customer experience, but factors like product quality, ease of doing business, and communication also influence how customers perceive your brand.
What are some quick, practical ways to improve customer service without a big budget?
Many of the most effective improvements cost little or nothing. Respond to inquiries promptly, personalize communications whenever possible, and set clear expectations about response times or order fulfillment. Train employees to listen carefully before offering solutions, regularly ask customers for feedback, and review online reviews for recurring themes. Small improvements in communication and consistency often have a greater impact than expensive customer service technology.
How do I measure whether my customer service is actually working?
Look beyond the number of complaints you receive. Useful metrics include customer satisfaction scores, customer retention rate, average response time, resolution time, and the volume and quality of online reviews. You should also monitor trends over time rather than focusing on individual interactions. Combining customer feedback with operational metrics provides a more complete picture of whether your service efforts are improving the overall customer experience.
