Customer Service is FREE!

A few years ago, Philip Crosby wrote a best-selling book, QUALITY IS FREE.

Countering the perception that producing flawless products is costly, Crosby demonstrates that the savings achieved, especially in manufacturing, by doing something right the first time, and by avoiding recalls and repairs, is an effort that more than pays for itself.

In the same spirit, I’m here to shout from the rooftops that CUSTOMER SERVICE IS FREE.

This is to counter a growing and debilitating belief that providing service, especially through human beings, is a costly frill, unnecessary, and old hat when technologies such as the Internet can be used to provide information and to promote much cheaper self-help.

Companies are gutting their customer service staffs, in some cases after having outsourced them at a surprisingly higher cost–30% higher according to a Gartner Group study–but with diminished quality.

There is a fundamental misperception regarding service that muddles our thinking and leads to the slashing of training budgets and the evisceration of service staffs, everywhere:

Accountants, operations officers, and the companies they serve have wrongly labeled customer service as a COST.

The implication is that a dollar invested in a person that answers questions and calms concerned callers earns back something substantially less than a dollar in repeat business, referrals, add-on sales, positive public relations, and employee satisfaction.

This perception has never been conclusively proved.

There simply aren’t many studies that even try to assess the impact customer service has on the bottom line, whether it is the effect of an individual rep on her clients, or the impact a company’s service program has on retaining and enhancing its customer base, or the effects service is responsible for producing across an industry or the economy, as a whole.

We see many assertions that “It is 6 times” or “8 times” or “10 times” more costly to put a new customer onto the books than to retain an existing one, but how many companies have customer satisfaction monitoring techniques in place that capture the service events and specifically say: “Emily saved this customer, whose expected life-cycle value to our firm is X Dollars, by using an effective protocol for customer transaction handling”?

Less dramatically, how many firms track what everyone seems to say is the Holy Grail of service, customer loyalty? More to the point, can your organization accurately predict which of today’s clients will stay with you and which will bolt, before it’s too late?

Rare as they are, such metrics can be found, and we must develop more of them.

For example, my TEAMEASURES (TM) or Telephone Effectiveness Assessment Measures (TM) monitor customer transactions for what we term, “Recommitment.” This is a pledge, or its equivalent, that a client will return to do added business with us.

This STATED INTENTION, ELICITED UNOBTRUSIVELY AND VOLUNTARILY FROM THE CUSTOMER, operationally defines Loyalty, enabling it to be purposely evoked, tracked, monetized, and rewarded both for the customer and for the service rep that engenders it.

Without devices such as TEAMEASURES’ and the systematic thought and research and investment they embody, customer service departments, and service providers in general, fail to justify their existence, and quietly disappear.

In this sense, failing to appreciate that customer service is free, is the most costly customer service mistake of all.