Monday, August 15, 2011

Why Service in a Downturn is important?

During a downturn or a looming double dip recession, service operations have never been so important. The primary rationale for this is that during a downturn, cost management has never been so crucial, and a healthy balance sheet insulates big firms. So what does service have to do with this? 


Do you have any idea the cost difference between getting a new customer compared to retaining a current customer? It costs 5 times as much to bring in a new customer, than to keep an existing one, as we all know. Now is time to ensure loyalty with your customers through utilizing the “back to basics” of customer service. It is a big chore for consumers to have to find another company to meet the needs that presently you fulfill. Customers want to be loyal. So, why do they leave? They leave because of a lack of attention to plain-old customer service. What's even more paramount, is that in lean times, customer loyalty falls by the waist-side. When lean times are forecast during the annual budget process, many training and development budgets are slashed and peripheral development programs are halted. This often results in no natural progression for service operations development within the firm. As a result service levels start to deteriorate or plateau, which ultimately impacts the customer experience in dealing with the organisation, prompting the consumer to think about trying other alternatives, seeking new products, or even new service experiences. 


They key for organisations confronted with lean times, is to invest in the core. Invest in the very reasons why a consumer uses their service in the first place. When customers contact a company, customer service has an opportunity to improve or worsen the relationship with the customers. Hopefully service improves the relationship with customers. So, it would make good sense to make these contacts as meaningful and helpful to the customers as possible. Some key tips at driving high service levels during a slow economy are as follows:

1. Do not slash the service training and development budget. Invest in the frontline, and improve service levels. 
2. Make the consumer feel like they are all that matters 
3. Re-organise the mindset of the organisation - ensure all overheads are working towards the quality service experience
4. Ensure the consumer's problem is solved and satisfaction levels are met
5. Ensure the organisation is explicit in defining its service experience. Managing consumer expectations often delivers a positive consumer service experience.
In lean times, service levels maintain consumer loyalty which has a direct flow-through correlation to an organisation's profit and loss. Whilst many argue the service experience is not the sexy part of a business model, it is often the interface to the transaction which is the bloodlines of an organisation's financial health, so getting it right is fundamental to surviving during a contracting economy. 

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