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>>Trying
to justify the bottom line benefit of your consumer
affairs department?
I
remember being in the position many times of having to
defend my department’s budget to protect it from cuts
or having to work four times as hard as other
departments to build a case to make minor purchases.
That was because I worked for a company that viewed
customer service as a “cost center.” Any funds
allocated to my department were “wasted” because the
department was not revenue generating. I wish I knew
then what I know now: customer service is in fact a
profit center. While consumer affairs departments
aren’t selling products or services, they are selling
and making money for the company– they are selling the
company back to customers who are dissatisfied or on the
brink of defection. Complaint handling is a sales
function with proven bottom-line value. Recent research
points to five indisputable bottom-line benefits of
effective complaint handling:
Here's
exactly how you can justify the bottom
line benefits of your consumer affairs
operation...
1.
Builds loyalty.
TARP, Inc. (now e-Satisfy) has found that 95% of
complaining customers will remain loyal if their
problems are resolved immediately. And it gets better:
The same company’s research revealed that the mere
voicing of a complaint (even in the absence of
resolution) increases loyalty as much as 10%.
2.
Increases sales.
Successfully regaining customer goodwill and maintaining
loyalty boosts sales because over time loyal customers
(the customers you successfully won back) tend to be
willing to pay a price premium for your products or
services. Research by Bain & Co. found that loyal
customers are less price sensitive than new customers.
3.
Generates positive word-of-mouth advertising.
When service is truly outstanding, customers will tell
an average of 5 people about the great service. If the
service doesn’t meet the customer’s expectations,
they will tell 11 people. But, if there’s a problem
and it is resolved immediately, customers will tell 17
people about the service recovery. Getting it right the
first time results in 5 people hearing the good news
story. If your company blows it, but offers a quick
recovery, you can generate more than 3 times as much
positive word-of-mouth advertising!
4.
Decreases acquisition costs.
Most industry experts agree it costs 5-6 times more to
win a new customer than it does to keep a customer. When
you maintain loyalty after a mishap, you have just
reduced acquisition costs.
5.
Reduces problem occurrence and customer dissatisfaction.
When complaint handling is done right, customer feedback
is used to eliminate problems at the root and the data
is used to help the company anticipate and prevent
future problems from occurring.
In
many companies upper management is now requesting that
customer service, consumer affairs, and customer care
departments demonstrate value-added services. This
“show me the results” request is demanding that we
provide measurable bottom-line value. Knowing the
bottom-line value of your department and being able to
communicate this impact positions you to gain
visibility, budgetary funding and to create even more
value.
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