Customer service is about managing customer expectations to give them what they want, when they want it, in the best possible way to meet those expectations.
If your business provides good customer service, you have a greater chance of keeping and increasing your customer base.
Why is customer service important
The level of customer service you and your team provide contributes to the way your customers see your business. It may also influence their purchasing decisions.
For example, excellent customer service can lead to:
- increased customer numbers—through favourable word-of-mouth and online recommendations
- higher dollar amount spent per customer per transaction
- repeat customer visits
- more referrals to your business.
Establish a culture of excellent customer service in your business by planning, developing and sustaining a customer service program.
Good customer service is important for however you deal with customers—face-to-face, over the phone or online.
Principles of good customer service
Listening, understanding your customer's needs, thanking the customer and promoting a positive, helpful and friendly environment will ensure they leave with a great impression.
A happy customer will return often and is likely to spend more. They may also refer other people to your business.
Consider these elements of good customer service.
To build customer relationships:
- greet customers and approach them in a way that is natural and fits the individual situation
- build rapport—find something you have in common with that customer (i.e. you may know someone in common, have children at the same school, admire their car)
- show customers that you understand what their needs are
- accept that some people won't want your products and concentrate on building relationships with those who do
- help people (if you see an opportunity to)
- continue to keep customers aware of what's in it for them to do business with you.
A customer service culture can be created by:
- training staff
- valuing service in your business
- embedding service in your communication with your staff and your customers
- improving sales skills.
As a business owner, lead by example and make sure you're always providing excellent customer service.
Always listen to complaints from your customers and let them know that you appreciate their feedback. Listen to what the customer is objecting about—often price, merchandise or time. Confirm the validity of each concern and offer a solution.
Make sure you regularly monitor your communication channels for complaints or other feedback and respond in a timely manner. This could include your social media, email and online reviews.
Customer complaints and feedback can be an opportunity to learn something about your product or service.
Find out more about managing customer complaints.
Know your products, including where they're located in your store, brand names, place of manufacture and price. The more you know, the more confidence you can build in the customer.
Recognise product features and turn these features into benefits for the customer. Ensure your staff are trained and can tell customers about these features and benefits.
Find out more about knowing your products and services in improving your sales skills.
Tips for great customer service
- Understand what your customers consider to be good customer service.
- Take the time to find out customers' expectations.
- Follow up on both positive and negative feedback you receive.
- Monitor social media platforms for positive and negative comments.
- Ensure that you consider customer service in all aspects of your business.
- Continuously look for ways to improve the level of customer service you deliver.
Managing customer expectations
To provide good customer service, understand who your customers are and what they want, need and expect.
Know your customers
Gather as much information about your customers as possible. Try to find out what your customers are buying, and why, and the frequency of their purchases.
Find out details such as their lifestyle, occupation and interests. This includes potential customers who have made enquiries about your product or service.
Understand your customers' needs
Each customer has a different perception of what customer service means to them. To provide good customer service, you'll need to know the needs of the customer and how to fulfil those needs.
Find out how your customers expect you to meet their needs. The expected level of service may vary between consumer groups, industries and marketplaces.
Research your marketplace and your target markets to find out what your customers expect of your business in your location.
Action: Understand your customers
- Create a customer profile.
- Map the customer journey.
Find out more about becoming a customer-focused business.
Meet or manage your customers' needs
Tailor your level of service to suit your customers' needs. Some businesses work well providing a 'no frills' or basic level of service, while others go beyond customer expectations to achieve a level of service to impress their customers.
In each case, the business communicates to create and manage customer expectations about the service it provides.
Failing to meet or manage expectations
Customer expectations come from many places, including interactions with staff, promises and claims from advertising, in-store signage and your branding.
When a business fails to meet or manage these customer expectations, customers may be disappointed or dissatisfied.
For example, if you promote a product or service as 'high quality' or you've made an offer to a customer, this becomes a promise that they expect you to follow through on. Failing to honour that promise can lead to complaints, lost sales or limited repeat business.
Poor customer service, and the perceived indifference of staff and management, is often where customer expectations are not met.
Customer complaints can alert you if your business is failing to meet customer expectations. Learn more about managing customer complaints.
To improve your customer service:
- identify and investigate problem areas
- identify recurring issues and develop strategies to prevent them
- train staff in good customer service and sales skills
- rotate staff to increase their knowledge of other areas of your business
- encourage and support teamwork
- review processes for hiring and recruitment.
Create a service delivery flowchart
A service delivery flowchart will help you to examine the links between what your customers expect (e.g. service delivered by trained staff), and how successfully the service met customer expectations. It can help you identify gaps in your customer service, and how to improve.
Create a set of maps and figures that describe:
- how you deliver service to customers
- where things can go wrong
- what is done when there is a service failure.
Consider including these 4actions in your service delivery flowchart.
Learn what customers expect by:
- researching your customers and studying complaints
- using information from customers to try new ways to deliver the service
- talking to and genuinely listening to your customers.
Establish service quality values and standards by:
- developing values and standards that are realistic, clear and achievable
- regularly assessing staff using these service standards
- knowing what tasks are most important to maximise customer satisfaction (e.g. reduce queues, deliver on time).
Develop good customer service skills in your business by:
- providing staff with training in your products and services to meet your service standards
- ensuring staff have well-developed soft skills (e.g. listening, problem solving)
- building teamwork among staff
- empowering staff to take appropriate actions to resolve customer concerns.
Ensure your service matches the promises you make by:
- making sure that all advertising material reflects the nature of the product or service
- communicating advertising and promotional activities to all staff so they know what customers are expecting
- offering customers different levels of service for different prices and explaining the differences between those levels.
Measuring customer service
Identify areas of your customer service that are measurable, and regularly check that these meet your expectations. There are many ways to measure the success of your customer service.
Mystery shoppers
Mystery shoppers can provide your business with objective third party feedback on your customer service.
To get started with mystery shopping, you can:
- organise a friend or family member who isn't known to your staff to visit or phone your business. Have them ask specific questions of your staff to test their product knowledge, helpfulness and the time taken to be served
- hire a mystery shopping company, who can design their visits around your specific requirements.
Surveys and feedback forms
Customer feedback can be a good measure of your service. Make sure you review any feedback regularly and track recurring issues, which will help you improve your customer service. Share customer feedback with your staff so they understand what customers are saying.
To collect information on customer satisfaction, you can:
- use survey cards where customers rate aspects of your service (e.g. on a scale of 1to5)
- follow up a product or service purchase with an email survey or feedback form
- ask for feedback on specific aspects of your business or leave forms open-ended, like a suggestion box.
You may like to invite customers to provide their name and contact details so you can get in touch with them to discuss their feedback in more detail. Make sure you are correctly collecting and storing customer information.
Business website
Include a feedback page or section on your website (this could be with your contact information) with a statement that you appreciate, value and assess all feedback.
Find out more about building and managing your website.
Business social media
Monitor both negative and positive comments posted by customers across social media platforms your business is featured on. These can include Google reviews, Facebook, LinkedIn, Instagram, Twitter, TikTok and TripAdvisor.
Find out more about managing online communication and customer reviews.
Business records
You can also measure aspects of your operations that have numerical values, such as:
- number of orders
- number of complaints
- number of pageviews on your website.
Over time, these numbers provide a benchmark for performance. Changes in these numbers over time can provide insight into aspects of your customer service.
Create a customer service program
A customer service program formalises the level of customer service you aim to provide, and what practical things you will do to achieve this and improve customer loyalty and retention.
Customer loyalty and retention
Customer retention relies on building customers' product loyalty and satisfaction. It is often more expensive to find a new customer than to retain a current customer.
Satisfied customers are more likely to be loyal customers.
Loyal customers:
- create great word-of-mouth referral (potentially reducing advertising costs)
- offer repeat business
- use competing products less and are open to your alternatives
- create more stable demand for your products and services
- may be more willing to forgive issues in the delivery of your product or service.
Steps for creating an effective customer service program
A successful customer service program involves planning, development and implementation. You and your staff must be committed to sustain it for a period of time so you can evaluate the results.
To create your customer service program:
- think about what your customers need
- plan how you will meet their needs—write a document outlining the program's aims, details, and how it will be implemented throughout your business
- deliver training to your staff, including training for any new systems
- implement the program, making sure all staff are confident with it
- sustain the program by reviewing changing customer needs and feedback
- encourage and support staff through a staff recognition program.
If your program is working well, your customers will be satisfied and more likely to be loyal to your business, which, in turn, means higher profits for you.
Working with staff
Encourage staff to work together to put the needs of the customer first. Ask staff to treat customers as individuals and listen to their comments, complaints and requests. Thank customers to ensure that they feel valued, important and needed. These small things add up to a great customer service attitude.
Strive to have your team understand that customers are not an interruption or distraction to completing other tasks—customers are the reason for being in business.
As the first point of contact for your customers, recognise that you and your team must:
- have the right attitude
- feel valued and part of an inclusive environment that includes customers
- present with a positive outlook
- contribute to improvement
- advocate for the business.
Customer service systems and processes
Review the ways your customers buy from you and if this can be improved. If customers find the buying experience frustrating or difficult, they may not bother to complete their first purchase, or any future purchases.
10 tips to improve your customer service
- Give staff the opportunity to provide input.
- Record customer service standards and relate them back to business goals.
- Reward customers with a customer loyalty program.
- Record client details in a customer relationship management (CRM) database.
- Seek post-sale feedback from clients.
- Establish a customer complaint policy to manage customer complaints.
- Recognise and reward positive staff behaviour that you want repeated.
- Develop a staff training program and regularly review staff performance.
- Ask key staff what they already do to provide good customer service.
- Encourage ideas, suggestions and observations from all staff and establish an anonymous staff suggestion box if staff are uncomfortable sharing ideas.
Also consider...
- Find tips and advice on becoming a customer-focused business.
- Learn more about finding new customers.
- Register your business for seniors and carers discount schemes.
- Explore during and after-sales service.
- Learn about using chatbots for business from our Mentoring for Growth mentors.
- Watch our Lean your business webinar to learn about the 'lean' approach to making continuous improvements, increasing productivity in your business and creating more value for your customers.
- Last reviewed: 16 Nov 2022
- Last updated: 20 Sep 2023
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