The value of Customer Service (part II)
In the last Management Voice we looked at the basic building blocks of valuing Customer Service. We identified that having good Customer Service Skills has a real value to both the client and the organisation. For many people, this is a major change to their thinking, as they have been accustomed to view Customer Service Training simply as a cost. So the next stage is
The Value of Customer Service:
Customer vs. Organisation
The value of Customer Service to the organisation may be quite different to the value that customers place on the service they are offered. It is important to assess these two perspectives separately.
From the Customer's Perspective:
A cross functional team that includes Marketing, Sales and Customer Service should come together with as much information as possible based on: customer satisfaction surveys, competitor price/service levels, market positioning, service data.
The team should consider what would the customer response be if Customer Service was removed altogether. This raises a number of important questions.
- Is Customer Service an integral part of the product – i.e. it cannot be removed?
- Can Customer Service be separated into distinct parts – one, which is essential and one which is optional?
- Can the customer base be segmented by the amount of service it needs/ is prepared to pay for?
Each case is different, and other important questions may arise from your particular product/service offer. If removal of Customer Service would make no difference to clients – then your service offer has no value in the sale. If removal would make a difference, you need to establish how that difference would be expressed – a lowering of demand, the need to reduce prices, loss of market positioning etc.
This process of analysing the impact of good customer service skills on customers is tricky, but not impossible. Remember the aim is to get a reasonable approximation, not a precise answer.
The Organisation's Perspective:
Repeat the process from the organisation's perspective. This time, operations and finance may also need to be involved. Questions that come up may include:-
- How much does having Customer Service skills drive future business?
- How much does having Customer Service skills separate us from competitors?
- How much does having Customer Service skills contribute to future product development?
- And Many others.
Once again look at the impact of removing service altogether, separating it into essential and optional aspects, and the financial impacts of abandoning the optional aspects altogether.
Putting It Altogether
Using a good facilitator skilled in these valuing methods, it is likely that you will identify what part of the sales revenue is really due to customers valuing the service, and how much business value derives from the service department. These figures may not be the same – in other words, the value to the business of the Customer Service you offer may not be the same as the value to the customer.
It is now a matter of judgement to decide how to align these two values for the purpose of decision making in terms of investment and pricing of Customer Service Training.
