How much is it worth? Great Customer Service

Have you ever had a really poor experience at a restaurant, store or business that made you stop going there?  Probably all of us have.  Furthermore, there are probably places you used to frequent often, where you’ve cut back.  I know for me personnally, after many years shopping at the local grocery store, I started food shopping at a store much further away.  I still may shop at my local grocery store for odds and ends, but the bulk of my food shopping is done elsewhere.  How many businesses would provide better client service and train, hire more customer-oriented employees, or emphasize the importance of a better client experience, if the true worth of each client was calculated?  

For I find it is often the case that many businesses never calculate the true value of their clients when making business decisions.  Here is a way to do it:

• Start with the lost revenue stream:   include not only the cost of the average transaction, but the net-present value of future transactions.  The meals purchased, clothes purchased, sales lost over time should be included in here.  Even discounted for net-present value, this number can add up to serious money.  
• Add in the revenue stream of referrals:  loyal clients tend to make referrals.  Referrals are a cheap source of income, since it costs nothing to acquire them, and current clients help advocate your services for you, so they are more likely to trust you and purchase more quickly.  If you lose the customer, you’ve also lost the revenue of referrals.
• Add marketing costs:  loyal clients who help build the business mean cheap referrals and reduced marketing costs.  If you lose loyal clients, you will need to market more, incurring increased costs.  There are often a lot of upfront costs with new clients as well.  Be sure to add that in. 

According to a November 2009 study on The Cost of Poor Service, Genesys calculates the one year cost of poor customer service in 16 key economies at $338.5 billion!  Take the time to calculate what your clients are worth to you.  It may be an exercise that results in different decisions being made and a better client experience overall.