Use Customer Service to Build Sustainable Shareholder Value
Many corporations tell their employees that the company’s primary purpose is to increase shareholder value. There is a lot of truth to this. It is the Shareholders who risk their hard earned money with the expectation that their investment will grow and generate cash flow.
With this mandate in mind, management will focus on improving productivity and cutting costs to maximize profitability. Decisions are usually based on driving numbers. The current Fiscal Quarter must look good even at the expense of long term profitability.
The area of the company that pays the price for short term profitability is usually Customer Service. We have all been to a retail store that does not have enough staff on the floor to answer our questions. We’ve been put on hold while on the phone for unacceptable amounts of time. Often we’ve been told “I’m sorry, I can’t help you” when trying to return a product that just passed its warranty period.
The result is high customer turnover. The worrisome part of this is that many companies find this acceptable and have even created a metric called “customer churn”. These companies openly accept that they will upset a number of their customers. They will simply replace them with new ones by investing large amounts of money into sales and marketing.
Adopting the Customer Service Approach
On the other hand, companies who adopt a long term approach for profitability are easy to recognize. They recognize customer service as a valuable part of their marketing. There will always be knowledgeable and helpful staff around to answer your questions. A live person will answer your phone call. At the very least you’ll hear a recording that tells you the expected wait time that is often less than the time given. They will take back that product that just came off warranty because it is “the right thing to do” even if they are not legally obligated to so.
Companies who adopt the Customer Service approach to building shareholder value often lead their industries in financial and share value performance in any economy. Rather than devoting their time and resources to driving numbers for this quarter they are already planning their strategies for the next quarter or even for the next year. They can count on their loyal customers supporting them today and tomorrow.
The Customer Service approach does require a short term investment. There may be times when there is just a little too much staff. You may have to give a refund you were not obligated to give. As the word about your great service gets around you will reduce customer churn and build a strong business that provides a high level of security and value for shareholders.
Business Coach: Vancouver, Surrey, Langley