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Customer Service: A Cost or Brand Loyalty Builder?

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“Customer service is a choice. It’s either part of your strategy or you’re paying for your mistake,” writes marketing expert Seth Godin in his blog post “Customer Service is a Choice”. This succinct statement cuts to the heart of a key decision facing many businesses today. Do you invest in customer service as a core part of your brand strategy? Or do you view it as an unavoidable cost to be minimised wherever possible?

According to Godin, online retailer Zappos and carmaker Rivian see customer service as integral to their marketing. “Rivian has adopted the strategy of being the most honest, diligent and responsible car company in history,” he writes. By contrast, tech giants like Google and Facebook “see it as a bottomless expense and do as little as they can.”

The logic behind the latter approach is clear. “Great customer service is expensive,” Godin acknowledges. Companies that skimp on service can divert more resources into improving products and user experiences “so you’d never need to call them.” And yet, he argues this comes at a hidden cost.

Godin says: “It’s free because delighting a customer who has an issue is the single cheapest way to not only keep that customer, but also have them spread the word.”

In other words, the lifetime value of a delighted customer – including the new customers they attract through word-of-mouth – can more than offset the cost of quality service.

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“You can’t cost cut your way to greatness,” Godin warns. No matter how polished the user experience, some customers will inevitably need human assistance. How a company handles these moments can have an outsized impact on its brand reputation.

Godin asserts: “Even if you’re a solo-preneur, the availability of instant communication means that if you choose to do a lousy job on support, you’re going to be judged accordingly.”

In an age of viral social media complaints, just a few negative service encounters can snowball into a public relations crisis.

On the other hand, brands that make customer service part of their identity – like adventure clothing company Patagonia – tend to inspire incredible loyalty. Their customers become their best marketers.

So which is the better strategy? There’s no one-size-fits-all answer. As Godin notes, “Both are defensible choices.” Startups with limited resources may opt to focus narrowly on product-market fit first. But for most established companies, especially those selling directly to consumers, customer service deserves serious strategic consideration – not just as a cost centre, but as a profit driver that fuels growth.

The decision ultimately comes down to corporate values. Do you aim to maximise short-term gains and shareholder returns at all costs? Or do you prioritise longer-term customer relationships, even if they require financial trade-offs? Whichever path you choose, own the decision and recognise that customers will be watching closely. 

When facing these big decisions, it can help to have an experienced accounting firm like KeyPoint Accountants by your side. Contact us at 07 5585 0600 or info@keypointaccountants.com.au to discuss your company’s values and how we can support you in upholding them.

Source: https://seths.blog/2024/01/customer-service-is-a-choice

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Peter Cutforth

Peter Cutforth

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