+234 701 130 5444

Blog Post

Customer Service and Its Impact on Business Profitability

Profitability in business is often tied to aggressive marketing and sales. While marketing and sales are vital ingredients for business success, modern research shows that Customer Service has a more lasting effect on business profitability.

The Nigerian business environment has grown in the area of customer service delivery. With more and more people being exposed to quality customer service, the customer today is very aware of his or her rights and will not hesitate to demand for quality service when denied. Moreso, with stiff competition in the marketplace, the quality of customer service rendered tends to be a distinguishing factor amongst businesses. Research shows that customers are willing to pay 9% to 22% more for exceptional service and 60% will gladly try a new brand if they will get better customer service[1].

Smart business owners operating in this knowledge age leverage information like this to serve their clients better, position themselves in the marketplace, build customer loyalty and boost profitability. While giant strides have been made regarding customer service delivery, business owners in Nigeria need to go beyond mere customer service delivery to creating new experiences for their customers.

A customer is typically seen as an individual or business that purchases the goods or services produced by an organization but your customers also include stakeholders affiliated with your business including your suppliers, your work team etc. When you offer less than the expectations of your customers, it is perceived as bad service. When you meet the expectations of your customers, it is perceived as good service but when you exceed their expectations, it is perceived as superior service. As a business owner, you want to be known for offering superior service.

Exceptional service is about professionals being the most connected, responsive and insightful in relating with their customers. This kind of service stems from relationships built on trust and a demonstration of commitment by everyone in an organization to be proactive, visible and timely in relating with customers. Exceptional service also means sharing organizational experiences and a point of view tailored to the customer situation, thereby advancing their thinking. Delivering exceptional customer service involves thinking strategically about new ways to improve customer experience and create unforgettable moments.

The benefits of offering exceptional service include:

  • Enhanced customer loyalty: Exceptional customer service builds customer loyalty which is very important for business success. Research shows that it costs 5 to 8 times more to get new customers [2] than it does to retain the ones you have so it is far smarter and cheaper to keep many of your customers returning, than to spend fortunes attracting new ones.
  • Increased sales, improved returns and profitability: With your customers returning and bringing in new customers through referrals and the power of word of mouth transmission, the sales, returns and profitability of your business will be impacted positively.
  •  Greater customer bases and associated ratios: With a higher percentage of returning customers and an increasing rate of referred customers, your customer base and associated ratio will increase.
  • Enhanced reputation in the market place: Exceptional service enhances both your reputation in the marketplace and customer pride, leading to more cooperative customers, even in the face of difficulties.
  • Improved employee morale, retention and productivity: Exceptional customer service towards your customers who also include your employees boosts employee morale and impacts on employee retention and productivity

You can enhance your customer service delivery skills by:

  • Responding to requests and complaints as quickly as possible: Nothing frustrates a customer like a sluggish response to requests or complaints. It leaves the customer feeling uncared for, angry and ready to move to the next service provider that will offer better service even if it’s at a higher cost. A research conducted by the Rockefeller Foundation showed that over 65% of respondents[3] admitted to moving their business elsewhere because they felt uncared for by their service provider.
  • Knowing your customers (birthdays, anniversaries, lifestyle etc):  Getting to know more about your customers, their special days and lifestyles allows for the development of a healthy relationship built on care and trust. With such a relationship, you can anticipate the needs of your customers and better align your products or services to serve them. Healthy customer relationships also give you leeway to understand your customer so you can design and improve customer experience within your organization.
  •  Admitting and fixing your mistakes: When an error occurs, there is always the temptation to cover it up. Covering up mistakes breeds distrust and once this negative trait is associated with your business or organization, the news will travel faster than you imagine via word of mouth and will impact on your business adversely. It is always advisable to admit mistakes and work on fixing the problems that have arisen as a result of the error. However, in admitting mistakes it is important to use the appropriate language and communication channels so as not to do more harm than good.
  • Going the extra mile: Every customer feels valued and respected when a service provider goes the extra mile in rendering service. Such acts of kindness are committed to memory and pulled up during referrals. The attribute of going the extra the mile should be built into your organization so that your employees find themselves responding to clients with a sense of duty and helpfulness.
  •  Thinking long term: A customer is for life, so as you make efforts to retain and attract new customers, think long term and devise strategies to constantly improve customer experience. This will keep your customers coming back and attract new customers to your business naturally.

Designing new experiences for your customers could be a tough call because it requires deliberate efforts in thinking and strategizing on the best possible ways to improve customer experience, but the impacts on profits make it worthwhile. A recent research conducted in the United Kingdom showed that organizations focused on customer satisfaction and improving customer experience had average revenue growth of14% – 163% when compared to organizations that didn’t prioritize customer service [4]. In Nigeria, a survey conducted by KPMG Advisory Services, revealed that Banks which had excelled in customer services over the span of 4 years (2011-2015) outperformed their peers in average Return on Equity. Without going into complicated statistics, it is easy to see the possible impact customer service could have on your business returns.

Creating new experiences or improving customer experience simply involves creating new ways in which your customers can better appreciate your product or service. For instance, if while running your beauty salon, you observe that your clients always complain about towels and the state of their hygiene, the introduction of a reward system that gives clients discounts for coming in with their towels could be a life-saver or the introduction of a system that ensures that every client walking into your beauty salon has access to freshly washed, dry and ironed towels could make all the difference between your current level of profit and the level you desire to be. Creating new experiences is customer service on a deeper level and it requires paying attention to your clients’ needs, showing empathy and respect for your clients and demonstrating commitment to constantly improving their experience.

As exceptional Customer Service continues to blaze the trail as the winning strategy to boost business profits and business success, incorporating exceptional customer service standards into your business now would be wise given the current economic challenges facing small and growing businesses in Nigeria.


Key excerpts for this writeup were taken from the March 29, 2016 FATE Foundation Workshop titled “Customer Service for Outstanding Profitability” which was facilitated by Funmi Nyambi, Head, Service Standards, First Bank Plc and Yoyin Familusi, Senior Manager, Customer Management, MTN Nigeria as speakers.

19 / 131

1 Comment

  1. March 31, 2016 at 4:08 pm

    Helpful article

Comments are closed.

© 2024 All rights Reserved. FATE Foundation