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Relationship Between Customer Service Quality and Market Share

Via LinkedIn : What is the Relationship Between Customer Service Quality and Market Share?

Today’s businesses are fiercely fighting to attract and keep their customers, whose attention is increasingly difficult to capture and even more difficult to hold on to.

Consumers these days are faced with an overwhelming choice between similar price and quality products and services. So it’s no wonder that customer service is becoming the new battlefield on which successful organisations can differentiate and thus triumph over their failing counterparts.

As businesses grow, their customer satisfaction seems to drop – but why is this? Good customer service requires a significant investment of resources and time. Unfortunately a lack of time and investable resources is exactly what makes a small company small. Customers are becoming more discerning, more informed and the expectations that they have for companies is changing.

It is perhaps an unavoidable truth that the larger a company gets and the more customers it has, the more removed it has to become from each individual one of those customers. In many ways, the customer service challenges of larger company are the same as those of a smaller company but with the numbers raised dramatically; the question of how to direct a limited pool of resources in a way that is going to have the maximum impact.

Some of the main problems caused by the size of a company when it comes to customer service are:

  • Adopting a “one size fits all” approach, where all customers are treated as the same so there is no variance in the information or guidance given to people
  • Getting lost in jargon or overly complicated language on your help or FAQ pages
  • Automating the vast majority of their helplines so that customers can only get through to a human if it is really, really necessary

Top-level executives of outstanding service organizations spend little time setting profit goals or focusing on market share, the management mantra of the 1970s and 1980s. Instead, they understand that in the new economics of service, frontline workers and customers need to be the center of management concern. Successful service managers pay attention to the factors that drive profitability in this new service paradigm: investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance for employees at every leve

The one cardinal sin of customer service is over-promising and under-delivering, and this unfortunately seems to be something that larger companies can fall into relatively easily

So whats it gonna be growth or good service?

So the answer to this question is no. While the ability to deliver targeted and effective customer service is directly tied to a company’s profitability and its ability to increase its market share, an increase in market share can also begin to negatively affect a company’s ability to provide quality customer service.

But the central point is that as long as you continue to harness and structure your customer service processes around the homogenous demand of your customers, whether that be for jargon-free technical help or a quick and easy way for customers to order new parts, there is a potential to achieve growth while maintaining good service.

The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers

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