Customer Experience Featured Article

Link Between Customer Service and Profits is Stronger than Ever in the Digital Age

While “the customer is always right” has been the mantra of companies since the beginnings of capitalism, new research indicates that customer service has only become more important in the digital age. A recent survey found eight out of 10 companies with solid customer service programs see significant profit increases.

"Lackluster customer service is inexcusable in a digital world where customers are king," says Garry Veale, president of Avaya (News - Alert), a provider of business collaboration and communications solutions, and the sponsor of a recent survey on the customer experience.

But many companies are struggling to close the gap between customer expectations and the service they deliver. Approximately 81 percent of organizations have seen their customer initiatives fail in the last three years, costing them up to £750,000 (or approximately $1,258,725) each over the past three years, according to the research report.

The problem seems particularly acute in Europe, where businesses have not changed their customer program fast enough to keep consumers satisfied. Much of the problem stems from corporate philosophy.

The research found less than one-fifth (16 percent) of British and German managers believe customer effort significantly impacts spending satisfaction and retention. That number accounts for the reason than less than half (40 percent) of U.K. and less than one-third (30 percent) of German companies have initiatives in place to improve customer service.

"When it is so closely linked with customer loyalty and increased profits, and with cost-effective and easy-to-implement software and services available to companies of all sizes, there really is no excuse for not having a comprehensive program in place," Veale said.

In comparison, 83 percent and 73 percent of businesses in China and the United States, respectively, have a customer management program in place, while 72 percent of businesses in India do. In India, three-quarters of business managers say customer experience management is very important. The United States (59 percent) and Brazil (59 percent) also view it as very important.

Technology integration is a big factor. Among organizations without a customer management program in place, 31 percent say it’s because of a lack of appropriate technology. A further 37 percent report their companies are struggling with the fact that different parts of the business own the customer experience.

The survey was conducted globally across 13 countries by independent market research firm Dynamic Markets on behalf of Avaya. According to the company, 1,268 businesses with more than 1,500 employees were interviewed, 54 percent of whom are at senior-management level or above. 8,500 adult consumers were surveyed: 49 percent male and 51 percent female.

Countries surveyed in the research include the United States, Canada, Mexico, Brazil, United Kingdom, Germany, Netherlands, Russia, China, Singapore, Japan, India and Australia.