Do you know where your sales come from ?
Now is the time to shatter the myth that advertising delivers a higher ROI than customer service .
CustomerService BY JOHN DIJULIUS
Advertising vs . Customer Service
Do you know where your sales come from ?
Answer these 3 questions correctly and you will have an incredible 2017 :
Where do your sales come from ? What is your company ’ s biggest expense ? Which has a better ROI , advertising or customer service ?
1 ) Where do your sales come from ? Leaders love to talk about revenue streams by showing graphs and charts with the breakdown of sales categories . It is important to know the percentage of sales generated by products or services and to monitor trends , especially the growth and decline of your business revenue . However , there is one critical component that every business has in common , which is never discussed : 100 percent of your sales come from one place — your customers ! When you look at it this way , it sheds a stronger light on why companies need to put more emphasis on building an incredible , consistent customer experience that becomes your number-one competitive advantage and helps make price irrelevant .
2 ) What is your company ’ s biggest expense ? Another major focus of executive leaders is analyzing the company ’ s P & L to determine where the company is overspending , being wasteful , and how to reduce expenses to drive more profit to the bottom line . However , the company ’ s biggest expense does not show on your P & L , at least not directly — it is hidden . There is no line item for poor customer service , but nothing may have a greater impact on your bottom line than dissatisfied customers . It can dramatically cause loss of sales , decline of company reputation , lack of new customers / referrals , increased returns and refunds , increased discounting , more service recovery , higher advertising expense , lower morale , higher turnover , increased hiring , and more training , which further perpetuates a poor customer experience . It is imperative that every person in your company understand that your biggest expense is
Now is the time to shatter the myth that advertising delivers a higher ROI than customer service .
dissatisfied customers .
3 ) Which has a better ROI , advertising or customer service ? Now is the time to shatter the myth that advertising delivers a higher ROI than customer service . Each year , every department in every company fights for an increase in their budget , determining what they are allowed to spend in the coming year . In the advertising versus customer service budget debate , the only way to win the battle is to prove which budget will produce a better ROI for the company . In 2016 , the fact that this is even still a debate is a sign of old-paradigm thinking by too many senior executives . The shortsighted obsession of constantly bringing new customers / traffic to your business is
significantly more expensive than building an incredible customer experience .
In an article on Our Social Times (“ Can online customer service deliver a higher ROI than marketing ?”), Tom Eggemeier , EVP of global sales at Genesys , shared that the company ’ s annual global marketing and advertising spend was $ 500 billion — versus $ 9 billion on customer service . Compare that with the percentage you spend on marketing and advertising versus customer service .
Are you penalizing brand loyalty ? Are you constantly offering incentives for “ New Customers Only ”? What about rewarding the customers who have been loyal to your business for years , who do business with you regularly , no questions asked , and refer others ? Some important facts to remember :
• Repeat customers spend more than new customers .
• Repeat customers give higher satisfaction scores .
• Repeat customers refer more than new customers do .
• You need five new customers to produce as much as one repeat customer .
Further , an Adobe report (“ The ROI from Marketing to Existing Online Customers ”) stated the following :
• A 5 % increase in customer satisfaction can increase a company ’ s profitability by 75 %.
• 80 % of your company ’ s future revenue will come from just 20 % of your existing customer base .
Conclusion What if we reversed the spending on advertising and customer service ? Companies spend millions creating and advertising their brands , yet the customer ’ s actual experience is what drives brand perception . If you take really good care of your existing clients , they will generate more new customers than any kind of advertising campaign ever could .
John R . DiJulius III , author of The Customer Service Revolution , is president of The DiJulius Group , a customer service consulting firm that works with companies including Starbucks , Chickfil-A , Ritz-Carlton , Nestle , PwC , Lexus , and many more . Contact him at 216-839-1430 or info @ thedijuliusgroup . com .
64 MULTI-UNIT FRANCHISEE ISSUE II , 2017