Discussion Paper - Guidelines Summary

30 October 1998

Customer Service Guidelines

How happier customers can lead to healthier business

It’s no secret that good customer service makes good business sense, and there are no trade secrets, mystery formulas, or special schemes. But the Customer Service Guidelines handbook, produced in Australia (but equally relevant to New Zealand) takes some of the hard work out of providing good customer service by turning best practice customer service theory into easy-to-follow actions.

Customers are becoming increasingly vocal about the high priority they place in customer service, and businesses are feeling the pressure, according to the guidelines.

While business managers consistently place customer satisfaction at the top of the list of factors they believe directly affect their business success, the report believes there is a lack of any significant sustained improvement in service in Australia. "At best it could be claimed business is just keeping up with customers’ expectations, at worst that service levels are in fact declining," says the report.

Introducing the fans, the fence sitters, and the critics...

The report draws together Australian research studies, business writings and testimonials from successful business people, big and small.

One research study concluded that 95 percent of customers will experience poor service somewhere.

The fans

One estimate suggests that 95 percent of customers that experience no problems will remain loyal, and another suggests that over 90 percent said they would buy from the supplier again if they had no problems.

Many studies have shown that it costs around three to five times as much to attract a new customer compared with making the same sale to an existing customer. It has also been shown that good service businesses have a greater ability to hold market share during a recession.

The fence sitters

A real worrying factor is that often you will be the last person to hear about the customer’s poor service experience with you. Within Australia, over 80 percent of people who receive mediocre or poor service do not complain to the service or goods provider.

And the critics

Only when things get really bad will customers (around 73 percent) resort to formally complaining about their serious problems. Even then, 27 percent will still not complain.

But it’s not that they don’t talk about the bad service - they just don’t talk about it with you. It is estimated that a person with a complaint is likely to tell nine others about the bad experience – including naming the company.

Even when you do hear about the complaint, and make a strong recovery, you will still lose around 10-30 percent of these customers after only their first complaint.
What is often not fully recognised is that providing only mediocre service also has its costs. Even when things don’t go badly wrong, it is estimated that around 12 –16 percent of customers will still leave, because they were not satisfied with the service.

But the good news is...

While drawing together statistics on customer service, the guidelines also provides sets of simple, practical activities to strengthen the service you provide to your customers. The report provides checklists and case studies in the ten customer activity areas most critical to customer service, that is: Products and Services Information; Counter and Face to Face Service; Telephone Service; Taking Customers’ Orders; Follow-up Documentation; Billing and Managing Payments; Visiting the Customer; Making Repairs; Handling Complaints; Managing the Service Culture.

Guidelines Paper - full text

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