“Why can’t we keep our customers happy?!?” a CEO called out during a meeting with his department heads. “Just take care of the problems! What’s the big fuss?!?”

And he meant it. But that was before he learned how much it would cost.

Over the years, I’ve heard numerous owners, presidents, and CEOs vacillate between making prideful service promises and declaring angrily that too much is being spent on customer service, or employees are giving the store away, or customers don’t need so much generosity.

It pays to work both angles for your service strategy, rather than acting on kneejerk reactions and feelings of righteous generosity or tightfisted caution. So instead of swinging the pendulum of service policies from bargain basement to top shelf and back again, try examining the cost/benefit calculus of your service stance.

Using Service as a Sales Tool

When customers trust your company and believe you care about them — and like your stuff, of course — better service helps you sell more. Treat service not merely as complaint resolution, but as an opportunity to build loyalty: Doing a little more for customers builds mutual regard and relationship.

service-pendulumHelp customers buy more by giving them more value during the shopping experience and greater enjoyment from owning your merchandise. If your product margins support the investment, explore higher levels of associate training or predictive models for assessing customer preference. Both initiatives declare that you’re in this relationship together.

For instance, if you sell fashion and customers want shopping support, your reps could ask which public figures they admire whose styles fall within your company’s range, and then suggest outfits in that mode. If customers are on the fence about a purchase, reps could tell them that, based on experience with other customers like them, if they liked product X, they’ll really love product Y.

Taking the Cost-Reduction Route

In many companies, though, the margin for that kind of experimentation isn’t there. In that case, start building a service upside by handling operations as efficiently as possible while trying to buy some graciousness out of the cost savings. This can be a smart strategy even for purveyors of high-margin goods: Why leave money on the table?

If you go this route, consider conducting a rigorous evaluation of the hidden costs of poor organizational structure. Look for unnecessary process layers like redundant checkpoints or inefficient hand-offs. There could be opportunities to manage ongoing service expense through a combination of standardization and self-help, as well as excellent associate training for service issues requiring human intervention.

Dig Deep into Returns

Returns are one service issue that can yield a mother lode of data for expense reduction, so track customers who return merchandise frequently, associates whose sales are returned often, and product categories that trigger the most buyers’ remorse. Then, consider these questions to reduce the frequency of returns:

  • Can associates more accurately communicate product attributes like sizing, color, or compatibility?
  • Will adjustments in manufacturing or delivery methods enhance customer satisfaction?
  • How about encouraging exchanges rather than returns, so more customers end up with good experiences, instead of going to a competitor?
  • If customers’ purchases arrive slightly damaged or not exactly as expected, could you test providing small reimbursements for repair or revision, or discounts good against future purchases rather than replacement?
  • Similarly, can you encourage more customers to keep products, by providing self-help information about usage or care?
  • Is it more cost effective to abandon lower-cost merchandise in the field rather than insisting it be returned for credit and incurring higher processing costs?

Whether your customers love your company for its efficiency or your associates’ graciousness, it’s important to find the balance point — and keep checking it — rather than careening from one extreme to the other when it comes to service policies.