In my guidance to startups raising capital, two of the most important financial metrics to nearly all VCs are customer acquisition cost (CAC) and Lifetime Value (LTV) of a customer. There two metrics are important for understanding a company's business model and how they make money. Two related metrics that are critically important are Conversion Rate, the percentage of customers opportunities that you convert to revenue each period, and Churn Rate, or the percentage of customers that discontinue doing business with you during a period of time. Obviously, conversion rate has a big impact on CAC, and churn rate has a big impact on LTV. Great customer service, along with having great products improves conversion rates and decreases churn rates, both of which are massively important to any business.
Although there is a lot of lip service paid to focusing on the customer, there is still an urgent need to focus more on services the customer when they have problems. Here is my list of 11 things that most companies can do to improve the customer service experience, increase conversion rates, and decrease churn. Just writing this is a reminder for my business as much as it is for you and your business.
1. Listening to the Customer
It is hard not to become defensive when someone is really upset, and maybe even verbally attacking you. It takes a special person to look past an attack and "hear" what the customer is saying. In many cases their coworkers or customers are attacking them, and they are just reacting. Maybe they are just having a bad day. They want and need your help. They need a solution to a problem. Listening is key to understanding and having a chance to fix the problem and defuse the situation.
2. Fixing Issues Proactively
If you listen really closely, customers usually will tell you about problems before they become catastrophic. A regular dialog and a proactive approach in your product development process to fix issues as you get feedback can go a long way to avoiding catastrophes.
3. Talk or Chat with a Live Person
Although automation is perceived to be cost effective, it is really penny-wise and pound-foolish. Even if you do have automation, there should be an easy way to bypass this if the customer really wants to talk with a person.
4. Not Having an Endless Menu of Options
If you do have an automated system, use it yourself and have your employees use it. Does it delight them? If not, scrap it or replace it with something that the vast majority of people inside the company thinks is great.
5. Not Being Put on Hold, Much Less for an Eternity
There is enough intelligence available in most automated systems today that you can offer to call a person back or at a minimum give them a time countdown and estimate of hold time. Although this is still sub-optimal, it is better than leaving the customer in the abyss of uncertainty. By the time you get on the phone with these people, they are really upset.
6. Empathy and Patience in Customer Service
Hire and train people that have empathy and patience to deal with your customers. Customers are your biggest assets, so invest in the people that work the most with them.
7. Solution-Oriented Organization
The best companies don't leave customer service to the sales and service organization. Everyone is involved and prioritizes the solving of customer problems. This can easily become overwhelming if you are not proactive in your approach to solving customer problems, so you have to do both.
8. Providing Status
One of the worst things you can do with a customer is leave them in the dark about status. I'm an advocate of calling the customer on a frequent basis, even if there is no apparent progress on the solution, just to let them know that their problem is top of mind and everyone is working hard to fix the problem.
9. Invoking the Right Expertise
Sometimes you need to take your top people off of new product development or other seemingly higher priority activities to fix key costumer problems. These are never easy choices, but organization flexibility and agility is how great companies win.
10. Smooth Hand-Offs
Never pass-off a customer to someone else you your organization without being on the line to make the hand-off and making sure it goes smooth. This extra 30 seconds to a minute is very important. In a foot race, you can't just the baton to the next runner; you need to hand it to them and make sure they have it.
11. Solving Problems
Bottom-line, you need to be solution-oriented. To solve problems, you need to understand them at a root level. This requires that you ask questions and listen to the answers. A culture of winning includes a culture of service and problem solving.
Do these things, and you will increase conversion rate, reduce churn rate, reduce CAC, increase LTV, and make everyone including your customers and investors happier.