Almost 25 years ago, Carl Sewell, one of the smartest retailers on the planet, and I sat down to write Customers for Life. It was the first book to argue that customer service is a business strategy. (Back then, only Nordstrom, which was confined to the Pacific Northwest, and Neiman Marcus were known for providing great service.)

A lot has happened since. When we started, hardly anyone had heard of the internet. If you wanted to look up something, you went to the library. And while there were a handful of people who had "car phones" and that new-fangled invention called a cell phone, there weren't many.

But what hasn't changed is the importance of providing solid customer service. In fact, it has become more important.

When few people offer good service, simply trying to provide it makes you stand out. Today, everyone--to some degree--is competing on service. That means you have to work hard to get it right.

All this raises two questions: Is there a secret to providing good service, and what is the payoff if you do?

Let's take them one at a time.

Providing remarkably good service is simple--in theory: You ask customers what they want and then you give it to them.

You have to ask, because you don't define good service and neither do I. Only the customer does. That's why you have to ask.

And then you have to provide it. Otherwise, you are just going to make those customers cranky.

But what about the basic premise? Why is providing excellent service a business strategy?

That's simple. If you can turn a one-time buyer into a lifetime customer, at least 10 things happen, all of them good.

1. Sales rise. People have another reason to do business with you.

2. If you're helped (i.e., your sales are going up), the competition is hurt. (Their sales go down.) If people are spending money with you, they are not spending that same money with the people you are competing against. In a slow-growth economy, this is a very good thing.

3. Greater margins (Part I). Acquiring customers is always expensive. If you take care of your existing customers, they have fewer reasons to leave you. That means you don't have to spend money to replace customers who leave--since few of them will. Lower marketing costs mean higher margins.

4. It will be harder for your competitors to steal your customers away, since you have done a good job taking care of them.

5. Greater margins (Part II). If you have made your customers happy, they will pay a bit more for what you offer. You can't gouge them, of course. But they will be a bit less price sensitive.

6, Growth made simple. It is always easier to sell additional products and services to people with whom you already have a good relationship.

7. Work becomes more pleasant for you. Whom would you rather deal with: Customers who like your offerings or those who don't?

8. Work becomes more pleasant for your employees. Think of all those overwhelmed customer service agents at the airport the last time your flight got canceled. Do you think they were having a nice day?

9. Fewer headaches. If you do a good job taking care of your customers, they are far less likely to make trouble by suing or taking their complaints to the press.

10. You are literally creating "good will," which, as your accountant will be quick to tell you, is a real asset.

The takeaway: Providing excellent customer service was important in 1990. It is even more important today.

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