3 Customer Service Strategies to Increase and Measure Customer Loyalty

When you run a business, it’s important to build a loyal customer base. Not only do repeat customers help to keep revenue flowing, but statistics show that it costs much more to acquire new customers than it does to retain existing ones. And by increasing customer retention by just 5%, businesses can increase their profits by as much as 95%. 

But improving customer loyalty is easier said than done. Businesses often look to areas like product development and sales to find ways to improve loyalty while ignoring one of the most crucial areas – customer service. 

Customer service is the key to improving loyalty

According to a study by Microsoft, 90% of consumers worldwide consider customer service to be important when it comes to choosing who to buy from. If you want loyal, repeat customers, then stellar customer service is simply a must-have. 

The reason for this is simple: as you well know, customer service is often the only point of contact that you have with your customer base. Interactions here are critical and have a lasting impact on whether the customer decides to stick with your brand or look for an alternative. 

With this in mind, here are three ways businesses can improve loyalty and retention through customer service. 

3 customer service strategies for improving loyalty

1. Stick to your word

This might sound simple, but it is essential. You need to make sure that you are delivering on your promises to customers. If you say that you are going to do something, do it. 

In terms of customer service, sticking to your word can be broken down into three key moments:

• When your business makes commitments: When a customer buys a product or service, businesses usually make promises surrounding things like product quality and delivery times. Naturally, the customer then expects these promises to be fulfilled. If you promise to deliver the product within 48 hours, then you need to make this happen. If you promise that a product will last X years, then you need to ensure that it will. 

• When you can’t stick to these commitments: Sometimes unforeseen circumstances mean that you can’t stick to the commitments you have made to your customers. When this happens, your customer service team must communicate a reasonable explanation and offer a solution that will keep the affected customers satisfied. 

• When your commitment was misunderstood: Sometimes your commitment can be misunderstood. For example, a manufacturer may sell a product with a delivery time of two-to-six weeks depending on lead times and stock availability and have customers calling up in week three with a complaint.

While all businesses make commitments, it’s not always possible to stick to them. Problems can crop up which can lead to commitments being missed or misunderstood. What’s important is not that your business sticks to its word 100% of the time but that you minimize the risks by empowering customer service agents to make amends with customers and have some autonomy to decide what the best solution is, investigating and fixing any trending issue causing commitment breaches, and proactively notifying customers when an extensive complication arises. 

While an apology might be sufficient for minor transgressions, it could also be seen as an empty token gesture. We always recommend allowing customer service agents to go the extra mile if they deem it appropriate to do so, for example by offering a voucher, discount code, or replacement product. 

You should also conduct regular monitoring of your customer service team so that you can build an understanding of what can go wrong (delivery, product quality, etc.) and how your customer service agents resolve problems (and more importantly, whether these resolutions work.) 

Don’t forget to follow the evolution of your CSAT and net promoter score (NPS) to understand how customers feel about your company.

2. Find the right balance between human vs automated interactions

The use of automated customer service chatbots is on the rise, but that doesn’t mean that every interaction needs to be handed off to a robot. 

While chatbots do have their uses, it’s simply the case that customers don’t want to talk to them… at least not for an extended period of time. They want to speak to a real human being because human-to-human interaction makes them feel more valued. 

It’s therefore important to strike the right balance between humans and automation when it comes to customer interactions.

• Decide which interactions require more human involvement from your customer service agents: There are many ways to do this, such as by prioritizing based on criticality (e.g., refunds, escalated complaints, fraud, theft) and where positive customer interaction is likely to make the biggest difference (e.g., product support or a missed delivery). Meanwhile, automated chatbot interaction can be reserved for low-level queries concerning things like store opening hours. 

• Establish a communication style and stick to it consistently through all customer service channels and interactions: This can be achieved by building templates, pre-set answers, and a company-wide communications guide that highlights things like what tone of voice to use and any spelling or grammar requirements (e.g., UK vs U.S. English). Be sure that this is accessible to all your CS agents and that any automated bot channels are configured in line with your requirements. 

Tracking metrics like quality assurance scores, first contact resolution, and query reopening rates should help you see whether you’re getting the balance right and if improvements need to be made. 

3. Work on your customer service responsiveness and reactivity

One of the most important attributes of good customer service is, according to customers, a quick response time. According to statistics, almost half of all customers expect a response within four hours, while 12% expect a response in 15 minutes or less. Despite this, the average response time is 12 hours. 

It should go without saying that the longer you take to reply, the more likely you are to sour relationships with your customers and damage your credibility. From the moment you receive the very first contact from a customer to the moment you resolve their query, you need to keep waiting times as low as you possibly can. 

To do this, ensure that you’ve got appropriate processes in place to manage backlogs and prioritize queries. It’s also a good idea to ensure that your customer service agents are equipped with all the tools and training that they need to reply to queries quickly. 

We suggest you keep an eye on the following KPIs to gauge your CS team’s responsiveness: First response time (FRT), next reply time (NRT), customer waiting time, total time to solve (TTS), and handling time.

Customer service can turn angry customers into loyal ones

If your business is struggling to build loyalty with and retain customers, it might be time to consider a new strategy to keep them engaged. While there are many ways to do this, you don’t need to reinvent the wheel. A great starting point is to look at your CSAT and NPS to gather the first insights on your capacity to build customer loyalty. 

Customer service is often thought of in terms of dealing with customer problems and complaints – and that’s it. Good customer service is about far more than that, though, and it has a huge impact on customer loyalty that many businesses neglect to recognize. 

By making simple yet impactful changes to your customer service strategy, you can make customers feel more empowered and valued, thus increasing the likelihood that they’ll remain loyal to your brand for the years to come.