Impact of Customer Service on Retaining Customers

Digital Image of Customer Service Icons

The importance of customer service

Customer service is a great way to retain loyal, happy customers. Businesses all over the US understand this and have been creating robust systems in place to ensure their teams are adequately trained on simple customer service techniques that can go a long way. Other businesses engage in high-level customer service techniques; we will talk about these businesses later on in the blog post. In this Blog post, you will learn about the importance of customer service for customer retention.

Examples of customer service

Excellent customer service techniques include everything from a simple smile, the opening of a door, fast email response, customer surveys, and more.

Customer service and customer retention

Indeed, customer service and customer retention go hand-in-hand. Many businesses focus on acquiring new leads and clients while forgetting to keep their existing customers serviced and happy. So as you can see, customer service is key to retaining your current and future customers. 

Customer acquisition versus retention costs

According to invesp it costs five times as much to attract a new customer than it is to keep an existing one, that is huge! Retaining a customer makes more monetary sense than seeking a new one. This does not mean to stop focusing your attention on acquiring new clients but to start also having a focus on taking care and nurturing the ones that you currently do have.

Approximately, 40% of companies and 30% of agencies have an equal focus on acquisition and retention. Here are a few shocking statistics of customer acquisition versus retention cost by invesp:

  1. It cost five times as much to attract a new customer than to keep an existing one
  2. Increasing customer retention rates by 5% increase has shown to increase profits by 25% to 95%
  3. Nearly 70% of respondents agreed that it cheaper to retain then acquire a customer

The stats listed above show proof that customer retention is vital to a successful business,and the key to customer retention circles back to customer service.

Customer service impact on retention

Customer service is an amazing way to leave a lasting impression. Once you leave a lasting impression with the customer they will most likely go and share their experience and your service or products with their friends and family. The same rules apply if they were to experience bad customer service in a bad impression according to a Zendesk study someone with a bad customer service interaction with a company is 50% more likely to share their bad experience on social media like Instagram and Facebook more than those who had good experiences.

In a recent survey, 42% of customers said they actually bought more after a good customer service experience.  Treatment of customers when there is an issue can go a long way in creating a lasting positive impression with your customers and you want to make sure you are leveraging the opportunity.  On the other hand, a negative customer service experience can permanently sever a relationship with a customer.  Additionally, it can negatively affect future prospecting efforts due to low ratings and social media posts.  

As if those stats aren’t  staggering enough, did you know that being able to sell to an existing customer is well above 50%? While the probability of selling to a new prospect is 5 to 20%.  That means that existing customers are approximately 50% more likely to try new products and repurchase from a company they know and spend more than 30% more when compared to new customers.

Here are five ways to improve your customer retention using customer service:

  1. Create an easy returns process.  It can be a great way to encourage customers to trust in you and increase their openness to trying new products.
  2. Market your customer service success this is a great way to let people know that you value customer service and make it a focus in your business.
  3. Monitor your customer service metrics to make sure that you are on track and customer issues are being resolved promptly and fully.  Put corrective measures into place quickly when goals are not met.  
  4. Communicate customer service channels and hours.  Offer a contact phone number, service email address, social channel service handles (if available) for your business.  
  5. Empower your employees, maintain a good customer service at times can get very stressful dealing with a lot of customer frustrations so be sure to empower your employees to take certain actions to resolve customer problems.


Now that we went over customer service’s impact on retaining customers, what will you do in your business today to increase your customer service and maintain your own customers?