Customer Service Excellence Linked to Profits

Organisations with a reputation for service excellence are likely to reap real financial rewards even when hard accounting measures such as Return On Investment, Return On Equity and Return On Total Assets are used.

A new report finds that companies regarded as 'being easy to do business with' are more likely to achieve bottom line benefits than organisations that do not have such a reputation. This reputation is developed and sustained when organisations have a service culture and personality, committed staff and customer focused systems. Together, these qualities provide significant bottom line benefits, creating increased value for customers and shareholders alike.

These are some of the key findings in the report Service Excellence equals Reputation equals Profit, published on 26 November, and commissioned by the Institute of Customer Service (ICS). The report, produced by Professor Bob Johnston of Warwick Business School, evaluates the business case for service excellence and identifies financial benefits to organisations that establish a service reputation, compared with others who fail to do this.

"Once an organisation gains a reputation for service excellence it can improve profit per employee and reap the rewards of high net margins," says Professor Johnston. "Problem resolution and complaint management have a particularly significant impact on customers' assessment of an organisation's reputation for service excellence," he added.

The research team used focus groups and interviews with customers and customer service managers to identify a list of 48 companies that ranged from those perceived to have a high reputation for service excellence to those who are perceived to have a low reputation.

The report also provides new insights into how organisations provide customer service excellence including developing a particular service personality, or style, the need for 'adult' relationships between managers and staff, top to bottom training and the way organisations can achieve both consistency of service and a flexible approach.