According to “Research Links Customer Satisfaction to Stock Returns,” a report from the CFI Group, “Customer satisfaction is directly linked to stock market performance. Companies with high scores on the American Customer Satisfaction Index (ACSI) and the National Customer Satisfaction Index UK (NCSI-UK) produce higher stock returns than competitors, and greatly outperform market indices.
“Companies with highly satisfied customers generate superior returns because customer satisfaction is critical for repeat business, and that type of business is usually very profitable,” said ACSI founder, Claes Fornell. “That is, loyal customers tend to be highly profitable as long as their loyalty comes from their satisfaction and not because prices are low.”
By and large, however, the way customer service is performed by many companies today will not boost anyone’s stock price.
For many if not most companies, customer service agents are hired and given a playbook and a mandate – the playbook tells them how to respond to each type of complaint and the mandate explains how to process each type of complaint, usually through a product return, a replacement or, if absolutely necessary, a refund.
The underlying issue is that most companies consider customer service only as an expense, rather than an investment. Costs are always to be minimized, while investments are to be nurtured as a way of growing value.
What then can a company do to nourish its value through effective customer service?
There are two changes that can have a lasting positive effect on a company’s value through superior customer support:
- Make the satisfaction of each customer a priority. This may sound a bit obvious, but until an organization accepts customer service as a priority on a conscious level, its efforts will always seem to be an afterthought, at best. Your customers will quickly sense – and appreciate – when good customer service is your priority.
- Give your customer service agents the flexibility they need to solve the problems they encounter. Instead of teaching a set method of dispensing with customer service issues as quickly as possible, empower your stuff to solve customer problems. In doing so they will deepen your relationship with your customers and your customers’ greater satisfaction will help grow your company’s value.