Have you called your switchboard lately? Chances are your competitors have.

The experience can be an eye-opener for any company that has not measured customer service recently. In an era of aggressive competition, customer service is more than a buzzword, it’s a strategy … and an imperative.

Retaining your customer base is necessary if you are going to keep costs down and revenues up. As the U.S. Department of Commerce has found, it costs five to six times as much to get a new customer as it does to keep the one you already have.

Lowering customer turnover is not as simple as it first appears. Just as many problems throughout the company are merely symptoms of a much larger issue, so customer retention needs to be addressed as a companywide issue, not piecemeal, if the desired results are to be produced.

“Customer Service” is more than a department it is the very lifeblood of your company. Every person, whether they “touch” the customer directly or not, makes a difference in how the customer is served and how your company is perceived. Retaining customers is accomplished when there is a daily commitment throughout the organization.

Sufficient resources must be allocated and a communication system must be in place that penetrates throughout the organization.

To test reality against perception, key performance, service and quality measurements are needed.

There are several questions that need to be asked: What are your customers saying about your company, product and service? How easy is it for them to do business with you? What is your customer retention rate? What do your customers want that you are not providing? Which product or service is “stale”?

If you have ready answers to these questions, you are clearly listening to your customers. If you are scratching your head, it is time to get in touch with your customers, because if you continue to ignore them, you are headed for extinction.

What are your employees saying about the company? When was the last time you acknowledged an idea from one of your front-line employees? How often are your employees involved with management in any decision-making processes? Do they have the authority as well as the information necessary to satisfy the customer on the first contact?

Again, if you have answers to these questions and have “flattened” the problem-solving process, so that it is not just a few managers making the decisions, you are more likely to have employees who care about how the company fares.

Employee “ownership” does not mean turning the physical ownership over to the employees. What it does mean is that they take pride and are concerned about how the customer is treated, how the internal processes work to support the customer and are going to provide the outstanding customer service necessary to retain your customers. Without it, you open yourself up to poor customer service and being one of the “horror stories” being told about poor customer service.

What would a reduction of 27 percent in customer turnover mean to your company? Or a cost reduction of 15 percent due to streamlined work processes? How about an 8 to 10 percent increase in revenues?

These are actual results of companies that have made the commitment to outstanding customer service and gone into action to make it happen. The impact was measured in millions of dollars.

In summary, to increase revenues, cut costs and increase customer loyalty, these are the critical elements to have in place and some steps you can take now:

1. The cornerstone of customer retention is that company leadership must have, and demonstrate, a commitment and dedication to providing outstanding customer service. This means clear goals, satisfied employees and effective systems and processes.

2. Survey your customers regularly. This can be done periodically with your whole active customer base, and with your customers shortly after the sale. There are many resources that can help you put a survey together so that you get meaningful results.

3. Act on the survey results. A study recently completed of 38,000 customers of 25 large Canadian companies finds that customers willing to let you know what and how you can do better are your more loyal customers. If you listen to what they say and take action on their recommendations, they will keep coming back.

4. Survey your employees. They are the people who know what is and is not working in the company. Get their ideas. Bring different departments together to resolve issues.

5. A well-managed human resource function is needed, providing the right number of people at the right time. As well as surveying the employees for their satisfaction level, there should be regular appraisals and equitable incentive programs.

6. Are the information systems in place to provide everyone with the data they need, when they need it? Is it accurate? Have you added systems as you have grown and now they do not talk to each other? Are your systems making it easy for your internal and external customers to do business with you? Negative responses mean you need to focus on transforming your information systems.

7. Lastly, but definitely not least, planning will make continued success easier to obtain, rather than leaving it to the whim of circumstances. Cross-functional teams can identify and analyze opportunities for improvement in human resource planning, customer service issues and the needs for information management strategies.

Pauline Field is president and senior consultant with FieldWorks, a Los Angeles-based management consulting firm.

Small Business is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications. Contact Dan Rabinovitch at (213) 743-2344 with feedback and topic suggestions.

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