Profit IdeasThe Simple Math of Concierge-Level Customer Service
Dr. Jeanne Hurlbert, President — Hurlbert Consulting Group
• customer service • distribution management best practices • marketing practices • management strategies • Wholesale Distribution Industry • distribution industry trends • new opportunities for distribution industry
Sitting down with Dr. Jeanne Hurlbert of the Hurlbert Consulting Group, Randy MacLean addresses the perceived cost of concierge-level customer service.
For many, exceptional service seems like a great idea, but it is not cheap. However, exceptional service – concierge-level service – is a money-making proposition.
"Every business," Randy says, "is made up of money-making accounts and money-losing accounts, and it's a balance of those things that controls the bottom line." But, as Jeanne points out, "what determines if you're a money-making account is the relationship between gross profit and cost-to-serve." Your greatest profits come from customers who buy a lot of your product but who do not have a high cost-to-serve.
You don't want anyone to steal away your biggest profit generators. So how do you protect them? You need something that your competitors can't or don't provide, and, as both Randy and Jeanne explain, concierge-level customer service is a key element in retaining customers. In fact, exceptional service is THE retention tool.
Exceptional service may seem costly at a glance, but in fact may not cost at all. Exceptional service guarantees the retention of your best and most profitable clients. Randy offers a clear explanation: "what you're really doing is you're investing a certain amount of the extraordinary profits that you get from your best accounts in order to get more best accounts. And to make sure you don't lose any best accounts. And that's money well spent."
Ultimately, this is a net gain in profit. With concierge-level service, you protect, defend, and even grow the best parts of your business. This level of service is instrumental to adding new profitable accounts and changing your less-profitable accounts into money-makers.
Randy identifies three opportunities to add high levels of growth through concierge-level customer service. First, you are saving and retaining your existing profitable accounts. They don't want to leave. Second, you get more profitable accounts – your service is an incentive for others to do business with you. Third, and finally, you convert your most costly accounts into good, profitable accounts.
The increase in gross profit far exceeds the investment you make in concierge-level customer service.
Finally, exceptional service is also good math. Randy explains that you are more productive and you get better returns by converting existing customers into better-performing customers than you would by chasing new customers. Existing customers already have a relationship with you and have bought from you before. By focusing on your service, you increase the likelihood that those customers will buy from you again and your expenses are much more targeted.
With exceptional, concierge-level customer service, your reputation goes up. People appreciate you and want to work with you. More opportunities come your way due to word-of-mouth referrals, which leads directly into more conversion benefits. Using exceptional service to retain and gain customers is a practice that literally pays more than it costs – it's simple math.
For more information about Dr. Jeanne Hurlbert, visit: www.hurlbertconsulting.com