How do you value Customer Service?

Ideas for creating clarity at work

As you face a New Year, it is probable that your organisation will be thinking about Customer Service in some way. Whatever your challenges with Customer Service Skills - launching, improving, changing, cost cutting, off-shoring – if you don't know what Customer Service Training is worth to the business, its near impossible to make the best response to the challenge. So…

How do you Value Customer Service?

As you may imagine, for a large service based organisation, valuing Customer Service Skills is a major challenge. If you are not financially minded, it can be a daunting prospect.

A practical approach to valuing Customer Service:

The first stage is to identify the importance of Customer Service to the business or business unit. It is usual to involve Marketing, Sales and Finance in this process, as well as the Customer Service team.

When estimating the importance of Customer Service there are 2 founding principles:

HATS Principle 1

Customer Service must have SOME value (i.e. it is not worth nothing). If Customer Service has no value, the organisation should not be providing it.

HATS Principle 2

It is unlikely that Customer Service represents the TOTAL value of the organisation. Every organisation has additional resource such as knowledge, process, or environment as part of its customer offer.

From these two principles, it is clear that Customer Service represents between 0 and 100% of the VALUE of the business.

These principles apply whether the organisation is public or private, large or small.

For many organisations, taking on board these two principles provides a major shift in thinking. So that if, for example, your contact centre is treated purely as a cost to the business, it is unlikely that the best investment decisions about its development will be made.

The next stage is to estimate, from the Customers Perspective , what is the VALUE of the Customer Service your organisation provides as a proportion of the total customer spend? Once again you will need to involve at least Sales and Marketing in the process as well as the Customer Service team. Remember that the VALUE of Customer Service may be unrelated to the COST.

At this point you will have to start segmenting your customer base. Some will value Customer Service much more than others. You may be able to segment your customer base by the products they buy, but where you offer a uniform product, for example, utilities or public sector services, you will need to use customer satisfaction surveys and market research to help you.