When Being Nice to Your Customers Make You Lose Money: An Analysis of Profits vs Customer Service
Personalized notes, surprise gifts, prompt replies, and emotional conversations with your customers can delight them for sure. But they also eat up your profits…
Oops, did I just touch a raw nerve?
As an entrepreneur, you’re attuned to all the facts about good customer service leading to increased business, more sales, and higher customer loyalty. And there’s no denying that, of course.
But then why do P&L statements show the opposite picture? Why are America’s most hated companies the most profitable?
There’s certainly a clash between good customer service and high profits. When your customer service team spends hours on the phone, engaging in emotional and ‘human’ conversations, it’s bound to increase your overhead.
And as more business comes in because of that great experience you’re delivering, those overheads keep bending upwards.
Delivering good customer service isn’t all that hard. But delivering it at scale and still making a profit is something businesses continue to struggle with.
Take a look at Chewy
Founded in 2017, Chewy tried to compete with Amazon by differentiating itself with its amazing customer service. They figured out the fast track to its customers’ hearts – by being terrifically nice to customers and their pets! They would send handwritten, personalized notes to customers, engage in emotional conversations with them, and give them full refunds even when they haven’t been asked to do so!
They still do it. And they’re still losing money.
Chewy was valued at $31.59 billion in 2021, which is great. But the company has still not turned a profit.
But we aren’t here to criticize Chewy. Though many things account for the lack of profitability, we are certain it’ll be big one day.
What we’ll touch upon here is how new businesses and startups can follow the footsteps of Chewy and deliver great customer service WITHOUT losing money.
Unfortunately, when businesses are faced with the stark reality of costly customer service which they blame on for the red line on their P&L, offshoring is the only option they consider. That’s why the customer service of most companies is so bad today. Because it’s profitable – in the short term, at least.
Bringing Down Customer Service Costs Without Hurting Customer Experience
So, the secret sauce is Customer Service Automation.
Let the bots come to the rescue of our customer service teams!
With customer service automation, humans and bots work together. Human resources are only dedicated to tasks that can’t be handled by a bot. It’s not wasted on manual, repetitive tasks that could be easily automated.
And there are things that computers can handle better than humans – like keeping track of all the little personal details of customers.
Just think about an automation solution that lets agents run a search for a customer to retrieve all of their personal details. The agent uses those details and crafts a nice, personalized note and sends it off, delighting the customer!
Or better, use dynamic placeholder tags like <pets_name> in templates and send personalized notes in bulk, delighting not one but thousands of customers at once!
Compassion4Paws – When Customer Data became Hard to Manage
Compassion 4 Paws is one recent pet care company that figured out the secret sauce. Their problem was having too much data about their customers and managing that efficiently and effectively.
Offering in-home pet euthanasia and other related pet care services, Compassion 4 Paws felt compelled to know everything about their clients and their pets – hence the lengthy and detailed forms on their website.
But how do they manage all that data efficiently? Michael Grabham, their business developer, knew the drawbacks of dedicating valuable human resources to the repetitive task of entering and retrieving data and using it to personalize their conversations with customers.
That led him to figure out the key: automation.
Codup built a customer service automation solution for Freshdesk – the helpdesk solution Compassion4Paws was using. With our solution, the team at Compassion4Paws can now collect information whenever a new customer calls in.
Whenever the agent submits a form, a ticket is created in Freshdesk and all information is saved under ticket details. A contact is also created with several relevant fields saved there as well.
So, even if a customer comes back after five years, it would now take a few seconds for their team to retrieve and view his information and personalize the experience.
What to Takeaway…
Customer service automation is how you reach that perfect Nirvana where your customer service costs don’t cut your profits.
Want breakthrough results for your business as well? Hire Codup to develop a game-changing customer engagement solution for your business.