Customer Service Impact

Jan. 1, 2006
While the equipment rental industry is enjoying an upswing, the past few years have been tough. Customers are more sophisticated than ever and consider

While the equipment rental industry is enjoying an upswing, the past few years have been tough. Customers are more sophisticated than ever and consider more than just rates when choosing where to spend their dollars. For this reason, companies realize they have to work harder for each sale. Smart organizations are putting measures into place to differentiate themselves from competitors while keeping prices reasonable and at a profitable level.

A universally effective initiative to increase profitability is to create a culture based on exceeding customer expectations. Great customer service impacts virtually every aspect of a business. This often makes it difficult for companies to definitively measure the success of service-oriented training. But if you know where and how to look for results, you can see the impact exceptional service can make.

When we think of training ROI, we automatically think in terms of direct revenues from the initiative. However, it's often tricky to clearly link sales results to a customer-service training program. Good service impacts a business on all levels, collectively contributing to your bottom line.

There are four areas in which the effects of customer service training are most apparent and measurable.

Increased revenues

The most obvious way customer service training impacts your revenues is through increased conversion rates on incoming inquiry/transactional calls. An employee trained in service and sales strategies knows how to build value for the caller, preferably before quoting rates. This individual asks the right questions to find out more about the caller's needs and, as a result, can offer the best solution. A caller whose inquiry is met by a knowledgeable, friendly representative is much more likely to place an order than a potential customer who calls for rates and gets only the basic information he or she requested.

When thinking about the value of training for your staff that handles incoming requests, consider this: If at each location you were able to convert just two additional inquiries per day into a $400 transaction, five days a week, 52 weeks a year, you have the potential to increase your annual revenues by more than $200,000. Factor in the number of locations your business has and that number becomes even more impressive. That's an obvious example of return on your customer service training investment.

Another example that's not so obvious is with pricing. The ability to build value for your products and services in your customers' minds enables you to charge higher rates. Most customers, while price conscious, will readily pay a few extra dollars for an increase in value. Is your staff prepared to proactively provide reasons your customers should rent from you?

Repeat business and referrals

In an industry reliant on long-term relationships and referrals, you can't ignore the importance of customer loyalty and retention. From a bottom-line perspective, striving for repeat business and referrals is the most cost-effective sales and marketing strategy out there. A staff that understands the business, your customers' needs and consistently exceeds expectations is invaluable in creating ongoing relationships and new sales opportunities.

Increased transaction amounts

Another cost effective way to see how customer service training affects the bottom line is through up-selling and cross-selling. A savvy phone representative asks customers the right questions to find opportunities to up-sell or cross-sell, increasing each transaction amount. Often, customers may not know the options available to them and appreciate a knowledgeable staff member who takes the time to help them find the best solution, even when additional or more expensive equipment is suggested.

Employee retention

Employee satisfaction also contributes to your bottom line. It's a fact that people who are successful in their jobs are often the happiest, and happy employees always treat customers better. When you invest in customer service and sales training to help your team excel in their roles, you substantially increase job satisfaction and retention. Have you ever considered how much staff turnover may cost your organization? Human resource experts estimate the cost of losing a single employee ranges from 30 to 150 percent of that individual's yearly salary (both hourly and salaried). In an industry that relies on employees with technical skills and expertise, replacing staff members can be a tough and expensive prospect.

So what kind of customer service training initiative will help you show ROI in all of the areas mentioned above? You must have an effective, strategic program that enables you to track each employee's success with the skills you have taught them and a way to measure increases in each of the areas you want to impact.

Creating a culture focused on customer needs begins with you, the principal or manager of your organization. It's imperative that you know why and how customer service is crucial to the success of the business. Then, share this with your employees. The passion you have for your business is contagious. Once your staff understands how their ability to provide exceptional service affects the entire organization including company profitability and their own job security, they will be more likely to embrace your service philosophy and training program.

Determine your current situation in each of the above areas — revenues, repeat business, up-selling/cross-selling and employee turnover rate. Begin tracking these so you can see a correlation between your employees' success in your training initiatives and areas you've marked for improvement. Set realistic goals in these areas and share them with employees. Better yet, ask your employees to help in the creation of these goals.

In any effective customer service training program, you must give your employees a step-by-step description of how you want them to behave and how their success will be defined. This may be a different formula for different roles within your organization, but it should be consistent for each job function. Make sure to provide employees the opportunity to practice the new skills you've taught them. Anxiety and resentment can occur when employees are taught new skills and then expected to change their behavior without proper time to adjust.

Building a culture where your company is not only known for great products but also great service requires patience and persistence. Make sure to put a reinforcement training program in place to keep employees fresh and consistent.

Measuring performance is the key to demonstrating ROI. Creating a system to review the performance of your employees enables you to determine whether or not the skills are being used and if your program is impacting your business as you had hoped. Scored mystery shopping calls or visits are a great way to measure employee performance. This allows you to gauge your employees' success based on the objectives you defined for them during the training phase. Scoring helps you draw a correlation between how well your employees are performing and how your company is doing in each of the four areas discussed above. Continue to review the goals you set with your employees to help track your progress.

Once you have a system in place for measuring how well your employees are using the skills they've been taught, compare these scores to your conversion rates, your transaction amounts, how much new business and referral business you are enjoying and your employee retention rate. An increase in your employees' scores should match an increase in all of the areas you are tracking. Compare these to the goals you have set and consider incentives to help reward and recognize positive results.

Because good customer service affects literally every aspect of your organization from revenues to employee satisfaction to customer retention, it's often hard to track the return on a customer service and sales training investment. You will see a definitive relationship between exceptional service and bottom-line results by understanding the areas with the most impact, tracking success in those areas, and putting a training program in place with an objective performance measurement system. Over time, tracking this ROI will become a natural part of your business-planning initiatives and customer service the foundation of your success.

Barry Himmel, senior vice president for Dublin, Ohio-based Signature Worldwide, has provided training for equipment dealerships across the United States.