Customer Service Affects Online Commerce

The quality of customer service greatly affects the success of online commerce. In a 2010 study, STELLAService (a company that measures online customer experience) focused on customer service and its effect on sales.

They found that the value of great customer service in the U.S. economy is a staggering $267.8 billion per year. This figure was calculated based on the average “spend” per person per year with each type of company.

This table shows the premium that consumers are willing to spend on a product or service if they know they will receive great customer service.

The Value of Great Customer Service
Consumer Category Average Spend per Person per Year Average Extra Value Consumers Are Prepared to Pay Estimated Total Value of Great Customer Service ($m)
Internet service provider $649.34 11.2% $17,978
Hotel $546.71 11.0% $14,834
Consumer products $1,361.84 10.9% $36,593
Online retail $653.29 10.7% $17,267
Healthcare $1,047.04 10.6% $27,338
Wireless carrier $854.61 10.2% $21,543
Insurance $1,307.57 9.7% $31,410
Financial services $640.46 9.7% $15,346
Cable and satellite TV $911.84 9.7% $21,815
Travel and transportation $929.61 9.5% $21,825
Landline carrier $549.67 8.8% $11,922
Utilities $573.87 8.6% $12,251
Government agencies $463.82 7.7% $8,837
Paid subscriptions $472.70 7.6% $8,887
Total $10,962.36 $267,846
Note: Consumer spending is highest (more than $1,000 per year) in healthcare, consumer products, and insurance. As a result, the value of great customer service is estimated to be higher for these categories.

The 2012 Global Customer Service Barometer from American Express (United States findings) supported the STELLAService result that found customers willing to spend more for good service. Respondents in the American Express study reported the following:

  • 66 percent said they would spend an average of 13 percent more with a company that provides excellent customer service — matching the results in 2011 and up from 9 percent more in 2010.

  • When asked the question “Why would you be willing to spend more with a company that provides excellent customer service?” 35 percent felt that companies who provide excellent service have earned their business.

  • 25 percent were willing to spend more with a company they believe placed a high value on excellent customer service.

  • 18 percent felt that “excellent service is worth spending more.”

  • 41 percent were willing to spend more with a small business versus a large company when both provided excellent customer service. Another plus for small business!

Examining the Online Retail category in the STELLAService study (shown in the figure), the leading factor in determining great customer service was speed of delivery. Ease of access to information on a website came in second.

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Two findings were surprising. When shopping on sites with great customer service, more than 80 percent of consumers expected a reply to their e-mails within 1 hour and more than 30 percent expected their phone call to be connected to a live representative in less than 30 seconds.

As far as preferred channels for customer service, the American Express study found that customers prefer getting answers to simple inquiries through a company website or e-mail.

Now that you have the data, you should understand that giving good customer service

  • Attracts customers

  • Builds customer loyalty

  • Allows you to charge more for your products or service

If you’re going to do business online, deliver customer service through information on your website. By doing so, your customers will know that they can connect when they need to reach you.

Gone is the 9-to-5 workday — the web is open 24/7. The more information you give your customers on your site, the less often they need to call you with questions.

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