What is the Dollar Value of an Uplifting Service Culture?

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How much is an Uplifting Service Culture worth to you?

Many people think quantifying excellence in service is an exercise in “fuzzy math”.  Do you think so, too? Can you put a hard dollar value on consistently delivering uplifting and outstanding service? Do you know how much money is left behind when your service doesn’t measure up?

Let’s take out our calculators, shall we?

First, punch in the total revenue number for your company last year – the full dollar amount that came into your accounts. Now do a quick calculation to determine 9% of that amount and then ADD that 9% back into your year-end revenue total.

Now imagine that new and larger number was the actual revenue you collected last year. Looks nice, doesn’t it? What would you have been willing to invest in your business in order to reap that extra 9%?  What if the answer to that question was “not a single cent more”?

Well that is the answer, and the great news. You don’t have to “invest” anything significant from a monetary perspective to earn an extra 9%. But you do need to “invest” your time, energy, enthusiasm, creativity, and likely some strategic education on Service Leadership (yes, that is where we come in).

American Express discovered in their annual customer service survey that Americans are willing to spend an extra 9% with companies that provide excellent service. This is not a reflection of your product or your price –  it’s a reflection of your service. 9% greater revenue: the bounty that awaits when you deliver superior service

And this isn’t just in America: the ratings from customers in India, Germany, Japan and Mexico were even higher.

But here’s the rub. 33% of those asked by American Express believe that companies are not doing enough to earn their business. 27% believe companies have not changed their attitude about service, even in tougher economic times. And worst of all, 28% think companies are paying less attention to service than they were before recent economic difficulties appeared!

Do you see the irony? Customers aren’t asking you to upgrade your product. They aren’t asking you to make sweeping changes in your business model. They aren’t asking for discounts, free offers, coupons, or special deals. They don’t require you to be the low cost provider. Customers are asking you to pay attention to them, to build a culture of dedicated service providers that deliver better service.

And if you do that, they will pay you more –  9% more.

And as an added benefit, they will tell their friends, colleagues, family and online social network. People report today they are more ready and willing to blog, post, and online review positive service experiences than ever before. Maybe it’s because great service experiences have become so uncommon.

What a great competitive opportunity for you, worth 9% of your total revenue. Does the service you deliver deserve it?

PS: There are two sides to every coin, and two edges to this sharp blade. In the next blog post, we’ll look at the side that cuts deep and bleeds long; the cost of delivering lousy service.

Posted On: 3 March 2011
Categories: Service Culture
Tags: , , ,


4 Responses

  1. Vinay Kumar says:

    To build on what you have shared Ron, let’s look at it one more way.

    Assuming a company has revenue of $100 million and their profitablity is 10%. Then adding 9% to revenue is VERY significant because using this as example, an increase in revenue of 9% increases profitablity by nearly 100% as much of this added revenues goes straight to the bottom line. So in this example, instead of making $10 million, they would have made $19 million.

    Just from numbers perspective alone, if this doesn’t make the case for service, then I don’t know what will. Good service is a good thing to do and it’s good business. Everyone wins!

  2. CashWatch says:

    Vinay Kumar, Your enthusiasm is admirable, but you may be confused about what is Cost Of Goods Sold (COGS). If your net profit margin is 10%, your gross profit margin should be approx 30% (excluding overheads, interest, taxes etc), and in most businesses your variable costs will also increase when your sales revenue goes up by 9%. So based on your example, it would be almost impossible for your net profits will increase 90% when your revenue increases 9%…unless your business model does not have substantial COGS, as in a licensing, or some online and professional services firms.

  3. cyrus magol says:

    dear andrea, i love your articles. kindly pass on my regards to ron and jen. thanks. best regards, cyrus.

  4. Andrea Ihara says:

    Cyrus,

    Thank you. I look forward to doing a monthly Blog post. Perhaps there is a subject matter that is of particular interest to you?

    I will give your kind regards to both Ron and Jen! I am excited to see them both at our upcoming Invitational Service Leadership Workshop in San Francisco in July…

    Andrea



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