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What is Customer Service and Why is It So important?

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    What’s your company’s most valuable asset? It may be your great product, supportive shareholders, or dedicated team that comes to mind. 

    But you will certainly agree that without satisfied customers, you’re out of business. And that can be achieved by delivering extraordinary customer service.

    What is customer service and why does it hold so much importance?

    Great customer service has a direct impact on any business plus it is a key way to improve customer experience (CX). 

    Want proof?

    Satisfied customers are the lifeblood of any business. It takes a lot of money to acquire a new customer,  so business owners need to do what is necessary to ensure these customers come back. 

    Many retailers try to encourage repeat business through sales and promotions, but one shouldn’t underestimate the importance of good customer service. 

    Let us understand what is outstanding customer service and what makes it truly exceptional & effective?

    What is Customer Service?

    Excellent customer service is defined as going the extra mile in making a customer highly satisfied with both the products or services of your company. 

    Great customer service involves providing quality service promptly by using advanced customer engagement tools. It is the act of taking care of the customer’s needs by providing high-quality service before, during, and after the customer’s requirements are met.

    Customer service representatives are the main line of contact between an organization and its customers, making CX a critical facet and the main priority. Besides, customer service etiquette is important if you want to retain customers and grow your business. 

    Note: You can look through this peer-reviewed scientific journal article on CX provides empirical evidence that customer service is one of the most critical aspects of CX due to its impact on customer satisfaction and loyalty.

    It suggests that customer service representatives in omnichannel retailing should be courteous, helpful, and prompt across all channels. Also, they should be highly knowledgeable to answer customers’ questions.

    What is Customer Service to You as a Business?

    Successful small business owners understand the need for good customer service instinctively. Enterprises conduct in-depth studies and have concluded some key components.

    What customer service mean to you

    The key components of good customer service are as follow:

    • Addressing the issues raised by customers in real-time is critical. Requiring a customer to wait in queue sours an interaction before it begins.
    • Customer service should be a single-step process for the consumer. If a customer calls a helpline, the representative should be able to provide the first contact resolution.
    • If a customer is routed to a department/team, the original representative should follow up with the customer to ensure that the problem is resolved.

    Fundamental Steps Towards Delivering Outstanding Customer Service

    In today’s hyper-competitive market, where information is more freely available, businesses need to meet the ever-changing customer expectations. It needs a concrete customer service plan that goes far beyond internal analysis. 

    Below is the blueprint that, if implemented, could benefit your business by ensuring customer service excellence.

    • The first step is to outline policies to ensure the regular operations are consistent with all customers. The customer needs are broad so it is important to ensure your business can meet their expectations.
    • The second step is to put yourself in the customer’s shoes. Create a vision of how you would ideally like your customers to perceive you and consider the elements of your business that makes them choose you.
    • To really make your customer service model worthwhile you need to develop a solid customer engagement strategy to differentiate is the third step. Conduct research to develop a unique strategy and set customer service benchmarks.
    • The final step is to set clear goals. Aim to strengthen your customer relationships and ask for their feedback. Use technology to provide your customers with surveys and evaluate what attracts new customers and analyze customer retention.

    Importance of Customer Service?

    Excellent customer service creates loyal customers for life who are willing to refer your business to friends, family, and colleagues. 

    Providing such kind of excellent customer service starts with a mindset to delight your customers, but you also have to think beyond selling your products or services.  It also requires superb communication and problem-resolution skills.

    Learn more about your customers to create a pattern of excellent service in your small business.

    1. Increase Customer Retention with Exceptional Customer Service

    Every business needs new clients, it is equally critical to improving customer retention as acquisition costs are five times more than retaining an existing customer.

    Delivering prompt and effective service boosts customer satisfaction and enhances the experience. 


    Improve customer retention with excellent customer service


    When customer retention increases there is an increase in profit. It is because repeat customers are more likely to spend more with your brand, which impacts operating costs.

    Keyways that help to deliver great customer service that improves retention: 

    • Immediate assistance: Live chat helps to provide instant solutions to all the sales and support-related queries. By routing the conversation to the right support team the queries are solved faster.
    • Real-time personalized support: Using co-browsing and video chat allows real-time collaboration and encourages personalized conversations that help in building personal and reliable customer relationships.
    • Consistent omnichannel service: When you understand how customers interact with your brand across multiple channels, it increases customer satisfaction and acts as a great customer retention solution.
    • Deliver 24×7 support: Leverage an AI-based chatbot that can engage customers’ FAQs round the clock and reduce support tickets and improve customer satisfaction.

    2. Good Quality Service = Boost Business Revenue 

    One of the key reasons for the importance of customer service in a business is because it correlates to revenue: 84% of organizations working to improve customer service report an increase in revenue.

    Excellent customer service goes a long way and promotes more sales opportunities because you’re building a company with a reputation for always wanting to impress its customers.


    Excellent customer service improves revenue (1)


    Putting is simple – prioritizing good customer service in an organization increases revenue.

    Studies show that 86% of people will pay more for great customer service.

    Great customer service allows you to:

    • Ask for customer feedback to improve your product & services
    • Gain new and repeat customers that add value
    • Go the extra mile and deliver an unforgettable experience

    3. Reduce Customer Churn with Excellent Client Service

    Successful companies make it a strategic priority as they know the importance of customer service and to retain customers as retention has a significant impact on their bottom line.

    Excellent customer service should be a core component in the strategy of every company seeking to retain customers long term. 

    Investing in the same can reduce customer churn rate, which decreases the amount to be spent on acquiring new customers.

    When customers are treated well, they’re more likely to remain loyal to that organization. With a well-trained and knowledgeable support team, your consumers will reward you by referring to their peers, helping the business to grow.

    Conversely, poor customer service is utterly catastrophic. Almost 9 in 10 customers have left a business due to poor customer experience. In contrast, 86% of customers are willing to pay more just for a better customer experience—product aside.

    4. Quality Customer Service Showcases Brand Image & Values

    Brands that exhibit the best brand awareness gain popularity and fortune. And positive customer experiences play a huge role in brand awareness, as they often lead to word-of-mouth advertising. 

    Usually, customers choose to become the customer of a company because of their reputation for great customer service.

    What is the importance of customer service - brand value (1)

    Note: Brands should focus on providing a positive experience for existing customers and witness them rave about your brand. 

    With a well-defined customer experience strategy, you build your brand awareness and also measure everything from online reviews to social media sentiment to recommendation potential.

    When you build a brand awareness strategy around customer loyalty, you’ll see authentic and sustainable growth.

    5. Higher Customer Lifetime Value with Quality Support

    Customer lifetime value (CLTV) is the amount of revenue that you can expect from a customer over the period that your service will be provided to them.

    An increasing CLV means that your customers are spending more money each time they order.

    why-customer-service-is-important - higher CLTV

    Providing extraordinary customer service is a great way to increase CLTV. If customers have a positive shopping experience, they will be more likely to buy from you again. It’s also easier to market new products to existing customers. 

    Best customer service techniques to increase CLTV are:

    • Better communications based on well-researched buyer personas and customer segmentation.
    • Go above and beyond by sending a personal thank you message, offer a special gift or deal based on a customer’s unique preferences. 
    • Create a loyalty program as it is an effective tool for increasing CLTV, with a 20%
    • Take a proactive approach to train your team to ensure their standards for customer service are through the roof. 

    6. Extraordinary Customer Service Generates Referrals

    Positive word-of-mouth referrals come directly from previous and existing customers that have had a great experience with your company. 

    One of the key importance of customer service is you can get more brand advocates with less investment. It improves brand credibility and face value as well.

    Happy customers refer others

    Word-of-mouth advertising is often considered to be the company’s best and least expensive form of advertising.

    When customers receive a satisfactory and delightful experience, they can’t stop sharing their success stories with their friends, relatives, colleagues and even post to their social network about your friendly and helpful customer service. 

    Such acts turn out to encourage their contacts to follow the same brand and make purchases. 

    7. Outstanding Customer Service Aligns Goals & Processes

    When everyone at a company has the same end goal, the entire workflow becomes streamlined. 

    Keep your focal point on your customer, then move through each department to align them behind customer service.

    For example, when everyone is on the same page, the flow for resolving an issue report should precisely look something like the below one:


    what is excellent customer service important.png


    To make sure this collaboration spans the long-term, set a larger goal to improve a customer experience-based metric, like NPS. Then, put the responsibility on every department to move the needle.

    You’ll have happier customers, more streamlined processes, and easily hit your KPIs.

    Understanding Different Degrees of Customer Service

    Many customer-centric companies strive to differentiate themselves from the competition by offering outstanding customer service. 

    It is an excellent tactic since greater retention leads to significantly higher profits. In fact, an increase in retention rates of just 5% can boost profits from 25% to 95%.

    Here is a brief overview of different degrees.

    What is Good Customer Service?

    The key to good customer service is building good relationships with your customers. A happy customer will return often and is likely to spend more.

    To ensure you provide the best customer service:

    • Learn what your customers consider to be good customer service
    • Try to find out your customers’ expectations
    • Follow up on both positive and negative feedback 

    What is Great Customer Service

    Diving right in with specific customer service techniques, or you could start with the core principles governing the quality of great customer service in the first place. They are speed, accuracy, clarity, transparency, and accessibility. 

    For providing great customer services, keep a tab on the following things:

    • Ensure focusing customer service in all aspects of your business
    • Continuously look for ways to improve the level of service you deliver

    What is Quality Customer Service

    The quality of customer service is the key differentiator between good, bad, and indifferent companies. Good quality service keeps customers coming back whereas bad service drives them away.

    Focus on a few things to maintain good quality customer service:

    • Understand your customers’ needs and meet them
    • Deliver consistent customer service across all communication channels
    • Focus on your core product design to lure customers
    • Realize what is follow-up in customer service and implement its virtues

    What is Exceptional Customer Service

    Exceptional customer service refers to the unconditional commitment to delivering the highest quality product or service to every customer. Such a service gives customers a complete, cohesive customer experience that aligns with the organization’s goal.

    Best practices for providing exceptional customer service:

    • Surpass your customer expectations by making them feel important & valued
    • Be available to deliver a faster response to customer queries & issues
    • Practice active listening skills and deliver personalized customer support

    Examples of Good Quality Customer Service

    Competition pushes companies to exceed customer expectations to woo consumers away from other brands, while market dominators can generally set lower service standards.

    Which companies excel at building long-term customer relationships? Here are some examples of brands delivering high-quality customer service, with takeaways.

    #1. Yumble – Proactive Approach

    While selling online, problems with shipping and delivery issues come with the territory. Between missed deliveries, damaged shipments, and delays, there are a host of problems that could arise. And while these issues technically aren’t your fault, you are still responsible for the customer experience. 


    Yumble - Good customer service example

    Yumble, a food delivery company that experienced delays in delivering the meals instead of waiting until the shoppers got in touch, proactively emailed customers about the problem and even issued a $10 credit to make up for the inconvenience.

    Action Step

    If you are selling online, stay ahead of the situation by proactively reaching out to customers instead of waiting for them to contact you.

    #2. Spotify – Understand Customer Needs

    Spotify identified that great customer service is also about finding what your customers love, then delivering it in ways that make their products a staple of their everyday lives. 

    Its business model is to learn a user’s preferences and provide the additional service of curating and customizing playlists and radio stations. 

    Spotify - Excellent Customer Service Example

    Spotify went so far as to make interacting with customer service fun: Customers who tweet questions to the company are rewarded with individual playlists tailored to answer their questions.

    Action Step

    • Utilize technology in innovative ways to give customers what they want, how they want it.
    • Reward your customers with fun, personalized customer service.

    #3. Tesla – Connect With Customers Where They Are

    When it comes to quality customer service, the delivery of services can be a game-changer. Tesla recognized this fact and implied to deliver excellent customer service.

    Tesla engages with customers where they are and fixes issues. It is convenient for the customer because they don’t have to sit around a repair shop and it can be scheduled on their own time. 

    Action Step

    • Learn your customer-preferred channels and offer them the support channels to reach out to you conveniently. 
    • Provide real-time support by using advanced customer engagement tools and self-service options.

    Final Thoughts

    Undoubtedly, good quality customer service plays a major role in your business. It is the top indicator for measuring customer loyalty. Identify your unhappy customers, reduce churn, and increase revenue. It is also a key point of differentiation that helps to attract fresh customers in a competitive business environment. 

    Top-quality customer service goes a long way to creating a great customer experience and increasing lifetime value. You can also go through the best books on customer services to enrich your theoretical knowledge. Customers today are not merely interested in the product or service they are buying, but also the add-on elements they get. Here is an easy way for you to strengthen your customer relationships. Sign up with REVE Chat and give your consumers various channels and deliver exceptional customer service.

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    Snigdha Patel

    Snigdha Patel is a customer experience researcher, author, and blogger. As part of REVE Chat, she focuses on helping organizations maximize customer experience using omnichannel messaging and conversational AI.

    She creates contextual, insightful, and conversational content for business audiences across a broad range of industries and categories like Customer Service, Customer Experience (CX), Chatbots, and more.

    Serving as the lead content strategist, Snigdha helps the customer service teams to leverage the right technology along with AI to deliver exceptional and memorable customer experiences.

    Being a customer service adherent, her goal is to show that organizations can use customer experience as a competitive advantage and win customer loyalty.

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