How customer service contributes to startups?
The fundamental way to interact with customers and understand how they think and feel is through customer service. Since it is the first and most effective communication with customers, customer service enables companies to build trust and loyalty. Loyal customers usually transform into reference customers and it destroys one of the most difficult obstacles a startup faces: credibility. When a venture starts to create validity, it gains reputation and trust in its brand, products, and solutions. Customers, who become loyal by having a positive experience thanks to good customer service, kill the fundamental concern of potential customers in the pipeline: “How can I trust the quality and sustainability of the product/service I will receive?”. In addition, satisfied customers purchase more frequently and the number of sales per customer has an exponential growth curve along with satisfaction level. Therefore, customer service creates a dual advantage in sales since it directly contributes to increase in both number of customers and number of sales per customer.
Lastly, it is free marketing. People always talk about brands and their experiences with any products/services. The reason why all retail marketplaces distribute discount coupons for purchase reviews is just to create this concept through word-of-mouth marketing. People put more importance on what others think and feel than we expected and the ratio of people who are influenced by the reviews is 88%. (please check the detailed study of Zendeck, if the customer service concept attracts your attention). Also, 42% of people indicate that recommendation is more impactful than any other promotion, discount, or brand reputation.
In the end, I want to mention how can customer service muscle makes a company the market leader. This idea comes from the HBR case study: “Yemeksepeti: Growing and Expanding the Business Model through Data” (One of my favorite case studies in HBR). Yemeksepeti was established in 2001 and acquired by DeliveryHero in 2015 with a $589 million valuation. When Yemeksepeti started the meal order business, they targeted to change the habits of people that is why creating trust in people’s minds was the primary aim. The call center was the element that makes customers satisfied. Yemeksepeti achieved to have a distinctive capability by creating casual ambiguity since no competitor realized that the call center is the X-factor that glue customer to the Yemeksepeti platform.
The starting point of my attention on customer service is Paul Graham’s essay “Do Things That Don’t Scale” in which he emphasizes that startups should focus on doing things that cannot be easily replicated by their competitors in the early stages of their development. The Apple versus startup comparison example in the article was impressive. Basically, he mentions that startups can benefit from having a few number of customers so Tim Cook cannot write a personalized note to each customer but a startup founder can.
In most general framework, we can conclude that intensive customer service allows startups to differentiate themselves and gain a competitive advantage over both larger companies and other ventures.
