We all love an iconic brand. Names like Arnott’s, Bunnings, Vegemite, Holden and Billabong all epitomise the best Australia has to offer. But these companies have not built their reputations – or profits – overnight. It has taken time to build and maintain brand loyalty and customer service, responding efficiently to complaints and ensuring their customers’ needs feel value.

However, with boardroom pressures to drive ever-increasing profit margins, brands look to cut expenditure across the business, often at the expense of customer service. That’s how the love affair starts to wane. Over time, poor customer experience can start to strain the relationship. Here, loyalty is tested or indeed, lost.

In Australia alone, businesses lose $720 on average per bad customer experience. This adds to the costs of marketing, promotions and sales in constantly winning new customers, not to mention that it is more costly to attract a new customer than it is to retain an existing one.

With 3 in 4 marketers relying on good customer experience to gain consumer trust – now the breaking point for loyalty – it is clear that business need to adapt to changing consumer demands for competitive advantage. To do this, businesses must supply fast shipping, easy and fast returns, expertise, knowledge and personalisation to keep customers coming back for more.

The profit potential

Studies show a clear correlation between customer service and profitability. Customer satisfaction has the potential to boost your bottom line and impact your ultimate success as a business. Maximising customer satisfaction creates a mutually reinforcing value chain; happy customers continue to support companies that successfully meet their needs. In turn, businesses reap the benefits of increased revenue.

One of the key drivers of happy customers are happy colleagues. Increased revenue provides businesses with the means to reward employees with benefits and incentives for championing customer satisfaction. These rewards motivate employees to continue launching great products and taking excellent care of the customers who purchase them.

However, not all customers will be profitable to a business. Forbes says companies with a customer experience mindset drive revenue 4-8 percent higher than the rest of their industries. In fact, companies that lead in customer experience outperform laggards by nearly 80 percent. The bottom line: keeping the right customers is essential. 

Major VIP customers require special treatment and big discounts to feel valued. The smallest customers are likely to pay the full price and are low maintenance, but very often their costs of doing business outweigh the benefits. On the other hand, the average customer buys regularly at almost the full price and justifies the business investment for providing quality customer service.

Loyalty programs enhance brand experience and drives support for businesses over time because customers create emotional connections with the brand or product. Building brand loyalty by prioritising customer satisfaction and building emotional connections doesn’t have to be expensive.

The case for servitisation

Businesses have caught on to the power of providing good customer service as an extension of their own product line. Extending the capabilities of their company to deliver a greater experience for the end customer is called servitisation.

It means some manufacturers or producers (e.g. those that offer heating systems) are now also offering maintenance and installation support as part of their processes. It’s all about providing a service that builds loyalty and customer satisfaction. 

The Sage-IDG report Discrete Manufacturing in a Changing World, found 74 percent of Australian companies had a positive reaction to servitisation over the past 24 months, with 48 percent recording a strong positive result.

Further, 89 percent of Australian manufacturing companies are currently pursuing a servitisation policy. The main reason was to capture more share of the wallet with a ‘pay-for-use’ of the solution (73 percent), obtaining long-term contacts (62 percent), steady cash-flow forecasting (61 percent) and using better customer knowledge to develop new solutions (60 percent).

These indicate Australian companies understand the value of long-term relationships. Sustainable business is not developed on a model of ‘build and sell’, but instead one that is focused on driving long-term personal relationships and selling on reputation.

For Holden enthusiasts, it is all about the brand and the love for the marque – the look, the feel and the smell. An emotional attachment to the brand needs to be backed up with stellar customer service. The minute a retailer provides bad customer service, there is little chance of getting their custom back. That applies just as much for a true Australian icon as it does for a small start-up brand. The true test lies with the personal touch and attention to detail that all customers appreciate and love.