By Liam Ward-Proud, Business Features writer, City A.M

The importance of customer service in business barely needs restating. We’re all more likely to go back to the barista who remembers our name, who serves our coffee with a smile, than the one who slams it down on the counter, moving swiftly on to the next customer. Indeed, a survey of 800 people by Vodafone found that 76% said they would tell at least one other person about an episode of poor customer service from a company.

Bad news travels fast, and this can be particularly damaging for small to medium-sized enterprises (SMEs), whose customer bases often aren’t large enough to absorb reputational damage. A 2009 study by consultancy Ovum put the annual business cost of poor customer service at £15.3bn in the UK alone.

So does this mean that just by refocusing on the swift, friendly delivery of products and services, SMEs can improve customer relations and ultimately the bottom line?

Service with a smile isn’t enough anymore, and this creates an opportunity for forward-looking firms. Businesses no longer interact with customers purely at the point of sale — connected technologies, including the Internet and social media; have made the relationship far more fluid. Through email, Twitter, Facebook and other tools, customers are only ever a click away, and this calls for a new approach. By focusing on customer experience (an individual’s overall experience with your business, beyond the sale touchpoint), SME trailblazers are turning these challenges into opportunities.

Responsiveness is one element of this. Through Twitter, for example, customer relationship teams can quickly (and cheaply) deal with enquiries raised online. But it can also allow firms to pick up issues that might not have been raised through conventional customer service channels.

Harley Manning and Kerry Bodine of US customer research firm Forrester argue that by thinking purely about the complaint phone lines and issue resolution procedure that usually make up customer service, firms are taking an overly reactive approach. In the book Outside In: The Power of Putting Customers at the Center of Your Business, they argue that “people call customer service when they have a problem. So equating customer service with customer experience is like saying that a safety net is a trapeze act.”

Instead, progressive businesses are now using business data to actively seek out customers who might have similar problems to ones that have been noticed. They stay ahead of the game by sorting issues out before they occur, and placing consumer feedback at the heart of product and services design, Manning and Bodine say.

Practically, this will involve organisational change in some SMEs. Worryingly, 41% of people feel that most businesses aren’t able to hold conversations using Facebook, and 44% say the same of Twitter. And customers want to be able to access firms quickly, regardless of the time of day or channel of communication. This can mean allocating teams or individuals to manage different aspects of the customer experience.

It’s also easy to overstate the importance of the digital aspects of a customer’s experience. Vodafone’s research surprisingly found that 46% of people still prefer to interact with firms over the telephone, and SMEs should make sure they’ve got a firm handle on the basics of customer service as part of the overall customer experience. But with its research also highlighting that 23% of young people want to be able to use Facebook more to contact businesses, the digitally connected consumer may still be the future.

This article originally featured on Your Better Business

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