Here at Zavee we spend a lot of time thinking about what smaller businesses can learn from larger ones. We also think a lot about customer service. The current recession seems to us an excellent time for businesses to focus on customer service. Commentators seem to agree. Their reasons may be obvious, but they make sense nevertheless:

• Retaining existing customers costs far less than acquiring new ones
• When competing for customers, businesses often have to choose between offering more value (e.g., by improving service) or cutting prices
• A good customer experience makes future purchases more likely, while a bad experience does the opposite

These posts focused mainly on larger companies, many of which have downsized their customer service staffs. There are anecdotal indications, if nothing else, that customer service has suffered as a result.

On the other hand, some larger companies are maintaining or even improving customer service. We think that these companies will be well positioned after the economy recovers because they will have generated loyalty and improved the value of their brand at a time when some of their competitors were cutting service or hiding from customers. Some are using technology: Comcast and Best Buy are by now well known as pioneers in the use of Twitter to learn about and respond to customer care issues. Other companies, such as Southwest Airlines, maintain high levels of customer satisfaction by making service part of the organization’s DNA (although no one is perfect). And I have had at least one potentially negative experience with a rental car company turn positive simply because a well-trained senior manager was on the scene and jumped in with the right approach and a fair solution.

Smaller companies have both a harder and an easier time maintaining customer service in a recession. Harder, because increasing expenses during a time of weak revenues may be difficult to swallow. Easier, because the cost-benefit analysis is much clearer. Some large companies may believe they can afford to exchange so much in sales for so much in customer service expense, but most small companies don’t think that way. Although there certainly are exceptions, most small companies realize that they can’t afford to give up sales to save money. They also realize that good service builds repeat business and long-term loyalty. Finally, they should also realize that customers talk – which means that good customer service can generate referrals: the least expensive but most reliable way to acquire new customers. The good news for small companies is that maintaining and improving customer service doesn’t have to be expensive. Here are some low-cost approaches to customer service that businesses can start now and keep in place even after the economy improves:

• Listen to your customers. There are many ways to listen: you can use applications like Facebook and Twitter; you can send surveys to customers by email; you can call them on the phone; and you can chat with them at the point of sale. As long as you are sincere and open you will learn a lot about what you are doing right and how you might improve.
• Empower your associates. Your customer-facing employees should be encouraged to engage with customers at every point of contact and empowered to offer solutions to at least some concerns or complaints. Anything that can’t be handled at their level should be referred to the appropriate person and dealt with promptly.
• Use technology wisely. At Zavee, we use a third-party application called Zendesk to help us manage customer service. Clicking on a “Help” link from anywhere on the Zavee site opens our Member Services page, from which anyone (even non-members) can read our content, engage with others in a forum or contact us with a question, comment or complaint. This system creates a numbered “ticket” for every interaction, which is automatically flagged for followup by Zavee but also gives the user a way to follow up with us. It turns everyone in our organization into a customer service agent, because we never know in advance who will be the best person to handle the next ticket that comes in.
• Don’t go it alone. In addition to blogs and other online resources, local chambers of commerce are a great source of information from businesses like yours in your own market. If you are located in South Florida, we invite you to join Zavee. Our marketing tools help merchants understand their customers better and our networking tools improve their ability to communicate with and learn from customers.

The Zavee takeaway:

• If you think the recession is time to double down on customer service, you’re right. If you think it’s time to cut back, think again.
• It may be easier for you to provide excellent service than a larger competitor, because you are closer to the customer. That’s a key point of differentiation – make the most of it.
• Customers talk. Make sure they have only good things to say about you.
• Don’t stop once the economy improves.

Update (2/18/10): “Poor Customer Service Costs Companies $83 Billion Annually” provides a useful summary of an impressive global research report (pdf) on the high cost of poor customer service.