How good customer service enhances reputation, both offline and online

By Marit Sillavee, consultant at ReputationInc

According to the European Parliament’s recent study, 40% of EU consumers purchased goods or services online in 2010, up from 20% in 2005. Why such a dramatic rise?

Quite simply, more and more people have Internet access and the skills to surf the web, and it doesn’t hurt that e-commerce outlets have invested heavily in ensuring that the entire ‘click-and-buy experience’ is now so generally straightforward and stress-free.

It comes as no surprise that a large majority of online shoppers find consumer reviews highly relevant. To remain credible and trustworthy, it is therefore a must for an online outlet to allow commenting and, furthermore, also even encourage all customers to rate and comment products and the entire shopping experience.

Ocado, the UK online retailer for instance sends their users an e-mail after the goods have been delivered so that they can let the firm know if the driver was helpful and happy and remembered to ask back the plastic bags for recycling. No wonder they have won plaudits for their service.

Customer service remains crucial – even in an increasingly on-line world. Social media guru David Spark’s latest newsletter presented the following useful statistics on the importance of good customers’ service:

• The average "wronged customer" will tell 8-16 people about their experience.

• A typical business hears from only about 4% of its dissatisfied customers, 96% just go away and 91% will never come back.

• 95% of complaining customers will come back if the complaint is instantly resolved and customers who get their issue resolved tell 4-6 people about their good experience.

So, if you don’t want your customers to trash your reputation, firms would be wise to eliminate bad customer service in the first place. Is there a simple, foolproof recipe, which ensures high profit margins and good reputation for all consumer-facing outlets, be they online or offline?

One increasingly utilised area of best practice is to develop an easy-to-use feedback system whereby unhappy customers can express dissatisfaction. Here, it is crucial to always, always, respond immediately to each and every complaint. It is also key to be transparent about your products – if you don’t, consumers will ‘fill in’ the gap by reviewing the products you sell and describing honestly its quality, colour, smell and functionality.

Firms are also increasingly utilising other cutting edge technologies, e.g. the Transparency Toolbar, an application that tells you if the products that you’ve chosen are safe, healthy, green and socially responsible. As a downloadable application, this has the potential to work with all online shopping sites. I love the comment of Josh Dorfman from the Huffington Post on this particular application:

“Any free-market loving capitalist will tell you that transparency is crucial to an efficient, functional economy. Without complete information, consumers cannot send accurate demand signals to suppliers about what they truly want and, therefore, what suppliers should produce.”

It is interesting that even today, regardless of how open or closed a website is, brand name is of major importance. According to the European Parliament’s survey, if a brand has a credible reputation and a relationship already established offline, it is more likely to be trusted by consumers in the online environment. Therefore – to gain a bigger market share online, it is essential to cement or establish offline relationships with consumers, in one form or another.

And last but not least, the study finds that men (yes, men) are more likely to buy online than women. How have online shops managed to attract an audience who are commonly perceived to resent shopping?

I guess the explanation is simple – men don’t mind buying goods, they just mind having to take the trip to the high street and fight for their right for a pair of pants. Shopping online is perfect: they can buy a whole new wardrobe within 15 minutes and get it delivered to their door next morning. Researching male audience perceptions of online shopping experience (which sites they prefer, how do they choose the online outlet, is the online outlet’s reputation important to them, etc) would thus help online outlets to target their commercial activities and draw even more male shoppers to discover the wonders of online shopping.

After all, men are a growing audience shopping segment. Women will also continue shopping online, but let’s face it - they will never give up spending time in boutiques and department stores!