We’re big fans of customer service and feedback loops here at Efficient Era, so we’ve talked at length about them in various other posts. However, sometimes it’s good to take a step back and ask yourself what all the fuss is about.

Why does customer service matter so much on Amazon?

Every business owner knows that, in an ideal world, they would offer fantastic customer service, low prices, and quality products. Every business owner also knows that this is not an ideal world. Budgets constrain us, margins limit us, and constant bumps in the road force us to always be on our toes. It’s easy to see how, for the sake of product quality or actual positive revenue, customer service may be the first thing to get the cut.

Plus, at the end of the day, Amazon is a marketplace. Doesn’t the lowest price always win?

Brick-and-Mortar

Much of this thinking comes from traditional commerce theory, where sales were actually made in brick-and-mortar stores.

In a physical storefront that offers a variety of products, a customer’s choice often comes down to two similar items from different companies. When trying to make their decision, they really don’t have much information to sway them. They have the copy on the box, which usually isn’t different enough to justify one purchase over another in this situation. They have feature lists, which could rule out one product as not meeting the customer’s needs, but often don't.

Finally, they have price—and all other things being equal, this is the factor that will decide everything.

Let’s say you run one of the companies that the customer is deciding between. You’ve taken it upon yourself to strive for excellence in customer service—you offer 24/7 phone support, lightning-fast email responses, and an extremely generous return/refund program. Other customers have had great experiences and have become loyal customers. The downside is, understandably, you’ve had to raise your prices a bit to keep this level of support up.

In a brick-and-mortar store, none of this information is communicated to the customer. All they see is your higher price, and they choose your competitor.

If that’s the case, you’ll likely get more sales by focusing on lowering your price and cutting unnecessary expenses to make lower margins go further. But again—these strategies are only for traditional sales.

The Amazon Difference

The Amazon marketplace is revolutionary compared to traditional marketplaces for a number of reasons. Chief among them: their overwhelming focus on customer feedback and reviews.

This love of feedback means that customer service excellence is no longer relegated to a post-purchase discovery—it can become a sales point in and of itself. Customer reviews mean that providing fantastic customer service on Amazon is directly rewarding. Aside from the previous effect of creating loyal customers, the positive reviews your customer service generates will attract new customers, boost rankings, and drive more overall sales.

Finally, the premium price you ask for in exchange for this customer service experience can be justified. A 2011 customer service impact report by Oracle found that 86% of customers are willing to pay more for a better customer service experience.

Okay, But How Do I Do It?

Evidently, it’s one thing to say “I should have better customer service” and another thing to actually do it.

If you're interested in some additional reading, we have a number of resources on customer service, especially concerning reviews and feedback:

In general, however, our advice for customer service comes down to two things:

Be responsive and be generous.

Being Responsive

Speed is a huge part of customer service. It doesn’t matter if you give the most thorough and helpful answer the customer’s ever received—if it’s sent out two weeks after they left a complaint, you’ve already failed.

A big part of getting customers to recognize that you care about them is responding quickly. Even if the customer is initially outraged, a quick response will likely calm them down a bit as they realize they’re being heard.

Speed applies most naturally to email queries, but is also especially important when it come to addressing negative reviews. Negative reviews often go unanswered on Amazon, and a seller reaching out to try and work out the problems brought up in the review will likely impress the reviewer.

To give you an idea of what “quick” means, here are some numbers:

  • Less than 24 hours is widely considered an acceptable email response time. (Benchmark Portal, 2005)
  • However, 41% of customers expect a response within 6 hours. (Forrester Research Inc., 2008)

Of course, this does not mean that you should rush out sloppy, unfinished, or unhelpful answers just to meet these metrics. If 24 hours is what you need to formulate a well-thought-out and productive response, then take your time.

At the same time, however, you shouldn’t put a difficult problem off for weeks. Even if you can’t solve it right away, starting a dialogue with the customer gives you a chance at retaining them, in addition to helping you gather more information. No response, on the other hand, means no more customer.

Being Generous

One of our Amazon seller partners practices an extremely generous replacement policy that we love as a model. It’s very simple: if a customer engages them with a problem and it isn’t solved after a few back-and-forth emails, they will always send a replacement.

They operate at an immediate loss whenever they send a replacement, which is a free, brand-new, fully tested unit. However, they continue this policy for a few reasons.

First of all, they deal in electronics, so if the problem remains past the troubleshooting phase, the product itself is likely broken. If they didn’t offer a replacement at this point, the customer would be left with a broken unit and a bad attitude. If they kept that up, they’d soon find themselves with a lovely collection of scathing negative reviews.

On the other hand, when they do send a replacement, it generates an enormous amount of goodwill. Technically, all the customer got was what they paid for, but it feels much better than that. They're satisfied not only with the product, but also the level of care and attention paid to them. They will be more likely to a) purchase from the same seller again, b) write a positive review, and c) spread word-of-mouth recommendations to friends and family.

This combination of customer loyalty, high-quality positive reviews, and word-of-mouth marketing means that the immediate loss from sending the replacement is more than made up for with long-term sales potential.

Some more numbers:

  • It is 6 to 7 times more expensive to acquire a new customer than it is to keep a current one. (White House Office of Consumer Affairs)
  • It takes 12 positive experiences to make up for one unresolved negative experience. ("Understanding Customers" by Ruby Newell-Legner)

The takeaways:

  • Generosity helps get customers that stick around, saving you on costs of acquiring new customers.
  • It's worth it to solve problems—sending one replacement is much easier than wrangling a dozen new positive reviews.

Conclusion

We’ve said it a hundred times before, but it bears repeating: customer service is how you succeed on Amazon. Hopefully, this post lets you take away a sense of perspective when it comes to customer service on Amazon, as well as some actionable steps to take to improve your own customer service.

If you have any questions, additions, or comments, leave them below as always!



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