# What Is Customer Service, and What Makes It Excellent?

> **Definition**
>
> Customer service is the support and assistance that a company provides to its customers before and after purchasing its products or services.

## What Is Customer Service?

Customer service is the support, assistance, and advice provided by a company to its customers both before and after they buy or use its products or services. Customer service is a critical factor in ensuring buyer satisfaction. It also helps a company retain customers and grow its business.

### Key Takeaways

*   Customer service is the interaction between the buyer of a product and the company that sells it.
*   Good customer service is critical to business success, ensuring brand loyalty one customer at a time.
*   Recent innovations have focused on automating customer service systems, but the human element is, in some cases, indispensable.

![Customer Service](https://www.investopedia.com/thmb/r3OL6afUqJ5GrbpWqYNMX95UCSw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Term-Definitions_customer-service-2ef862f130cf4651b2c3b3bf14d87492.jpg)

*— Investopedia / Jessica Olah*

## How Customer Service Works

At most companies, [customer service representatives](https://www.investopedia.com/articles/financial-advisors/110315/considering-career-client-service-associate.asp) are the only employees who have direct contact with buyers or users. The buyers' perceptions of the company and the product are shaped in part by their experience in dealing with that person. This is why many companies work hard to increase customer satisfaction levels.

[Successful small businesses](https://www.investopedia.com/articles/pf/08/make-money-in-business.asp) and large companies alike understand the need for excellent customer service instinctively. Here are the key components of excellent customer service:

*   Timely attention to issues raised by customers is critical. Requiring a customer to wait in line or sit on hold sours an interaction before it begins and can [ruin their opinion of a business](https://www.investopedia.com/terms/a/abandon-rate.asp).
*   Customer service should be a single-step process for the consumer. If a customer calls a helpline, the representative should, whenever possible, follow the problem through to its resolution.
*   If a customer must be transferred to another department, the original representative should follow up with the customer to ensure that the problem was solved.  
    

> **Fast Fact**
>
> Customer service should be a one-stop process for the consumer whenever possible.

## Benefits of Customer Service

There are many reasons why it's a good idea to invest in excellent customer service. The following are just some of the main benefits of implementing a customer service program within a company:

*   **Customer Retention:** The first and most obvious advantage of having a customer service plan in place is to keep customers happy. It means listening to concerns, being empathetic, and streamlining issues related to product availability, payment, returns, and technical support. Showing that a company cares keeps its customers loyal.
*   **Employee Retention:** Customer service isn't just for customers. It also helps keep employees with the company. When customers are happy, employees are, too. People tend to want to work for a business that cares about its customers.
*   **Troubleshooting and Problem-Solving:** Businesses have to take care of their customers' problems. But companies that take a proactive approach tend to do better. This means that it's important to reach out to customers before any issues arise. This shows that the company cares and is doing all that it can to ensure a smooth customer experience.
*   **Referrals:** Consumers who have a good experience might pass on that information to others through word-of-mouth, customer reviews, or [social media](https://www.investopedia.com/terms/s/social-media.asp). This often helps businesses generate new sales.
*   **Brand Boost:** Businesses that show consumers they care through customer service help increase their [brand equity](https://www.investopedia.com/terms/b/brandequity.asp). This leads to more referrals and an increase in sales.  
    
*   **Increased Customer Lifetime Value:** This refers to the relationship customer service helps establish and solidify with a single customer. When a company provides someone with good service, that person is more likely to add to the company's revenue by remaining loyal and making more purchases.  
    
*   **Corporate Culture:** Customer service allows businesses to streamline their [workflows](https://www.investopedia.com/terms/w/workflow.asp) and promote cooperation among different teams. This includes communication between agents and managers, technical engineers, and production teams. All of this helps corporations achieve their goals of customer attraction and retention, which increases sales revenue.
*   **Competitive Advantage:** Having a good customer service base sets a company apart from its competition. It boosts its reputation and increases its brand value by showing consumers and competitors that the business values the relationships it has with new and existing customers.  
    

## Traits of Good Customer Service

It isn't enough to have a customer service plan in place. The plan needs to be effectively executed to reap the benefits. But before we look at what effective execution looks like, it's important to understand bad customer service.

Bad customer service is any communication or experience where a consumer feels as though they are let down. This includes negative experiences, such as long wait or hold times, not being able to speak to an agent, being transferred too many times, and not being heard. This can lead customers to provide negative reviews and/or begin shopping with a competitor.

There are a few key traits that businesses can apply to their customer service to make it a better experience.

*   **Personalization:** Tailoring the experience to each customer is an effective way of practicing good customer service. After all, not everyone has the same needs. Listening to what a customer's needs are can help determine the course of action and the direction of the experience.
*   **Speed:** Businesses should provide their service quickly. If there's a problem, it should be resolved as soon as possible. Customers don't want to wait to get an issue resolved or to have their questions answered. Having said this, there is a fine balance between speed and problem-solving. Don't brush off the customer or get them off the phone without a resolution. This means that [efficiency](https://www.investopedia.com/terms/e/efficiency.asp) and effectiveness may have to supersede speed in order to provide a great experience.
*   **Option for Self-Service:** It's important to give customers the option to help themselves, whether that's through an automated banking telephone service or a self-service checkout. Keep in mind that this should be done only if consumers want it. Forcing everyone to help themselves may alienate those who want to deal with customer service agents.
*   **Listening and Empathy:** This requires training and skills, along with a certain degree of compassion.
*   **Being Proactive:** It's a good idea to reach out to customers first rather than waiting for a problem to arise. It shows that a company cares. This can be done with a simple follow-up email or a phone call.

> **Important**
>
> The Bureau of Labor Statistics projects that job growth for customer service representatives will decline by 5% between 2023 and 2033.

## How to Deliver Great Customer Service

Studies of customer service have centered on creating the perfect [online experience](https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internet-banks.asp). The first and most difficult factor is the multiplicity of channels. Today's customers expect to get service through whatever app or device they happen to be using at the moment.

Once again, the focus has been on packaging how-to content and related resources that are designed for self-service. Increasingly [sophisticated data analytics](https://www.investopedia.com/terms/p/pareto-analysis.asp) also are being used to identify dissatisfied or low-engagement customers. But, as always, the most effective customer service needs to incorporate human contact, if only as a last resort.

## Customer Service Channels

There are a number of different channels to deliver customer service. Many companies, especially larger ones, offer more than one way for consumers to reach them. Smaller businesses may use one or just a few of them. And in the age of social media, it's become even easier to get in touch with businesses.

The following chart highlights some of the most common customer service channels companies use.

## Customer Service Automation

For decades, businesses in many industries have sought to reduce personnel costs by automating their processes to the greatest extent possible.

This led many companies to implement systems online and by phone that answer as many questions or resolve as many problems as they can without a human presence. But in the end, there are customer service issues for which human interaction is indispensable, creating a [competitive advantage](https://www.investopedia.com/terms/c/competitive_advantage.asp).

Amazon is an example of a company that is trying to automate a vast and complex operation. Nevertheless, Amazon still offers 24-hour customer service by phone, in addition to email and live chat services.

Most successful businesses recognize the importance of providing outstanding customer service. Courteous and empathetic interaction with a trained customer service representative can mean the difference between losing or retaining a customer.

## Customer Services Job Requirements

Much is expected of customer service representatives, yet the pay is modest. The estimated [median](https://www.investopedia.com/terms/m/median.asp) annual compensation is $44,000 as of 2024.

Here are some of the job expectations.

*   Customer service representatives must be knowledgeable and courteous.
*   They must have excellent listening skills and a willingness to talk through a resolution. Training in conflict resolution can be beneficial.
*   Strong speaking skills are important. For phone staff, this means speaking clearly and slowly while maintaining a calm demeanor even if the customer doesn't.

## Why Is Customer Service So Important?

Having a good customer service plan in place leads to more sales, increases brand loyalty, generates referrals, helps retain customers, and provides businesses with a competitive advantage over others in the same industry.

## What Are Some of the Most Important Skills of a Customer Service Agent?

Effective customer service agents are skilled at listening and being empathetic. They're also very good at problem-solving and being proactive. It's also important for them to have a level of professionalism, which means that when things get heated, they can take a step back and not take anything to heart.  

## What Are Some Examples of Good Customer Service?

Some of the ways to provide effective customer service include providing a friendly and warm experience, listening, and empathizing. It's also important for customers to feel as though their concerns and problems are valid and that they're being accommodated. Being proactive, not taking anything personally, and following up are also some examples of good customer service.

## The Bottom Line

Having a customer service plan in place can make or break a company. Putting in a good plan with the right people, proper training, and appropriate channels can lead to more sales, customer loyalty, and referrals.

> **Article Sources**
>
> 1.  U.S. Bureau of Labor and Statistics. "[Customer Service Representative](https://www.bls.gov/ooh/office-and-administrative-support/customer-service-representatives.htm)."
>     
> 2.  Glassdoor. "[Customer Service Representative Salaries](https://www.glassdoor.com/Salaries/us-customer-service-representative-salary-SRCH_IL.0,2_IN1_KO3,34.htm)."