Building Customer Relations by Listening

Improving service at a small business starts with communication. Ask employees and clients what's working and what's not

by Karen E. Klein

Customer service is one area where small companies can outshine their competitors and cultivate intense loyalty among regular customers. But exceptional customer service goes beyond mere politeness into nuanced relationship building. Diane Berenbaum, senior vice-president of Communico, a Westport (Conn.) customer service consultancy, has just written How to Talk to Customers (Jossey-Bass, 2007) with her colleague Tom Larkin. She spoke recently to Smart Answers columnist Karen E. Klein about what makes a great impression on a customer and where some small-business owners miss chances to wow their clients. Edited excerpts of their conversation follow.

Why is customer relations so important, particularly for small companies?
Service is a real differentiator, no matter the size of the organization. Small companies particularly need to differentiate themselves because they don't have the advertising and exposure that larger firms do. One of the best ways to differentiate in your relationships with customers is to focus more on listening than on talking.

Companies sometimes are so anxious to sell their services that they do way too much talking. The only way you can meet or exceed customer needs is really listening—not just to what they're telling you, but to get beyond that and understand their unstated needs. Once you do that, not only will you have a better connection, you'll be able to exceed their expectations.

When people feel listened to, valued, and important to a company, it's rare. That's because great service and effective communication are more than a set of skills. It's a mind-set of respect and accountability where you do what you say you're going to do for the customer. If every associate in your firm models that mind-set, you'll create a great experience for everyone.

Is excellent customer service really that rare?
Yes, it really is. Despite the fact that many companies tout their focus on service in advertising, the research we did showed that overall customer satisfaction is declining. A global benchmarking study we looked at showed a reduction in customer service satisfaction from 82% to 68% in the last year alone. Additional studies show that 68% of customers leave a business relationship because of a perceived attitude of indifference on the part of the company. It's not that the associates are actually indifferent—it's the perception that they are.

So a customer may get what she needs from the company, but if it was delivered with indifference, that interaction still won't leave a positive impression. Similarly, 63% of consumers said the last time they stopped doing business with a company it was partly or wholly due to a poor customer service experience. Another very similar study showed that two out of three consumers said they'd stop buying from a company if they had just one bad customer service experience.

Those are dramatic numbers. What accounts for them?
One factor is that customers are not as easily satisfied as they used to be. They have much higher expectations for service as they face far greater demands in their own lives. Another factor is that companies themselves aren't quite sure how to deliver great service. They think they're doing enough by talking about it in a company policy manual or telling their associates to do it. But you can't just put it in a document and assume it's going to get done.

What constitutes excellent service—how do you measure it?
Customers want to feel they have a relationship with a firm. They want to make a connection and feel important. If a customer brings up a complaint, how is it handled? Is your company representative spouting information, citing policies and procedures—or is he genuinely interested in helping? Just listening to a complaint, instead of cutting it off, will increase the chances of maintaining that customer's loyalty.

Some entrepreneurs don't realize they need to make connections with their clients, and that they need to do that with courtesy, empathy, and professionalism.