Customer Service For Small Business

Ilya Leybovich of Thomas Net Industrial Market Trends recently wrote "Good customer service can mean the difference between a solid client base and losing market share".

Customer service is an important strategy for increasing sales and improving customer loyalty since it is less expensive and easier to keep existing customers than to acquire new ones.

One important aspect of customer service the customer service level, which is often expressed as ratio or percentage of the number of orders completed on time to the number of orders placed. For example, 0.97 means that 97% of orders can be filled immediately from available stock, which includes safety stock. The safety stock quantity is inventory in excess of forecast demand that is kept on hand to avoid stockouts and to maintain a high value of customer service.

According to a survey of 800 Supply Executives all over the world by Aberdeen , typical customer service values can be categorized as follows:

• Best in Class (top 20%) 0.97
• Industry Average (middle 50%) 0.85
• Laggards (bottom 30%) 0.71
  

An ineffective or unsatisfying customer service experience, including a late or incomplete delivery, can often drive clients away from a business and give it a negative reputation, ultimately hurting the bottom line.

While one might assume that increasing customer service comes at a cost, that is adding more safety stock, the study by Aberdeen suggests otherwise:

• Best in class companies typically have 9 times the inventory turns of laggards and 2 times the industry average.
• Best in class companies typically have 1/4th the logistics costs of laggards and 1/3rd the logisitics costs of the industry average.

In other words, by making smarter inventory decisions, best in class companies are able to provide better customer service at a competitive advantage.

Unfortunately, small businesses have not had the tools to make smart inventory management decisions so that they can implement an effective customer service plan. Kathy Yakal of PCMAG highlighted that "QuickBooks can help you determine how much inventory you have on hand and when it's time to reorder, but how do you decide how much to keep around so you neither run out nor keep so much in stock that it's not cost-effective?" In other words, QuickBooks has no capability to set customer service levels.

In fact, of the many QuickBooks add-ons that help with administrative inventory tasks, Phitch OC 9.0 is the only one that actually determines the best amount of safety stock to meet customer service objectives. In other words, Phitch provides today's small businesses with the capability to implement customer service objectives that was once only available to large companies with expensive systems.

ePhiphony Incorporated has created the ultimate inventory optimization application for small business accounting software - Phitch OC 9.0. The platform includes powerful tools that help maximize economic profit, which has mostly been for large companies that can afford costly systems. Economic profit properly accounts for all the complex trade-offs involved in inventory decisions.