Creating a competitive advantage through client service

“Client-centric firms that consistently produce satisfied clients can give themselves a major competitive advantage, which can lead to an increase in profitability and growth.”

A firm that wants to stand out, claim to be different and be recognised as being different, needs to put a lot of effort into all aspects of client service – consistently. Client-centric firms that consistently produce satisfied clients can give themselves a major competitive advantage, which can lead to an increase in profitability and growth.

There are three major competitive advantages a firm can gain through excellent client service and all of them can positively contribute to the dual financial objectives of profitability and long-term growth: 

Repeat buying – resulting in lower cost
It is a known fact that it costs less to retain an existing client than to attract a new one – especially in more mature markets with entrenched competitors. Satisfied clients generally tend to stick with you. Operations can be streamlined to deliver the service in line with their expectations. They require less management because they complain less than new clients, they pay better, they require less above the line marketing – all resulting in lower output costs. 

Price advantage through client service
Loyal clients have invested a significant amount of time, effort and expertise in searching and selecting the most suitable (and trusted) service provider. Unless there is a very strong incentive to leave you, they are unlikely to just switch service providers. Therefore, if a competitor wants to capture your satisfied client, they must provide significantly better value then you by either lowering prices for the same level of performance, or increase performance levels at the same price. Research shows that firms can generate a price advantage of between 5 percent and 30 percent through extremely satisfied clients. The client is willing to pay more for differentiation – for your brand reputation, service excellence or a strong client-orientated culture.

Company crisis
The market (nationally and internationally) is volatile and unpredictable and firms may face crisis from several sources (internal and external). Industry changes or restructuring, unfair competition, operational breakdown and staff turn-around, can all create a crisis overnight. Customer satisfaction is probably the best source of insulation against a crisis with the firm. Loyal and satisfied clients want the firm to survive and will assist in ensuring its survival (to their own benefit).

Satisfied clients generate new customers
Satisfied clients become strong brand-advocates that are more willing to put in time and effort to share their experiences with potential new customers. Word of mouth communication is a very powerful form of communication and influence. It is more credible, goes through less perceptual filters and can enhance the service better than any sales communication – and it is free! All potential buyers of your services have a perceived sense of risk in dealing with your firm – economic, social, reliability and safety risk – depending on your services. Referrals and positive word-of-mouth greatly reduces the perceived sense of risk, often speeding up the buying decision!

Client satisfaction encourages one-stop shopping
Satisfied clients often buy more of your service than they initially did. Clients prefer one-stop “shopping” as it makes economic sense: it is convenient, saves time, often leads to discounts, better payment terms, better service support and reduced admin (compared to dealing with multiple service providers).

Client satisfaction increases successful innovation
Satisfied clients are generally more open to give you positive or negative (yet constructive) feedback. Firms that ask their clients for input and feedback on service levels, processes, systems and use of technology, often put themselves in a great position to innovate. Innovation is crucial in today’s competitive environment and there are significant growth opportunities in new technologies – who better to point you in the right direction than a happy client. 

For more information contact Tobie vd Merwe at

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.