What is customer goodwill? + 3 ways to build it

Doing business with a company that misses the mark on providing a high-quality customer service experience goes a step further than leaving a bad impression; it can keep the customer from ever giving your business a second chance.

According to recent research, roughly 73 percent of customers will stop patronizing a company after only three (or fewer) bad customer service experiences. What’s worse is that companies are losing revenue without a chance to find out why. Less than half (44 percent) of survey participants make a formal complaint with the company because leaving feedback is too much of a hassle.

In general, it’s only those customers who have the strongest complaints that go through a formal process to speak to a customer service representative. This is why fostering customer goodwill should be at the top of your management team’s list of priorities.

Examples of customer goodwill

In business, your reputation is everything. And if you have a reputation for creating customer goodwill at all costs, then you’ve started to develop a foundation that will build strong customer relationships over the long term. Of course, not every company is able to go as far as legendary brands like the Ritz-Carlton, whose employee famously returned a forgotten stuffed giraffe to a guest’s son.

In practice, customer goodwill can be fostered through customer appreciation programs that go above and beyond to please your ideal client. Some notable customer loyalty programs include the points program at Marriott, tier-based programs at DSW, and mission-driven programs at Ben & Jerry’s.

While customer goodwill can be difficult to measure, it is often reflected in the way a customer feels when they interact with your employees, visible in a smile, or by the “thank you” at the end of an interaction. It can be heard in the language customers use to describe their experiences with your brand in testimonials, on social media, or when a customer refers your business to a friend. In this way, customer goodwill is often an intangible asset, something seen and felt whenever present.

Customer goodwill can be fostered through customer appreciation programs that go above and beyond to please your ideal client.

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Why customer goodwill is important

Failing to create a system that emphasizes customer goodwill puts a revenue strain on a business. No matter the industry, it takes a company ten times the amount of effort to attract new customers than it does to tend to the customers who are already being serviced. Having a reputation of customer goodwill can override a customer’s tendency to run elsewhere and encourage them to buy more from you, even when your product or service does not meet expectations.

In fact, 2021 research from Zendesk shows that 75 percent of customers are willing to spend more to buy from companies that give them a good customer experience.

3 ways to build goodwill with customers

So, how can your company build a reputation for customer goodwill? Let’s dive into the different ways you can foster positive customer relations that will benefit your business’ bottom line.

1. Establish customer loyalty

   
   Building a reputation of customer goodwill helps your company to both expand your customer base and retain your most loyal customers. Why? When a customer finds a solution to their problem in your business, they tend to want to stick around for as long as possible. They not only feel confident that their needs will be met, but they also make referrals to their friends and family so they can have a similar experience. Creating a strategic referral system that emphasizes goodwill can go a long way towards promoting customer loyalty.

2. Use data to meet customer expectations

   
   Part of the responsibility of the customer service manager is to analyze data and create reports that review customer trends. They, in turn, become advocates for the customer’s wants and needs.
   Customers make buying decisions based on more than just who has similar products and services at the lowest price point. When was the last time one of your customer service managers went above and beyond to find an answer to a question for a customer? Have you spent time collecting feedback from your customers on what works for them and what can be improved? Sometimes, it might be as small as resolving an extra click in the website buying process. Other times, it might be tackling something as large as your company’s return policy.
   No matter what you do, ensure that your front-facing customer service agents understand that creating customer goodwill is built through small, positive interactions over the course of time.

3. Improve the long-term value of your business with quality customer service training

   
   Customer goodwill should be at the center of how you train your customer service managers and supporting team members. The point here is to be proactive about how your customer service staff approaches problem-solving. Pinpointing a potential customer problem before it happens can improve the customer experience tremendously, increasing your customer goodwill quotient.
   Focusing on your customer service training will inevitably encourage your customers to do business with you again, thereby increasing the value of your business in the eyes of investors.

How can you measure customer goodwill?

Due to the intangibility of the concept, you may not tend to think of ‘goodwill’ as a viable asset or as directly impacting your revenue and profit margins. But customer goodwill needs to be a foundational element of your long-term strategic business plan.

While there really is no universal way to measure what customer goodwill should look like, what you can do is steadily measure customer satisfaction after each service interaction and consistently gauge brand sentiment through a Net Promoter Score. You can also take stock of whether you have Voice of the Customer listening programs in place, loyalty programs, or other means through which you’re collecting—and more importantly, acting on—customer feedback.

Building goodwill takes time, but the good news is that your business can decide how best to foster and expand customer goodwill with your clients. And it often starts with your team of customer service agents who are actively tracking the satisfaction of the customers with each interaction.