Is Customer Service More Important Than Price?

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“Is customer service more important than price?”

That’s exactly what we asked more than 1,000 consumers in our customer service research. The response was that 58% said, “Yes.” And just to make sure, we asked a similar question later in the survey, “Would you pay more if you knew you would receive great customer service?” Once again, 58% said, “Yes.”

“Please take care of me, and I’ll even pay a little more.”

When more than half of your customers are saying, “Please take care of me, and I’ll even pay a little more,” you have to listen. The point is that price becomes less relevant when you know you’re going to get better service or have a better experience.

Amazon is an excellent example. People trust Amazon, not just for its reliability, which is an important part of the customer experience, but also for its customer service. They like the instant email confirmations, the ability to track a package, a notification when the package is delivered, and the comfort of knowing that if the item is damaged or lost – or they simply don’t like the product – Amazon will take care of them. The result of that trust for the service and experience Amazon provides means price becomes less relevant to its customers.

Some of you may be thinking, “Isn’t Amazon always the lowest price?” The answer is, “No.” At one time, Amazon was typically the lowest priced online retailer, but not anymore. Today Amazon is competitively priced, which means customers may find the same merchandise on another website for a little less. Even so, customers often come back to Amazon because they know what to expect. The experience is consistent and predictable, and they know if they need customer service for a problem, they will get it, and it will be good.

Furthermore, Amazon is so confident about its service that its website displays where certain products can be purchased for lower prices through third-party sellers that use Amazon as a marketplace but sell directly to the customer. Yet once again, many Amazon customers still choose to buy through the Amazon Prime program.

And some customers are willing to pay more than others. Specifically, younger customers are less price-sensitive than older customers:

Sixty-two percent of Millennials and 60% of Gen Z are willing to pay more for great customer service versus just 46% of Boomers.

Offering the lowest prices makes sense for some businesses, but you can’t ignore the findings. A great service experience creates price tolerance. How much tolerance depends on the market or industry. That’s up to you to determine. You’ll have to experiment to determine the tolerance levels. Just consider the findings. You can’t ignore that more than half of the customers we surveyed said, “Great customer service is more important than price.”