Interactions with customers is a key part of any business.
To successfully interact with customers you’ll need to:
- Provide good customer service.
- Handle customer complaints effectively.
- Respond professionally to negative customer reviews online.
- Correctly and accurately provide customers with quotes, estimates, invoices and receipts.
In this topic we’ll explore each of these points as well as how to ensure timely payment from customers and how to code these and other transactions for accurate financial records.
David McEwen - Managing Director at ReviewboostCustomer complaints are helpful for a business manager to find out what problems need to be addressed. Research by Ameyo, a customer service platform, found that 67% of customer loss can be prevented if businesses fix issues the first time they happen.
Customers have an expectation of good customer service whether from a products or services based business.
Providing excellent customer service helps you to build a loyal customer base, encourage referrals, and ultimately drive business success. Here are some tips for delivering outstanding customer service:
- Know your customers: Take the time to understand your customers' needs, preferences, and expectations. Build relationships with them by engaging in personalised interactions and actively listening to their feedback and concerns.
- Be responsive: Respond promptly to customer inquiries, whether they come in through phone calls, emails, social media messages, or in-person visits. Acknowledge their questions or concerns and provide timely and helpful assistance.
- Provide clear communication: Ensure that your communication with customers is clear, courteous, and professional. Use language that is easy to understand and provide detailed information when addressing their inquiries or explaining your products or services.
- Exceed expectations: Go above and beyond to exceed customer expectations whenever possible. Offer personalised recommendations, provide additional assistance or resources, or surprise them with small gestures of appreciation to leave a lasting impression.
- Empower your team: If you have staff, empower them to deliver excellent customer service by providing training, resources, and guidelines for handling various customer interactions.
- Show gratitude: Express gratitude to your customers for their support. Thank them for their business, loyalty, and referrals, and consider offering special discounts, rewards, or exclusive perks to show your appreciation.
Reflection
Do you recall the native plant nursery, Piwakawaka Plants from a case study in the previous module? They talked about delivering plants to their customers themselves. This is a personable approach that also spares the customers the cost of delivery.
Consider
- What methods does your business currently implement to provide good service to its customers?
- How can you build on these or improve them?
- What positive experiences have you had as a customer?
- What made this experience positive for you?
Handling Customer Complaints
Handling customer complaints effectively is an important aspect of maintaining customer satisfaction and loyalty in any business. When customers express dissatisfaction or raise concerns about products, services, or experiences, it presents an opportunity for businesses to demonstrate their commitment to customer service and problem resolution. Customer complaints can also provide valuable feedback that can help businesses identify areas for improvement.
Ignoring or mishandling complaints can result in dissatisfied customers, reputational damage, and being in breach of your legal obligations. Addressing complaints promptly and satisfactorily can turn dissatisfied customers into loyal advocates who are more likely to continue doing business with the company and recommend it to others.
Reading
When Customers Complain
Earlier in this programme we covered your business’ obligations under the Fair Trading Act 1986 and the Consumer Guarantees Act 1993. This article provides a good recap.
Fair Returns and Complaints Policies
Policies and procedures were also covered earlier in this programme. If you haven’t done so already, it’s a good idea to develop policies and procedures for handling complaints. This article provides some guidance for this.
Responding to Negative Online Reviews
Responding to negative reviews online requires a thoughtful approach to address the customer's concerns while also maintaining your brand's reputation and integrity. Ideally you will have a planned approach to your responses. Here are some steps to effectively respond to negative online reviews:
- Respond promptly: Aim to respond as soon as possible, while still taking the time to create a thoughtful response. This demonstrates that you value the customer's feedback and are committed to addressing their concerns in a timely manner.
- Acknowledge the feedback: Begin your response by thanking the customer for taking the time to provide feedback.
- Apologise: Offer a sincere apology for any dissatisfaction or inconvenience the customer has experienced. Even if the issue was beyond your control, expressing empathy and apologising can help defuse the situation and show that you take the customer's concerns seriously.
- Take ownership: Take ownership of the issue and demonstrate your commitment to resolving it. Avoid making excuses or shifting blame onto others. Instead, assure the customer that you are dedicated to finding a solution and making things right.
- Offer solutions: Propose practical solutions to address the customer's concerns and rectify the situation. This could involve offering a refund, replacement, discount, or complimentary service.
- Move to a private conversation: Whenever possible, encourage the customer to continue the conversation privately to discuss the issue in more detail and find a resolution. Provide contact information or a direct channel for the customer to reach out to you directly.
- Follow up: After addressing the customer's concerns, follow up with them privately to ensure that the issue has been resolved to their satisfaction. Thank them for their patience and feedback, and reiterate your commitment to providing excellent customer service.
When responding to negative reviews, ensure you remain courteous and professional, even if the customer's feedback is particularly harsh or confrontational. Avoid engaging in arguments or getting defensive, as this can escalate the situation further and reflect poorly on your brand.
WATCH
The Best Responses to Bad Reviews (& TOP MISTAKES to Avoid)
Duration: 3:02
In this video, five experienced business owners share their tips on handling negative reviews.
It is illegal to mislead customers and therefore you must not delete any negative reviews. However, if the review is harmful, abusive, or offensive, you can contact the review platform about having the review removed.
Legal avenues exist for addressing clearly false and defamatory online reviews, though pursuing such action may be time-consuming and costly, and negative reviews are generally considered a standard aspect of business.
Negative reviews can give your business credibility – customers can be suspicious of a business with only good reviews.
Quotes and Estimates
Providing quotes to potential customers is an important aspect of the sales process, whether you're offering products or services.
A quote, also known as a price quote or a quotation, is a document provided by a seller to a potential buyer that outlines the proposed prices for goods or services. Quotes are typically issued in response to a customer inquiry or request for pricing information. They provide costing and terms and serve as offers or proposals that customers can consider before making a purchase decision.
An estimate is similar to a quote in that it provides pricing information for goods or services, but it is often used in industries where the final cost of a project may vary depending on factors such as labour, materials, and unforeseen circumstances. Estimates are typically provided as rough approximations of costs and are subject to change based on the actual work performed or materials used.
Reading
How to Make Price Quotes Work For You
When a customer asks for a quote, they're giving you a golden opportunity. This article advises how to make the most of price quotes.
Ideally, you would use a professional-looking quote or estimate template that includes your company logo, contact information, and branding elements. There are a few options here, and these also apply to invoices and receipts:
- You can create your own template using office or creativity tools like Google Docs, Microsoft Excel, or Canva.
- You can purchase or find a free template online.
- You can create quotes, estimates and invoices using accounting software like Xero and MYOB, CRMs or online quote tools such as Quoter and QuoteWerks. Some of these tools also allow you to track quotes, estimates and invoices and can integrate with other tools, for example, QuoteWerks integrates with Zoho CRM.
Reading
Quotes, Estimates and Invoicing
Ensure you’re aware of your compliance legal obligations when providing quotes, estimates or invoices to customers. Read this article for more information.
URL: https://comcom.govt.nz/business/dealing-with-typical-situations/quotes,-estimates-and-invoicing
Invoices and Payment
An invoice is a document issued by a seller to a buyer after goods or services have been provided, requesting payment for the amount owed. Invoices include detailed information about the transaction, such as the products or services provided, quantities, prices, payment terms, and any applicable taxes or fees.
Invoices are legally binding documents that create an obligation for the buyer to pay the specified amount by the due date indicated on the invoice.
WATCH
Duration: 4:41
This video provides guidance and tips for preparing invoices as well as information about eInvoicing and what to do if you don’t receive payment.
Resource
Invoice Template
The free invoice template as referred to in the video above.
URL: https://www.business.govt.nz/assets/uploads/Documents/Invoice-template.docx
Ensuring timely payment as a small business owner is crucial for maintaining cash flow and sustaining operations. Here are some tips to help you get paid promptly:
- Clear payment terms: Establish clear payment terms and communicate them to your customers upfront. Clearly outline the payment due date, accepted payment methods, late fees, and any consequences for non-payment in your contracts, invoices, or terms of service.
- Require deposits: Consider requesting deposits or upfront payments from customers before starting work or delivering products. This helps mitigate the risk of non-payment and ensures that you have some funds to cover expenses.
- Use contracts: Use written contracts or agreements to formalise your business relationships with customers. Include payment terms, deliverables, timelines, and dispute resolution mechanisms in your contracts to protect your interests and clarify expectations.
- Invoice promptly and accurately: Send invoices promptly after completing work or delivering products to customers. Ensure that your invoices are accurate, clearly itemised, and include all relevant details, such as the agreed-upon price, payment due date, and payment instructions.
- Follow up on overdue payments: Develop a process for following up on overdue payments. Send polite reminders or follow-up emails to customers as the payment due date approaches and escalate your reminders if payment remains outstanding.
- Offer multiple payment options: Provide customers with multiple convenient payment options, such as credit card, bank transfer, PayPal, or online payment platforms. Make it as easy as possible for customers to submit payments promptly.
- Establish relationships: Build strong relationships with your customers based on trust, transparency, and reliability. Good communication and a positive working relationship can encourage customers to prioritise timely payment and address any payment issues promptly.
Reading
How Can My NZ Business Get Money Owed By a Customer?
This article outlines the different methods of receiving overdue payments from customers, including legal action.
URL: https://legalvision.co.nz/disputes-and-litigation/how-can-business-get-money-owed-by-customer/
Providing Receipts
A receipt should be provided to a customer as proof of payment for goods or services. Receipts typically include details such as the date of the transaction, the items purchased, the total amount paid, and any payment method used. Receipts serve as a record of the transaction and can be used for accounting, tax, and warranty purposes.
If you have already given a customer an invoice, you may not need to provide a separate receipt unless requested by the customer. An invoice serves as a bill and a request for payment, and once payment is made, it often serves as proof of purchase.
As mentioned earlier in this topic, you can create, customise existing receipt templates, or issue receipts from some accounting and CRM software. You can buy dedicated receipt printers that connect to a computer or point of sale (POS) system. Popular receipt printer brands include Epson and Star Micronics.
POS Systems
A point of sale (POS) system is a combination of hardware and software used by businesses to process transactions, manage sales, and produce receipts. A POS system typically includes components such as a computer or tablet, cash register or terminal, barcode scanner and receipt printer.
Key features of a POS system include:
- Sales processing: POS systems enable businesses to ring up sales transactions quickly and accurately. They allow users to scan or manually input items, calculate totals, apply discounts or promotions, and generate receipts for customers.
- Inventory management: Many POS systems include inventory management features that track stock levels, monitor product quantities, and generate reports on inventory movements. This helps businesses keep track of their inventory in real-time and avoid stockouts or overstocking.
- Customer management: Some POS systems offer CRM functionality, allowing businesses to capture customer information, track purchase history, and create customer profiles.
- Reporting and analytics: POS systems provide reporting and analytics tools that give businesses insights into their sales performance, inventory turnover, and customer behaviour. Businesses can generate reports on sales trends, top-selling items, and profitability, helping them make informed decisions and optimise their operations.
WATCH
Point of Sale Systems
Duration: 1:29
Watch this case study about how Lashings utilises their POS system.
Coding Transactions
Coding transactions is essential for capturing, organising, and analysing financial data. Proper coding ensures that financial records can be easily traced, verified, and audited to ensure accuracy, completeness, and compliance. It also enables businesses to track and manage their finances and gain valuable insights into business performance.
Coding transactions applies to the payments you receive from customers as well as any purchases or payments your business makes.
Here are some key definitions to help you with this section:
To code a transaction means to categorise it by assigning it to an account, according to a predefined chart of accounts. This process ensures that each transaction is accurately recorded in the appropriate category, such as expenses, revenues, assets, or liabilities.
A chart of accounts is a structured list of all the financial accounts used by a business to record transactions in its general ledger. Each account in the chart of accounts is usually assigned a unique code or number, which helps organise and identify transactions for accurate financial reporting.
A general ledger is a comprehensive record of all the financial transactions of a business, organised by accounts. It serves as the central repository for accounting data and includes all the debits and credits that affect each account, providing a detailed history of financial activity. The general ledger is used to prepare financial statements, such as the balance sheet and profit and loss statement and is essential for accurate financial reporting and analysis.
Coding transactions is part of the reconciliation process which also includes ensuring that the details of a transaction are correctly entered in your accounting software or whichever tool you are using. Transactions are generally sourced from bank statements. These statements can be exported to a spreadsheet document which can then be imported into accounting software.
Accounting software like Xero and MYOB allow you to connect your bank accounts to automatically feed in the transactions. Refer to receipts and invoices to ensure that the details of your transactions are recorded correctly during the reconciliation process.
Your accounting software should provide guidance for how to use the software. Below are courses for reconciling bank transactions for two popular accounting software options, MYOB and Xero.
Reading
MYOB Business | Bank Reconciliation
This course will guide you through the process of reconciliation in MYOB and includes how to connect a bank account.
You will need to create a free account to access this course if you don’t already have one
Note that this course is for MYOB Business, if that is not the MYOB product you are using, find the correct course under Browse Learning.
URL: https://academy.myob.com/course/view.php?id=156
Reconcile Bank Account Transactions
This course will guide you through the process of reconciliation in Xero. How to connect a bank account is covered separately.
Note that you will need to log in using an existing Xero subscription to view this course. The process is very similar in MYOB, if you would like to see what this looks like, take a look at the MYOB course.
URL: https://learning.central.xero.com/student/activity/813
Add Bank Accounts and Transactions
This course will guide you through the process of connecting a bank account in Xero.
If you aren’t using accounting software, then we recommend that you use a chart of accounts to ensure accurate coding of transactions. You will need to do so for your assessment.
Reading
What is a Chart of Accounts?
This article provides more information and an example of a chart of accounts which you can use for your assessment.
It is recommended you keep on top of your reconciliations, that is to reconcile transactions in small batches regularly, rather than letting the transactions build up. Coding transactions when they are fresh in your memory can make it easier.
GST
Part of the reconciliation process is ensuring that the correct GST rate is applied. You can do this by referring to the receipt or invoice for that transaction. When you code a transaction using accounting software, a GST rate is automatically assigned to the transaction based on the settings in your chart of accounts – this does not mean that the correct GST rate has been applied, make sure to check this and change it if required. In particular, this is the case for overseas transactions and subscription to overseas software. Always refer to the receipt or invoice.
Splitting Transactions
The reconciliation courses above showed how to split a transaction. You’ll need to do this when a single transaction affects multiple accounts. For example, when you have put in an office supply order that includes both office supplies and computer equipment, or when you receive a payment from a customer that covers multiple invoices.
Reading
Types of Business Expenses
Businesses get taxed on their income minus any business expenses and other deductions. In some cases you can only claim part of a transaction as a business expense and therefore you’ll need to split the transaction appropriately. This page on the IRD website provides more information on business expenses and when and how they may need to be split.
It is recommended you engage an accountant; they can help you with claiming business expenses and splitting transactions.
Summary
Customer interaction is a key aspect of running a business. This includes providing good service to your customers and handling complaints and negative reviews. When providing customers with quotes, estimates, invoices and receipts, you must ensure to do this accurately and in compliance with the law. It is also important to make sure that all business transactions are coded correctly.
