The UK online customer service (OCS) market is expected to grow by up to 20% this year, according to a new Econsultancy report which highlights the fact that businesses are starting to wise up to the importance of investing in the provision of proper service and support online.

As the new financial year is nearly upon the UK, it’s more than likely that one issue being hotly discussed by businesses everywhere is that of the new budget.

It is a sign of the times that companies are visibly making cutbacks in offline marketing and services, but more encouragingly, many business are realising that there is a powerful case for investing in online customer service.

To coincide with the release of Econsultancy’s new Online Customer Service Buyer’s Guide, I’m going to argue the importance of offering support to customers online; not just as an expected service, but as a way to improve both acquisition and retention.

With a great number of different tools now available, there’s little excuse for any online business not to offer some form of customer service, especially as investment doesn’t necessarily have to be financial.

Often, all that is needed is time and internal resources. For example, Twitter is a free medium which allows both feedback and interaction with consumers. Furthermore, because you can monitor what people are saying about a brand or product,  allowing grievances to be rectified before they snowball.

Other tools offered by vendors that are profiled in the report include live chat and intelligent FAQs through to customer ratings and feedback surveys. (As an aside, email can also play a vital part in a good customer service strategy).

As with any part of running a business, you only get out what you put in. Because of this, a continuous investment into providing good customer service will ensure that you are able to see a return on this, either directly or indirectly, through ROI, leads, buzz, etc.

Customer service is an area often overlooked by many online businesses, as it is arguably seen to have more importance in the offline world. However, in the face of consumers becoming more and more selective in their purchasing habits, it can’t be ignored.

Additionally, it needs to be recognised that it bridges a wide variety of elements involved in successfully operating any online business, ranging from on-site search and navigation through to the usability of checkout processes.

For the purposes of our report, we have divided online customer services into two areas; interaction with customers and understanding customers.

Both can be measured to a far greater degree than offline, therefore generating valuable data that can be used to improve services, products or similar online offerings. If used effectively, this can be immensely powerful in contributing to driving a company forward, digitally.

The most important point to remember is that any service must meet the needs of the customer. It seems obvious, but a lot of businesses fail to grasp this fundamental fact. One example often cited is that companies offering live chat need to make it available when traffic to their site is at a peak. For example, why have it during standard working hours, when most users visit the site in the evenings or at weekends?

Of course, the cost of implementing this needs to be weighed up again the potential benefits.

Recently, Forrester carried out specific research that revealed the average cost incurred by a business for a customer’s online self-service session is less than $1, compared to $10 for an email response or $33 for a telephone call. Similarly, in-house research by UK companies show almost identical results. The time, effort and cost of acquiring a new customer typically exceed those of retaining an existing customer. Whilst it seems fair to suggest that both hold similar importance, many companies appear to neglect the latter.

By creating a good OCS strategy and channeling the right resources into it, this can boost customer retention (and in a lot of instances, acquisition), with any investment more than likely to be rewarded. For all the businesses out there: If you haven’t reviewed your customer service strategy, I suggest you do so straight away.

The Online Customer Service Buyer’s Guide features the following suppliers: ATG, Bazaarvoice, Clicktools, Confirmit, Creative Virtual, Danesoft, Globalpark, InQuira, Instantservice, iPerceptions, nGenera (Formerly Talisma), Parker Software, RightNow Technologies, Synthetix, Transversal