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Customer Service 101: Phone Etiquette for Small Businesses

Max Freedman
Max Freedman
Business News Daily Contributing Writer
Updated Sep 15, 2022

Phone etiquette is essential to maintaining customer satisfaction and representing your brand professionally. Here's what small business owners should know about managing the phone lines.

  • Customer service over the phone matters a great deal in terms of customer satisfaction and your brand’s professionalism.
  • Customer service requires etiquette that is often unspoken but always expected by your customers.
  • Outsourcing management of your phone lines to a call center could free up internal resources and boost the quality of your customer service.
  • This article is for small business owners who want to improve their customer service over the phone and are considering outsourcing to a call center or answering service.

A reality of running a small business is being on the phone constantly. Whether you’re talking to clients or business partners, correct etiquette is the key to leaving a positive impression on everyone you interact with and letting them know you’re a professional.

“If you are the owner of a small business, make sure that everyone who talks to customers on the phone or answers the business line is trained,” said Gail Goodman, president of phone service training company PhoneTeacher.

Training, however, is never-ending. Business owners and the management team need to make sure employees consistently apply company phone policies and best practices.

“Your challenge may be that you can’t really identify what it is that people should do,” Goodman said. “But when you hear something that’s wrong, you know it.”

What is phone etiquette, and why is it important?

Proper phone etiquette is your use of greetings, word choice, tone of voice, active listening, greetings and general manners on the phone. A potential client’s first impression of you is often over the phone, and how you communicate with them might be the deciding factor in whether you gain or lose them as a customer.

The benefits of maintaining great phone etiquette as you provide customer service include the following:

  • Making great, long-lasting first impressions: Callers judge your business by the way you interact with them and handle their requests or answer their questions. Good communication is key to establishing and maintaining a positive relationship with your customers.
  • Compensating for the lack of nonverbal cues: It can be difficult to communicate with customers over the phone, since neither party can pick up on body language and other nonverbal cues. Setting phone etiquette standards and training your team to adhere to them can make up for this gap.
  • Developing a great reputation: The top-notch customer service to which excellent phone etiquette often leads can build your business a great reputation. That’s because 72% of your customers tell at least six people about their best customer service experiences – and that could include your business. Over time, this could lead to your company forming a reputation for great customer service.
  • Retaining customers: Bad phone etiquette leads to poor customer service, and bad customer service leads to customer churn. And you really don’t want a rotating cast of customers: It’s five to 25 times more expensive to acquire customers than retain them, according to Harvard Business Review.
  • Identifying new customer needs: A customer service team with great phone etiquette can expand beyond solving immediate problems and identify other customer needs. A conversation about a tech issue could turn into a customer saying, “I wish your company offered this product or service too.” And then you can implement it, but you might never have identified it if your team lacked phone etiquette.

Whenever you’re on the phone with customers, it’s important to use your words, tone and professionalism to convey what you are trying to get across. Continuously practice the right etiquette and ensure your staff is adhering to it as well. Consistency is key.

Key takeaway: Your phone etiquette could be the difference between turning a lead into a customer or losing a prospect for good.

Examples of phone etiquette

There are many examples of phone etiquette, but these are a few common ones:

  • Immediately introducing yourself and your business: This is a professional alternative to simply saying “hello.” Introducing yourself and your business will assert your credibility and tell the caller with whom they are speaking.
  • Speaking clearly and calmly: It’s important for your customers to understand you and not feel rushed. By speaking clearly and calmly, you’re also telling them that they have your undivided attention.
  • Listening and taking notes: Rather than rushing a caller, proper etiquette involves listening to their concerns or requests while jotting down any information you deem necessary. That way, you can better help them reach a solution without becoming overwhelmed by the conversation.
  • Remaining cheerful: Your tone will impact how your customers feel while speaking to you. For example, if you speak in monotone or give the impression that you’re bored, your customers won’t feel heard and might even shut down. If you are friendly and upbeat, they’ll feel inclined to reflect that same attitude back to you.

10 phone etiquette tips for businesses

To start, here are 10 phone etiquette tips for call center customer service for small businesses.

1. Be consistent.

Have everyone answer the business line consistently. If it’s an inbound call, all the customer wants to know is that they got the right number. Your “hello” should be brief. Train staff to use a professional greeting that mentions the company and then their own names. “How can I help you?” is assumed, so don’t waste precious time adding those five words. “Hello. Mary’s Mittens. This is Becky” is sufficient.

2. Never interrupt.

Don’t interrupt a complaining customer. It can be hard not to do this, but train your team to listen to the whole problem, no matter how long it takes. Even if call center employees will eventually hand off the call to another member of your staff, listening to the whole story is important so the customer feels taken care of.

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3. Get to know the hold button.

Does everyone at your company know how to use your business phone system? The hold button is your friend. Never put the phone to your chest to muffle the mouthpiece so you can speak among yourselves. Clients may hear things you don’t want them to hear.

4. Get to know the transfer button.

You need to know how to transfer someone to another member of the team. Say to the client, “The best person to handle this is Jane, so I’m going to transfer you.” If it’s going to take time for you to locate Jane or explain the problem to her, tell the client it’ll be a while. For instance, say, “It will take me about three or four minutes to get Jane up to speed, so can I please put you on hold?”

Most people will say yes. Then Jane must answer the phone with some knowledge of the problem, not starting from square one.

5. Keep customers informed.

It’s important to train your team on this. They have to give the client a list of what they’re going to do, then a longer time frame than necessary. Why? Because when you fix the problem in less time than you stated, they know you went to bat for them. You’ll have a loyal customer at that point. Take longer than you said, and they’ll be steaming mad.

For example, say, “Mrs. Smith, here’s what I’m going to do. After we hang up, I’ll immediately call the supplier. It may take me a day or more until I reach the right person. Then I’m going to tell them I need another widget for you in Emerald Green. The shipment of that to our store may take another week. At that point, I will call you, and you can come pick it up or decide to have me ship it. In the meantime, I’m sending you a return label to send back the damaged item. I am hoping to get a new one for you within two and a half weeks. I’ll call you when it’s here.”

6. Smile when you talk to customers.

Did you know you can hear a smile? Research shows that smiling while speaking on the phone makes a detectable difference in your tone of voice, so make sure that your team sounds happy to talk to customers. If staff members sound dour, it is worse on the phone, since the client does not see body language. Words and inflection are much more important over the phone than in a face-to-face encounter.

7. Learn how to handle angry people.

First, don’t tell someone to calm down. No one wants to sound like a crazy person, but when a client is that mad, they can’t help it. It’s going to sound counterintuitive, but your customer service person should speak in a slightly louder voice initially if the customer starts out loud. 

Their words should be reassuring, like “how awful,” “you’re absolutely right to be upset” or “I can’t believe this – how terrible.” The client will feel understood. Slowly, the caller’s voice will resume normal volume, and the customer service rep should once again mimic the client’s volume. Once the customer is quieter, you can use technique No. 5 to describe how you will solve the problem.

8. Answer after the first few rings.

You never want to let a call go to voicemail. In fact, you should answer within the first few rings rather than keeping a caller waiting. Customers often grow frustrated or even hang up if they are left on the line without assistance for too long. Even if you answer just to put them on hold while you handle another caller, it’s better than leaving them hanging with no greeting for minutes at a time.

9. Eliminate background noise.

Background noise is extremely distracting and unprofessional. To eliminate unwanted sounds, make sure you are in a quiet area, like a call box or private office, and don’t use the speakerphone. If your typical workspace happens to be too loud, try taking the call elsewhere or asking those around you to lower their voices.

10. Ask questions and take notes.

If you’re unsure who exactly the caller is and what they need from you, ask them. Make sure you jot down information like their name, number and company, and understand exactly what they’re asking or requesting. For instance, if they’re trying to reach someone in the company who is currently unavailable, you’ll want to record the message they wish to relay, along with their phone number and full name, so you can deliver it accordingly.

TipTip: Using a top CRM software can improve your ability to record and track customer interactions. Consider some of our best picks, like our Salesforce CRM review and our monday.com CRM review.

Mistakes to avoid on the phone with customers

Now that you know what you should do when you’re on the phone with customers, here’s what not to do.

1. Don’t interrupt your customers.

This one is pretty much self-explanatory. You wouldn’t interrupt someone in a regular conversation, so why would you interrupt your customers? Be patient and wait for them to fully finish before you speak.

2. Don’t give answers you don’t have.

It’s OK not to know something – if anything, not knowing is the start of your journey toward knowing. Instead of giving a customer an incorrect answer, tell them you’ll put them on hold as you speak with the right team member. Then, return with the right answer. This way, if the customer calls in again later, they’ll encounter consistency from your team. That consistency can minimize the chance of customer confusion and frustration.

3. Don’t lean on scripts.

Scripts can help your customer service employees know what to say when they pick up the phone – but that’s all that scripts should do. After that, your team should use their phone etiquette knowledge and other training to navigate the conversation intuitively. An over-scripted conversation can make the customer feel unheard and thus unsatisfied, whereas a genuine conversation can reassure and retain the customer.

4. Don’t transfer the customer too often.

If you need to transfer someone to the right party for their inquiry, then do so. But what you shouldn’t do is send the customer ricocheting among different people from your team. 

Before transferring, you should be 100% certain you’re transferring the customer to the right team member. This way, that team member doesn’t also have to transfer the caller. A series of transfers can confuse, overwhelm and frustrate the customer, and that does your company no favors.

5. Don’t keep your customer service in-house if you don’t have the capacity.

Let’s say that, no matter how hard you try, your budget and time just aren’t dovetailing with your desire to provide great in-house customer service. In that case, you can choose a call center service to handle all your phone-based customer service. Plus, when your team isn’t on the phone all day, they’ll get time back to handle all kinds of other business needs.

TipTip: Check out our choices for the best call center services to find the right call center for your business’s needs. Start with our TeleDirect review, as this service is our top pick overall.

Great phone etiquette makes a great business

Creating one-of-a-kind products or providing reliable services is just the start of running a well-trusted, successful business. How you interact with your customers, including on the phone, is also part of the equation. Whether you outsource your customer phone line to a call center or keep it in-house, strong phone etiquette is key. And with this guide, that etiquette will be easier to maintain during each and every customer interaction.

Andreas Rivera contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.

Image Credit:

Gajus / Getty Images

Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.