The True cost of poor customer service
No company wants to give poor customer service. However, many companies may not understand the true cost of bad customer service. You will find it’s ultimately much cheaper to invest in quality service than neglecting it. Providing excellent customer service isn’t a nice bonus or an “add-on” feature, it should be a core tenant of just about every company’s mission statement. Below are just some of the many ways providing poor customer service is hurting your business.
Losing Customers
Obviously, you never want to lose customers. However, things happen, you can’t possibly keep everyone happy. That being said, never write off those customers you lost due to poor customer service, they could be damaging your profit margin much more than you know. Even when a problem does occur, providing poor customer service only hurts your chances of getting a second chance to woo your customer.
According to Newvoicemedia, U.S. companies lose more than $62 billion a year due to providing poor customer service.
A study by American Express showed customers were willing to spend 17% more on companies they felt provided excellent service. That number has been steadily increasing as time goes on. Make sure you’re getting a slice of that pie.
Poor customer service damages both customer retention and new customer acquisition. An American Express study showed that half of Americans have scrapped a planned purchase simply because they felt the companies customer service wasn’t up to par. I don’t think losing existing customers, and alienating potential new ones needs any more explanation, do you?
Low Company Morale
Happy workers are good workers. You want your employees to believe in your product, your company, and your business. More than that, ideally you want your employees to take pride in the company they work for. Providing poor customer service can make this very difficult.
Customer service deals directly with the consumer/customer. To treat them poorly, ultimately, is to treat people poorly. How could anyone in their right mind be excited about a company that treats their customer base poorly?
Providing poor customer service begins a revolving door of negativity. Employees constantly forced to deal with angry customers will, in turn, make them angry. When they see that management isn’t providing the proper tools to alleviate this problem, they’ll start looking for the door. No one wants to care about a company more than their boss. Harboring a toxic work environment only increases turnover. With a high turnover rate, expect higher costs in recruiting, hiring and training.
Customer service is about finding solutions with your customers and routing out systematic problems. Never treat your companies like the opposition, your employees will notice and carry on that negative attitude as well.
Damaged Reputation
Word of mouth travels fast. In the age of social media, a bad review or instance of customer service can be blasted all over the internet in moments, and read by hundreds of thousands of people, instantly.
According to American Express, on average, Americans will tell 15 people about a poor customer service experience.
According to Helpscout, news of poor customer service is more likely to reach 3 times the amount of people than positive posts.
A study done by Beijing University showed that out of 70 million social media users, posts categorized by “rage” were shared and consumed the most by far.
You simply can’t afford to be known for poor customer service, the days of keeping a lid on things are long gone.
Increased Sensitivity to price
According to TARP Worldwide, customers that experience poor customer service are far more sensitive to price changes, service changes, additional fees, and overall price.
In any market, there are highly disloyal customers, who are ultimately looking for the best price in the industry. Having poor customer service is enough to turn these customers away to your competitors.
Laura Freedman, President of the E-tailing Group, once said “Always keep in mind the old retail adage: Customers remember the service a lot longer than they remember the price.” Obviously you can see how this stretches beyond retail.
Providing poor customer service can send all of these potential customers right into the waiting arms of your competition.