The Cost of Bad Customer Service

Bad customer service is possibly one of my biggest pet peeves next to people not washing their hands after using the bathroom – but that’s another topic. I think we can all relate to receiving horrible customer service at some time or another whether in a restaurant, telecommunication, retail store, online retailer, hospital, and so on.

After a recent experience, I started wondering what the actual cost of bad The Cost of Bad Customer Service image custservice copy1The Cost of Bad Customer Servicecustomer service is. After shopping at one of the top wireless providers, I was sent a survey via text. My response caught the attention of the General Manager for the district and he called to apologize and to offer me a token in the form of a $60 item from the store. That made we wonder about all the times I received a compensation here, a free gadget there, and all those FREE items to retain me as a customer. How many times do they do this? Who is paying for this?

My $60 item equates to a full day’s pay (8.27 hours) in NY since the minimum wage here is $7.25/hour (Labor standards, 2013). Now let me enlarge this scope with some interesting stats:

  1. Since 2009, the overall cost of poor customer service in the US averages about $338.5 billion per year, (CSM, 2009)
  2. $289 is the average value of every lost business relationship per year, (Kissmetrics, 2013)
  3. About 86% of consumers ended their business relationship due to a poor customer service experience (Rightnow customer experience, 2011)
  4. 61% of consumers take their business to a competitor, (Kissmetrics, 2013)
  5. 51% of consumers will only give you one chance, (Rosales) – first impressions last
  6. Only 4% actually complained about bad service, (Rosales)

With the advent of social media, poor customer service is no longer a “behind-the-scenes” issue companies can keep a secret. Everything is public. I am known for posting my experiences on Facebook.

Customer-facing employees are capable of making a company a success or simply destroying it. Poor service is one of the most immediate impacts on your bottom line. Here are a few suggestions you can use to make improvements:

  1. Understand and measure the direct business impact of customer service.
  2. Identify the gaps between the customer experience and the expectations.
  3. Hold customer-facing employees accountable. This I find to be lacking. Until they are held accountable, they will continue to not care about their actions.

Companies need to personalize their overall treatment of consumers by integrating consumer data and developing processes that recognize the value and history of each customer. You should see this as an opportunity to enforce your customer satisfaction; this could very well translate into grabbing a bigger piece of the pie in your niche.

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