Five Ways Customer Service, Good or Bad, Impacts Loyalty

With today’s consumer being so connected, whether it’s to devices, digital content or to each other, it’s time that companies also provide a connected customer experience. The passive attitude that isolates customers in channel silos or dead-end processes is out of tune with digital consumers. It’s time to change.

A passive approach to service

A passive approach to service is characterized by managing customer interactions in a disconnected way or as single transactions. A company may do a great job with each single transaction, but a siloed view of the customer risks damaging a relationship or missing a revenue opportunity through the loss of context. The larger picture includes customer value, personalization of information and messaging, transaction history, product ownership, complaints, social activity and so on. The biggest impact of not connecting these dots is ultimately losing customer loyalty and losing customers.

What causes disloyalty? 

Most executives would probably say that unhappy customers are caused by an employee in the front office handling a transaction poorly, but they would probably be wrong.  Research shows that the biggest cause of disloyalty is broken internal processes that damage the customer experience. The internal processes can take place during any part of the end-to-end customer experience, from the back office to the front office. Take a look at research done by TARP, a leading authority on customer experience that reveals the cause of the majority of service issues.

Causes of disloyalty

  • Broken internal processes cause the majority of problems: (50-60 percent)
  • Employee mistakes or bad attitudes: (20-30 percent)
  • Unreasonable expectations: (20-30 percent)

Fixing broken internal processes

I recently spoke to one of our customers who had created a new type of internal role called the ‘Customer Experience Technology Manager’. His one job was to identify broken areas and lead a team to plug holes in broken processes that damage the customer experience. They were working on a list of 44 broken areas that had been identified when I spoke to him. One example he gave sounded minor, but had to be fixed.  It was in the automated response system where if someone asked for a fax to be sent of their service record and the dialed number was bad, the fax would fail. But, there was no built-in cycle to fix the problem such as to call the customer back. No problem was too small or too big.

The impact of disconnected customer service

How does disconnected service caused by broken processes impact business? Research shows that customer service problems have a direct impact on loyalty, churn and revenue. According to John Goodman in the book Strategic Customer Service*, the following stats can be attributed to customer service problems and how customer loyalty is impacted:

  • “On average, problems damage loyalty by 20%; that is, for every five customers who experience a problem, one will stop buying the product or service
  • Customers with problems often do not complain, but their loyalty is 20% to 40% lower than of customers without problems
  • When customers do complain, they are often left mollified (that is, partially satisfied) or dissatisfied  – with resulting 20% to 40% lower levels of loyalty
  • When complaining customers are converted to satisfied from dissatisfied, their loyalty increases by at least 25% and possibly as much as 60%.
  • Customers who are delighted by proactive education or superior service are 10% to 30% more loyal than customers who have not been delighted

Genesys is in the business of helping organizations improve customer conversations and connect the dots across channels and interactions. Learn more about plugging your customer service holes and fixing broken processes. Get the white paper here.

*John A. Goodman, Strategic Customer Service, AMACOM, New York, New York, 2009

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