Bad Customer Service
It goes without saying that poor customer service will result in substantial costs for a company. The logic barely needs explaining – if a customer is treated poorly, they may pull out of the sale, refuse to do business with us in future, and encourage any friends and family to do the same. Too many of these isolated incidents and the cost can quickly become damaging to a company. We’re all aware of the logic, but up until now a lack of quantitative data may have prevented us from giving this fundamental issue the consideration which it deserves.
Let’s begin by reviewing the results of research conducted in 2013, which provides an insight into the financial cost of poor customer service. A study by Genesys Telecommunications Laboratories asked 28 questions to a wide sample of consumers from varying age groups and income brackets. The results suggested that poor customer service costs the United Kingdom’s businesses a total of £15.3 billion every year.
The research also found that 73% of UK consumers ended a business relationship last year due to poor customer service, with the average value of each lost relationship equating to £248. Additional research by Harris Interactive placed this figure at just under 69%, but both statistics highlight the paramount importance of good customer service, and the financial consequences if we fail to provide it.
Countless examples of bad customer service
We need only look to the newspapers to find countless examples of larger, more established companies suffering massive losses as a result of their poor customer service. Perhaps the most well-known example is Ryanair, an Irish airline company which found fame for its discounted prices.
Until recently, Ryanair were named the United Kingdom’s worst brand for customer service by Which?, who evaluated 100 companies on factors like staff attitude and their ability to deal with problems. The airline consistently scored 2 stars out of 5, for a final result of 54%, comfortably the lowest of all who were reviewed. With over 500,000 flights every year, it now seems unsurprising that Ryanair’s sub-standard customer service resulted in a 13% slump in shares and an estimated £50m loss compared to expected profits. Since then, there has been a new emphasis on customer service with an easier to navigate website, assigned seats and a more sympathetic approach to baggage. mThis has resulted in a large increase in sales and a return to profit.
Poor customer service shows on the balance sheet
Whatever the size of the company, it is clear that poor customer service is mirrored on the balance sheet. However, the problem need not be terminal, as long as it is identified and rectified. One of the most effective ways to do so is to recruit the help of a dedicated third-party training company, who can provide objective opinions on your current customer services and show you how to improve them.
Social media will amplify poor customer service
With the prevalence of social media and the high likelihood of consumers telling others about their bad experiences, it can often be difficult to lose a reputation for poor customer services. However, the use of an external training company can be the ideal solution for making those radical changes required to turn the tide. With unbiased input from knowledgeable experts, you could benefit from training in identifying customer needs, building rapport, handling complaints and many other aspects of good customer service.
To what extent do you think poor customer service will affect a company financially? Have you ever experienced particularly bad customer service from a company, and did you go back again?