The Giant Cost of Lousy Service
For those of us old enough to remember, forty years ago, most businesses did well despite pretty lousy customer service. Being on hold forever with the phone company; dealing with a rude banker; or shopping in a dirty retail store, were pretty common place. But, in spite of it all, those companies were profitable and grew because they were the only game in town.
Fast forward to today, when competition is brutal, buyers have no tolerance for poor service, and it’s easier than ever to shout disgruntled opinions from every social media rooftop. In fact, research shows that in 2015 customer service is the MOST IMPORTANT factor influencing buying decisions.
Are YOU delusional…
Unfortunately, studies show that business owners can’t accurately judge the level of customer service they provide. Global consulting firm Bain & Company reports, “90% of companies declare they provide excellent customer service, yet only 8% of customers say the same.” That’s quite the disconnect!
Many companies don’t realize the disconnect while others don’t think remarkable service is necessary. No matter the case, poor service IS costing companies… A lot.
Analysts, measured the cost of poor customer service and found that U.S. enterprises lose an estimated $83 billion each year due to defections and abandoned purchases as a direct result of a poor experience.
This staggering loss is a result of the many negative effects poor customer service has on businesses. To name a few:
- Negative word-of-mouth and online reviews
- Lackluster brand reputation
- Failure to attract repeat customers
- Loss of ideal customers to competitors
- Employee exodus and burnout
But it doesn’t have to be this way …
The leaders I interviewed for The Success Code knew that customer service is a business differentiator; 66% of consumers are willing to spend more with a company they believe provides excellent customer service.
A great example is Zappos.com. CEO Tony Hsieh said in a 2005 Bloomberg Business interview, “I wanted us to have a whole company built around [customer service].” Using this model, Hsieh built a company from startup to $1 billion in sales in just 10 years.
Customer service by the numbers
- According to research, 87% of customers who’ve had a good experience will tell others. 33% will tell five or more people.
- 95% of those who’ve had a bad experience will tell others. And 54% of them will tell five or more people.
You may lose a repeat customer or never have the chance to impress an ideal customer — all from one bad experience and that can add up to a hefty cost!
An analysis by SumAll, found that 25% to 40% of total revenues from the most stable businesses, come from repeat business. And, businesses with a 40% level of repeat customers generated 47% more revenue than similar businesses that only had 10% of their customers returning. Wow!
So how can you amp up your customer service ratings?
- Create a service-oriented culture from the top down – That’s right, it starts with you.
- Define what great service looks like through the entire customer journey.
- Train employees to make sure they ALL know what impressive service looks like, then set and monitor measurable goals to ensure follow through.
- Screen new hires for service quality and aptitude.
- Solicit feedback from customers and act on that feedback.
- Embrace mistakes – do what it takes to fix it for the customer, then use them as teaching opportunities.
- When in doubt, give more.
Bottom Line
No doubt, delivering outstanding service is easier to talk about than to execute. Global competition, together with social networks, online review sites, and instant communication tools, has raised service level expectations. But, in today’s competitive markets, customer service is the key differentiator that can make or break you. By giving more now and providing all employees with the proper customer service tools and training, you can help to ensure the long-term success of your company.
