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How much does bad customer service cost your business?

How much does bad customer service cost your business?

Are you losing customers?

Although there have been various studies into the effect of poor customer service on businesses, the results do vary somewhat. Despite this, the majority of studies report that over 70% of customers will stop doing business with a company if they aren’t happy with the customer service they receive.

With businesses investing so much capital in attracting new customers, it seems foolhardy to let them go so easily, particularly when effective customer service can be provided in such a cost-effective manner. 

While losing a first-time buyer is costly, if an existing customer turns to a competitor, your business could be losing repeat income, in addition to its market share. Whilst losing one customer may not have a significant effect in the long-term, if bad customer service has cost you, one customer, it’s likely to have resulted in the loss of other customers too.

It’s estimated that just 4% of customers contact a company to report poor service. Although you may not be receiving a high level of complaints, it’s possible that customers are simply choosing to go elsewhere, without contacting you to alert you of their dissatisfaction.

You may not think that inefficient customer care is costing you business but it’s likely to be having a much greater impact than you realise. 

Due to the potentially irreversible effects of poor customer service, it’s important that businesses address their existing service strategies and improves them where possible. Whilst bad customer service will inevitably cost you business, effective customer care will lead to increased sales and, therefore, additional revenue.

Selling your customer service

While businesses may have had the advantage over consumers years ago, the ease of travel and the increasing rise of online shopping means that it’s easy for consumers to access other brands and companies. If they aren’t happy with your service, it’s no hardship for customers to take their business elsewhere

These days, many businesses are struggling to compete with their competitor’s prices. Often, branded products are sold at the same retail price, regardless of which company is selling them. As a result, your customer service is really one of the only ways to differentiate yourself in the marketplace.

Poor customer care could cost you sales. Effective customer service will help you to retain business, attract new customers and even justify slightly higher prices. 

As many customers are willing to pay extra for an above average service, businesses can increase their turnover via good customer care, without adding to their costs. Associating your brand with exemplary customer service can, therefore, be an effective marketing technique in itself.

Once customers benefit from your commitment to above average customer care, they are likely to stay loyal to your company and encourage others to engage with you.

Increase your accessibility

In order to provide effective customer service, you must enable your customers or clients to contact you easily. Providing multi-channel customer support, for example, is an easy way to increase your accessibility. With people relying on a variety of devices and formats, providing customer services across channels will encourage customers to engage with you.

However, this does come with a caveat. Only provide customer service via the channels you can manage appropriately. If you have a customer care line, for example, ensure that it’s manned during the advertised hours. 

Customers often complain about long hold times when they attempt to contact businesses via the phone and this can be viewed as bad customer service. It’s better to have your phone line open for fewer hours and provide an efficient response than promising a service you can’t deliver.

Similarly, try to avoid forcing customers to use premium rate phone numbers, where possible. If a customer has an issue or a problem with a product, they won’t appreciate being charged costly fees merely to get in touch with you.

Good customer service starts prior to purchase

Although customer service often focuses on resolving a problem or issue, this isn’t the sole objective when providing customer care. Whilst customers may need to contact you following a purchase, effective customer service starts before the customer has committed to buying anything.

While all the salient sales details should be available on your website or at the point of purchase, customers may have missed this information or they may require a more in-depth response. Enabling a potential customer to contact you prior to purchase will encourage them to go ahead with the sale, particularly if you’re able to fulfil any additional requirements they have. 

Fulfilling specific delivery instructions, for example, often sets businesses apart from one another. Whilst this is a relatively simple thing to get right, many companies fail to do so. By listening to your customers' needs and responding, you can provide effective customer service and create long-lasting brand loyalty.

Why does poor customer service affect your turnover?

Despite many people shopping or purchasing services online, word of mouth is still important when it comes to reputation. Indeed, the prolific rise of social media and online review sites means that millions of people can hear about your customer service within a matter of minutes.

In addition to this, consumers are more likely to discuss bad customer service than they are to talk about good customer care. Whilst this may be somewhat frustrating for businesses, this is an important pattern of consumer behaviour and it shouldn’t be ignored. 

Providing bad service to just one consumer won’t just lose you that customer. While they may tell their close friends and family, they may also post the story online and this could result in the loss of hundreds, or even thousands, of potential customers. 

In exceptional circumstances, poor customer reviews and inadequate responses from companies have gone viral, often with catastrophic consequences for the business in question. Highlighting the importance of good customer service and professionalism to your staff will ensure that your business doesn’t suffer the same fate. 

Can good customer service increase your profits?

Yes! Effective customer care will increase your turnover in two ways. Firstly, a new customer will be encouraged to make a purchase if they receive good customer support prior to purchase and existing customers are likely to return if they were treated well.

Secondly, many customers are willing to pay a higher price for a product or service, if they receive good customer service from the company. With many consumers willing to invest in customer service, it’s only right that businesses should reflect this attitude too. 

Providing effective customer service

In order to reap the rewards of providing good customer care, businesses must invest their resources into this area. Retraining existing staff, for example, will ensure that all your employees are providing the same levels of customer service. Similarly, setting new company guidelines regarding pre and post-purchase customer service will ensure that customers receive consistent customer care. 

However, many companies may struggle to incorporate new and effective customer service strategies. This may be particularly problematic for entrepreneurs or owners of small to medium sized businesses. Whilst you may not have the in-house staff or resources to provide effective customer service, this doesn’t mean it can be ignored.

Outsourcing some of your customer service or your administrative tasks to a PA will enable you to deliver effective customer care, for example. If you currently have full-time, in-house administrative staff, you may wish to outsource this work and use your existing personnel to focus on customer care.

In doing so, you can provide good customer service to customers and ensure that your administrative tasks are carried out to a high standard. Whilst hiring additional full-time staff may be a cost burden, outsourcing your business requirements is an effective way to create additional resources without increasing unnecessary costs. 

With businesses losing billions of pounds each year because of poor customer service, the fiscal effects of bad customer care are undeniable. As companies struggle to cut costs and increase revenue, providing effective customer service is a simple way to achieve these aims. 

Taking a proactive approach and incorporating customer service in the design of your business processes will ensure that it is always of paramount importance. By doing so, your company can create another USP, retain customers and boost brand loyalty in the long-term.

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