Companies often do not see the depth of a poor customer experience. Some of the negative effects might seem obvious and others are harder to conceive. After close examination, the financial consequences should make any business ensure that they provide the highest quality service to customers.
This post will highlight some of the negative effects of poor customer service including:
- High Financial Cost
- Poor Customer Retention
- Increased Cost of Customer Acquisition
1. High Financial Cost To The Company
Poor customer service is costing businesses 75 billion USD a year. Yes, you read that correctly, 75 Billion USD. This is mostly due to customers taking their business elsewhere to a different company after receiving poor customer service. This alone should be a wake up call to every company to ensure that they are providing more than adequate customer service to their customers. Profit is the main goal of most companies, and it is detrimental to a company’s bottom line to treat their customers poorly. Companies on the other hand who provide good customer service grow their revenue 4-8% above their market. This good customer service comes in the form of short hold times, polite agents, and having questions answered efficiently. This leads to a higher return rate of customers, and having one client spend money with you twice will increase your revenue compared to a company that only has a client spend with them once.
2. Poor Customer Retention
Retaining customers can be vital to the success of most companies. A poor customer service experience can lead customers to competitors, causing a company to miss out on the return of investment from the customer they already spent money acquiring. Bain & Company found that increasing customer retention rates by 5% can increase profits by 25-95%. Customers are not, and do not have to be, forgiving when it comes to a bad experience and are less willing to give a company even a second chance. 58% of customers will stop buying from a company after one bad customer service experience.
3. Increased Cost Of Customer Acquisition
People are more likely to talk about their unpleasant experiences than their pleasant ones. Americans tell on average 11 people about a good customer service experience, and on average 15 people about a poor customer service experience. This fact shows that a bad customer service experience can turn away customers before they even have an experience with the company. There is an exponential effect that can lead one unhappy customer to prevent the acquisition of many more customers. Having good customer service will ensure that only positive messages will be spread about your company, bringing in more customers and not scaring them away.
Source: Bain and Company
The importance of quality and efficient customer service should not be underestimated. Anything less will hurt your company financially. To circumvent this, it is essential to hire the best talent to serve your highly valued customers. The best way to do this is through data-driven hiring decisions, and with Contack you can solve all of your hiring needs.