What Is the True Cost of Poor Customer Service?

Madeline Jacobson
Madeline Jacobson
4 mins
negative survey response demonstrates cost of poor customer service

What’s the cost of poor customer service?

About $75 billion annually, according to a 2018 report by NewVoiceMedia — a $13 billion increase from 2016.

Given this tremendous financial loss, you’d think organizations would be scrambling to find the cause and stop the bleeding. But, unfortunately, it’s not as easy as it sounds.

In most cases, businesses aren’t facing one single issue, but several internal missteps coupled with shifting consumer behaviors and expectations. Together, the problem is compounding and costing organizations across every industry a lot of money.

So what can you do?

Here are a few hidden ways customer service pitfalls are costing you dearly, and what you can do to turn it around: 

Customers Remember the Bad Over the Good

If I asked you to recall the last poor customer service experience you endured, you’d likely have no problem listing the ways a company frustrated or disappointed you. But if I asked you to share the most recent positive brand encounter, you’d probably find that a little more challenging. Why? 

Unfortunately, human beings are hard-wired to recall bad experiences more than good ones. And that’s because negative stimuli have a more significant impact on the human brain than positive ones, according to a study shared by the Association for Psychological Science.

Scientists hypothesize that this has something to do with our innate survivalism. If we remember bad things more clearly, we’ll strive to avoid them in the future. In terms of customer service, though, this means people who have a negative brush with your company may forever associate your brand with that unpleasant memory — and take their business elsewhere. 

Bad Customer Experiences are Becoming More Public

People aren’t just more likely to remember bad experiences than good ones — they’re more likely to share them through online reviews, too, according to data from ReviewTracker.

And those reviews are taken seriously. According to the same ReviewTracker survey, a whopping 94 percent of respondents say an online review convinced them to avoid a business. And few people trust brands with anything less than a 4-star rating.

Whether they’re making a purchasing decision for their business or personal life, buyers rely heavily on third-party reviews. In many cases, this feedback offers a level of honesty and transparency buyers don’t always feel they’ll receive from sales and marketing messages.

Not only does low-quality service drive existing customers away, but it can prevent potential prospects from engaging with you in the first place. In other words, the ripple effects of one negative encounter can block countless new relationships from developing.

It’s Easy to Find Other Options

What’s the first thing you do when you’re highly dissatisfied with a brand experience? (Aside from leaving a scathing review on social media, of course.) If you’re like most buyers, you’ll immediately begin seeking other options.

Today, it’s easier than ever to find other brands to replace a provider. If a customer ends up getting transferred between multiple customer service agents or sitting on hold for minutes at a time while an agent looks for the information they need to help them, the customer may decide it will be faster and less aggravating just to take their business elsewhere. 

With one simple Google search and a few spare minutes, a buyer can identify several alternatives, compare offerings, and — depending on the product or service and gravity of the purchase — make the switch. 

41 percent of people who have stopped buying from a company and switched to a competitor did so in the last year, and 38 percent changed two or more times over the year, according to the previously mentioned report by NewVoiceMedia. And when asked what they would do after a poor customer service experience, 37 percent said they’d change their supplier.

The reality is, in a time when consumers complete most of their buyers’ journey without speaking to a single human being, brand loyalty is hard-won and easily lost. People can (and do) hop from brand to brand in favor of more convenience and better support.

5 Ways to Avoid the High Cost of Poor Customer Service

The good news is that by making a few upgrades to your current customer support processes, you can overcome the high cost of poor customer service. Here are five steps customer service leaders can take immediately:

Ask Customers What They Want

If you’re experiencing significant customer turnover, it’s crucial you identify the leading causes. Send out customer surveys, scan reviews to look for trends, and, when possible, engage in direct conversations with people leaving for other providers. It’s hard to fix your process until you know for sure why customers are running away.

Improve Your Customer Service Culture

What’s the secret behind successful brands like Southwest Airlines and Chewy (who are known for consistent, high-quality customer service)? These organizations provide a positive culture and ensure their reps feel empowered.

For example, Southwest includes its employees when making big decisions that affect them (like designing new brand uniforms), while Chewy is committed to customer service rep autonomy and career-building efforts.

Lead Empathy Training

Empathy is essential to better customer experiences. But, when reps are busy and overwhelmed, they may not appear as compassionate as they feel. By providing empathy training to all new reps (and refresher sessions for existing employees), you can help ensure service agents are demonstrating empathy in ways that make customers feel acknowledged and respected.

Address Negative Reviews Head-On

A negative review is a blemish on your brand’s reputation and can potentially scare away otherwise highly qualified and interested prospects. But responding to negative feedback in a way that exhibits patience, respect, and understanding can help you overcome those effects. Not only can a well-written response turn an unhappy customer around, but it shows prospects you’re dedicated to making things right.

Leverage a Knowledge Sharing Platform

One of the best ways to empower employees, streamline customer conversations, and ensure all reps are providing the most up-to-date information is by deploying a searchable, centralized knowledge sharing platform. When customer service professionals have easy access to all the information they need to assist customers, they’ll be more productive and confident, and they’ll offer faster resolutions. Democratizing knowledge helps everyone succeed. Improving customer service experiences can boost your reputation, eliminate a significant chunk of your revenue loss, and boost profits by increasing customer retention. In other words, it’s well worth the investment to fix your process. By taking the five steps above, you can build brand love and avoid paying the cost of poor customer service.

January 8, 2020

Want to learn more about how a knowledge sharing platform can benefit your customer service team?

Check out our white paper, The ROI of Knowledge Sharing for Customer Support Teams, to find out how you can boost agent productivity and increase customer satisfaction.

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