The consequences of bad customer service

The consequences of bad customer service

July 10, 2017
The consequences of bad customer service

We know the qualitative, anecdotal impacts of bad customer service—most of us can easily remember the last time we were on the receiving end of it. But a recently updated Forrester report, “Transform the Contact Center for Customer Service Excellence,” has quantified the impacts of bad customer experience.

In sum? It really adds up.

Customer experience, or CX, goes hand in hand with customer service. It’s the sum of a customer’s experience with a company over the entirety of his or her relationship with that company: from initial awareness and discovery all the way to their becoming full-on, brand-champion loyal. In the end, transforming customer service helps businesses deliver great experiences, according to the updated findings.

First, the bad news

Forrester says companies have an increasingly hard time delivering on the customer service dream due to complex software solutions, evolving customer demands, and the trickle-down, tactical fallout of mergers and acquisitions.

…which comes at great cost. The Harvard Business Review reports that customers are willing and able to punish a business for bad customer service, which greatly impacts their experience. In fact, they’re more willing to punish bad customer service than reward good customer service. Furthermore, the Forrester report finds that customer satisfaction levels (CSATs) for customer service across industries decreased for four years in a row between 2013-2016.

Poor customer service experiences lead to increased service costs

The costs are higher than a bad review or negative word of mouth—Forrester estimates the unnecessary costs to retailers for channel switching is $22 million. Approximately 69 percent customers switch to other channels—usually the phone—when online customer service is lacking. But almost half of adults in the U.S. making purchases online will give up on their shopping cart if they can’t find a quick answer to their questions online.

Poor customer service experiences also lead to customer defection and service loss

Let’s say a company has four million customers, and each of those customers spends $100. That means projected annual revenue is $400 million. How does that break down? Three out of five adults who shop online say they’re unlikely to return to a website if their customer experience is below par. But a teeny percentage (roughly 2 percent) will complain to a contact center. For our hypothetical company, that represents an annual loss of $240 million.

Now, for the good news

Half of those surveyed say they want to improve their differentiation in the market—which is actually great news, as some say customer experience is your only differentiator. And, more than three quarters of the surveyed decision makers in the a customer service department say improving CX is among their top priorities. So, businesses appear to be operating with good intentions.

If your intentions are good, but you’ve yet to implement that solution, not to worry. You could give your FAQ page a makeover or try using video for customer self-service, giving online customers the opportunity to self help.

Forrester: Transform the Contact Center for Customer Service Excellence

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