The impact of customer service on customer lifetime value

A research report that defines the long term benefits of providing good customer service

Customer service — both good and bad — impacts revenue

1. Participants ranked customer service as the #1 factor impacting vendor trust

2. 62% of B2B and 42% of B2C customers purchased more after a good customer service experience

3. 66% of B2B and 52% of B2C customers stopped buying after a bad customer service interaction

4. 88% have been influenced by an online customer service review when making a buying decision

Fast customer service matters

5. 69% attributed their good customer service experience to quick resolution of their problem

6. 72% blamed their bad customer service interaction on having to explain their problem to multiple people

Customer service experiences have a long lasting impact

7. 24% continue to seek out vendors two or more years after a good experience

8. 39% continue to avoid vendors two or more years after a bad experience

9. Women (45%), B2B (51%), Gen X (54%) and high income households (79%) are most likely to avoid vendors two or more years after a bad customer service experience

Customer service stories are spread widely — especially bad ones

10. 95% share bad experiences and 87% share good experiences with others

11. 54% shared bad experiences with more than five people and 33% shared good experiences with more than five people

12. 58% are more likely to tell others about their customer services experiences today than they were five years ago

13. B2B, Gen X, and high income households most likely to share their customer service stories

Social media drives increased sharing of customer service experiences

14. 45% share bad customer service experiences and 30% share good customer service experiences via social media

15. More have read positive reviews (69%) of customer service online than negative reviews (63%)

Executive Summary

Every business manager knows that when a customer has a problem, the experience of resolving the issue has a profound impact on future purchases. This effect has been amplified as social media and web review sites enable customer service experiences to be widely shared with friends, colleagues, and the general public. But just how impactful are these customer service experiences on buying behavior and the lifetime value of a customer? How long does the effect last? And what is the impact for mid-sized companies?

The following report is based on a survey of 1046 individuals who have had experiences with the customer service of a mid-sized company. The survey's main intent was to quantify the long term impact of customer service on business results. The survey was conducted by Dimensional Research, an independent market research company specializing in technology.

This survey clearly demonstrates that customer service has a dramatic impact on the buying behaviors among customers of mid-sized companies. Good customer service results in increased personal and business purchases while bad customer service drives customers to find alternatives. Interestingly, customer service experiences are judged more on the timeliness of the interaction than on the final outcome.

Customer service has a long-term impact on buying decisions, with customers continuing to be effected years after the initial interaction. Customers share service interactions more widely than ever before. Social media and review sites are providing increased awareness of customer service experiences, and these stories influence the purchases of others.

Detailed Findings

Customer service impacts trust

Participants were asked to rank a series of factors in the order in which they impact the level of trust they have in their vendors. Excellence in customer service ranked as the #1 factor that most impacted participants.

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