Poor customer service could cost companies millions

Do you know how much revenue your business loses each year because customers are dissatisfied with the service they experience?

June 18, 2010

By Kevin Meltzer, Business Development Director at Consology

Do you know how much revenue your business loses each year because customers are dissatisfied with the service they experience? Few businesses sit down and do the maths about how many customers and transactions they lose as a result of poor service in a financial year, but the cost for the average big business is likely to be substantial.

One recent study – undertaken by Genesys Telecommunications Laboratories, Greenfield Online and Datamonitor/Ovum – tried to quantify what poor customer service costs companies in 16 major industrialised economies. The number it came up with was a staggering $338.5-billion lost by businesses per year as a result of customers defecting to alternative suppliers or abandoning their purchases.

The companies that were hardest hit were financial services firms, pay TV providers, and a variety of telecommunications companies. South Africans can relate to these findings: these sectors have all become notorious for inconsistent service levels in this country.

Though it’s perhaps not as easy to switch providers here because the competition isn’t as fierce as it is most developed countries, customer service issues cost local companies lots of money, too. Many South Africans would spend more money with their telecommunications service provider or bank, if only they were happy with the service they were getting.

Service complexities

The customer service problems that South African companies face are complex. They’re wrestling with legacy systems, fragmented processes and, in many cases, a shortage of human resources. These factors all contribute towards service issues such as call centre interactions that frustrate customers or a customer who speaks to a rep at a call centre getting a different answer when he visits a store.

Added to the mix is the complexity of providing standard service levels for complex products such as financial services or telecommunications. Though products can be standardised to a huge degree, providing a consistent service level is more difficult.

The goal companies should be striving for is to offer a consistently good service experience to all customers. This is one of the major reasons to consider adding more Self-Service to the customer service experience: an automated process can offer far more consistency than a manual one.

So how does Self-Service address customer service issues?

Perhaps the most important way it helps make customers happier is that it gives them control over, and visibility into, their relationships with their suppliers.

Most customers love Self-Service because it spares them from standing in queues or holding for a call centre agent to carry out a transaction. Customers prefer to pay bills, apply for services, initiate bill disputes, update account information, initiate and track support requests, and more, all from their desks at work or at home.

They don’t need to wait for someone to post or fax them an account. They can log a fault or a support request whenever they want to. That level of empowerment makes Self-Service customers the happiest customers.

Getting it right

Customers who can quickly resolve service issues at their own convenience are less likely to leave the organisation and more likely to extend their relationship with the business than those who struggle through call centres to get a query answered or a problem sorted out.

Self-Service solutions – apart from the low-costs and convenience they offer to customers and suppliers – can also be effectively used for customer relationship management applications, for example cross-and up-selling.

It’s important to remember, however, that poorly-implemented Self-Service is as likely to drive customers away as any other kind of bad service. Self-Service that is not intelligently integrated with Assisted Service can annoy customers and drive them away – one should make sure that they can access personalised human care when they need it. And it goes without saying that Self-Service systems must be reliable and easy-to-use.

Closing words: No room for complacency

Even in a market such as South Africa, where many industries are dominated by a few large players, companies can’t afford to be complacent about customer service. One important trend we’re seeing in the market is that younger and more Web-savvy users are more likely to churn than older customers are. But the flip side is that they’re especially loyal to companies that treat them well.

That means the costs to businesses of consumers swapping suppliers are likely to increase in the years to come. Most unhappy customers driven to leaving a supplier or service provider will never give it a second chance, but those that are happy will spend eagerly with a brand they have had good experiences with.

Self-Service is perhaps the most powerful way to give customers a consistent service experience that makes them happy and secures their loyalty.