Bad service equals lost revenue

Tuesday, February 23rd, 2010

We have discussed this before on Regard ARMA: giving bad customer service has a cost. We know it turns away customers, and makes them not buy from a company again. Further, it has the added “bonus” of spreading negative feedback about the company.  One customer has many associates (business partners, friends, family). So the damage from a bad customer service interaction is exponential.

As is reported by Jan Norman this article from the Orange County Register,  Genesys has quantified the monetary damage caused by bad customer service at $83 billion a year.  That is a staggering number!

Norman writes that:

In the United States, 71% of consumers have stopped doing business with a company because of a poor customer service experience. Each lost customer costs a business, on average, $289 a year.

This means that more than two-thirds of consumers make business decisions based on customer service.

Each business is losing on average of nearly $300 from each customer, and as we mentioned above, each customer should be multiplied by the number of associates he/she influences.  This number can add up quickly depending on how upset each customer is and how many people regard him/her as an information source.

It seems obvious then that businesses should keep revenue in mind when they make customer service decisions. If there is money to be lost for each poor customer service interaction, the obverse is true too–there is money to be made from positive customer service.

It always helps to look at the numbers.

Tags: cost of bad customer service, Genesys study
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Is retail customer service getting worse?

Thursday, February 18th, 2010

There are different types of customer service.  ARMA, for instance, is involved in a business-to-business customer service, where we strive to make sure our clients are getting the support they need, so that they in turn can serve their customers. Most people are exposed to business-to-consumer customer service.  As we have discussed here before, this type of customer service can actually make or break a customer relationship.

A new study by Emphatica, Inc. shows that 55% of  Canadian and American customers feel that customer service at retail outlets has gotten worse. The study is revealed in this article on Chain Leader, a trade publication. What is interesting is that because of the recession, customers are spending less money but are expecting better service.

One interesting item in the study found that  in the restaurant trade:

The data also revealed that customer service is so important to U.S. consumers, that one in five respondents said they value good customer service over good food.

Furthermore, bad service DAMAGED the restaurant’s brand perception:

The survey found that those who receive poor service — even at a restaurant they’ve been to several times –can cause huge damage to a brand. One in four U.S. consumers stated they would tell others not to go there in addition to never going again.

It is hard to say whether customer service in retail has gotten worse if we also know expectations are higher. Perhaps customer service has remained constant, and people, who have been getting more careful with their spending, are being more judicious in where and how they spend it. What do you think?

Tags: Emphatica customer service survey, expectations and customer service, retail customer service
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Cost and customer service

Tuesday, February 16th, 2010

How much does it cost to provide service to your customers?  Actually, the answer is it depends. It certainly costs time, and effort. But does it cost money?  Again, it varies.

Big organizations have customer service departments, with hundreds of employees set to assist customers. These departments cost lots of money to maintain, but as anyone who has had a bad customer service experience can attest, they also help you preserve money.

The return on investment (ROI) on customer service is quite large. Satisfied customers tend to be repeat customers. And if those customers never make a purchase from you again, there is still substantial ROI in positive experience, which helps company image. There could also be positive word of mouth.

Smaller organizations probably handle customer service directly. For instance, at a mom and pop shop, the customer that has an issue will most likely speak to the owner and the owner will take care of the situation. Here the cost is not dollars but rather time and effort. But again, the ROI is well worth it to make sure a customer is satisfied.

Columnist Jan Kantor addresses setting up a customer service strategy in his Naples News column on February 15.  As Kantor writes:

Giving great service to your customers is your key competitive advantage. Therefore, you need to find the best ways to meet customer needs and expectations. Think about it. What does great customer service cost in dollars? Very little. Creating a customer service-oriented company is a matter of focus and attitude.

Is there too much cost for customer service in your view? Or is it always worth the ROI?

Tags: customer service costs, ROI of customer service
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Daily practice

Thursday, February 11th, 2010

Customer service is akin to exercise, the more you do it the better it is for you (and for your customer). And, as David Evans, chairman of the Grass Roots group, says, customer service should be practiced every day. Evans, who is interviewed in the article Customer Service to be Practiced Every Day, in the U.K.’s Economic Times,  concludes the following:

a consistently well-delivered product or service at good value goes much further than programs that focus on retaining customers with “bribery.”

To Evans, customer loyalty programs are the “bribery.”  The article says that Evans:

doesn’t care for loyalty cards and says price-driven loyalty is often the lowest form of loyalty. Instead, Evans tells his clients that the best way of retaining customer  is to enhance the overall value of their product or service.

In sum, maintaining a customer relationship is about offering a quality good or service, consistently. People will seek out the better product or service.

What do you think?

Posted in Customer Satisfaction Programs, Customer service, customer loyalty | Comments Off

How do you treat your guests?

Tuesday, February 9th, 2010

Social media expert Chris Brogan has written a very insightful post on his chrisbrogan.com blog, and it has to do with customer service. Brogan normally writes about marketing,  business and social media, but this time he writes about customer service and how it should be renamed guest experience:

Disney, where I am this week, has a concept called a Moment of Truth. A moment of truth is “any time a guest comes into contact with any aspect of a business, however remote, is an opportunity to form an impression.” Note that it’s “an impression.” It can be good; it can be bad.

Why “guest?” Because guest is much more hospitable than “customer.” What “experience?” Because experience covers so much more than “service.” Service is important, but there are many other parts of the experience than just that.

Beside, how do you treat a guest? You generally treat your guests with hospitality. You welcome them. You want to make sure they are enjoying themselves. If you think of your customers as guests, then you must treat them well. After all, they are with you because you have invited them.

When we criticize customer service it is generally because of the way we were treated: rudely, dismissively. We complain that we did not get the help we needed or had our problem resolved.  If we treated our guests rudely or with attitude, they would leave because they would feel unwelcome.

The lesson here is simple: treat every customer as a guest to your business, no matter what kind of business you are in. You have invited the customer to try your product or service and you want the customer to be comfortable. Right?

Tags: Chris Brogan and guest experience, Customers as guests, guest experience
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Saying it nicely

Thursday, February 4th, 2010

Given a choice in customer service help, would people choose someone that is pleasant or someone that is not pleasant, all other issues being equal? The answer is a no-brainer. Most people choose to do business with people who are pleasant. Of course, if someone is pleasant but inefficient or incompetent, we’d rather put up with an attitude as long as it resolves issues.

Having said this, it seems that many times people in customer service are trained in how to resolve issues but not trained in how to deal with people.  Recently, we tried to get some information about a meeting space. The woman who “helped” us  was clearly unhappy with our questions. She mentioned a policy, and told us that as organizers we would have to tell everyone about it or else. Truthfully, we understood the policy, but we did not appreciate her attitude, her dismissive way of speaking to us. We decided not to use her establishment for our meeting.

People who excel at customer service are attentive, efficient and have good communication skills. They enjoy helping people and treat people nicely.  Even if you are delivering bad news, or cannot help someone,  saying it nicely helps relieve anger and frustration. It is that simple.

What are your thoughts?

Tags: habits of good customer service agents
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Does cost correlate to service?

Tuesday, February 2nd, 2010

If you are paying more, do you get better service? Some would expect so, and that is what is worth underlining.  Higher cost or price point may translate into a higher expectation of service. Conversely, a lower cost or price point may create a lowered expectation of service.

Let’s look at the airlines. When you fly (and pay for) first class, you are assuming that a good portion of the additional cost will cover better service and amenities. Indeed, that is what you are paying for.  If you fly on a discount airline, you expect very little in the way of amenities.  Ryanair, a European value airline, is considering charging for the use of the lavatories, so that they can remain as low cost as possible. In the airline world,  cost definitely correlates to service (although we all have experienced inflated pricing at certain times of the year, but this has more to do with supply and demand).

An area that is still not resolved when it comes to cost is the baggage surcharge most airlines charge. Does this mean that you will get better service (i.e. your bag will arrive with you at your destination)?  USA Today explores this in the article “As bag fees rise, are airlines improving baggage handling?“  The answer seems to be maybe. Unfortunately, the fee is not being applied toward service but rather to offset other costs.

Again, this brings us to the main point, which is can we relate better service to higher cost. In many cases we can, and when higher costs do not associate with better service, we will have expectations shattered.

What are your thoughts?

Tags: cost and service, paying more for better service, relation of cost to customer service
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