Report: Poor Customer Service Costs US Businesses $75 billion

Broken promises. Defective products. Surly employees. The list of poor experiences we face as customers goes on.

A report from NewVoiceMedia estimates those service failures are costing companies in the United States $75 billion per year.

The company worked with research firm Opinion Matters to survey 2,002 consumers. Its objective was to learn what people do when they experience poor service and why. The results should be a wake-up call for businesses:

  • 67 percent have left a company due to poor service
  • 10 percent have switched 5 or more times in the past year
  • $430 is the average a business loses per lost customer

Losing a customer isn't the only consequence of poor service. A separate study revealed many other ways angry customers can hurt a company.

Here are two insights from the report along with what you should do about them.

 Customer fuming over a terrible service experience.

Insight #1: Focus on Emotions

Think about the last time you used a vending machine and it cheated you. Perhaps it was a candy bar that got stuck on the rack. It hung there, as if to taunt you with nobody around to help fix it. 

We've all felt anger and frustration in those moments.

Customer service is about emotions. Yes, customers have rational needs like getting the candy bar they purchased or solving a billing issue. However, it's the emotions behind these experiences that will cause a customer to be loyal or jump ship.

NewVoiceMedia's report discovered that 86 percent of customers are likely to do business with a company again if they make a positive emotional connection with the person serving them. It could be a moment of friendly banter or an empathetic gesture to solve an issue.

Sadly, customers say that emotional connection happens just 30 percent of the time.

Smart companies train employees to read and respond to their customers' emotional cues. You can do this by having employees recall recent interactions or even watching videos of customer service scenarios.

  1. Try to identify the emotions the customer is expressing.
  2. Decide upon an appropriate way to respond.
  3. Practice those new techniques with real customers.

Here are some more ways you can make customer service more human.

 

Insight #2: Make Service Easy

The phone is still king when it comes to customers' preferred channel for solving issues quickly, with 48 percent indicating it is their top choice. 

That doesn't mean everything is perfect. Customers often find calling companies to be exceptionally frustrating. Here are the biggest challenges cited in the NewVoiceMedia report:

  • Talking to multiple agents.
  • Not being able to talk to a real person right away.
  • Being kept on hold.

My own study of customer complains on Twitter shows that 80 percent of complaints are an escalation. This means that customers tried to call, email, or contact the company via a different channel and were unable to get their issue resolved.

Companies make service too difficult.

Customer-focused companies constantly try to make things easy for their customers. In The Service Culture Handbook, I profiled Safelite AutoGlass for its strong service culture. One of the company's best practices is having a real person answer their phones so customers don't have to deal with annoying phone menus.

Another way you can make things easy is to analyze your survey data. The comments and ratings your customers provide often reveal clear pain points that can quickly be addressed to improve service. 

The best surveys allow customers to opt-in to a follow-up contact, so you can close the loop with upset customers. This gives you another chance to save their business. You can also learn more about what caused their issue so you can prevent future customers from experiencing the same thing.

 

Take Action to Improve Service!

Building a service culture starts with a customer service vision.

This is a shared definition of outstanding customer service that gets everyone on the same page. It gives employees purpose and meaning in their daily work, while also giving companies an internal benchmark to evaluate each service experience.

Once you have a vision in place, spend time looking at areas where that vision is difficult to execute:

  • Feedback from frontline employees
  • Customer service surveys
  • Online reviews and social media mentions
  • Contact volume by type and channel

This data can help you understand where service failures are happening so you can find the root causes and address them.

Customer-centric organizations constantly engage in continuously improving service, because they know the financial consequences of service failures.