Silent But Deadly: The Impact of Poor Customer Service is by Ray Miller
When your customers encounter a mediocre or poor service experience the vast majority will not complain but rather, they will simply take their business elsewhere.
Here is what research from several reliable sources tells us:
If you receive one complaint about poor service it is likely that 24 other people also received poor service but did not make a complaint. Why? Because they don’t think it will do any good, or they can’t be bothered, or they don’t want the hassle.
Out of these 24 people, research indicates that approximately 22 will simply take their business elsewhere.
According to the latest American Express Global Customer Service Barometer survey, there is one possible exception. If your customers are reasonably satisfied with the overall service experience with you but they encounter a poor service experience, they may return one more time. However, if the service they experience on their second visit is also poor, they are gone for good. Quoting from the survey results, “Two Strikes and You’re Out!”
Losing customers is always bad, but the risk to your business is even greater in the current economy. The same survey confirmed what we in the customer focus training community have known for some time. “The current economy has made customer service more important to customers.” Depending on the country surveyed the increase in the importance ranges from 58% to 82%.
Your customers’ silence is deadly for your business not only because you have lost the lifetime value these customers bring to your business but because of the impact these customers have on your potential prospects. Forum, TARP and other respected research groups suggest that each unhappy customer will tell 8 to 10 friends, colleagues, and/or family about their bad experience. Human nature being what it is, they will embellish their bad service stories as well. The upshot is that for every bad service complaint you do receive, there are 198 bad service stories circulating about your business. To make matters worse, this does not even factor in the internet and the proliferation of bad service experience stories which have the potential to go viral. Maybe you have seen the Airline Lost My Guitar song that went viral on You Tube and was viewed by millions, or the Comcast service technician who fell asleep while waiting on hold with his service department.
More and more customers are also using online postings of others’ opinions about their service experience when making buying decisions. The Amex research suggests that consumers in some countries rely on this resource more than others, but there is a clear trend occurring. The survey indicates that customers in India (80%), Italy (68%), Japan (61%), Mexico (60%), Spain (58%) and USA (48%) are the most likely to always or often use a consumer review, blog or online posting to get other consumers’ opinions about a company’s reputation for customer service. If the markets you serve are global in nature, this information should not be ignored.
The survey also indicated that a posting that describes a poor experience is significantly more influential in customers’ decisions to do business with a company than a posting describing a good experience. This rating averages out at approximately 60%.
Customers in Australia, the Netherlands (40% each), Canada and France (38% each) are the least likely to (always/often) use online postings as a resource. This offers little comfort because you still have to contend with the bad stories being told to friends, family and colleagues. These bad stories are even more powerful than online postings because the stories are being recounted by people who your potential new customers know and trust. These stories will negatively impact the perceptions of these potential customers and reduce the chances of them doing business with you.
The American Express Global Service Barometer offers a significant wake up call. Clearly, your customers are telling you that you need to do more to maintain their patronage, earn their loyalty, not take them for granted and to keep them from going elsewhere.
The realities of business are harsh these days. Failure to listen to your customers just makes matters worse.
Here is a short list of some of the things you can do right now.
Make sure everyone in your Organization understands the impact Customer Service has on your bottom line.
Service is important to customers and they are willing to pay more for excellent service. The Amex survey indicates that they are willing to pay from 7% to 11% more. Make sure your employees have the knowledge, skills and authority they need to enable them to make each customer experience convenient, positive, and beyond what your customers expect.
Make it easy for your customers to do business with you.
Customers want to deal with organizations that demonstrate they value their business. Internal policies and procedures are designed to protect the interests of the organization. While important, these can inadvertently make it difficult for your customers and service providers to do business. Evaluate your systems, process and procedures from your customers’ points of view and make the necessary changes. Be sure to include your performance management processes and modify these so that people are held accountable for service excellence.
Make it easy for your customers to complain.
As you have seen from the information in this article, most customers won’t complain about poor service. That is, unless they feel that if they do complain something positive will result. Make listening to the voice of your customers a part of every employee’s daily routine. Train your employees in how to become listening posts for your organization and ensure they know how to use this information to make changes which will have a positive impact on customer perceptions.
Serve from the inside out.
Service is not the sole responsibility of customer contact staff. Everyone in your organization has a role to play in contributing to the success of each customer experience. We call it internal service partnership. The reason for most service failures is a breakdown in effective service partnerships. Everyone needs to know how their work impacts the customer experience and what they need to do to contribute to the success of every customer interaction with your organization.
Make service recovery proactive.
People make mistakes that impact on the customer. How these mistakes are handled can make or break a service reputation. Your goal must be to use every service problem as an opportunity to impress the customer. When mistakes happen, use proactive recovery as the means to create customer loyalty. Research shows that most customers will become more loyal when a company’s recovery efforts are fast, convenient and designed to exceed customer expectations.
Ensure your Managers and Supervisors are Customer-Focused Leaders.
Traditional methods of managing and supervising others needs to be replaced with new methods which build and reinforce the kind of customer-focused performance you need from every employee. Most service initiatives fail because those that supervise others are unwilling or unable to make the changes needed to create sustainable customer focus. Ensure all leaders receive the training they need in Customer-Focused Leadership.
These suggestions are by no means everything you will need to do. They are however a good starting point. The best time to start is now. The research indicates that if you wait, you will likely lose valued customers. Can you afford to take the risk?
Ray Miller is the Author of That’s Customer Focus! and The Customer Focus Companion, creator of Maximizing the Customer Experience, and Managing Partner of The Training Bank which offers several highly effective , fully customizable training programs in customer focus, service excellence and leadership.