September 22, 2014

How Much Can Poor Customer Service Cost Your Business? Read On

poor customer service

Customer service is important. If you run a business, you already know that. But you might not realize just how great an impact poor customer service can have on your company’s bottom line. The data collected by ClickSoftware explains:

“Poor customer experiences result in an estimated $83 billion loss by U.S. enterprises each year because of defections and abandoned purchases.”

When dealing with customer service issues, it can be easy to focus more on the cost that might be associated with correcting issues. But the cost of not making your customers happy can be much greater. In many cases, just one misstep can cost you a customer that could have made future purchases with your business. In fact, the data suggests that 89% of consumers who experience poor service will switch to another brand.

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It’s not just bad customer service that can impact your bottom line. The data also states that 63.9% of consumers consider customer service to be more important than price when deciding whether or not to do business with a company. And 55% would actually pay more to guarantee better service.

So even though providing good service can cost your company in some cases, customers appreciate it. And a strong reputation for customer service can actually help you balance out the costs sometimes associated with keeping your customers happy.

In order to maintain a strong reputation for customer service, using social media is almost a necessity. Customers who once had to call, write, or otherwise reach out to a company privately now turn to social media to express concerns or comments. Even though 70% of complaints on Twitter go unanswered, customers expect you to respond to them.

This more public means of airing grievances means that not only do businesses have a responsibility to address the concerns of their customers, but also the concerns of the rest of their social connections as well. Thanks to social media, one poor service experience can do more than just lose you a customer. It can damage your brand with all your followers.

So next time you’re dealing with a customer service issue – be sure to consider the real potential cost.

Unhappy Photo via Shutterstock

16 Comments ▼

Annie Pilon - Staff Writer


Annie Pilon Annie Pilon is a staff writer for Small Business Trends, covering entrepreneur profiles and feature stories. She is a freelance writer specializing in marketing, social media, and creative topics. When she’s not writing for her various freelance projects or her personal blog Wattlebird, she can be found exploring all that her home state of Michigan has to offer.

16 Reactions

  1. Knowing that less-than-perfect customer service is negatively impacting your small business is easy; knowing how to go about fixing the problem is much, much harder. Our company routinely “monitors” how our employees answer the telephone and/or respond to e-mails but we can’t this 100% of the time. Nevertheless, even though we only monitor less than 10% of our internal communications, we feel that it has added tremendously positive impact as rarely do we have irate customers… at least ones that we care about!

    • That’s great! I would imagine that monitoring even some customer interactions would offer incentive to give great service 100% of the time. But you’re right – fixing service issues can be difficult. I’m glad you’ve found something that works!

  2. Customer service will always be important because customers will always be the reason why a business continues to exist. Sometimes, you may have a good product or service already. But when there is a problem in customer service, you may still experience some problems.

    • Yes, word of mouth is so powerful so even a couple of bad experiences can hurt so much – especially with so many people posting grievances on social media.

  3. I am always advising my clients to monitor social media — if they aren’t checking what people are saying about their company, everyone else is!

    • So true! It’s out there for everyone to see, so it’s so important to see what people are saying and fix the problems if necessary.

  4. Well customer service has always been a dominant part of every industry, if they are not made aware of their duties as how to handle customers. Then things can really go wrong without anything more can be done with it. If the customer is happy with the service provided then the credit is enjoyed by company as a team.

  5. Its often said that ‘x’ billion dollars is lost to poor customer service but surely the ‘lost’ money is just spent in a different store where the service is better…unless customers are giving up the idea of buying their item altogether following one bad experience?

    • Yes, I do think that money is probably just spent with competing businesses. But I guess you could then say it is still “lost” to your company, just not lost in general.

  6. Adrian Minjineanu

    Business are complaining that customers just do not buy, yet are to willing to keep the high markup to maximize profit.
    I am one of those to vote with the mouse on www as an Chinese seller on Ebay will give me better customer service over $1 transaction than an Australian leading furniture shop over $2000 transaction.
    WWW is fantastic so stop voting with your feet and start shopping with the mouse, I do and save heaps.

  7. How much could earn on great customer service? ;)

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