The World Lost $338 Billion—You Included
Ever wonder just how much poor customer service costs?
It costs a lot.
Probably more than you think.
- A recent survey of consumer attitudes toward customer service in 16 economies says poor customer service cost upwards of $338.5 billion (USD) worldwide annually.
- The survey also says that the average annual value of each customer relationship lost to a competitor or abandoned because of poor customer service is $243 (USD).
- Across all countries 7 out of 10 consumers ended at lest 1 relationship annually because of poor customer service.
Nearly 9,000 consumers were surveyed, with a minimum sampling of 500 per country. Countries included in the survey were the United Stats, the United Kingdom, China, Germany, and Russia.
This information may surprise you. But it shouldn’t. Savvy managers know that poor customer service is costly—very costly.
Let’s take a closer look at just what it does costs.
When Consumers Defect
What happens when customers defect?
The vast majority of consumers that leave a company, says the survey, defect to competitors. In fact, nearly, two-thirds of consumers who ended a relationship defected to a competitor.
That’s a lot of business to lose. It’s also a lot of revenue to lose. Exactly how much revenue is lost through defections and abandonments is hard to say, but the survey gives us a good estimate:
- The average business abandoned and lost to an entire industry was approximately $126.3 billion (USD)
- Customer churn and defections within an industry was approximately $212.2 billion.
And while customer churn may make up for some customers you lose to poor customers service, it’s still costs you.
That’s because it’s costly for you to gain this new business—even if they’re coming over from a competitor. For example, you still have to recoup the marketing expenses you incurred to gain this new business.
In fact, it costs you 7 times more to acquire a new customer than retaining an existing customer—and that’s a fact.
While the exact cost of marketing depends on your industry, you can bet it’s a hefty sum. Put simply, it costs more to find a new customer than retain an existing one—a lot more.
Improving Customer Service
So what can you do to keep customers from defecting—provide exceptional customer service.
One way to do that is to be more proactive. Consumers in the survey overwhelmingly said they wanted more proactive engagement. Consumers also said they wanted more personalization when it comes to customer service.
Personalization and proactive engagement are areas you’re probably working to improve already. If not, you should be.
A third area you may not be working on that the survey’s respondents thought critical is cross-channel integration.
Here are some things you can do to improve cross-channel integration:
- Start in voice self-service then have customers switch to an agent
- Start on the Web then provide voice assistance or chat from the Web
- Start in e-mail then provide assistance from a contact center
- Schedule callbacks to avoid wait times
- Add chat or instant messaging to Web interactions
Implementing these tactics can help you improve cross-channel integration. They can also help you provide continuity and consistency—customer service traits that consumers value highly.
A Huge Impact
Poor customer service has a huge impact on businesses. In fact, it costs businesses billions in lost revenue annually.
Improving customer service increases customer satisfaction. And that can stop customers from defecting and increase revenues.
But what do you do if customer service isn’t a competency at your business. There are still ways to boost customer service.
One approach is to outsource customer service. Using an outside service provider with experience in your industry can boost customer service.
A good service provider can help you fill in the gaps between customer experience and customer expectations and stop customers from defecting.
More important, it can keep you from losing billions in revenue.
Let us put our proven experience in providing tech support for small and medium size companies to work for you. Request a quote from our sales team.