Bad customer service is one of most expensive costs a business can incur.

It is particularly destructive because it is not very visible to managers. It doesn’t appear on a profit and loss statement or any management accounts, but it can have more of an effect on your bottom line than anything that does. So, what exactly happens when bad customer service is received?

What happens when bad customer service is received?

Angry customers are vocal customers

Have a look at the review section of TripAdvisor or Google Play. The most in depth and passionate reviews are often the ones where a customer is not happy. People sometimes leave reviews when they are satisfied, but they always do when they are not happy with the service they receive. The Internet has provided every customer with a multitude of platforms to vent their frustration. All someone needs to do express their displeasure about your business is tag you on social media, leave a review or, if they are particularly unhappy, write a blog post or upload a vlog. Instantly, what may have been a small problem is now visible to all your customers, current or prospective. It is not just confined to social media either. If a customer is not happy, they will vent to their family, friends, coworkers and anyone else who will listen. No marketing strategy can counter word of mouth or a post that goes viral.

Often, companies end up making things worse trying to resolve bad customer service. Trying to hide it or cover it up results in the Streisand effect where it gets even more coverage. Attempting to over compensate a customer or group upset by bad customer service can seem cynical, like the company is trying to buy them off.

Reputation is paramount in every business today, whether it’s bricks and mortar or online. Crowdsourced reviews cover every possible business and can make or break a business. Despite this, businesses will invest huge amounts in marketing without ever considering the need to train its staff in how to deliver good customer service. The best way to avoid problems arising from bad customer service is to stop it happening in the first place. The second best way is to have a capable person to deal with complaints from customers, who can address the problem early and resolve it to the customer’s satisfaction. This may be a quality engineer, relationship manager or customer service assistant, depending on the industry, but what is important is that this person is ready and available to fix these problems. Unhappy customers don’t like to be ignored and they rarely just forget about things. Engage with them early, never let a bad review go unaddressed or a complaint not dealt with.

Unhappy customers are former customers

The greatest damage done to a business from poor customer service is to lose a repeat or long term client. Any business will tell you they make most of their profits from a core of loyal, repeat customers. Constantly searching for new customers is expensive, very expensive. Marketing, social media campaigns and discounts are all necessary to win new business, with no guarantee of future business. Regular customers don’t need this kind of investment in time and money, they spend more and they often actively promote your business.

A single instance of bad customer service can destroy a business relationship that has taken years to build. It doesn’t take much to change a customer’s view of your company. If they don’t feel valued, they can and will take their business elsewhere. It could be anything from poor response times, unfulfilled promises to missing deadlines or delivery dates.

Loyal customers need to be considered as an intangible asset, because that is what they are. When corporations talk about goodwill in valuations, this is exactly what they are talking about. The goodwill and reputation built up in a core group of customers over time, through excellent customer service. Losing a regular client does not simply affect your sales figures, your assets are also reduced.

Every business can get too focused on growth and acquiring new customers. However, the foundation that growth is built on is its core group of customers. Their needs are often more important than new customers. Bad customer service with this group can easily destroy the heart of your business.

How can a manager keep on top of this? The best way is to actively manage your customer interactions. Customer Relationship Management (CRM) software is affordable for every business. It can guarantee that leads are followed in a timely fashion, converting more sales and that customer’s needs are dealt with quickly and effectively. It can often be dismissed as an unnecessary expense, especially for small businesses, but it is actually an investment in your most critical asset.

Customer service reflects your company as a whole

Most discussions on customer service focus outward, towards the customer. But what effect does bad customer service have on your employees? Customer service can be looked at as a barometer of the health of your company, particularly when it comes to metrics like employee morale that are hard to quantify. If you are delivering poor customer service, there is something wrong within your company. Your processes don’t work efficiently or your employees may not be motivated. Bad customer service is just a symptom of problems inside your organization.

Should those problems not be addressed, they tend to fester and get worse over time, causing even worse customer service. You soon become trapped in a vicious circle. You will lose your better employees and often that experience is irreplaceable. Your sales drop so you don’t have the capital to invest in the right machines or tools to do your job better.

Bad customer service is expensive but good customer service is cheap

Having seen some of the huge hidden costs of bad customer service, it would be easy to think that good customer service would be expensive to deliver. However, the complete opposite is true. Good customer service just takes a little forethought and a little investment in training and processes. A good CRM program is very cheap when compared to a damaged reputation and a couple of hours training for employees is nothing when you consider the cost of losing a big client. Customer service should be a part of every manager’s job and when thought through properly and practiced every day, it becomes an asset rather than an expense.

ALSO READ: “What happens when good customer service is received?

Write a comment