By Gregory Ciotti, marketing at Help Scout.
While many companies see customer service as little more than a cost of doing business, research shows providing great customer service is as rewarding for customers as it is for your bottom line.
It's true some industries get away with bad customer service. Airlines and their famously low expectations are a well-known example; as a perishable good with search engines galore, most people choose to optimize for price and go with the cheapest ticket. Service suffers as a result, and customers, in some ways, have grown to tolerate it. However, this is largely the exception to the rule. In most other industries, customers reward companies who create hassle-free experiences.
Bad customer service could be creating a leak in your business, causing potentially loyal customers to slip away. But what exactly is at stake?
1. Bad service increases sensitivity to price
You've probably seen the well-covered factoid that it's more expensive to acquire a new customer than to keep a current one. But there's another facet of price that bad customer service directly affects: how sensitive people are to a change in price.
Research from TARP Worldwide, published in Customer Experience 3.0, found that additional problems increased customers' sensitivity to price, price changes, and additional fees (above is a survey from retail banking customers). What's important to note is how perception plays a role in defining what a "problem" really is -- if a customer follows up multiple times regarding the same issue, this is often viewed as multiple problems, because it takes separate amounts of time to contact support and get a resolution.
Bad customer service enables individual problems to manifest into multiple issues, and often misses the opportunity to fix the root cause. The risk of customers leaving is already scary enough, but a large base of price sensitive (read: highly disloyal) customers is a whole other can of worms.
2. Bad service sabotages your second chance
In customer support, the best surprise you can provide is no unpleasant surprises. CX Solutions and former lead researcher John Goodman have driven this point home with research that shows many customers won't bother contacting support when they run into an unpleasant surprise -- they'll brood in silence and may not buy from you again.
While the exact percentages vary by industry, the cards are stacked against every business when it comes to hearing about problems.
Great customer service fixes this in two ways. First, those customers who do contact support are quite forgiving if you can quickly fix their problem. A consumer survey published in Goodman's book Strategic Customer Service showed a vast majority of customers would do business with a company again if their problem cost them less than $100 and if it was resolved by support in a reasonable time frame.
Second, great customer support teams won't just fix the surface-level problem; they'll find the systemic cause and share feedback with the product team on what's causing the issue, how many customers might be affected, and what the current sentiment is. With bad customer service you'll not only lose your chance to recover after a problem, you may not even find out a problem exists.
3. Bad customer service spreads like wildfire
A 2014 survey conducted by American Express found that, "While 46% of American consumers say they always tell others about good service experiences, an even greater number say they talk about poor service experiences. In fact, 60% said they always share the bad ones, and they tell nearly three times as many people (an average of 21 people vs. 8 people)."
What is causing such a disparity between sharing positive and negative experiences? It has to do with the nature of customer service (getting people back to "neutral") and the types of interactions that are most likely to elicit responses online.
For the former, it's important to remember that a fundamental part of good customer service is getting people back to where they were before they encountered a problem. While delight certainly has it's place and provides lots of value, many customers simply prefer to avoid problems rather than have their expectations exceeded.
For the latter, it's interesting to note that Researchers at China's Beihang University studied 70 million Weibo (similar to Twitter) posts over a six-month period, placing them into categories like anger, joy, disgust, and happiness. They found that happy posts were likely to be reposted, and messages that contained sadness or disgust didn't resonate and therefore weren't shared as often (why be seen as the purveyor of bad news?). But what category was reposted most? Rage was the emotion most likely to spread.
On social media, sharing a story where you've been wronged often leads to a surge of support from your friends and followers. People want to call out bad service, which, in some cases, can lead to insane media coverage and a ripple effect driven by outrage. Positive stories definitely get their fair share of the limelight, but they lack the call to action that's present in tales of injustice.
The high cost of poor customer service
In addition to the statistics above, which often fly below the radar, we found five other major takeaways and trends from the available data on the impact of good/bad customer service:
- Products attract customers; service drives them away. According to a RightNow Customer Experience Report, 86 percent of consumers said they've quit doing business with a company due to a bad customer experience.
- Customer expectations are only getting higher. 51 percent of consumers admitted they'd only try to contact support once before giving up on a purchase.
- What customers want is simple. When asked about why they'd given up on a company's customer support, 73 percent of customers cited incompetent (and rude) replies as their primary reason.
- Great service impacts the bottom line. Loyal customers are cheaper to retain, are willing to spend more, and 78 percent of them will recommend your product to others after a great experience.
- A low bar creates a big opportunity. While a Bain & Company report found that 80 percent of companies believe they provide a "superior customer experience," only 8 percent of customers agreed.
We've spent years building support tools for companies who want to deliver outstanding customer experiences. We understand how hard providing great customer service can be -- it's far from easy, but it is worth the effort.